EX-99.3 19 t1500540_ex99-3.htm EXHIBIT 99.3

 

 

Exhibit 99.3

 

St. James Federal

savings and loan association

 

St. James, minnesota

 

Conversion Valuation Appraisal Report

 

 

 

As of February 13, 2015

 

Prepared by:

McAuliffe Financial, LLC

19457 Olson Ave., Lake Oswego, OR 97034

 

 
 

 

McAuliffe Financial, LLC

 

  February 13, 2015

 

Board of Directors

St. James Federal Savings and Loan Association

501 First Avenue, South

St. James, Minnesota 56081

 

Dear Board Members:

 

At your request, we have completed and hereby provide an independent appraisal ("Appraisal") of the estimated pro forma market value of the common stock which is to be offered in connection with the mutual-to-stock conversion transaction described below.

 

This Appraisal is furnished pursuant to the conversion regulations promulgated by the Office of the Comptroller of the Currency ("OCC"). This Appraisal has been prepared in accordance with the written valuation guidelines promulgated by the OCC, most recently updated as of October 21, 1994. Specifically, this Appraisal has been prepared in accordance with the "Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization", dated as of October 21, 1994; and applicable regulatory interpretations thereof.

 

Description of Reorganization

On November 5, 2014, the Boards of Directors of St. James Federal Savings & Loan Association (“St. James” or the “Association”), Wells Financial Corp. (“Wells”) and Wells Federal Bank (the “Bank”), respectively, adopted and approved a Plan of Conversion Merger (the “Plan”) and the related Agreement and Plan of Conversion Merger (the “Agreement”), subject to regulatory and Member approvals, whereby St. James proposes to convert from a federally-chartered mutual savings association to a federally-chartered stock savings association, pursuant to the rules and regulations of the Office of the Comptroller of the Currency and any successor thereto (the “OCC”). The Plan and the Agreement provide that St. James shall merge with and into the Bank concurrently with St. James’ conversion to stock form and the issuance of shares of common stock of Wells to depositors and borrowers of St. James and the community served by St. James, pursuant to the terms and conditions of the Plan and the Agreement (the “Conversion Merger”).

 

It is anticipated that the public shares will be offered in a Subscription offering to the St. James’ Eligible Account Holders, Tax-Qualified Employee Plans, including the employee stock ownership plan (the "ESOP"), Supplemental Eligible Account Holders and Other Members. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the Subscription offering, the shares may be offered for sale in a Community offering.

 

McAuliffe Financial, LLC

McAuliffe Financial, LLC. ("McAuliffe Financial") is a financial consulting firm serving the financial services industry that, among other things, specializes in financial valuations and analyses of business enterprises and securities. The background and experience of McAuliffe

 

 
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Financial is detailed in Exhibit VI-1. We believe that, except for the fee we will receive for our appraisal, we are independent of the Association and the other parties engaged by St. James to assist in the corporate reorganization and stock issuance process.

 

Valuation Methodology

In preparing our appraisal, we have reviewed the Association’s, Wells’ and Wells Federal Bank’s regulatory applications, including the prospectus as filed with the OCC, the Minnesota Department of Financial Institutions (“MDFI”) and the Securities and Exchange Commission ("SEC"). We have conducted a financial analysis of the Association that has included a review of its financial information for fiscal years ended September 30, 2010 through September 30, 2014, various unaudited information and internal financial reports through December 31, 2014 and due diligence related discussions with the Association’s management, Lindquist & Vennum PLLP, the Association’s counsel in connection with the reorganization, Jones Walker LLP, the counsel for Wells Financial, and Sterne Agee & Leach, Inc., the marketing advisor in connection with the common stock offering. All conclusions set forth in the Appraisal were reached independently from such discussions. In addition, where appropriate, we have considered information based on other available published sources that we believe are reliable. While we believe the information and data gathered from all these sources are reliable, we cannot guarantee the accuracy and completeness of such information.

 

We have investigated the competitive environment within which the Association operates and have assessed the Association's relative strengths and weaknesses. We have kept abreast of the changing regulatory and legislative environment for financial institutions and analyzed the potential impact on the Association and the industry as a whole. We have analyzed the potential effects of conversion on the Association's operating characteristics and financial performance as they relate to the pro forma market value. We have reviewed the economy in the Association's primary market area and have compared the Association's financial performance and condition with a peer group of publicly-traded thrifts as well as all publicly-traded thrifts. We have reviewed conditions in the securities markets in general and in the market for thrift stocks in particular, including the market for existing thrift issues and the market for initial public offerings by thrifts. We have excluded from such analyses thrifts subject to announced or rumored acquisition, mutual holding companies or mutual holding company institutions that have announced their intent to pursue second step conversions, and/or those institutions that exhibit other unusual characteristics.

 

Our Appraisal is based on the Association's representation that the information contained in the regulatory applications and additional information furnished to us by the Association, its legal counsel and other authorized agents are truthful, accurate and complete. We did not independently verify the financial statements and other information provided by the Association, its legal counsel and other authorized agents nor did we independently value the assets or liabilities of the Association. The valuation considers the Association only as a going concern and should not be considered as an indication of the Association's liquidation value.

 

Our appraised value is predicated on a continuation of the current operating environment for the Association and for all thrifts and their holding companies. Changes in the local, state and national economy, the legislative and regulatory environment for financial institutions, the stock

 

 
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market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability, and may materially impact the value of thrift stocks as a whole or the Association's value alone. To the extent that such factors can be foreseen, they have been factored into our analysis.

 

Pro forma market value is defined as the price at which the Association's stock, immediately upon completion of the offering, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

 

Valuation Conclusion

 

It is our opinion that, as of February 13 2015, the estimated aggregate pro forma market value of the shares to be issued immediately following the offering was $2,300,000 at the midpoint . Pursuant to conversion guidelines, the 15 percent offering range indicates a minimum value of $1,955,000 and a maximum value of $2,645,000. All shares of common stock will be offered for sale at a price equal to the average of the daily arithmetic mean of the closing bid and asked quotations of Wells’ stock as traded on the OTCQB of commencing 30 trading days before the second trading day prior to the date of the final prospectus, rounded to the nearest cent, with any amount equal to or greater than $0.005 rounded to the next higher $0.01. Based on an assumed offering price of $27.00 per share offering price, this valuation range equates to total offering shares of 72,407 shares at the minimum to 97,963 shares at the maximum. In the event that the appraised value is subject to an increase, the aggregate pro forma market value may be increased up to a supermaximum value of $3,041,750 without a resolicitation. Based on the $27.00 per share offering price, the supermaximum value would result in total shares issued of 112,657.

 

Limiting Factors and Considerations

 

Our valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of the common stock. Moreover, because such valuation is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of common stock in the conversion will thereafter be able to buy or sell such shares at prices related to the foregoing valuation of the pro forma market value thereof.

 

McAuliffe Financial's valuation was determined based on the financial condition and operations of St. James Federal as of December 31, 2014, the date of the financial data included in the regulatory applications and prospectus.

 

McAuliffe Financial is not a seller of securities within the meaning of any federal and state securities laws and any report prepared by McAuliffe Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities.

 

The valuation will be updated as provided for in the conversion regulations and guidelines. These updates will consider, among other things, any developments or changes in the

 
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Association’s financial performance and condition, management policies, and current conditions in the equity markets for thrift shares. These updates may also consider changes in other external factors which impact value including, but not limited to: various changes in the legislative and regulatory environment, the stock market and the market for thrift stocks, and interest rates. Should any such new developments or changes be material, in our opinion, to the valuation of the shares, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained in the update at the date of the release of the

update.

 

  Respectfully submitted,
  McAuliffe Financial, LLC
 
   
  J. Kevin McAuliffe
  President

 

 

 
 

 

McAuliffe Financial, LLC

 

Table of Contents

 

I.         DESCRIPTION OF ST. JAMES FEDERAL SAVINGS AND LOAN ASSOCIATION 3
   
Overview of the Association 3
   
Balance Sheet Trends 3
   
Lending Activities 5
   
Asset Quality 7
   
Funding Composition 8
   
Interest Rate Risk Management and Asset/Liability Management 10
   
Capital 11
   
Profitability Trends 11
   
Properties 14
   
Subsidiary Activities 14
   
Legal Proceedings 14
   
II.         MARKET AREA ANALYSIS 15
   
Introduction 15
   
Demographics 16
   
Unemployment Rates 17
   
Competition in Watonwan County 18
   
Summary 18
   
III.         COMPARISONS WITH PUBLICLY TRADED THRIFTS 20
   
Introduction 20
   
Selection Process 20
   
Review of the Comparable Group 22
   
Asset size 22
   
Asset Size 22
   
Balance Sheet Mix 23
   
Asset Quality 23

 

 
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Equity to Asset Level 23
   
Profitability 24
   
Conclusion 24
   
IV.         MARKET VALUE ADJUSTMENTS 26
   
Introduction 26
   
Financial Condition 26
   
Balance Sheet Growth 32
   
Earnings Performance 34
   
Market Area Review 38
   
Cash Dividends 38
   
Liquidity of the Issue 56
   
Management 57
   
Marketing of the Issue 58
   
Summary of Valuation Adjustments 62
   
V.         MARKET VALUE DETERMINATION 63
   
Introduction 63
   
Discussion of Pricing Ratios 63
   
Price to Earnings Ratio 63
   
Price to Book Value/Price to Tangible Book Value Ratio 63
   
Price to Assets Ratio 64
   
Pro Forma Value 64
   
Valuation Conclusion 66

 

 
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I.DESCRIPTION OF ST. JAMES FEDERAL SAVINGS AND LOAN ASSOCIATION

 

Overview of the Association

 

St. James Federal Savings and Loan Association (“St. James Federal” or the “Association”) was originally chartered on September 15, 1958 in St. James, Minnesota. St. James Federal operates through a single office in St. James which is located in a rural community approximately 100 miles southwest of Minneapolis and approximately 100 miles east of Sioux Falls, South Dakota. At December 31, 2014, the Association’s total assets equaled $27.2 million. The Association’s primary market area of Watonwan County is largely rural and supported by the agricultural industry and with no major population centers.

 

St. James Federal’s lending efforts have reflected a diversified portfolio focused on agricultural, one-to-four family, commercial and industrial and consumer loans. At December 31, 2014, 39.9% of the Association’s total loan portfolio was comprised of farm and agricultural loans and 31.8% were permanent one-to-four family residential mortgage loans. Management believes that St. James Federal has maintained a very positive image in Watonwan County for its lending and depository services. The primary liability funding source for St. James Federal is retail deposits raised through the Association’s single office.

 

Balance Sheet Trends

 

Table 1.1 presents key balance sheet data for St. James Federal for the five fiscal years ended September 30, 2010 through September 30, 2014 and at December 31, 2014. Over this period, St. James Federal’s asset base has remained relatively flat fluctuating between $24.4 million at September 30, 2010 to $27.5 million at September 30, 2012. At December 31, 2014, the Association’s asset base has declined to $27.2 million. The current assets are near the peak reached in fiscal 2012.

 

Loans, net of the allowance for loan losses, comprise the largest component of assets, equaling $18.7 million (68.8% of assets) as of December 31, 2014. Between September 30, 2010 and December 31, 2014, the Association’s loan portfolio remained relatively flat and fluctuated between a high of $18.7 million at September 30, 2014 and a low of $18.0 million at September 30, 2011. The largest single component of the loan portfolio has consisted of permanent one-to-four family mortgage loans, which has exceeded over 32% of total loans during recent years followed by agricultural loans (22%) and farm loans (18%).

 

 
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Table 1.1

St James Federal Savings and Loan Association

 

Selected Balance Sheet Items

(Dollars in Thousands)

 

   At September 30,   At December 31, 
   2010     % Assets      2011     % Assets     2012     % Assets     2013    % Assets     2014    % Assets     2014    % Assets 
Total Assets  $24,367    100.00%    $25,582   100.00%    $27,523    100.00%    $26,993    100.00%    $26,589   100.00%    $27,215    100.00%
Cash and Cash Equivalents   4,246    17.43%   5,589    21.85%   7,125    25.89%   7,479    27.71%   6,758    25.42%   6,776    24.90%
Investment Securities   833    3.42%   1,344    5.25%   1,246    4.53%   914    3.39%   1,231    4.63%   1,198    4.40%
FHLB Stock   80    0.33%   80    0.31%   77    0.28%   35    0.13%   32    0.12%   32    0.12%
Total Cash & Investments   5,159    21.17%   7,013    27.41%   8,447    30.69%   8,428    31.22%   8,021    30.17%   8,006    29.42%
Loans Receivable, net   18,687    76.69%   17,997    70.35%   18,557    67.42%   18,023    66.77%   18,030    67.81%   18,734    68.84%
Real Estate Owned   42    0.17%   -    0.00%   -    0.00%   50    0.19%   32    0.12%   -    0.00%
Other Assets   479    1.97%   572    2.24%   520    1.89%   491    1.82%   506    1.90%   475    1.75%
                                                             
Deposits (incl Escrows)   21,831    89.59%   23,138    90.45%   23,979    87.12%   24,327    90.12%   23,846    89.68%   24,439    89.80%
Borrowings   165    0.68%   -    0.00%   1,000    3.63%   -    0.00%   -    0.00%   -    0.00%
Other Liabilities   126    0.52%   77    0.30%   28    0.10%   25    0.09%   29    0.11%   21    0.08%
Total Liabilities   22,122    90.79%   23,215    90.75%   25,006    90.85%   24,352    90.22%   23,875    89.79%   24,460    89.88%
Equity   2,245    9.21%   2,367    9.25%   2,517    9.15%   2,641    9.78%   2,714    10.21%   2,755    10.12%
Tangible Equity / Tg. Assets        9.21%        9.25%        9.15%        9.78%        10.21%        10.12%
Loans / Deposits   85.60%        77.78%        77.39%        74.09%        75.61%        76.66%     

 

Source: St James Federal’s internal financial statements and call reports.

 

 
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The Association has maintained a high level of cash and investments in recent years in an effort to help manage its interest rate sensitivity and also due to limited quality lending opportunities. Cash, cash equivalents and investment securities have ranged from 21.2% of total assets at September 30, 2010 to 31.2% at September 30, 2013. At December 31, 2014, cash and investments remained high at 29.4%.

 

The asset base is funded with retail deposits and capital. St. James Federal has rarely relied on FHLB borrowings to fund loan demand or meet asset/liability goals. Only in fiscal 2012 has the Association utilized FHLB borrowings which were repaid in fiscal 2013. All of the Association’s deposits are local deposits. The deposit balance increased from $21.8 million at September 30, 2010 to $24.4 million at December 31, 2014. Overall, between September 30, 2010 and December 31, 2014, the Association’s GAAP equity increased from $2.24 million or 9.21% of assets to $2.76 million or 10.12% of assets. The Association is a “well capitalized” institution pursuant to regulatory standards.

 

Lending Activities

 

As presented in Table 1.2, St. James Federal’s lending activities have emphasized the origination of permanent one-to-four family residential mortgage, farm, agricultural and commercial and industrial loans. Between September 30, 2010 and December 31, 2014, these types of loans constituted between 71% and 80% of the Association’s total loan portfolio. The Association plans to continue to offer permanent one-to-four family residential mortgage loans, farming and agricultural, and commercial and industrial loans while also originating smaller volumes of home equity and consumer loans. Generally, the Association does not originate construction or multifamily loans. The majority of St. James Federal’s one-to-four family residential mortgage loans are held in portfolio.

 

At December 31, 2014, the Association’s permanent first mortgage loans secured by one-to-four family residential properties totaled $6.1 million, or 31.8% of total loans. Generally, the Association’s one-to-four family loans are 5 year balloon loans with 15 to 30 year amortizations. After the initial 5 year term, the loans are re-priced at new market rates and again maintain the 5 year balloon feature. All one-to-four family loans are originated with a maximum loan to value ratio of 80%. For borrowers whose loans qualify for secondary market standards, the Association acts as a broker sending the loan to other financial institutions for a fee.

 

 
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Table 1.2

St James Federal Savings and Loan Association

Loan Portfolio

 

   At September 30,   At December 31, 
   2010   2011   2012   2013   2014   2014 
   Amount   Percent   Amount   Percent   Amount   Percent   Amount   Percent   Amount   Percent   Amount   Percent 
   (Dollars in thousands)         
Real estate loans:                                                            
One- to four-family  $8,601    45.98%  $7,545    41.30%  $6,772    35.92%  $6,649    36.19%  $6,162    33.53%  $6,068    31.82%
Farm loans   NA    NA    NA    NA    2,974    15.77%   3,809    20.73%   3,705    20.16%   3,448    18.08%
Home equity/second   959    5.13%   839    4.59%   890    4.72%   731    3.98%   613    3.34%   643    3.37%
Non-residential   NA    NA    NA    NA    1,487    7.89%   1,421    7.73%   1,818    9.89%   1,851    9.71%
Construction and land   0    0.00%   0    0.00%   0    0.00%   0    0.00%   125    0.68%   216    1.13%
Total real estate loans   12,659    67.68%   12,311    67.39%   12,123    64.30%   12,610    68.64%   12,423    67.61%   12,226    64.12%
                                                             
Agricultural loans   NA    NA    NA    NA    3,123    16.56%   2,696    14.67%   3,201    17.42%   4,166    21.85%
Commercial and Industrial   4,779    25.55%   4,360    23.87%   1,922    10.19%   1,449    7.89%   1,329    7.23%   1,378    7.23%
Consumer and other loans   1,266    6.77%   1,597    8.74%   1,686    8.94%   1,617    8.80%   1,422    7.74%   1,298    6.81%
Total loans  $18,704    100.00%  $18,268    100.00%  $18,854    100.00%  $18,372    100.00%  $18,375    100.00%  $19,068    100.00%
                                                             
Allowance for losses   (196)        (271)        (296)        (349)        (345)        (334)     
Loans, net  $18,508        $17,997        $18,558        $18,023        $18,030        $18,734      

 

Source: St. James Federal call reports

 

At December 31, 2014, the Association had $3.4 million in farm loans, representing 18.1% of total loan portfolio. Farm loans are generally fixed rate with 5 year balloon terms. The loans are amortized over a 15 to 30 year term while loan to value ratios generally do not exceed 80%. All of the farm loans are secured by property within or contiguous to the Association’s primary market area.

 

Home equity and second mortgages represent a small portion of the Association’s loan portfolio. At December 31, 2014, the Association had home equity and second mortgages totaling $643,000, or 3.4% of the total loan portfolio. These loans are generally adjustable rate loans based on the prime rate. The Association structures these loans so payments reflect both principal and interest with loan to value ratios ranging between 80% and 90%.

 

Nonresidential loan totaled $1.9 million at December 31, 2014, or 9.7% of the total loan portfolio. Generally, these loans consist of commercial buildings, though there is one small church loan. The Association provides borrowers with fixed rate loans secured by the underlying real estate. The Association lends up to 80% of the appraised value with the loans amortizing over a 15 to 30 year term.

 

St. James Federal rarely makes construction loans. At December 31, 2014, the Association had one construction loan for $213,000.

 

Agricultural loans totaled $4.2 million at December 31, 2014, or 21.9% of the total loan portfolio. Agricultural loans relate to farming operations and are generally short term of one

 

 
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year or less and are normally made over a crop season. Agricultural loans generally require a debt service ratio of 1.10x to 1.15x or have a loan to value ratio of 70%. The Association requires all agricultural borrowers to have crop insurance.

 

Commercial and industrial loans total $1.4 million at December 31, 2014, or 7.2% of total loans. Commercial loans include loans to local businesses for floor plans and equipment loans. The Association makes commercial loans on a fixed rate basis that include a balloon feature in 5 years. The loans are made to amortize up to 10 years.

 

Consumer loans include auto loans and personal loans to residents of the Association’s market area. At December 31, 2014, consumer and other loans totaled $1.3 million, or 6.8% of total loans. Generally, consumer loans are made for terms of 3 to 5 years.

 

St. James Federal does not engage in mortgage banking related activities. Presently, all loans originated by St. James Federal are retained in portfolio. Though not often, the Association has participated in loans with other financial institutions.

 

Asset Quality

 

St. James Federal has experienced only moderate levels of non-performing assets over the past 5 years as the agricultural community did not get impacted by declining real estate values experienced in other parts of the U.S. during the most recent economic downturn. As shown in Table 1.3, St. James Federal’s level of non- performing assets (non-accrual loans,

 

Table 1.3

St. James Federal Savings and Loan Association

Non-Performing Assets

 

   At September 30,   At Dec. 31, 
   2010   2011   2012   2013   2014   2014 
   (Dollars in thousands)     
Non-accrual loans:                              
Real estate loans:                              
One- to four-family  $67   $61   $152   $218   $109   $129 
Multi-family   0    0    0    0    0    0 
Home equity   0    0    0    0    0    0 
Non-residential   103    94    0    0    0    0 
Construction and land   0    0    0    0    0    0 
Total real estate loans  $170   $155   $152   $218   $109   $129 
Consumer and other loans   15    1    0    0    12    13 
Total nonaccrual loans  $185   $156   $152   $218   $121   $142 
                               
Real estate owned:   12    0    0    50    50    50 
Total nonperforming assets  $197   $156   $152   $268   $171   $192 
                               
Total nonperforming loans to total loans   0.99%   0.87%   0.82%   1.21%   0.67%   0.76%
Total nonperforming assets to total assets   0.81%   0.61%   0.55%   0.99%   0.64%   0.71%

Source: St James Federal call reports.

 

 
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accruing loans past due 90 days or more and real estate owned (“REO”)), remained relatively stable between September 30, 2010 and December 31, 2014. Generally, the nonperforming asset ratio (“NPA”) relative to total assets remained below 1.00% over the past 5 years. At December 31, 2014, NPAs were 0.71% of assets. Also, as of December 31, 2013 and December 31, 2014, the Association’s had classified assets as follows:

 

   At December 31, 2013   At December 31, 2014 
   (Dollars in Thousands) 
Special Mention  $573   $405 
Substandard   368    238 
Total Classified Assets   941    643 

 

Source: St. James Federal’s internal reports

 

As shown in Table 1.4, St. James Federal’s allowance for loan loss level has increased over the past several years. Between September 30, 2010 and December 31, the allowance for loan losses increased from $196,000 (1.04% of total outstanding loans) to $334,000 (1.75% of total outstanding loans). As a percentage of non-performing loans, the allowance has exceeded the level of nonperforming loans in each year and represented 235% at December 31, 2014.

 

Table 1.4

St. James Federal Savings and Loan Association

Allowance for Loan Losses

 

   At September 30,   At Dec. 31, 
   2010   2011   2012   2013   2014   2014 
   (Dollars in thousands)     
Allowance at Beginning of Period   137    196    271    296    349    345 
Provision for loan losses   83    68    45    60    33    0 
                               
Charge Offs   24    0    24    7    36    11 
Recoveries   0    (7)   (4)   0    0    0 
Allowance at End of Period   196    271    296    349    345    334 
                               
Allowance to nonperforming loans   105.95%   173.72%   194.74%   160.09%   285.12%   235.21%
Allowance to total loans   1.04%   1.48%   1.60%   1.90%   1.88%   1.75%
Net Charge Offs to average loans   0.13%   -0.04%   0.11%   0.04%   0.20%   0.06%

 

Source: St. James Federal call reports

 

Funding Composition

 

Deposits are the major source of funds for lending and other investment purposes. In addition to deposits, the Association’s other significant sources of funds include liquidity (cash

 

 
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and short-term interest-earning deposits), repayment of loans, maturing investments and earnings from operations. Based on the Association’s growth objectives, these sources should continue to adequately address funding demands.

 

Retail deposits are raised through St. James Federal’s single retail office. The Association does not solicit brokered deposits. As shown in Table 1.5, NOW and demand deposits constitute the largest portion of the Association’s deposit base, remaining constant near 43% to 44% of total deposits. Certificates of deposit, (“CDs”) represented over 40% at December 31, 2014 while regular savings and other deposits comprised the remainder of the deposit portfolio with 15% of total deposits. NOW and demand deposits totaled 44.6% at December 31, 2014. The Association does not offer money market deposit accounts (“MMDA’s”).

 

Table 1.5

St James Federal Savings and Loan Association

Deposit Portfolio

 

   At September 30,   At December 31, 
   2012   2013   2014   2014 
   Amount   Percent   Amount   Percent   Amount   Percent   Amount   Percent 
   (Dollars in thousands)         
                                 
NOW and demand deposits  $10,385    43.31%  $10,459    43.00%  $10,410    43.66%  $10,899    44.60%
Regular savings and other deposits   3,240    13.51%   4,013    16.50%   4,093    17.16%   3,709    15.18%
Certificates of deposit – IRA   1,951    8.14%   1,915    7.87%   2,269    9.52%   2,207    9.03%
Certificates of deposit - other   8,402    35.04%   7,939    32.64%   7,074    29.67%   7,624    31.20%
Total  $23,978    100.00%  $24,326    100.00%  $23,846    100.00%  $24,439    100.00%

 

Source: St James Federal’s call report.

 

Although deposits are the primary source of funds, the Association may utilize borrowings when it is a less costly source of funds and can be invested at a positive interest rate spread. Borrowings are utilized when additional liquidity is required to fund loan demand or when it meets asset/liability management goals. Borrowings have historically consisted of advances from the FHLB. The Association’s borrowing capacity is approximately $4.0 million with the FHLB. At December 31, 2014, the Association did not have any FHLB advances outstanding and had not utilized such borrowings since fiscal 2012, as deposits have been a reliable funding source. Based on anticipated loan volume and liquid asset levels during the next three years, the Association anticipates zero or minimal FHLB borrowings over the foreseeable future.

 

 
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Interest Rate Risk Management and Asset/Liability Management

 

St. James Federal’s primary objectives of asset/liability management include maximizing earnings and return on capital within acceptable and controllable levels of the following main risks:

 

·Interest Rate Risk
·Valuation Risk
·Liquidity Risk
·Credit Risk
·Capital Risk
·Operations Risk
·Yield Curve or Mismatch Risk
·Basis Risk
·Embedded Options Risk
·Event Risk

 

Additional objectives include providing for growth that is sound, profitable and balanced without sacrificing the quality of service and managing and maintaining policy and procedures that are consistent with the short and long-term strategic goals of the Board of Directors.

 

St. James Federal relies on an independent interest rate risk report prepared by UBB Securities. Table 1.6 provides a summary of the impact of interest rate shocks on the Association’s net interest income, net interest margin, market value change in the loan and securities portfolios and the impact on net economic value at December 31, 2014. As noted, the Association is asset rate sensitive and will generally increase economic value in a rising rate environment. The amounts of changes in the various categories are all within tolerance levels established by the Board of Directors.

 

Table 1.6

St. James Federal Savings and Loan Association

Interest Rate Sensitivity

At December 31, 2014

 

   Net       Market   Market   Economic 
   Interest   Net   Value   Value   Value of 
   Income   Interest   Change   Change   Equity at 
   Change   Margin   of Loans   of Sec.   Risk 
Rising 400 basis points   (7.93)   3.56    (3.74)   (11.22)   17.60 
Rising 300 basis points   (5.86)   3.64    (3.15)   (8.26)   10.92 
Rising 200 basis points   (3.84)   3.72    (2.06)   (5.26)   7.68 
Falling 200 basis points   (6.36)   3.62    2.15    2.59    (8.17)

 

Source: ALMEdge Analyzing Sensitivity to Market Risk December 31, 2014. UBB Securities.

 

 
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Capital

 

St. James Federal exceeded all regulatory capital requirements at December 31, 2014. The Association qualifies as “well capitalized” on such date. Table 1.7 presents St. James Federal’s capital position at December 31, 2014.

 

Table 1.7

St. James Federal Savings and Loan Association

Capital Position at December 31, 2014

 

       Percent of 
   Amount   Assets 
GAAP Capital   2,755    10.12%
           
Tier 1 Leverage Ratio   2,755    10.12%
Requirement   1,089    4.00%
Excess   1,666    6.12%
           
Tier 1 Capital Ratio   2,755    15.17%
Requirement   1,090    6.00%
Excess   1,665    9.17%
           
Total Capital Ratio   2,983    16.43%
Requirement   1,453    8.00%
Excess   1,530    8.43%
           
Source: St James Federal’s call reports.    

 

Profitability Trends

 

Table 1.8 presents income and expense trends for St. James Federal for the fiscal years ended September 30, 2010 through September 30, 2014 and for the twelve months ended December 31, 2014. Net income reflected a declining trend between the fiscal years ended September 30, 2012 and September 30, 2014, with net income declining from $150,000, and a return on assets (“ROA”) of 56 basis points, in fiscal 2012 to $73,000, and an ROA of 27 basis points, in fiscal 2014. For the twelve months ended December 31, 2014, net income increased to $96,000, or 36 basis points. The decline in profitability during this time period reflected a reduction in the Association’s net interest margins as well as a modest increase in operating expense levels relative to the asset base. Additionally, in fiscal 2014 and for the most recent twelve month period, the Association’s earnings were negatively impacted by a loss on the sale of real estate.

 

 
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Since fiscal 2010, the Association’s net interest margin has ranged from 3.47% in fiscal 2013 to 4.01% in fiscal 2011. The Association’s narrowing net interest margins largely reflects a higher level of lower yielding cash and investments. Over the past year, however, the Association’s net interest margin expanded slightly to 3.64%.

 

The Association’s net interest income level was partially offset by loan loss provision levels ranging from $83,000 in fiscal 2010 to $32,000 in fiscal 2014. The limited volatility in loan loss provisions reflects minimal charge off activity as well as a relatively low level on non-performing assets.

 

Non-interest income has been a small source of revenue for the Association and consists primarily of deposit related fees and service charges. In the past year, the Association did experience a loss on the sale of real estate owned properties. The Association had foreclosed on the properties in fiscal 2013 and adjusted the book value. However, the Association was not able to get an updated appraisal due to Minnesota law that prevents the Association or any of its service providers to enter the property for a six month period. Once the Association was able to review the condition of the properties, it was determined further write-downs were necessary and the property was ultimately sold.

 

Primarily reflecting their small operations, St James Federal has maintained a moderately high operating expense ratio. However, the operating expense ratio reflected some moderate volatility due to a fluctuating asset base rather than the absolute level of expenses increasing. The Associations operating expense ratio was below 3.00% in fiscal 2012 and 2013 as the average asset base increased. Since fiscal 2010, the Associations general and administrative expenses ranged from $754,000 to $838,000. For the most recent twelve month period, the Association’s operating expenses relative to average assets was 3.10%.

 

Table 1.9 provides McAuliffe Financial’s calculation of St James Federal’s core net income for the latest fiscal year ended September 30, 2014.

  

 
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Table 1.8

St James Federal Savings and Loan Association

Income and Expense Trends

(Dollars in Thousands)

 

   For the Fiscal Year Ended September 30,   For the 12 Months Ended 
   2010   2011   2012   2013   2014   December 31, 2014 
   ($000)   (%)   ($000)   (%)   ($000)   (%)   ($000)   (%)   ($000)   (%)   ($000)   (%) 
Average Assets  $25,961    100.00%  $24,975    100.00%   26,553$   100.00%  $27,258    100.00%  $26,791    100.00%  $27,013    100.00%
Average Equity   2,194    8.45%   2,306    9.23%   2,442    9.20%   2,579    9.46%   2,677    9.99%   2,707    10.02%
                                                             
Interest Income   1,359    5.23%   1,311    5.25%   1,236    4.66%   1,169    4.29%   1,119    4.18%   1,121    4.15%
Interest Expense   (400)   -1.54%   (310)   -1.24%   (262)   -0.99%   (222)   -0.82%   (150)   -0.56%   (138)   -0.51%
Net Interest Income   959    3.69%   1,001    4.01%   974    3.67%   946    3.47%   969    3.62%   983    3.64%
Loan Loss Provision   (83)   -0.32%   (68)   -0.27%   (45)   -0.17%   (60)   -0.22%   (32)   -0.12%   (17)   -0.06%
Net Interest Inc. after Prov.   876    3.37%   933    3.74%   929    3.50%   886    3.25%   937    3.50%   966    3.58%
                                                             
Noninterest income   61    0.23%   65    0.26%   64    0.24%   63    0.23%   67    0.25%   61    0.23%
Gain <Loss> on sale of assets   -    0.00%   -    0.00%   -    0.00%   -    0.00%   (65)   -0.24%   (53)   -0.20%
General & Admin. Expense   (786)   -3.03%   (804)   -3.22%   (754)   -2.84%   (772)   -2.83%   (833)   -3.11%   (838)   -3.10%
Income Before Income Taxes   151    0.58%    194    0.78%    240    0.90%    178    0.65%    106    0.40%    136    0.50%
Income Tax Provision   (50)   -0.19%   (72)   -0.29%   (90)   -0.34%   (54)   -0.20%   (33)   -0.12%   (40)   -0.15%
Net Income   101    0.39%   122    0.49%   150    0.56%   124    0.46%   73    0.27%   96    0.36%
Return on Equity        4.60%        5.30%        6.14%        4.82%        2.74%        3.55%

 

Source: St James Federal's internal financial statements and call reports. 

 

 
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Table 1.9

St James Federal Savings and Loan Association

Core Net Income Calculation

($000)

 

   For the Twelve 
   Ended December 31, 2014 
Net Income as Reported  $96 
Pre-Tax Adjustments:     
Plus: Loss on Sale of Real Estate   53 
Income Tax Impact (34%)   (18)
After-Tax Adjustment   35 
Core Net Income  $131 
Core ROA   0.49%
Core ROE   4.84%

Source: McAuliffe Financial calculation.

 

Properties

 

As of December 31, 2014, the net book value of St. James Federal’s properties was $185,000. The Association owned its single office facility and does not lease any property.

 

Subsidiary Activities

 

St. James Federal does not have any subsidiaries.

 

Legal Proceedings

 

St. James Federal is not involved in any pending legal proceedings as a defendant other than routine legal proceedings occurring in the ordinary course of business. The Association has indicated that it is not involved in any legal proceedings, the outcome of which would be material to its financial condition or results of operations.

 

 
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II.MARKET AREA ANALYSIS

 

Introduction

 

St. James Federal operates out of a single office in the south-central portion of Minnesota in the City of St. James which is the county seat of Watonwan County. St. James is located approximately 100 southwest of Minneapolis. The Association’s primary market area for its lending and deposit gathering base consists of the communities within and contiguous to Watonwan County. Watonwan County is largely agricultural with the community of St James largely supporting the farming needs of the surrounding area. Additionally, the surrounding counties are also largely agricultural comprised of small communities supporting the needs of farmers.

 

The largest employers in Watonwan County are listed in table 2.1. Though a couple of the largest employers are related to the government and education, a considerable number of the employers support the farming communities. The largest employer, Amour Eckrich, is an animal slaughtering and processing facility and is the facility many farmers in the surround area use to sell their livestock.

 

Table 2.1
St James Federal Savings & Loan Association

Major Employers in Watonwan County

 

Company   Employees   Product/Service
         
Watonwan County        
Amour Eckrich   275   Animal Slaughtering & Processing
St James Public Schools   235   Elementary and Secondary Schools
Watonwan County   165   Government
Good Samaritan Society   160   Nursing Care Facilities
S-T Industries   70   Mach Shops; Screw, Nut & Bolt Mfg.
Tony Downs Foods Co.   55   Fruit & Vegetable Preserving
City of St James   36   Government
United Parcel Service   35   Couriers
Watonwan Farm Services   35   Nondurable Goods Merchant Wholesaler
Wilcon Construction   34   New Multifamily Housing Construction
GM Runge, Inc.   20   General Freight Trucking
Industrial Construction Services   20   Industrial Building Construction
St James Publishing Company   19   Newspaper, Periodical, Book Publishers

 

Source:LakesnWoods.com.

 

 
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Demographics

 

The population in Watonwan County was approximately 11,200 in 2010 and has remained flat through the most current period. The very small county is mostly rural and is comprised of large farming acreage. With farming the primary economic base, the county demographic base remains generally un-influenced by urban employment centers.

 

Table 2.2 presents economic and demographic data from 2010 through 2014 and forecast data through 2019. From 2010 to 2014, Watonwan County’s population contracted 0.02 percent

 

Table 2.2

Economic and Demographic Data for the U.S, the State

of Minnesota and the Primary Market Area of

St James Federal Savings & Loan Association

 

               Percent   Percent 
               Change   Change 
Population (000)  2010   2014   2019 Proj   2010-2014   2014-2019 Proj 
United States   308,745,538    317,199,353    328,309,464    2.74    3.50 
Minnesota   5,303,925    5,424,948    5,582,534    2.28    2.90 
Watonwan, MN   11,211    11,209    11,289    -0.02    0.71 

 

               Percent   Percent 
               Change   Change 
Households  2010   2014   2019 Proj   2010-2014   2014-2019 Proj 
United States   116,716,292    120,163,305    124,622,756    2.95    3.71 
Minnesota   2,087,227    2,147,610    2,219,923    2.89    3.37 
Watonwan, MN   4,520    4,558    4,625    0.84    1.47 

 

               Percent   Percent 
               Change   Change 
Median Household Income ($)  2011   2014   2019 Proj   2011-2014   2014-2019 Proj 
United States   49,726    51,579    53,943    3.73    4.58 
Minnesota   56,076    59,127    62,361    5.44    5.47 
Watonwan, MN   43,435    52,945    58,486    21.89    10.47 

 

               Percent   Percent 
               Change   Change 
Per Capita Income ($)  2011   2014   2019 Proj   2011-2014   2014-2019 Proj 
United States   26,109    27,721    29,220    6.17    5.41 
Minnesota   28,460    30,539    32,567    7.30    6.64 
Watonwan, MN   20,316    26,621    29,930    31.03    12.43 

 

Demographic data is provided by ESRI based primarily on US Census data. For non-census year data, ESRI uses samples and projections to estimate the demographic data.

 

 
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compared to the national average growth of 2.74 percent throughout the U.S. and 2.28 percent for the State of Minnesota. Similarly, the population through 2019 is expected to remain flat in Watonwan County while national and state levels are expected to expand 3.50 percent and 2.90 percent, respectively.

 

Household growth followed a similar pattern as population growth with the number of households relatively flat in Watonwan County and projected to grow 1.47 percent through 2019. Minnesota household growth was higher at 2.89 percent and 3.37 percent for the past four years and projected five year periods, respectively. The slower growth largely reflects the rural environment of Watonwan County and its relatively non-diversified economic base with limited industrial growth.

 

Median household income growth for Watonwan County has substantially surpassed state and national averages as farming revenue has increased considerably over the past several years and projections indicate this trend will continue. Median household income in Watonwan County was $58,486 and increased 21.89 percent from 2011 to 2014 compared to state and national average increases of 5.44 percent and 3.73 percent, respectively. Relative to the State of Minnesota, the median household income in Watonwan County was 89.5 percent and by 2019 it is expected to be 93.8 percent.

 

The per capital income level in Watonwan County follow a similar pattern as the median household income.

 

Unemployment Rates

 

Unemployment rates in Watonwan County have historically been near State rates and below National rates. The agricultural economy has resulted in stable employment rates for residents of Watonwan County, though the county unemployment rates are affected by seasonal fluctuations.

 

Table 2.3

St. James Federal Savings & Loan Association

Unemployment Trends

 

   December 2013   December 2014 
Region  Unemployment   Unemployment 
United States   6.7%   5.6%
Minnesota   4.7    3.7 
Watonwan County (1)   5.1    4.7 

(1) Unemployment rates are not seasonally adjusted.

Source: U.S. Bureau of Labor Statistics.

 

 
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Competition in Watonwan County

 

As a savings institution that primarily focuses on real estate lending and the gathering of deposits in southwestern Minnesota, St. James Federal’ primary competitors have been (1) other financial institutions with offices in the local market (including commercial banks, thrifts and credit unions); (2) other mortgage loan originators and mortgage brokers (however, these potential competitors have not been much of a factor during the last three years); (3) those depository and lending organizations not physically located within the market but capable of doing business remotely through the Internet or by other means; and (4) other competitors such as investment firms, mutual funds, insurance companies, etc.

 

Competition among financial institutions in the Association’s market for the origination of loans and the attraction of deposits has been significant. However, St. James Federal has been able to maintain a stable base of loyal customers and depositors from its local community. As larger institutions compete for market share to achieve economies of scale, the environment for the Association’s products and services is expected to remain highly competitive. Community-sized institutions such as St. James Federal typically compete with larger institutions on pricing or operate in a niche that will allow for operating margins to be maintained at profitable levels.

 

St. James Federal competes with six other commercial banks for deposits in Watonwan County, including the branch offices of large in-state regional banks and out-of-state superregional banks. Table 2.4 displays deposit market share for all FDIC-insured banks and thrifts in Watonwan County. St. James Federal maintains a small market share in Watonwan County, where it ranks sixth out of seven with a total deposit market share of approximately 7%. One other community bank holds an approximately 51% market share.

 

Summary

 

The overall condition of St James Federal’s primary market area is stable, but with limited economic growth. The employment base in Watonwan County has been largely supported by the agricultural community. The largest employers in the County have remained consistent employers over the past 5 years with limited layoffs and Watonwan County did not experience the real estate asset bubble experienced in other parts of the country. St James Federal’s future organic growth is expected to be primarily oriented toward the offering of deposit and lending products in and around Watonwan County.

 

 
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Table 2.4

St. James Federal Savings and Loan Association

Competition in Watonwan County

 

             2014   2014   2013   2013 
         2014   Total   Total   Total   Total 
         Number   Deposits in   Market   Deposits in   Market 
2014  2013     of   Market   Share   Market   Share 
Rank  Rank Institution (ST)  Type  Branches   ($000)   (%)   ($000)   (%) 
                           
1  1 Citizens Bank Group Inc. (MN)  Bank HC   3    172,084    50.82    166,746    51.35 
2  2 Odin Bancshares Inc. (MN)  Bank HC   1    33,794    9.98    33,450    10.30 
3  3 Trimont Bancorp. (MN)  Bank HC   2    32,707    9.66    30,844    9.50 
4  4 Ctzns Bancorp. of New Ulm Inc. (MN)  Bank HC   1    27,279    8.06    25,668    7.90 
5  5 Frst Natl Agcy St. James Inc. (MN)  Bank HC   1    26,886    7.94    24,999    7.70 
6  6 St James FS&LA (MN)  Savings Bank   1    24,277    7.17    24,715    7.61 
7  7 Alliance Financial Svcs Inc (MN)  Bank HC   1    21,621    6.38    18,318    5.64 
      Total For Institutions In Market      10    338,648         324,740      

 

Note: Market Share is for U.S. Territories only and non-retail branches are not included.

Source: SNL Financial and FDIC data

 

 
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III.COMPARISONS WITH PUBLICLY TRADED THRIFTS

 

Introduction

 

An integral aspect in our valuation of St. James Federal entails a financial comparison of the Association with a selected group of publicly traded peer thrifts (“Comparable Group”). For the reasons stated below, the Comparable Group, which was selected based upon similar operating characteristics, are comprised solely of publicly traded thrifts. This section describes the methodologies and key factors utilized in the selection of the appropriate Comparable Group. Based on our comparative financial analysis with the Comparable Group in this section and Section IV and our subsequent review and analysis of the group’s pricing multiples in Section V, we are able to determine an appropriate valuation of the Association.

 

The various characteristics of the Comparable Group provide the basis for applying the appropriate adjustments for St. James Federal’s pro forma value. Factors that impact the Association’s pro forma value relative to the Comparable Group include balance sheet composition, capital levels, asset quality, profitability level and market area.

 

Our goal in the selection process for a Comparable Group is to find thrifts with operating characteristics that most closely match those of the Association. However, given the declining universe of actively traded thrifts with similar ownership structures, financial characteristics, business strategies and market areas, it is not possible to select a Comparable Group of thrifts that are exactly similar to the Association.

 

Selection Process

 

As of the date of this appraisal, there are a total of 192 publicly traded thrift institutions (inclusive of OTC Bulletin Board and Pink Sheets). Of this total, 31 institutions were mutual holding companies (“MHCs”) and 10 were under acquisition and were eliminated due to their unique pricing characteristics.

 

Of the 151 remaining institutions, there are a total of 62 that do not trade on a major exchange and 16 that completed an initial public offering within the past year. McAuliffe Financial limited the Comparable Group to institutions whose common stock is listed on a major exchange (defined as the NYSE or NASDAQ) since these companies tend to trade regularly. Thrifts that trade over the counter or as pink sheets are not included in the Comparable Group, due to irregular trading activity and wide bid/ask spreads, which may skew the trading value and make trading multiples less reliable as an indicator of value. Additionally, we believe it is

 

 
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important that the peers must be seasoned publicly traded issues that have at least one year of trading history. The resulting inventory of available thrifts to select a Comparable Group is 73.

 

Also in our selection process, we considered the following factors, to the extent possible:

 

·Non-performing asset levels for the Comparable Group should be at or below industry averages. The median and average level of non-performing assets to total assets for all publicly traded thrifts was 1.91% and 1.58%, respectively, as of the date of the appraisal.

 

·The Comparable Group should have a capital level at or above industry averages. Each member of the Comparable Group should show a tangible equity to tangible assets ratio of at least 10%.

 

·Members of the Comparable Group should show positive reported income or, at least, positive core earnings.

 

·In general, the Comparable Group should be comprised of community oriented thrifts and, to the extent possible, operating primarily in rural markets (We attempted to exclude institutions whose deposit base was concentrated in a densely populated urban setting or highly populated metropolitan area).

 

In our selection process noted above, we attempted to exclude any potential comparable group members with significantly high non-performing asset levels or that show an absence of core earnings since institutions with these attributes are typically discounted in the marketplace.

 

It is important to note that, given the relatively small universe of exchange traded, small asset sized thrifts, and our additional selection criteria, the number of acceptable thrifts worthy of consideration are very limited.

 

Our selection process results in a total of 10 Comparable Group thrifts. McAuliffe Financial reviewed the recent publicly available reports and news releases of these 10 thrifts and determined that all 10 were acceptable comparables. Table 3.1 identifies the Comparable Group members.

 

In addition to the selected Comparable Group, a Supplemental Group of OTC Bulletin Board and Pink Sheet thrifts have been included to provide further insight on the trading environment and pricing characteristics of small institutions like St. James Federal. The

 

 
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selection process for the Supplemental Group was the same as that used for the Comparable Group. Table 3.2 presents some characteristics of the Supplemental Group.

 

Review of the Comparable Group

 

Certain key characteristics of the Comparable Group were examined as they relate and compare to St James Federal. The following five characteristics were examined:

 

Table 3.1

St James Federal Peer Group

 

Institution Name   Ticker   City, State   Industry   Offices   IPO Date   Total Assets
First Federal of Northern Michigan Bancorp, Inc.   FFNM   Alpena, MI   Savings Bank   9   4/4/2005   311,923
FS Bancorp, Inc.   FSBW   Mountlake Terrace, WA   Savings Bank   8   7/10/2012   509,754
HMN Financial, Inc.   HMNF   Rochester, MN   Savings Bank   11   6/30/1994   577,426
La Porte Bancorp, Inc.   LPSB   La Porte, IN   Savings Bank   7   10/5/2012   518,616
Madison County Financial, Inc.   MCBK   Madison, NE   Savings Bank   5   10/4/2012   301,929
Polonia Bancorp, Inc.   PBCP   Huntingdon Valley, PA   Savings Bank   5   11/13/2012   297,885
Prudential Bancorp, Inc.   PBIP   Philadelphia, PA   Savings Bank   7   10/10/2013   527,082
United Community Bancorp   UCBA   Lawrenceburg, IN   Savings Bank   8   1/10/2013   508,938
Wolverine Bancorp, Inc.   WBKC   Midland, MI   Savings Bank   4   1/20/2011   338,671
WVS Financial Corp.   WVFC   Pittsburgh, PA   Savings Bank   6   11/29/1993   294,689

 

St James Federal Supplemental Peer Group

 

Institution Name   Ticker   City, State   Industry   Offices   IPO Date   Total Assets
CCSB Financial Corp.   CCFC   Munster, IN   Savings Bank   3   4/1/1996   87,263
Community Investors Bancorp, Inc.   CIBN   Liberty, MO   Savings Bank   3   1/9/2003   131,599
First Niles Financial, Inc.   FNFI   Bucyrus, OH   Savings Bank   5   2/7/1995   96,437
Great American Bancorp, Inc.   GTPS   Niles, OH   Savings Bank   1   10/27/1998   176,704
Hibernia Bancorp, Inc.   HIBE   Champaign, IL   Savings Bank   2   6/30/1995   105,445
Patriot Federal Bank   PFDB   Canajoharie, NY   Savings Bank   3   12/31/2005   122,365
Quarry City Savings and Loan Association   QRRY   Warrensburg, MO   Savings Bank   1   7/26/2013   46,757
Royal Financial, Inc.   RYFL   Chicago, IL   Savings Bank   3   1/21/2005   128,043
United-American Savings Bank   UASB   Pittsburgh, PA   Savings Bank   1   8/6/2010   90,084
Versailles Financial Corporation   VERF   Versailles, OH   Savings Bank   1   1/11/2010   52,513

 

Asset size

 

1.Balance Sheet Mix

 

2.Asset Quality

 

3.Equity to Asset Level

 

4.Profitability

 

Asset Size

 

We selected a peer group of thrifts which all had asset sizes below $600 million which generally represents small community based financial institutions. However, because of St

 

 
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James Federal’s very small asset size of $27.0 million at December 31, 2014, there are no publicly traded peers that closely match the Association’s limited asset base. The Comparable Group, however, does represent a group of small community based financial institutions. The Comparable Group had a median asset size of $424 million, and range in size from $298 million to $577 million. Reflective of their small asset size, the Comparable Group thrifts have a below average number of branches that range from 4 to 11 (see Table 3.1).

 

The Supplemental Peer Group reflects a group with smaller assets and less branch locations. Their median asset size was $101 million, and range in size from $47 million to $177 million and had a branch network of 1 to 5 branches.

 

Balance Sheet Mix

 

Since fiscal 2010, St James Federal has maintained an above average level of cash and investments relative to assets, and has historically maintained a high percentage of deposits as a liability funding source. For the Association, cash and investments equaled 29.4% of assets and deposits equaled 89.8% of assets at December 31, 2014. While certain members of the Comparable Group also maintained above average levels of cash and investments and deposits, the Comparable Group, on average, maintained cash and investments and deposits levels that were lower as lending opportunities were more prevalent in their larger markets. The median cash and investments to assets ratio and deposits to assets ratio for the Comparable Group was 32.7% and 72.0%, respectively, while the Supplemental Group had ratios of 20.0% and 76.8%, respectively (see Table 3.2).

 

Asset Quality

 

At December 31, 2014, St James Federal’s non-performing assets (“NPAs”) to total assets ratio was 0.71%. This compared to a median ratio of 1.48% for the Comparable Group and 1.32% for the Supplemental Group (see Table 3.2). These asset quality ratios for the Association, the Comparable Group and Supplemental Group were favorable compared to the publicly traded thrift industry average of 1.91%.

 

Equity to Asset Level

 

At December 31, 2014, the Association showed an equity to asset ratio and tangible equity to tangible assets ratio of 10.12%. If the Association was able to complete a standard conversion on its own, the Association’s pro forma tangible equity ratio would approximate

 

 
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14.52% at the midpoint of the valuation range. The median equity and tangible equity ratio for the Comparable Group was 13.54% and 13.10%, respectively while the Supplemental Group had respective ratios of 12.20% and 12.20% (see Table 3.2).

 

Profitability

 

The thrift industry, for the most part, has reported an increasing trend in reported profitability during the last several years with significant earnings variability. Profitability results during this time period largely reflect lower provisions for losses and, in some cases, improved net interest margins from low cost of funds and return of more interest earning assets from their nonperforming status. St James Federal’s operating performance, on the other hand, have remained relatively consistent over the same time frame, though during the twelve months ended December 31, 2014, the Association’s earnings were affected by losses on the sale of real estate. For the twelve months ended December 31, 2014, the Association reported a return on assets (“ROA”) of 0.36% and return on equity (“ROE”) of 3.55%. Core ROA and ROE for the Association was 0.49% and 4.84%, respectively. The pro forma core ROA and ROE for the Association is 0.33% and 3.25%, respectively. The Comparable Group reported a median ROA of 0.66% and a median ROE of 3.97% and a median core ROA and ROE of 0.55% and 4.05%, respectively (see Table 3.2 and Table 4.6). The Supplemental Group reported a median ROA of 0.33% and a median ROE of 2.12% and a median core ROA and ROE of 0.24% and 1.93%, respectively. The core ROA figure for the 10 Comparable Group thrifts ranged between a low of 0.00% to a high of 1.21% while the core ROE figures ranged from a low of 0.02% to a high of 9.12%. The Supplemental Group had a core ROA range of (0.04%) to 0.70% and a core ROE range of (0.42%) to 8.56%. The Association’s, Comparable Group’s and the Supplement Group core ROA and ROE levels were below the industry median ROA and ROE of 0.74 and 5.46%, respectively.

 

Conclusion

 

Although no single thrift or group of thrifts can be precisely the same as any other due to the numerous variables related to the nature of an institution’s condition, operations and environment, based on the foregoing selection criteria as well as the detailed comparative metrics presented in Section IV, we believe that the selected Comparable Group is appropriate, subject to the adjustments applied in the following section.

 

 
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Table 3.2

Key Financial Measures

 

   St James Federal   Comparative Group Median   Supplemental Group Median 
   At or for the 12   At or for the   At or for the 12 
   months ended 12/31/14   most recent 12 mo period   most recent 12 mo period 
Balance Sheet Data               
Net Loans to Deposits   76.66    88.20    97.31 
Net Loans to Assets   68.84    63.66    71.57 
Cash and Investments to Assets   29.42    32.66    20.01 
Deposits to Assets   89.80    71.96    76.78 
Borrowings to Assets   0.00    7.80    9.40 
                
Balance Sheet Growth               
(Latest 12 Months)               
Asset Growth Rate   1.51    2.31    5.83 
Loan Growth Rate   1.59    9.71    9.19 
Deposit Growth Rate   1.31    0.41    3.43 
                
Asset Quality               
NPAs/Assets   0.71    1.48    1.32 
                
Capital               
Equity to Assets   10.12    13.54    12.20 
Tang. Equity to Tang. Assets   10.12    13.10    12.20 
Intangible Assets to Equity   0.00    0.00    0.00 
Equity + Reserves to Assets   11.35    14.56    13.24 
                
Profitability               
ROA   0.36    0.66    0.33 
ROE   3.55    3.97    2.12 
Core ROA   0.49    0.55    0.24 
Core ROE   4.84    4.05    1.93 

 

Source: St James Federal's call reports, internal financials and SNL Financial

 

 
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IV.MARKET VALUE ADJUSTMENTS

 

Introduction

 

In this section, we make appropriate adjustments to determine the estimated pro forma market value of St James Federal based on a comparison of the Association with the Comparable Group. These adjustments will take into consideration such key items as financial condition, balance sheet growth, earnings performance, market area, cash dividends, liquidity of the stock to be issued, recent regulatory issues, management, subscription interest and thrift equity market conditions.

 

Based upon the pricing multiples of the Comparable Group and the types of adjustments described above, we will determine an estimated pro forma market value for St James Federal.

 

Financial Condition

 

In analyzing a thrifts institution’s financial condition, investors focus on both balance sheet strength and balance sheet mix. In this connection, we focus on such factors as equity/capital levels, balance sheet mix, funding mix, liquidity, interest rate risk and asset quality. Tables 4.1 through 4.4 highlight St James Federal’s key balance sheet, capital and asset quality data relative to the comparative group.

 

As noted in Table 4.1, the Association and the Comparable Group have a relatively small asset size. St James Federal’s total assets of $27.2 million compares to a median and average asset size of $423.8 million and $418.7 million, respectively, for the Comparative Group. The Supplemental Group, which includes thrifts traded on the Bulletin Board and Pink Sheets, had median and average asset sizes of $100.9 million and $103.7 million respectively. The Association has only one office while the median branch office size of the comparative group is six offices (also average of six offices) and 3 offices for the Supplemental Group. Subsequent to the merger with Wells Financial, the combined organization will have a slightly smaller asset base relative to the peer group and will operate from a 10 branch network.

 

The Association is a “well capitalized” institution under regulatory capital standards. The Association’s tangible equity to tangible assets ratio (St. James Federal has no intangible assets) of 10.12% compared to the Comparable Group median and average tangible equity ratios of 13.54% and 15.22%, respectively (See Table 4.3). The median and average ratios for the

 

 
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Supplemental Group were 12.20% and 13.94% respectively. Subsequent to the merger with Wells Financial, the pro forma consolidated tangible equity ratio is projected to be 11.03% at the midpoint of the offering valuation range.

 

Table 4.1

Key Balance Sheet Data

 

Company Name     Total   Loans/   Loans/   Securities/   Cash & Sec.   Deposits/   Borrowings/ 
Comparable Group  Ticker  Assets   Deposits   Assets   Assets   Assets   Assets   Assets 
First Federal of Northern Michigan   FFNM   311,923    63.76    52.99    38.76    41.02    82.87    6.98 
FS Bancorp, Inc.  FSBW   509,754    93.54    81.27    9.89    13.83    82.48    3.34 
HMN Financial, Inc.  HMNF   577,426    75.18    64.11    24.00    32.08    86.03    0.00 
La Porte Bancorp, Inc.  LPSB   518,616    90.89    59.46    30.75    33.71    65.71    17.37 
Madison County Financial, Inc.  MCBK   301,929    114.57    78.18    15.41    16.45    69.65    8.61 
Polonia Bancorp, Inc.  PBCP   297,885    107.22    71.79    21.04    23.63    65.69    19.81 
Prudential Bancorp, Inc.  PBIP   527,082    85.51    63.21    26.95    33.24    74.27    0.06 
United Community Bancorp  UCBA   508,938    57.89    47.62    38.74    46.27    82.63    2.95 
Wolverine Bancorp, Inc.  WBKC   338,671    137.45    87.55    0.98    10.70    65.11    15.65 
WVS Financial Corp.  WVFC   294,689    25.35    12.16    84.91    85.80    48.03    40.79 
                                       
Average      418,691    85.14    61.83    29.14    33.67    72.25    11.56 
Median      423,805    88.20    63.66    25.48    32.66    71.96    7.80 
Maximum      577,426    137.45    87.55    84.91    85.80    86.03    40.79 
Minimum      294,689    25.35    12.16    0.98    10.70    48.03    0.00 
                                       
Supplemental Group                                      
CCSB Financial Corp.  CCFC   87,263    83.06    69.26    7.71    20.26    84.70    2.86 
Community Investors Bancorp, Inc.  CIBN   131,599    107.05    77.35    12.61    18.56    71.75    19.38 
First Niles Financial, Inc.  FNFI   96,437    39.08    23.93    63.45    71.15    61.40    25.92 
Great American Bancorp, Inc.  GTPS   176,704    67.84    57.93    0.61    37.26    86.00    2.26 
Hibernia Bancorp, Inc.  HIBE   105,445    105.58    80.64    9.31    14.31    76.87    1.42 
Patriot Federal Bank  PFDB   122,365    92.74    70.50    24.63    26.08    76.69    13.83 
Quarry City Savings and Loan Assoc  QRRY   46,757    101.89    82.53    0.20    13.62    80.54    2.14 
Royal Financial, Inc.  RYFL   128,043    106.72    70.60    16.68    19.33    66.67    11.71 
United-American Savings Bank  UASB   90,084    86.70    72.54    21.84    24.89    83.92    7.37 
Versailles Financial Corporation  VERF   52,513    119.44    76.27    1.42    19.76    64.17    11.43 
                                       
Average      103,721    91.01    68.16    15.84    26.52    75.27    9.83 
Median      100,941    97.31    71.57    10.96    20.01    76.78    9.40 
Maximum      176,704    119.44    82.53    63.45    71.15    86.00    25.92 
Minimum      46,757    39.08    23.93    0.20    13.62    61.40    1.42 
                                       
St James Federal Savings Loan Assoc.      27,215    76.66    68.84    4.52    29.42    89.80    0.00 
                                       
Variance to the Comparable Median      (396,590)   (11.54)   5.18    (20.96)   (3.24)   17.84    (7.80)
Variance to the Supplemental Median      (73,726)   (20.65)   (2.73)   (6.44)   9.41    13.02    (9.40)

 

Source: SNL Financial

 

 
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Table 4.2

Comparative Group Loan Composition

 

Company Name     Const               Total       Consumer 
Comparable Group  Ticker  & Dev   1-4 Unit Res   MultiFamily   Other   RE Lns   Com Bus   & Other 
First Federal of Northern Michigan   FFNM   1.17    43.29    1.25    35.72    81.44    10.84    6.71 
FS Bancorp, Inc.  FSBW   14.70    11.90    4.12    10.93    26.95    19.80    38.79 
HMN Financial, Inc.  HMNF   1.98    19.31    2.05    45.07    68.41    18.11    13.49 
La Porte Bancorp, Inc.  LPSB   3.49    55.52    5.56    25.98    85.14    5.62    5.66 
Madison County Financial, Inc.  MCBK   1.69    14.22    3.25    59.32    76.79    17.21    3.28 
Polonia Bancorp, Inc.  PBCP   0.00    88.35    1.36    7.27    96.98    0.08    2.83 
Prudential Bancorp, Inc.  PBIP   9.89    82.74    1.72    7.99    89.93    0.20    4.76 
United Community Bancorp  UCBA   2.85    52.60    8.87    19.04    80.50    3.30    13.78 
Wolverine Bancorp, Inc.  WBKC   11.07    15.16    20.13    49.47    84.76    5.06    2.68 
WVS Financial Corp.  WVFC   9.92    55.61    11.27    11.09    77.96    3.93    8.11 
                                       
Average      5.68    43.87    5.96    27.19    76.89    8.42    10.01 
Median      3.17    47.95    3.68    22.51    80.97    5.34    6.18 
Maximum      14.70    88.35    20.13    59.32    96.98    19.80    38.79 
Minimum      0.00    11.90    1.25    7.27    26.95    0.08    2.68 
                                       
Supplemental Group                                      
CCSB Financial Corp.  CCFC   4.94    53.60    9.13    21.28    84.00    7.16    4.83 
Community Investors Bancorp, Inc.  CIBN   1.97    63.23    5.77    9.30    78.30    6.10    13.63 
First Niles Financial, Inc.  FNFI   0.53    72.35    1.03    14.95    88.33    0.48    10.66 
Great American Bancorp, Inc.  GTPS   1.78    47.50    14.25    19.51    83.04    5.94    9.24 
Hibernia Bancorp, Inc.  HIBE   4.13    59.60    0.15    30.22    89.98    4.63    1.06 
Patriot Federal Bank  PFDB   2.70    55.76    1.03    15.17    71.95    10.33    15.02 
Quarry City Savings and Loan Assoc  QRRY   13.86    47.90    NA    NA    84.81    2.92    5.13 
Royal Financial, Inc.  RYFL   5.30    25.18    27.79    35.61    88.58    4.91    1.21 
United-American Savings Bank  UASB   2.33    73.83    2.07    9.31    85.21    2.16    10.29 
Versailles Financial Corporation  VERF   0.68    70.84    0.20    19.46    90.50    4.06    4.71 
                                       
Average      3.82    56.98    6.82    19.42    84.47    4.87    7.58 
Median      2.51    57.68    2.07    19.46    85.01    4.77    7.18 
Maximum      13.86    73.83    27.79    35.61    90.50    10.33    15.02 
Minimum      0.53    25.18    0.15    9.30    71.95    0.48    1.06 
                                       
St James Federal Savings Loan Assoc.      1.13    31.82    0.00    31.17    64.12    7.23    28.66 
                                       
Variance to the Comparable Median      (2.04)   (16.13)   (3.68)   8.66    (16.85)   1.89    22.48 
Variance to the Supplemental Median      (1.38)   (25.86)   (2.07)   11.71    (20.89)   2.46    21.48 

 

Source: SNL Financial

 

 
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Table 4.3

Comparative Group Capital Ratios

 

Company Name     Equity/   Tang. Equity/   Intang./   Equity+Reserves/ 
Comparable Group  Ticker  Assets   Tang. Assets   Equity   Assets 
First Federal of Northern Michigan   FFNM   9.61    9.22    4.50    10.08 
FS Bancorp, Inc.  FSBW   12.92    12.92    0.00    14.11 
HMN Financial, Inc.  HMNF   13.16    13.16    0.00    14.61 
La Porte Bancorp, Inc.  LPSB   15.89    14.46    10.48    16.58 
Madison County Financial, Inc.  MCBK   20.47    20.20    1.67    22.82 
Polonia Bancorp, Inc.  PBCP   13.03    13.03    0.00    13.51 
Prudential Bancorp, Inc.  PBIP   24.31    24.31    0.00    24.78 
United Community Bancorp  UCBA   13.91    12.94    NA    14.51 
Wolverine Bancorp, Inc.  WBKC   18.15    18.15    0.00    20.66 
WVS Financial Corp.  WVFC   10.80    10.80    0.00    10.89 
                        
Average      15.22    14.92    1.85    16.25 
Median      13.54    13.10    0.00    14.56 
Maximum      24.31    24.31    10.48    24.78 
Minimum      9.61    9.22    0.00    10.08 
                        
Supplemental Group                       
CCSB Financial Corp.  CCFC   12.02    12.02    0.00    13.80 
Community Investors Bancorp, Inc.  CIBN   8.37    8.37    0.00    9.35 
First Niles Financial, Inc.  FNFI   12.39    12.39    0.00    12.68 
Great American Bancorp, Inc.  GTPS   9.31    9.06    2.95    10.01 
Hibernia Bancorp, Inc.  HIBE   20.75    20.75    0.00    21.39 
Patriot Federal Bank  PFDB   9.36    9.22    1.58    10.25 
Quarry City Savings and Loan Assoc  QRRY   16.94    16.94    0.00    17.98 
Royal Financial, Inc.  RYFL   20.20    20.20    0.00    21.27 
United-American Savings Bank  UASB   8.14    8.14    0.00    8.59 
Versailles Financial Corporation  VERF   21.91    21.91    0.00    22.39 
                        
Average      13.94    13.90    0.45    14.77 
Median      12.20    12.20    0.00    13.24 
Maximum      21.91    21.91    2.95    22.39 
Minimum      8.14    8.14    0.00    8.59 
                        
St James Federal Savings Loan Assoc.      10.12    10.12    0.00    11.35 
                        
Variance to the Comparable Median      (3.42)   (2.98)   0.00    (3.21)
Variance to the Supplemental Median      (2.08)   (2.08)   0.00    (1.89)

 

Source: SNL Financial

 

 
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Table 4.4

Comparative Group Asset Quality

 

Company Name     NPLs/   Reserves/   NPAs   NPAs   Reserves/ 
Comparable Group  Ticker  Loans   NPLs   Assets   Equity   Loans 
First Federal of Northern Michigan   FFNM   0.58    153.14    1.23    12.82    0.88 
FS Bancorp, Inc.  FSBW   0.29    500.82    0.24    1.85    1.45 
HMN Financial, Inc.  HMNF   2.99    76.30    2.43    18.45    2.22 
La Porte Bancorp, Inc.  LPSB   2.29    57.22    2.12    9.52    1.16 
Madison County Financial, Inc.  MCBK   0.18    NM    0.15    0.60    2.94 
Polonia Bancorp, Inc.  PBCP   1.15    35.34    1.51    13.09    0.67 
Prudential Bancorp, Inc.  PBIP   2.20    34.02    1.46    6.00    0.75 
United Community Bancorp  UCBA   5.39    32.36    2.73    20.31    2.21 
Wolverine Bancorp, Inc.  WBKC   1.72    162.46    1.68    9.27    2.79 
WVS Financial Corp.  WVFC   1.29    55.08    0.16    1.45    0.71 
                             
Average      1.81    122.97    1.37    9.34    1.58 
Median      1.51    57.22    1.48    9.40    1.31 
Maximum      5.39    500.82    2.73    20.31    2.94 
Minimum      0.18    32.36    0.15    0.60    0.67 
                             
Supplemental Group                            
CCSB Financial Corp.  CCFC   4.92    49.81    4.36    36.47    2.53 
Community Investors Bancorp, Inc.  CIBN   3.54    35.77    2.84    33.98    1.27 
First Niles Financial, Inc.  FNFI   5.82    20.33    1.79    14.47    1.18 
Great American Bancorp, Inc.  GTPS   1.36    87.62    1.28    14.24    1.19 
Hibernia Bancorp, Inc.  HIBE   0.34    236.11    0.30    1.47    0.79 
Patriot Federal Bank  PFDB   1.38    91.07    0.98    10.46    1.25 
Quarry City Savings and Loan Assoc  QRRY   0.82    152.83    0.68    4.02    1.25 
Royal Financial, Inc.  RYFL   1.13    133.14    2.20    11.64    1.50 
United-American Savings Bank  UASB   1.30    46.66    1.36    16.70    0.61 
Versailles Financial Corporation  VERF   0.00    NM    0.00    0.00    0.63 
                             
Average      2.06    94.82    1.58    14.34    1.22 
Median      1.33    87.62    1.32    12.94    1.22 
Maximum      5.82    236.11    4.36    36.47    2.53 
Minimum      0.00    20.33    0.00    0.00    0.61 
                             
St James Federal Savings Loan Assoc.      0.74    235.21    0.71    6.30    1.75 
                             
Variance to the Comparable Median      (0.77)   177.99    (0.77)   (3.10)   0.44 
Variance to the Supplemental Median      (0.59)   147.59    (0.61)   (6.64)   0.53 

 

Source: SNL Financial

 

 
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The Association has historically maintained a high level of cash and investments and funded the Association’s lending and investment programs primarily with deposits. The Association’s cash and investments represented 29.4% of total assets at December 31, 2014 compared to a median ratio of 32.6% for the Comparative Group and 20.0% for the Supplemental Group. Deposits, on the other hand, represented 89.8% of total assets relative to a median ratio of 72.0% for the Comparative Group and 76.8% for the Supplement Group. Loans relative to assets were 68.8% for St. James Federal versus a median of 63.7% for the Comparative Group and 71.6% for the Supplemental Group while the loan to deposit ratio was 76.7% for the Association versus a median of 88.2% for the Comparative Group and 97.3% for the Supplemental Group.

 

We have also compared St. James Federal’s loan portfolio composition to that of the Comparable Group. As shown in Table 4.2, 28.7% of the Association’s total loan portfolio is concentrated in consumer and other loans with a large portion of the other loans comprising agricultural production loans. Additionally, 31.2% of the loan portfolio consists of “other” real estate loans largely consisting of farm loans. The Comparable Group’s loan portfolio is more focused on 1-4 family lending. Permanent one-to-four family residential loans constitute 48.0% of the Comparable Group’s total loan portfolio and 57.7% for the Supplemental Group compared to 31.8% for the Association.

 

St. James Federal’s interest rate risk position is presented in Section I. The Association’s interest rate risk position appears to be within the acceptable limits established in its Interest Rate Risk Policy guidelines. While no similar interest rate risk data is readily available for the Comparable Group, we have duly noted St. James Federal’s diversified loan portfolio appears to adequately address interest rate fluctuations.

 

Asset quality is also an important consideration in assessing St. James Federal’s estimated market value. We have performed an analysis of St James Federal’s non-performing assets (“NPAs”), non-performing loans (“NPLs”) and allowance for loan loss (“reserves”) levels compared to the Comparable Group and Supplemental Group (see Table 4.4). The Association’s level of NPLs to total loans of 0.74% is below the Comparable Group median and average ratios of 1.51% and 1.81%, respectively. The Supplemental Group had median and average ratios of 1.33% and 2.06%, respectively. The Association’s NPA to total assets ratio of 0.71% also

 

 
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compared favorably to the Comparative Group and Supplemental Group median ratios of 1.48% and 1.32%, respectively. The Comparable Group and Supplemental Group maintain a lower reserve level than does St. James Federal. The Association’s reserves level equal 1.75% of total loans versus the lower Comparable Group and Supplemental Group median levels of 1.31% and 1.22% respectively. Finally, the Association’s ratio of reserves to NPAs of 235.2% compared to the Comparable Group’s and Supplemental Group’s lower median ratio of 57.2% and 87.6%, respectively.

 

A comparison of St James Federal to the Comparable Group is summarized below:

 

Positive   Neutral   Negative
-Lower NPLs and NPAs   -Liquid Assets Position   -Smaller Asset Size
-Higher Deposit Levels   -Pro Forma Capital     and Number of Branches
-Loan Reserves to Loans        

 

A comparison of St. James Federal to the Supplemental Group is summarized below:

 

Positive   Neutral   Negative
-Lower NPLs and NPAs   -Liquid Assets Position   -Smaller Asset Size
-Higher Deposit Levels   -Pro Forma Capital     and Number of Branches
-Loan Reserves to Loans        

 

On balance, and taking into consideration St James Federal’s balance sheet strength relative to the Comparable Group and the Supplemental Group and the positive impact of the merger with Wells Financial, we believe that a slight upward adjustment is warranted for financial condition.

 

Balance Sheet Growth

 

As we discussed in Section I, St. James Federal’s asset growth rate since December 31, 2013 was 1.51%. Similarly, loan growth and deposit growth has been relatively flat over the past year. The large rural community surrounding St. James is largely controlled by farming and the growth prospects within the St. James community is very limited.

 

For the latest twelve months ended December 31, 2014, the Association’s growth in assets, loans and deposits were 1.51%, 1.59% and 1.31%, respectively. This compared to median asset, loans and deposit growth of 2.31%, 9.71% and 0.41% for the Comparable Group

 

 
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Table 4.5

Balance Sheet Growth

 

Company Name     Asset   Net Loan   Deposit 
Comparable Group  Ticker  Growth   Growth   Growth 
First Federal of Northern Michigan   FFNM   45.84    18.42    63.56 
FS Bancorp, Inc.  FSBW   21.61    41.36    24.81 
HMN Financial, Inc.  HMNF   (10.98)   (4.90)   (10.32)
La Porte Bancorp, Inc.  LPSB   (1.57)   4.24    (1.71)
Madison County Financial, Inc.  MCBK   8.98    10.68    3.21 
Polonia Bancorp, Inc.  PBCP   4.25    8.74    (1.00)
Prudential Bancorp, Inc.  PBIP   0.36    3.30    0.64 
United Community Bancorp  UCBA   (0.64)   (0.05)   0.02 
Wolverine Bancorp, Inc.  WBKC   16.24    23.44    34.40 
WVS Financial Corp.  WVFC   (6.16)   13.18    0.18 
                   
Average      7.79    11.84    11.38 
Median      2.31    9.71    0.41 
Maximum      45.84    41.36    63.56 
Minimum      (10.98)   (4.90)   (10.32)
                   
Supplemental Group                  
CCSB Financial Corp.  CCFC   (3.64)   (6.07)   (3.36)
Community Investors Bancorp, Inc.  CIBN   6.71    14.34    (2.57)
First Niles Financial, Inc.  FNFI   (0.35)   6.61    (4.66)
Great American Bancorp, Inc.  GTPS   2.92    9.62    3.01 
Hibernia Bancorp, Inc.  HIBE   (0.71)   6.89    (2.71)
Patriot Federal Bank  PFDB   15.80    30.18    3.84 
Quarry City Savings and Loan Assoc  QRRY   6.88    17.51    5.01 
Royal Financial, Inc.  RYFL   6.12    21.33    13.54 
United-American Savings Bank  UASB   5.54    8.26    5.11 
Versailles Financial Corporation  VERF   8.12    8.76    8.66 
                   
Average      4.74    11.74    2.59 
Median      5.83    9.19    3.43 
Maximum      15.80    30.18    13.54 
Minimum      (3.64)   (6.07)   (4.66)
                   
St James Federal Savings Loan Assoc.      1.51    1.59    1.31 
                   
Variance to the Comparable Median      (0.80)   (8.12)   0.90 
Variance to the Supplemental Median      (4.32)   (7.60)   (2.12)

 

Source: SNL Financial

 

 
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(see Table 4.5). The Supplemental Group also experienced stronger asset, loan and deposit growth rates of 5.83%, 9.19% and 3.43%. Subsequent to merging with Wells Financial, the Association’s balance sheet growth will likely continue to be minimal as demographic data reflect limited population growth and market area growth opportunities are dim.

 

Balance sheet growth rates for the thrift industry is expected to reflect some expansion as thrifts are less affected by the impact of nonperforming assets and increased capital requirements. We believe that moderate downward adjustment is warranted for this item relative to both the Comparative Group and the Supplemental Group.

 

Earnings Performance

 

The earnings performance, including earnings sustainability and consistency of a thrift institution is determined by both internal and external factors. Internal factors include the composition of the balance sheet, the strength of the balance sheet (capital levels, interest rate and credit risk levels), the abilities of management and staff, the size and location of the branch office network and infrastructure in place to execute. External factors include the competitive environment, the interest rate environment, the regulatory climate and national and particularly local economic (including housing market) conditions.

 

For a small institution such as St James Federal that generate a less diversified revenue stream, net income levels are typically based on three major line items: (1) net interest income; (2) loan loss provision; and (3) non-interest (operating) expenses. In this section, we compare St. James Federal’s profitability levels to the Comparative Group and Supplemental Group levels, primarily based on these income/expense items.

 

As we discussed in Section I, St. James Federal’s net income and ROA levels have remained relatively consistent over the last five fiscal years. After peaking in fiscal 2012, the Association has realized declining income over the past two fiscal years ended in September 30, 2014. The recent decline was primarily driven by higher overhead expenses relative to the asset base and losses on the sale of real estate owned properties.

 

For the last twelve months ended December 31, 2014, St. James Federal generated a reported ROA and ROE of 0.36% and 3.55%, respectively. The Association’s core ROA and ROE were 0.49% and 4.84%, respectively. This compares to the Comparable Group’s median reported ROA of 0.66% (average ROA of 0.65%) and reported ROE of 3.97% (average ROE of 4.39+%). The Comparable Group’s median core ROA and core ROE was 0.55% (average core

 

 
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Table 4.6

Reported and Core Profitability Ratios

 

Company Name                   
Comparable Group  Ticker  ROAA (%)   ROAE (%)   Core ROAA (%)   Core ROAE (%) 
First Federal of Northern Michigan   FFNM   0.77    7.05    0.56    4.80 
FS Bancorp, Inc.  FSBW   1.01    7.17    1.01    7.22 
HMN Financial, Inc.  HMNF   1.21    9.12    1.21    9.12 
La Porte Bancorp, Inc.  LPSB   0.86    5.38    0.86    5.35 
Madison County Financial, Inc.  MCBK   1.01    4.69    1.04    4.84 
Polonia Bancorp, Inc.  PBCP   0.00    0.02    0.00    0.02 
Prudential Bancorp, Inc.  PBIP   0.37    1.51    0.32    1.30 
United Community Bancorp  UCBA   0.40    2.88    0.41    2.93 
Wolverine Bancorp, Inc.  WBKC   0.55    2.84    0.55    2.84 
WVS Financial Corp.  WVFC   0.33    3.25    0.34    3.29 
                        
Average      0.65    4.39    0.63    4.17 
Median      0.66    3.97    0.55    4.05 
Maximum      1.21    9.12    1.21    9.12 
Minimum      0.00    0.02    0.00    0.02 
                        
Supplemental Group                       
CCSB Financial Corp.  CCFC   0.11    0.97    0.11    0.97 
Community Investors Bancorp, Inc.  CIBN   0.42    5.03    0.41    4.87 
First Niles Financial, Inc.  FNFI   0.23    1.77    0.01    0.09 
Great American Bancorp, Inc.  GTPS   0.42    4.45    0.29    3.05 
Hibernia Bancorp, Inc.  HIBE   0.10    0.48    0.05    2.47 
Patriot Federal Bank  PFDB   (0.01)   (0.08)   (0.04)   (0.42)
Quarry City Savings and Loan Assoc  QRRY   0.52    2.99    0.52    2.99 
Royal Financial, Inc.  RYFL   0.48    2.47    0.27    1.39 
United-American Savings Bank  UASB   0.69    8.39    0.70    8.56 
Versailles Financial Corporation  VERF   0.19    0.83    0.20    0.91 
                        
Average      0.32    2.73    0.25    2.49 
Median      0.33    2.12    0.24    1.93 
Maximum      0.69    8.39    0.70    8.56 
Minimum      (0.01)   (0.08)   (0.04)   (0.42)
                        
St James Federal Savings Loan Assoc.      0.36    3.55    0.49    4.84 
                        
Variance to the Comparable Median      (0.30)   (0.42)   (0.06)   0.79 
Variance to the Supplemental Median      0.03    1.43    0.25    2.91 

 

Source: SNL Financial

 

 
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ROA of 0.63%) and 4.05% (average core ROE of 4.17%), respectively (see Table 4.6). The Supplemental Group had a median ROA of 0.33% and median ROE of 2.12% and their core ROA and core ROE ratios were 0.24% and 1.93%, respectively. On a pro forma basis, the Association’s core ROA and ROE are 0.35% and 2.41%, respectively.

 

Table 4.7 provides the key earnings components for St. James Federal, the Comparative Group and Supplemental Group. The Association generated a slightly higher net interest margin than the Comparative Group and Supplemental Group. The Association’s net interest margin of 3.64% compared to the Comparable Groups’ median net interest margin of 3.32% (average of 3.23%) and the Supplemental Groups’ median net interest margin of 3.48%. More than offsetting the higher net interest margin, the Association generated a lower level of non-interest income compared to the Comparable Group and Supplemental Group. The Association’s non-interest income of only 0.23% compared to a median of 0.65% (average of 0.81%) for the Comparable Group. The Supplemental Group generated a median non-interest income level of 0.37% (average of 0.51%).

 

The Association recorded a non-interest expense ratio higher than the Comparable Group but lower than the Supplemental Group. St. James Federal’s operating expense ratio was 3.10% versus the Comparable Group median and average ratios of 2.63% and 3.04%. Meanwhile, the Association and the Comparable Group had similar loan loss provision levels (0.06% versus median and average ratios of 0.06% and 0.04%) for the Comparable Group. Relative to the Supplemental Group, the Association’s operating expenses ratio compared favorably to the peer group median ratio of 3.31% (average of 3.19%) while the level of loan loss provision for the Association was similar to the Supplemental Group.

 

St. James Federal’s efficiency ratio of 84.56% is less favorable than the Comparable Group’s median and average ratios of 77.53% and 77.91%, respectively and slightly lower than the Supplemental Group ratios of 88.55% and 85.76%, respectively.

 

After the merger and stock offering, the Association’s operating expenses are not expected to decline materially as a result of economies attained through the elimination of duplicate expenses. Wells expects to keep all of the employees for at least one year subsequent to closing of the merger and no personnel efficiencies are expected. The savings realized from duplicative vendors is expected to be offset by expenses related to contract termination fees.

 

 
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Income generated from the offering proceeds that are raised and reinvested will be more than offset by expenses related to ESOP.

 

Table 4.7

Earnings Components

 

Company Name     Net Interest   Noninterest Income   Loan Loss Prov   Noninterest Expense   Efficiency 
Comparable Group  Ticker  Margin   /Avg Assets   /Avg Assets   /Avg Assets   Ratio 
First Federal of Northern Michigan   FFNM   3.46    0.66    0.24    3.67    91.62 
FS Bancorp, Inc.  FSBW   5.12    2.23    0.40    5.30    74.02 
HMN Financial, Inc.  HMNF   3.48    1.19    (1.15)   3.51    84.68 
La Porte Bancorp, Inc.  LPSB   3.17    0.47    (0.03)   2.42    71.48 
Madison County Financial, Inc.  MCBK   3.80    0.64    0.47    2.52    57.19 
Polonia Bancorp, Inc.  PBCP   2.88    1.58    0.07    4.23    97.91 
Prudential Bancorp, Inc.  PBIP   2.65    0.17    0.06    2.24    81.04 
United Community Bancorp  UCBA   2.58    0.68    0.05    2.53    82.03 
Wolverine Bancorp, Inc.  WBKC   3.57    0.34    0.26    2.73    69.01 
WVS Financial Corp.  WVFC   1.58    0.17    0.01    1.20    70.09 
                             
Average      3.23    0.81    0.04    3.04    77.91 
Median      3.32    0.65    0.06    2.63    77.53 
Maximum      5.12    2.23    0.47    5.30    97.91 
Minimum      1.58    0.17    (1.15)   1.20    57.19 
                             
Supplemental Group                            
CCSB Financial Corp.  CCFC   3.55    0.58    0.00    3.69    95.69 
Community Investors Bancorp, Inc.  CIBN   3.93    0.94    0.34    3.59    77.16 
First Niles Financial, Inc.  FNFI   1.91    0.13    0.16    1.98    101.11 
Great American Bancorp, Inc.  GTPS   3.06    1.71    (0.01)   4.05    87.27 
Hibernia Bancorp, Inc.  HIBE   3.36    0.16    0.04    3.04    91.65 
Patriot Federal Bank  PFDB   3.51    0.28    0.39    3.25    90.42 
Quarry City Savings and Loan Assoc  QRRY   4.07    0.59    0.06    3.64    80.31 
Royal Financial, Inc.  RYFL   4.14    0.17    0.09    3.36    83.24 
United-American Savings Bank  UASB   3.45    0.46    0.11    2.57    60.93 
Versailles Financial Corporation  VERF   3.18    0.02    0.00    2.76    89.84 
                             
Average      3.42    0.51    0.12    3.19    85.76 
Median      3.48    0.37    0.07    3.31    88.55 
Maximum      4.14    1.71    0.39    4.05    101.11 
Minimum      1.91    0.02    (0.01)   1.98    60.93 
                             
St James Federal Savings Loan Assoc.      3.64    0.23    0.06    3.10    84.56 
                             
Variance to the Comparable Median      0.32    (0.42)   (0.00)   0.47    7.03 
Variance to the Supplemental Median      0.16    (0.14)   (0.01)   (0.21)   (3.99)

 

Source: SNL Financial

 

Based on all the factors discussed above, we believe that a modest upward adjustment relative to the Comparative Group and Supplemental Group is warranted for Earnings Performance.

 

 
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Market Area Review

 

As we previously discussed, St. James Federal’s primary market area is concentrated in one county in Minnesota, Watonwan County. Watonwan County is largely rural with no major population centers. Historically, the County’s economy has been heavily concentrated in agricultural and farming related businesses. While Watonwan County has experienced a limited amount of industrial diversification during recent years, unemployment rates continue to remain stable and below national averages, however, growth opportunities remain minimal.

 

Table 4.8 compares certain demographic and economic data for Watonwan County with the county data of the Comparable Group and Supplemental Group thrifts. All of the Comparable Group thrifts have their deposit bases concentrated in multiple counties, though numerous operate in only a two county network. Like St. James Federal, seven of the Supplemental Group thrifts operate from within a single county, though the smallest county for the Supplement Group had a population of over 40,000 residents. The population in Watowan County was only 11,209 in 2014. Watonwan County experienced a population decline of 0.2% between 2010 and 2014 versus a median growth rate of 0.5% for the Comparable Group’s and 0.9% for the Supplemental Group primary market areas. Watonwan County’s latest median household income of approximately $52,945 compared similarly to the Comparable Group median household income of $52,191 and higher than the $48,744 for the Supplemental Group. The median household income growth expected for Watonwan County between 2014 and 2019 is 10.47% versus 5.72% and 5.62% growth in Comparable Group and Supplemental Group respective markets. As of December 2014, the unemployment rate in Watonwan County was 4.7% compared to the median unemployment rate of 5.4% in the Comparable Group’s market area and 4.9% in the Supplemental Group market area.

 

Based on the demographic and economic data discussed herein and given Watonwan County’s small population base and limited growth opportunities, on balance, we believe that a moderate discount downward is warranted for market area for both the Comparative Group and Supplemental Group.

 

Cash Dividends

 

Thrift institutions have been paying cash dividends as a key component of their capital management strategies. In particular, if a thrift has a strong capital position and does not plan

 

 
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Table 4.8

Demographic and Economic Data

Comparable Group Companies

 

 
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First Federal of Northern Michigan Bancorp, Inc. (NASDAQ: FFNM)

Demographic Profile (First Federal of Northern Michigan Bancorp, Inc.)

 

Ownership: Current

Market: County

 

Michigan (MI)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Alpena   1    3    162,998    46.66    70.46    70.46    29,008    (1.99)   (1.96)   37,462    4.70    5.6 
Cheboygan   4    1    17,192    5.99    7.43    7.43    25,609    (2.08)   (2.11)   36,562    (0.67)   12.0 
Emmet   9    1    12,715    1.61    5.50    5.50    33,054    1.10    1.06    50,747    6.24    7.3 
Iosco   5    1    12,633    4.61    5.46    5.46    25,041    (3.27)   (3.15)   35,538    2.53    7.8 
Otsego   5    1    9,114    2.39    3.94    3.94    23,879    (1.18)   (1.34)   47,743    12.71    6.4 
Montmorency   3    1    8,451    10.05    3.65    3.65    9,288    (4.88)   (4.83)   35,468    6.71    9.8 
Oscoda   3    1    8,239    12.62    3.56    3.56    8,519    (1.40)   (1.69)   33,831    4.25    8.9 
MI Totals        9    231,342         100.00    100.00    154,398                          
Weighted Average: Michigan Franchise                                      (1.95)   (1.94)   38,223    4.64      
Aggregate: Entire State of Michigan                                 9,882,647    (0.01)   (0.03)   46,476    2.19    5.6 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

FS Bancorp, Inc. (NASDAQ: FSBW)

Demographic Profile (FS Bancorp, Inc.)

 

Ownership: Current

Market: County

 

Washington (WA)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
  Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Snohomish   11    4    207,920    2.30    57.40    57.40    744,778    4.41    5.50    65,286    3.30    4.5 
King   27    2    93,690    0.15    25.86    25.86    2,034,524    5.35    6.28    70,485    7.02    4.1 
Pierce   22    1    36,919    0.41    10.19    10.19    827,385    4.04    5.18    57,536    5.26    7.2 
Kitsap   13    1    23,705    0.93    6.54    6.54    258,926    3.10    4.37    62,135    8.53    6.2 
WA Totals        8    362,234         100.00    100.00    3,865,613                          
Weighted Average: Washington Franchise                                      4.53    5.59    65,635    4.81      
Aggregate: Entire State of Washington                                 7,005,779    4.18    5.28    58,935    6.09    6.2 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

 
McAuliffe Financial, LLC
Page 41

 

Table 4.8 (cont.)

Demographic and Economic Data

Comparable Group Companies

 

HMN Financial, Inc. (NASDAQ: HMNF)

Demographic Profile (HMN Financial, Inc.)

 

Ownership: Current

Market: County

 

Iowa (IA)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Marshall   9    1    43,210    4.42    100.00    8.22    40,890    0.60    0.92    52,899    16.48    6.1 
IA Totals        1    43,210         100.00    8.22    40,890                          
Weighted Average: Iowa Franchise                                      0.60    0.92    52,899    16.48      
Aggregate: Entire State of Iowa                                 3,089,088    1.40    1.73    52,827    10.13    4.2 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

Minnesota (MN)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Olmsted   5    4    256,694    7.28    53.21    48.83    148,682    3.07    3.64    67,899    7.72    2.9 
Freeborn   6    1    57,998    9.87    12.02    11.03    31,079    (0.56)   0.18    46,093    7.49    4.1 
Mower   5    1    53,065    7.91    11.00    10.09    39,636    1.21    1.93    46,950    6.69    3.0 
Fillmore   5    1    51,735    11.11    10.72    9.84    20,923    0.27    1.01    51,483    11.33    4.1 
Dakota   29    1    21,159    0.37    4.39    4.03    409,226    2.68    3.30    69,299    0.82    3.2 
Houston   5    1    20,952    6.29    4.34    3.99    18,787    (1.26)   (0.53)   57,489    11.38    4.4 
Winona   7    1    20,847    2.12    4.32    3.97    51,692    0.45    1.18    44,540    3.35    3.1 
MN Totals        10    482,450         100.00    91.78    720,025                          
Weighted Average: Minnesota Franchise                                     1.81    2.45    59,813    7.64         
Aggregate: Entire State of Minnesota                                 5,424,948    2.28    2.90    59,127    5.47    3.7 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

 
McAuliffe Financial, LLC
Page 42

 

Table 4.8 (cont.)

Demographic and Economic Data

Comparable Group Companies

 

 

 
McAuliffe Financial, LLC
Page 43

La Porte Bancorp, Inc. (NASDAQ: LPSB)

Demographic Profile (La Porte Bancorp, Inc.)

 

Ownership: Current

Market: County

 

Indiana (IN)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
LaPorte   2    6    313,358    19.53    87.17    87.17    111,097    (0.33)   0.14    47,072    3.24    8.0 
Porter   9    1    46,126    1.66    12.83    12.83    166,118    1.08    1.33    62,376    6.71    6.6 
IN Totals        7    359,484         100.00    100.00    277,215                          
Weighted Average: Indiana Franchise                                      (0.15)   0.29    49,036    3.69      
Aggregate: Entire State of Indiana                                 6,567,159    1.29    1.62    47,121    2.64    5.8 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

Madison County Financial, Inc. (NASDAQ: MCBK)

Demographic Profile (Madison County Financial, Inc.)

 

Ownership: Current

Market: County

 

Nebraska (NE)                                         
                                   Projected   Median   Projected      
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy  
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate  
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014  
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%)  
Madison   2    2    149,300    10.26    66.86    66.86    35,121    0.70    1.63    49,528    15.29    2.6  
Boone   2    1    61,798    23.89    27.68    27.68    5,403    (1.85)   (0.30)   45,890    21.36    2.2  
Pierce   4    1    12,196    6.14    5.46    5.46    7,112    (2.12)   (1.04)   57,380    15.85    2.9  
Cedar   8    1    0    0.00    0.00    0.00    8,683    (1.91)   (0.86)   48,839    16.25    2.2  
NE Totals        5    223,294         100.00    100.00    56,319                           
Weighted Average: Nebraska Franchise                                    (0.16)   0.95    48,950    17.00         
Aggregate: Entire State of Nebraska                                 1,874,170    2.62    3.35    53,345    10.93    2.9  
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6  

 

 
McAuliffe Financial, LLC
Page 44

 

Table 4.8 (cont.)

Demographic and Economic Data

Comparable Group Companies

 

Polonia Bancorp, Inc. (NASDAQ: PBCP)

Demographic Profile (Polonia Bancorp, Inc.)

 

Ownership: Current

Market: County

 

Pennsylvania (PA)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Philadelphia   23    4    118,248    0.29    58.21    58.21    1,560,706    2.27    2.35    35,735    7.07    6.2 
Montgomery   28    1    84,894    0.34    41.79    41.79    813,379    1.69    1.80    78,454    7.17    3.8 
PA Totals        5    203,142         100.00    100.00    2,374,085                          
Weighted Average: Pennsylvania Franchise                                      2.03    2.12    53,587    7.11      
Aggregate: Entire State of Pennsylvania                                 12,791,303    0.70    0.84    51,961    7.89    4.6 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

Prudential Bancorp, Inc. (NASDAQ: PBIP)

Demographic Profile (Prudential Bancorp, Inc.)

 

Ownership: Current

Market: County

 

Pennsylvania (PA)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Philadelphia   13    6    373,153    0.91    90.73    90.73    1,560,706    2.27    2.35    35,735    7.07    6.2 
Delaware   24    1    38,117    0.32    9.27    9.27    562,633    0.65    0.90    61,896    4.37    4.5 
PA Totals        7    411,270         100.00    100.00    2,123,339                          
Weighted Average: Pennsylvania Franchise                                      2.12    2.22    38,160    6.82      
Aggregate: Entire State of Pennsylvania                                 12,791,303    0.70    0.84    51,961    7.89    4.6 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

 
McAuliffe Financial, LLC
Page 45

 

Table 4.8 (cont.)

Demographic and Economic Data

Comparable Group Companies

 

 
McAuliffe Financial, LLC
Page 46

 

United Community Bancorp (NASDAQ: UCBA)

Demographic Profile (United Community Bancorp)

 

Ownership: Current

Market: County

 

Indiana (IN)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of     in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Dearborn   1    5    370,350    39.45    83.33    83.33    49,579    (0.94)   (0.64)   57,529    1.21    5.3 
Ripley   5    3    74,062    10.56    16.67    16.67    28,339    (1.66)   (1.41)   49,062    7.93    6.5 
IN Totals        8    444,412         100.00    100.00    77,918                          
Weighted Average: Indiana Franchise                                      (1.06)   (0.77)   56,118    2.33      
Aggregate: Entire State of Indiana                                 6,567,159    1.29    1.62    47,121    2.64    5.8 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

Wolverine Bancorp, Inc. (NASDAQ: WBKC)

Demographic Profile (Wolverine Bancorp, Inc.)

 

Ownership: Current

Market: County

 

Michigan (MI)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of     in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Midland   2    3    208,657    16.35    92.26    92.26    83,692    0.08    (0.16)   50,984    1.27     4.4   
Saginaw   15    1    17,499    0.89    7.74    7.74    197,163    (1.50)   (1.51)   40,886    1.90     5.2   
MI Totals        4    226,156         100.00    100.00    280,855                             
Weighted Average: Michigan Franchise                                    (0.05)   (0.26)   50,203    1.31           
Aggregate: Entire State of Michigan                                 9,882,647    (0.01)   (0.03)   46,476    2.19     5.6   
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58     5.6   

 

 
McAuliffe Financial, LLC
Page 47

 

Table 4.8 (cont.)

Demographic and Economic Data

Comparable Group Companies

 

WVS Financial Corp. (NASDAQ: WVFC)

Demographic Profile (WVS Financial Corp.)

 

Ownership: Current

Market: County

 

Pennsylvania (PA)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
  Market  of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Allegheny   20    4    118,104    0.15    82.28    82.28    1,232,037    0.71    0.86    51,121    9.29    4.1 
Butler   16    2    25,436    0.67    17.72    17.72    185,435    0.86    0.97    59,606    9.43    4.1 
PA Totals        6    143,540         100.00    100.00    1,417,472                          
Weighted Average: Pennsylvania Franchise                                      0.74    0.88    52,625    9.31      
Aggregate: Entire State of Pennsylvania                                 12,791,303    0.70    0.84    51,961    7.89    4.6 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

St James Federal Savings and Loan Association

Demographic Profile (St James Federal Savings and Loan Association)

 

Ownership: Current

Market: County

 

Minnesota (MN)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
  Market  of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank  Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Watonwan   6    1    24,277    7.17    100.00    100.00    11,209    (0.02)   0.71    52,945    10.47    4.7 
MN Totals        1    24,277         100.00    100.00    11,209                          
Weighted Average: Minnesota Franchise                                      (0.02)   0.71    52,945    10.47      
Aggregate: Entire State of Minnesota                                 5,424,948    2.28    2.90    59,127    5.47    3.7 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

 
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Table 4.8 (cont.)

Demographic and Economic Data

Supplemental Group Companies

 

CCSB Financial Corp. (OTC Pink: CCFC)

Demographic Profile (CCSB Financial Corp.)

 

Ownership: Current

Market: County

 

Missouri (MO)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Clay   14    3    76,492    2.35    100.00    100.00    231,165    4.16    4.08    64,853    11.81     4.6   
MO Totals        3    76,492         100.00    100.00    231,165                             
Weighted Average: Missouri Franchise                                     4.16    4.08    64,853    11.81           
Aggregate: Entire State of Missouri                                 6,039,326    0.84    1.04    47,043    5.15     5.3   
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58     5.6   

 

Community Investors Bancorp, Inc. (OTC Pink: CIBN)

Demographic Profile (Community Investors Bancorp, Inc.)

 

Ownership: Current

Market: County

 

Ohio (OH)                                                
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Crawford   4    4    91,106    12.70    94.74    94.74    42,177    (3.67)   (3.73)   42,580    5.00    5.0 
Union   8    1    5,054    0.84    5.26    5.26    52,584    0.54    (0.02)   69,879    7.52    3.9 
OH Totals        5    96,160         100.00    100.00    94,761                          
Weighted Average: Ohio Franchise                                      (3.45)   (3.54)   44,015    5.13      
Aggregate: Entire State of Ohio                                 11,542,573    0.05    0.02    46,760    3.57    4.7 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

 
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Table 4.8 (cont.)

Demographic and Economic Data

Supplemental Group Companies

 

 
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First Niles Financial, Inc. (OTCQB: FNFI)

Demographic Profile (First Niles Financial, Inc.)

 

Ownership: Current

Market: County

 

Ohio (OH)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Trumbull   10    1    61,914    2.28    100.00    100.00    205,216    (2.42)   (2.48)   42,259    4.97    5.1 
OH Totals        1    61,914         100.00    100.00    205,216                          
Weighted Average: Ohio Franchise                                      (2.42)   (2.48)   42,259    4.97      
Aggregate: Entire State of Ohio                                 11,542,573    0.05    0.02    46,760    3.57    4.7 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

Great American Bancorp, Inc. (OTCQB: GTPS)

Demographic Profile (Great American Bancorp, Inc.)

 

Ownership: Current

Market: County

 

Illinois (IL)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Champaign   6    2    150,143    3.59    100.00    100.00    204,540    1.72    1.76    41,014    0.65    5.5 
IL Totals        2    150,143         100.00    100.00    204,540                          
Weighted Average: Illinois Franchise                                      1.72    1.76    41,014    0.65      
Aggregate: Entire State of Illinois                                 12,894,382    0.50    0.59    54,808    2.89    5.7 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

 
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Table 4.8 (cont.)

Demographic and Economic Data

Supplemental Group Companies

 

Hibernia Bancorp, Inc. (OTCQB: HIBE)

Demographic Profile (Hibernia Bancorp, Inc.)

 

Ownership: Current

Market: County

 

Louisiana (LA)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
  Market  of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Orleans   13    2    61,468    0.38    74.87    74.87    384,185    11.74    9.97    34,076    (3.80)   7.1 
Jefferson   22    1    20,629    0.21    25.13    25.13    433,916    0.32    1.19    44,273    (0.76)   5.8 
LA Totals        3    82,097         100.00    100.00    818,101                          
Weighted Average: Louisiana Franchise                                      8.87    7.76    36,638    (3.04)     
Aggregate: Entire State of Louisiana                                 4,642,398    2.40    3.04    44,055    5.09    6.2 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

Patriot Federal Bank (OTCQB: PFDB)

Demographic Profile (Patriot Federal Bank)

 

Ownership: Current

Market: County

 

New York (NY)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
  Market  of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Fulton   4    1    49,854    7.52    53.16    53.16    54,450    (1.95)   (1.52)   47,075    9.87    6.7 
Montgomery   4    2    43,924    6.60    46.84    46.84    49,786    (0.86)   (0.29)   46,549    10.97    6.8 
NY Totals        3    93,778         100.00    100.00    104,236                          
Weighted Average: New York Franchise                                      (1.44)   (0.94)   46,829    10.38      
Aggregate: Entire State of New York                                 19,674,630    1.53    1.91    57,619    6.61    5.7 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

 
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Table 4.8 (cont.)

Demographic and Economic Data

Supplemental Group Companies

 

Quarry City Savings and Loan Association (OTCQB: QRRY)

Demographic Profile (Quarry City Savings and Loan Association)

 

Ownership: Current

Market: County

 

Missouri (MO)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Johnson   6    1    37,041    6.18    100.00    100.00    55,653    5.81    5.55    51,563    15.42    4.6 
MO Totals        1    37,041         100.00    100.00    55,653                          
Weighted Average: Missouri Franchise                                      5.81    5.55    51,563    15.42      
Aggregate: Entire State of Missouri                                 6,039,326    0.84    1.04    47,043    5.15    5.3 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

Royal Financial, Inc. (OTCQX: RYFL)

Demographic Profile (Royal Financial, Inc.)

 

Ownership: Current

Market: County

 

Illinois (IL)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Cook   93    3    83,056    0.03    100.00    100.00    5,253,507    1.13    1.23    50,676    (0.31)   5.6 
IL Totals        3    83,056         100.00    100.00    5,253,507                          
Weighted Average: Illinois Franchise                                      1.13    1.23    50,676    (0.31)     
Aggregate: Entire State of Illinois                                 12,894,382    0.50    0.59    54,808    2.89    5.7 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

 

 
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Table 4.8 (cont.)

Demographic and Economic Data

Supplemental Group Companies

 

United-American Savings Bank (OTCQB: UASB)

Demographic Profile (United-American Savings Bank)

 

Ownership: Current

Market: County

 

Pennsylvania (PA)                                        
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Allegheny   23    1    73,001    0.09    100.00    100.00    1,232,037    0.71    0.86    51,121    9.29     4.1   
PA Totals        1    73,001         100.00    100.00    1,232,037                             
Weighted Average: Pennsylvania Franchise                                     0.71    0.86    51,121    9.29           
Aggregate: Entire State of Pennsylvania                                12,791,303    0.70    0.84    51,961    7.89      4.6    
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58     5.6   

 

Versailles Financial Corporation (OTC Pink: VERF)

Demographic Profile (Versailles Financial Corporation)

 

Ownership: Current

Market: County

 

Ohio (OH)                                                
                                   Projected   Median   Projected     
           Company   Deposit   Percent of   Percent of   Total   Population   Population   HH   HH Income   Unemploy 
       Number   Deposits   Market   State   National   Population   Change   Change   Income   Change   ment Rate 
   Market   of   in Market   Share   Franchise   Franchise   2014   2010-2014   2014-2019   2014   2014-2019   Dec. 2014 
County  Rank   Branches   ($000)   (%)   (%)   (%)   (Actual)   (%)   (%)   ($)   (%)   (%) 
Darke   10    1    34,742    3.35    100.00    100.00    52,208    (1.42)   (1.37)   45,207    4.82    3.9 
OH Totals        1    34,742         100.00    100.00    52,208                          
Weighted Average: Ohio Franchise                                      (1.42)   (1.37)   45,207    4.82      
Aggregate: Entire State of Ohio                                 11,542,573    0.05    0.02    46,760    3.57    4.7 
Aggregate: National                                 317,199,353    2.74    3.50    51,579    4.58    5.6 

  

 
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Weighted Average is calculated as the sum of (Percent of State/National Franchise * demographic item) within each market. Banks, Thrifts, and Savings Banks include
Note: National Franchise does not include deposits held in U.S. Territories and other non-states, excluding District of Columbia.
Demographic data is provided by Nielsen based primarily on US Census data. For non-census year data, Nielsen uses samples and projections to estimate the demographic data. SNL performs calculations on the underlying data provided by Nielsen for some of the data presented on this page. For more information on Nielsen's methodology, see https://www.snl.com/help/Docs/Nielsen_Demographic_Update_2014_Methodology.pdf

 

Source: SNL Financial.

  

 
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significant asset growth, at least a moderate level of cash dividends will typically be paid to stockholders.

 

As shown in Table 4.9, seven of the ten Comparable Group thrifts are currently paying a cash dividend. The group’s median dividend yield is 1.31% and its payouts ratio is 27.2%. Four of the thrifts in the Supplemental Group are paying dividends with a median dividend yield of 2.05%. Just under 75% of all publicly traded thrifts are paying cash dividends with an median yield of 1.56%.

 

Table 4.9

Dividend Data

 

Company Name     Dividend     
Comparable Group  Ticker  Yield   LTM Dividend Payout Ratio (%) 
First Federal of Northern Michigan   FFNM   1.47    15.38 
FS Bancorp, Inc.  FSBW   1.24    15.79 
HMN Financial, Inc.  HMNF   0.00    NM 
La Porte Bancorp, Inc.  LPSB   1.27    19.75 
Madison County Financial, Inc.  MCBK   1.19    23.53 
Polonia Bancorp, Inc.  PBCP   NA    NM 
Prudential Bancorp, Inc.  PBIP   0.98    45.00 
United Community Bancorp  UCBA   1.97    54.55 
Wolverine Bancorp, Inc.  WBKC   NA    74.07 
WVS Financial Corp.  WVFC   1.45    30.77 
              
Average      1.20    34.86 
Median      1.26    27.15 
Maximum      1.97    74.07 
Minimum      0.00    15.38 
              
Supplemental Group             
CCSB Financial Corp.  CCFC   NA    NM 
Community Investors Bancorp, Inc.  CIBN   2.05    29.41 
First Niles Financial, Inc.  FNFI   2.19    75.00 
Great American Bancorp, Inc.  GTPS   2.15    26.92 
Hibernia Bancorp, Inc.  HIBE   NA    NM 
Patriot Federal Bank  PFDB   0.00    NA 
Quarry City Savings and Loan Assoc  QRRY   NA    NM 
Royal Financial, Inc.  RYFL   NA    NM 
United-American Savings Bank  UASB   1.50    15.42 
Versailles Financial Corporation  VERF   NA    NM 
              
Average      1.58    36.69 
Median      2.05    28.17 
Maximum      2.19    75.00 
Minimum      0.00    15.42 

 

Source: SNL Securities

 

 
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St. James Federal’s merger with Well Financial will enable the members who purchase shares in the offering to participate in Wells Financial’s dividend program. Currently, Wells Financial is paying an annualized dividend of $0.60 per share, reflecting a dividend yield of 2.33% at current prices. As a result, we believe that no adjustment is warranted for this factor relative to either the Comparative Group or Supplemental Group.

 

Liquidity of the Issue

 

The Comparable Group contains ten companies that trade on the Nasdaq system. Wells Financial currently trades on the OTC Bulletin Board. Given the size of the stock offering, the level of market capitalization of Wells Financial post offering is expected to be approximately $22 million. Therefore, it can be expected that the common stock will continue to have a limited degree of trading activity and liquidity. The average daily trading volume of Wells Financial over the past year is only approximately 350 shares. The Comparative Group has experienced varying degrees of trading volume and, therefore, liquidity in their stocks. The market capitalization of the ten Comparable Group thrifts range from $20.3 million to $113.7 million and the median and average capitalization for the group is $55.1 million and $55.0 million, respectively (see Table 4.10). Therefore, Well Financial’s stock can be expected to have a modestly lower level of liquidity than the Comparative Group.

 

The median and average capitalization for the Supplemental Group peers was $8.1 million and $9.9 million, respectively. If St. James Federal was pursuing a standard conversion and its’ stock was independent of Wells Financial, the Association’s market capitalization would be less than that of the Supplemental Group. However, by merging into Wells Financial, the capitalization of the combined entity would be slightly larger than that of the Supplemental Group. Wells Financials’ initial public offering was in 1995 and the daily trading activity has been meager since the early days of the offering. An independent offering of St. James Federal’s stock would likely reflect some initial flurry of trading activity but would likely slow as the offering became more seasoned.

 

Based on the foregoing, we believe that a slight downward adjustment to the pro forma market value of St. James Federal relative to the Comparable Group is warranted. Relative to the Supplemental Group, we believe there is no adjustment necessary as trading activity and liquidity are expected to be similar.

 

 
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Table 4.10

Market Capitalization and Market Data

 

Company Name     Market   Stock   High   Low   Book Value   Tang. BV 
Comparable Group  Ticker  Value ($M)   Price   Price   Price   Per Share   Per Share 
First Federal of Northern Michigan  FFNM   20.31    5.45    6.30    4.69    8.04    7.68 
FS Bancorp, Inc.  FSBW   62.64    19.36    19.49    15.50    20.35    20.35 
HMN Financial, Inc.  HMNF   53.69    12.01    13.95    8.94    14.77    14.77 
La Porte Bancorp, Inc.  LPSB   71.37    12.58    13.15    10.63    14.52    13.00 
Madison County Financial, Inc.  MCBK   60.95    20.10    23.00    16.96    20.35    20.01 
Polonia Bancorp, Inc.  PBCP   34.69    10.40    10.91    9.25    11.64    11.64 
Prudential Bancorp, Inc.  PBIP   113.69    12.22    12.50    10.45    13.68    13.68 
United Community Bancorp  UCBA   56.36    12.16    12.58    10.45    15.27    NA 
Wolverine Bancorp, Inc.  WBKC   53.87    23.75    24.10    21.45    27.05    27.05 
WVS Financial Corp.  WVFC   22.60    11.02    12.50    10.75    15.52    15.52 
                                  
Average      55.02    13.90    14.85    11.91    16.12    15.97 
Median      55.11    12.19    12.86    10.54    15.02    14.77 
Maximum      113.69    23.75    24.10    21.45    27.05    27.05 
Minimum      20.31    5.45    6.30    4.69    8.04    7.68 
                                  
Supplemental Group                                 
CCSB Financial Corp.  CCFC   5.74    7.35    8.25    6.85    13.44    13.44 
Community Investors Bancorp, Inc.  CIBN   7.75    9.74    10.70    8.30    13.84    13.84 
First Niles Financial, Inc.  FNFI   10.30    9.15    9.95    6.20    10.51    10.51 
Great American Bancorp, Inc.  GTPS   12.22    26.00    30.00    22.00    35.00    33.97 
Hibernia Bancorp, Inc.  HIBE   16.62    17.40    17.85    17.40    22.90    22.90 
Patriot Federal Bank  PFDB   8.49    5.80    7.25    5.02    7.82    7.70 
Quarry City Savings and Loan Assoc  QRRY   4.85    11.90    11.90    10.20    19.42    19.42 
Royal Financial, Inc.  RYFL   20.06    8.00    8.20    7.25    10.32    10.32 
United-American Savings Bank  UASB   6.19    20.00    22.00    18.65    23.70    23.70 
Versailles Financial Corporation  VERF   6.95    15.75    17.99    14.99    28.36    28.36 
                                  
Average      9.92    13.11    14.41    11.69    18.53    18.42 
Median      8.12    10.82    11.30    9.25    16.63    16.63 
Maximum      20.06    26.00    30.00    22.00    35.00    33.97 
Minimum      4.85    5.80    7.25    5.02    7.82    7.70 

 

Source: SNL Financial

 

Management

 

The entire organization of St. James Federal includes 8 employees and 5 board members. The Association’s management team is small, but it appears to possess the experience and expertise in the key lending and financial service areas that are the focus of the Association’s operations. The financial results of the Association suggest that the Board of Directors and senior management have been effective in implementing an overall operating strategy that can be well managed by the current organizational structure. The Association has indicated that there are currently no senior management vacancies.

 

 
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The relatively small size of St. James Federal requires that multiple lines responsibilities be concentrated in a small handful of people. St. James Federal’s management appears to have established a favorable reputation for the Association in the communities in which it operates. Given the small market and limited growth opportunities, there has not been a need to significantly expand the staff size. However, any significant expansion in lending or depositor services will likely require that the size and experience of staff be expanded.

 

The Comparable Group thrifts, to vary degrees, have undertaken expansion of their management teams and support staff as part of their expansion and diversification strategies, many of which have had these strategies in place for some time. Most savings institutions have been confronted with the need to expand and restructure their management team in response to significant changes in financial, regulatory and operational challenges.

 

On balance, we believe that no specific adjustment to St. James Federal’s pro forma market value relative to the Comparable Group or Supplemental Group is warranted for managerial factors.

 

Marketing of the Issue

 

Marketing of the issue takes into consideration: (1) trends and conditions in the overall thrift market, as well as (2) the anticipated impact of the new issue market for thrift conversions on subscription interest for stock offered as part of the St. James conversion merger.

 

Beginning in 2012, thrift stocks began to show gradual recovery from the financial recession and banking crisis that began in 2008. Thrifts, as a whole, were beginning to see some stabilization and recovery in real estate values and non-performing assets appeared to have reached their peak. Some thrift institutions were able to raise new capital while other thrifts continued addressing operational losses and high levels of non-performing assets. Through 2012 and 2013, thrift institutions continued their trend of improved asset quality and equity offerings were more abundant.

 

Beginning in the first quarter of 2014, concerns about economic growth in emerging markets, geopolitical turmoil in Ukraine, extreme weather in the U.S. and profit taking tempered the financial markets. Additionally, the markets remained focused on Federal Reserve policy with regard to quantitative easing. The GDP for the first quarter was negative 2.1% reflecting slower consumer spending on health care and the effects of turbulent weather which closed airports and retail establishments throughout the U.S.

 

 
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During the second quarter, the Federal Open Market Committee (FOMC) made few changes to its policy other than making further reductions in its asset purchase program. As the year progressed, the economy began to transition from an economy driven by economic policy to an economy more reflective of fundamental economic forces such as consumer spending, durable goods orders, inflation and the labor market.

 

As shown in Table 4.11, the SNL Thrift Index peaked in 2006 at 1,829.29 before dropping to a low of 481.38 in 2011. Since the end of 2011, the Thrift Index has gradually increased to its current post recession high of 735.25. However, the recovery has reflected volatility with the index bouncing between 600 and 700 over the past eighteen months.

 

As a result of improving financial market conditions, the number of standard thrift conversion offerings has increased with the recovery in the financial markets. A total of seven standard conversion occurred in 2012, three in 2013, nine in 2014 and two so far in 2015. Numerous additional thrift conversion offerings in 2012 and 2013 were second stage mutual holding company conversions. The pro forma price to book value multiples of standard conversions have trended upward since 2012 (see Table 4.12), though the two offerings closed in 2015 shown a slightly lower trend. As shown in Table 4.13, aftermarket price performance has been moderate, with a median price appreciation ranging from 15% to 20% for one day, one week, one month and 3 month trading periods. Historically, converting thrifts stock prices have trended upwards towards existing peer valuation but have found resistance approaching tangible book value until an established trading market has been established, earnings growth was sustained and market comfort with management operating a new public company materialized. As a result, thrift conversions typically trade at discounts to public traded peers.

 

St. James Federal’s merger with Wells Financial will differ from a standard conversion as Wells Financial will offer stock in an amount equal to the appraised value of St. James Federal. As such, there already exists a trading market for Wells Financial’s common stock. However, like a standard conversion, members of St James Federal will be given priority rights to purchase Wells Financial shares.

 

St. James Federal has effectively limited a predominant portion of its depositors to the local communities in, and contiguous to, Watonwan County. Therefore, the Association anticipates that most of the subscription interest in its offering will be local, thereby limiting the amount of any potential speculative interest from outside of Minnesota.

 

 
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Table 4.11

Thrift Stock Index

Relative to Long and Short-Term Rates

 

       3-Month   12-Month   Long-Term   SNL 
   Prime   T-Bill   T-Bill   T-Secur.   Thrift 
Month Ended  Rate (1)   Rate (1)   Rate (1) (2)   Index (2)   Index 
(Last Day of Period) 
12/31/1988   10.50    8.35    8.99    9.01      
12/31/1989   10.50    7.88    7.72    7.90      
12/31/1990   10.00    6.95    7.05    8.24      
12/31/1991   7.21    4.18    4.38    7.70      
12/31/1992   6.00    3.29    3.71    7.44      
12/31/1993   6.00    3.13    3.61    6.25      
12/31/1994   8.50    5.76    7.14    7.87      
12/31/1995   8.65    5.29    5.31    6.06      
12/31/1996   8.25    5.04    5.47    6.55      
12/31/1997   8.50    5.30    5.53    5.99      
12/31/1998   7.75    4.50    4.52    5.06      
12/31/1999   8.50    5.36    5.84    6.35    562.39 
12/31/2000   9.50    5.94    5.60    5.49    874.27 
12/31/2001   4.84    1.72    2.22    5.48    918.18 
12/31/2002   4.25    1.21    1.45    5.04    1,073.20 
12/31/2003   4.00    0.91    1.31    5.11    1,482.32 
12/31/2004   5.15    2.22    2.67    4.88    1,605.59 
12/31/2005   7.15    3.97    4.35    4.73    1,616.43 
12/31/2006   8.25    4.97    4.94    4.78    1,829.29 
12/31/2007   7.33    3.07    3.26    4.57    1,058.03 
12/31/2008   3.61    0.03    0.49    3.18    653.86 
12/31/2009   3.25    0.06    0.47    4.58    586.96 
12/31/2010   3.25    0.12    0.29    4.21    592.13 
12/31/2011   3.25    0.02    0.11    2.57    481.38 
12/31/2012   3.25    0.04    0.15    2.47    565.76 
                          
3/31/2013   3.25    0.09    0.14    2.78    602.30 
6/30/2013   3.25    0.05    0.14    3.07    625.27 
9/30/2013   3.25    0.02    0.11    3.53    650.81 
12/31/2013   3.25    0.07    0.13    3.63    706.46 
                          
1/31/2014   3.25    0.04    0.11    3.52    685.52 
2/28/2014   3.25    0.05    0.11    3.38    701.33 
3/31/2014   3.25    0.06    0.13    3.36    718.88 
4/30/2014   3.25    0.03    0.10    3.27    699.89 
5/31/2014   3.25    0.04    0.09    3.12    699.20 
6/30/2014   3.25    0.04    0.10    3.15    723.14 
7/31/2014   3.25    0.03    0.10    3.07    702.16 
8/30/2014   3.25    0.03    0.10    2.94    717.24 
9/30/2014   3.25    0.02    0.10    3.01    697.68 
10/31/2014   3.25    0.01    0.10    2.81    725.45 
11/30/2014   3.25    0.02    0.12    2.62    723.61 
12/31/2014   3.25    0.04    0.22    2.47    738.69 
                          
1/31/2015   3.25    0.02    0.16    2.04    699.91 
2/13/2015   3.25    0.02    0.22    2.33    735.25 

 

(1) U.S. Financial Data, The Federal Reserve of St. Louis

(2) Treasury 20 Year Rate replaces the discontinued 30-Year Treasury Constant Maturity Rate as of 2/28/02.

 

Source: SNL Financial

 

 
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Table 4.12

Standard Conversions

Since 2012

 

Institution  Ticker  IPO Date  IPO Price   Net Proceeds   Price/Book   Price/Tang. Book   Price/Earnings 
             ($000)   (%)   (%)   (x) 
West End Indiana Bancshares, Inc.  WEIN  1/11/2012   10.0000    10,693    49.1    49.1    20.9 
Wellesley Bancorp, Inc.  WEBK  1/26/2012   10.0000    18,379    59.7    59.7    12.6 
FS Bancorp, Inc.  FSBW  7/10/2012   10.0000    26,266    61.1    61.1    25.6 
HomeTrust Bancshares, Inc.  HTBI  7/11/2012   10.0000    185,481    59.7    59.7    NM 
Madison County Financial, Inc.  MCBK  10/4/2012   10.0000    26,577    55.2    56.6    6.9 
Hamilton Bancorp, Inc.  HBK  10/10/2012   10.0000    31,394    55.7    58.3    NM 
Meetinghouse Bancorp, Inc.  MTGB  11/20/2012   10.0000    4,946    64.7    64.7    29.4 
      2012 Average             57.9    58.4    19.1 
      2012 Median             59.7    59.7    20.9 
                                
Westbury Bancorp, Inc.  WBB  4/10/2013   10.0000    42,279    57.7    57.7    250.0 
Sunnyside Bancorp, Inc.  SNNY  7/16/2013   10.0000    6,386    63.0    63.0    NM 
Quarry City Savings and Loan Association  QRRY  7/26/2013   10.0000    3,196    54.2    56.4    13.9 
      2013 Average             58.3    59.0    132.0 
      2013 Median             57.7    57.7    132.0 
                                
Coastway Bancorp, Inc.  CWAY  1/15/2014   10.0000    40,778    72.2    72.2    500.0 
Edgewater Bancorp, Inc.  EGDW  1/17/2014   10.0000    4,578    52.7    55.0    NM 
Home Bancorp Wisconsin, Inc.  HWIS  4/24/2014   10.0000    6,638    64.6    64.6    NM 
Sunshine Bancorp, Inc.  SBCP  7/15/2014   10.0000    35,860    67.8    67.8    NM 
Blue Hills Bancorp, Inc.  BHBK  7/22/2014   10.0000    239,742    72.0    74.8    100.0 
Entegra Financial Corp.  ENFC  10/1/2014   10.0000    61,724    66.5    66.5    7.6 
Pilgrim Bancshares, Inc.  PLRM  10/13/2014   10.0000    17,724    73.3    73.3    50.0 
Melrose Bancorp, Inc.  MELR  10/22/2014   10.0000    22,364    64.9    64.9    54.0 
MB Bancorp, Inc.  MBCQ  12/30/2014   10.0000    17,571    60.6    60.6    NM 
      2014 Average             66.3    66.3    37.2 
      2014 Median             65.7    65.7    50.0 
                                
First Northwest Bancorp  FNWB  1/30/2015   10.0000    102,652    70.2    70.2    62.5 
MW Bancorp, Inc.  MWBC  1/30/2015   10.0000    6,601    56.8    56.8    NM 
      2015 Average             63.5    63.5    62.5 
      2015 Median             63.5    63.5    62.5 

 

Source: SNL Financial

 

Table 4.13

Aftermarket Price Performance 

 

                 % Price   % Price   % Price   % Price 
                 Change One   Change One   Change One   Change 3 
Institution      Ticker  IPO Date  IPO Price   Day   Week   Month   Months 
West End Indiana Bancshares, Inc.   4293367   WEIN  1/11/2012   10.0000    12.60    12.50    20.00    20.00 
Wellesley Bancorp, Inc.   4298699   WEBK  1/26/2012   10.0000    20.00    20.90    22.90    26.50 
FS Bancorp, Inc.   4304579   FSBW  7/10/2012   10.0000    0.10    0.70    2.10    7.50 
HomeTrust Bancshares, Inc.   4309281   HTBI  7/11/2012   10.0000    17.00    20.00    24.50    36.00 
Madison County Financial, Inc.   4095155   MCBK  10/4/2012   10.0000    48.90    46.10    45.09    61.00 
Hamilton Bancorp, Inc.   4328225   HBK  10/10/2012   10.0000    19.00    17.00    12.50    13.90 
Meetinghouse Bancorp, Inc.   4315942   MTGB  11/20/2012   10.0000    12.50    27.50    20.00    14.20 
Westbury Bancorp, Inc.   4066453   WBB  4/10/2013   10.0000    35.20    35.10    33.30    36.50 
Sunnyside Bancorp, Inc.   4381269   SNNY  7/16/2013   10.0000    5.00    4.50    0.10    -1.30 
Quarry City Savings and Loan Association   1000790   QRRY  7/26/2013   10.0000    7.50    2.00    0.50    3.00 
Coastway Bancorp, Inc.   4320571   CWAY  1/15/2014   10.0000    9.20    8.50    1.90    2.80 
Edgewater Bancorp, Inc.   4410547   EGDW  1/17/2014   10.0000    0.00    2.50    2.50    4.00 
Home Bancorp Wisconsin, Inc.   4396910   HWIS  4/24/2014   10.0000    -3.90    -7.40    -17.50    -15.50 
Sunshine Bancorp, Inc.   4436252   SBCP  7/15/2014   10.0000    20.30    19.00    19.30    19.20 
Blue Hills Bancorp, Inc.   4436012   BHBK  7/22/2014   10.0000    23.80    21.50    29.70    32.00 
Entegra Financial Corp.   4290505   ENFC  10/1/2014   10.0000    32.80    30.70    34.00    43.90 
Pilgrim Bancshares, Inc.   4436228   PLRM  10/13/2014   10.0000    11.50    9.40    8.20    9.00 
Melrose Bancorp, Inc.   4436001   MELR  10/22/2014   10.0000    30.50    31.20    31.50    31.10 
MB Bancorp, Inc.   4560377   MBCQ  12/30/2014   10.0000    4.50    6.00    6.10    NA 
First Northwest Bancorp   4343673   FNWB  1/30/2015   10.0000    21.80    22.50    NA    NA 
MW Bancorp, Inc.   4559464   MWBC  1/30/2015   10.0000    15.00    14.70    NA    NA 

 

Source: SNL Financial

 

 
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Based on the above mentioned factors, we believe that a new issue discount applied to the price to book (and tangible book) valuation approach is necessary and appropriate in St. James Federal’s offering. As a result, we believe a slight downward adjustment is warranted for the marketing of new stock.

 

Summary of Valuation Adjustments

 

Overall, based on the factors discussed in this section, we have concluded that St. James Federal’s pro forma market value should reflect the following valuation adjustments relative to the Comparable Group:

 

Valuation Factor   Valuation Adjustment
Financial Condition   Slight Upward
Balance Sheet Growth   Modest Downward Adjustment
Earnings Performance   Modest Upward Adjustment
Market Area   Moderate Downward
Dividends   No Adjustment
Liquidity of the Issue   Slight Downward
Management   No Adjustment
Marketing of the Issue  

Slight Downward

 

Relative to the Supplemental Group

    
   
Valuation Factor   Valuation Adjustment
Financial Condition   Slight Upward
Balance Sheet Growth   Modest Downward Adjustment
Earnings Performance   Modest Upward Adjustment
Market Area   Moderate Downward
Dividends   No Adjustment
Liquidity of the Issue   No Adjustment
Management   No Adjustment
Marketing of the Issue   Slight Downward

 

 
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V.MARKET VALUE DETERMINATION

 

Introduction

 

In accordance with the accepted valuation methodology promulgated by the regulators, i.e., the pro forma market value approach, we have considered three key pricing ratios: (1) price/earnings (or “P/E”), (2) price/book value (or “P/B”), and (3) price/assets (or “P/A”). All of these pricing approaches were calculated on a pro forma basis including the effects of the stock proceeds. We have incorporated the valuation assumptions and parameters disclosed in Wells Financial’s offering prospectus for reinvestment rate, effective income tax rate, stock benefit plans and offering expenses.

 

In our estimate of St. James Federal’s pro forma market value, the pricing ratios of the Comparable Group and Supplemental Group were analyzed. We also assessed the pricing ratios of all publicly traded thrifts as well as recent thrift conversion offerings.

 

Discussion of Pricing Ratios

 

Price to Earnings Ratio

 

We believe that investors place their primary emphasis on making purchase decisions on the recent earnings results and expected profitability of savings institutions. Therefore, we believe it is appropriate to place considerable emphasis on the pro forma price/earnings valuation approach in deriving a fair market value for a converting savings institution. However, price/earnings ratios for some savings institutions are less meaningful as a result of the variability of reported earnings due to non-operating gains and losses. As a proper basis for comparison, the price to core earnings ratio was also utilized for both the Association, Comparable Group ant the Supplemental Group to eliminate any non-recurring items.

 

Price to Book Value/Price to Tangible Book Value Ratio

 

We also give considerable weight to the pro forma price/book value approach. This valuation method also is closely analyzed by investors in making investment decisions, particularly for a converting thrift institution. However, it is important to note that the “book value” of a company is an accounting derived concept that represents the historically accumulated retained earnings of such entity. Such book value does not necessarily take into consideration the current earnings power of the company. Obviously, a converting thrift institution has a base of capital in place prior to the time of conversion. To attempt to value such

 

 
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converting institution at a pro forma price/book value ratio equal to or even close to the price/book value ratios of publicly traded stock institutions will result, in most cases, in an unrealistic valuation that is unacceptable in the marketplace. Thus, a disproportionate reliance on a price/book value approach may result in unrealistic estimated pro forma market value of the Association. This is particularly true since investors will be seeking a certain minimum, and thus reasonable, return on equity (“ROE”).

 

Therefore, we believe that in determining an appropriate value for a converting institution such as St. James Federal, the pro forma price/book value ratio must be balanced against the pro forma price/earnings ratio and the pro forma price/assets ratio. Investors will also price financial institutions on a tangible book basis because it incorporates the price/book approach, adjusted for intangibles, if any.

 

Price to Assets Ratio

 

One other valuation method, the pro forma price/assets ratio, is most applicable for valuing savings institutions with low net worth and/or very low operating income or losses. Since this is not the case for St. James Federal, we have placed less weight on this approach but have considered the reasonableness of the resulting price/assets ratio in our valuation process.

 

Pro Forma Value

 

Based upon the adjustments discussed in the previous section, St. James Federal’s midpoint value is estimated to be $2,300,000. Based upon a range below and above the midpoint value, the relative values are $1,955,000 at the minimum and $2,645,000 at the maximum, respectively. At the super maximum of the range, the offering value would be $3,041,750.

 

At the various levels of the estimated value range, the offering would result in the following offering data:

 

Table 5.1

Value Range

 

   Total   Price   Total 
   Shares   Per Share   Value 
             
Appraised Value – Midpoint   85,185   $27.00   $2,300,000 
Range:               
- Minimum   72,407   $27.00   $1,955,000 
- Maximum   97,963   $27.00   $2,645,000 
- Super-Maximum   112,657   $27.00   $3,041,750 

 

 
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Table 5.2 highlights the key pro forma pricing ratios for St. James Federal, based on the above valuation range, and compares such ratios to the Comparable Group’s mean and median pricing ratios as well as to the Supplemental Group ratios.

 

Table 5.2

Pricing Ratios

 

      St. James Federal   Comparable Group   Supplemental Group 
          Mean   Median   Mean   Median 
   Min   13.71                     
Price-Core Earnings Ratio (P/CoreE)  Mid   15.98    27.40    16.66    32.98    17.61 
   Max   18.12                     
   Smax   20.61                     
                             
   Min   50.93                     
Price-to-Book Ratio (P/B)  Mid   55.34    84.68    87.21    71.52    74.20 
   Max   59.13                     
   Smax   62.97                     
                             
   Min   50.93                     
Price-to-Tangible Book Ratio (P/TB)  Mid   55.34    86.72    88.57    71.87    75.64 
   Max   59.13                     
   Smax   62.97                     
                             
   Min   6.91                     
Price-to-Assets (P/A)  Mid   8.04    13.03    11.97    9.78    8.66 
   Max   9.14                     
   Smax   10.38                     

 

Table 5.3 specifically compares the Association’s pro forma price/earnings, price/core

 

Table 5.3

Comparable and Supplemental Group

Pricing Multiple Comparison

 

   Price Relative to 
Comparable Group  CoreEarnings   Book   Tangible Book   Assets 
St. James Federal (Midpoint)   15.98    55.34    55.34    8.04 
Comparable Group Average   27.40    84.68    86.72    13.03 
Discount (Premium)   41.67    34.65    36.19    38.29 
Comparable Group Median   16.66    87.21    88.57    11.97 
Discount (Premium)   4.09    36.55    37.52    32.82 

 

   Price Relative to 
Supplemental Group  CoreEarnings   Book   Tangible Book   Assets 
St. James Federal (Midpoint)   15.98    55.34    55.34    8.04 
Supplemental Group Average   32.98    71.52    71.87    9.78 
Discount (Premium)   51.55    22.63    23.00    17.83 
Supplemental Group Median   17.61    74.20    75.64    8.66 
Discount (Premium)   9.28    25.42    26.84    7.12 

 

 
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earnings, price/book (and price/tangible book), and price/assets ratios, based on the $2,300,000 midpoint value, to the Comparable Group’s average and median ratios and as the Supplemental Group’s average and median ratios. Based on St. James Federal’s midpoint value, the Association is priced at a premium relative to earnings and discounts on a price/book value (and price/tangible book value) basis and price/assets basis.

 

Table 5.4 presents in more detail the pro forma pricing calculations for St. James Federal, the Comparable Group and the Supplemental Group.

 

Valuation Conclusion

 

It is therefore McAuliffe Financial’s opinion that as of February 13, 2015, the estimated pro forma market value of St. James Federal was $2,300,000 at the midpoint of a range with a minimum of $1,955,000 to a maximum of $2,645,000 at 15% below and 15% above the midpoint of the range, respectively. Based on an adjusted maximum value of 15% above the maximum value, the adjusted maximum value or super maximum value is $3,041,750.

 

This appraisal represents an initial valuation for St. James Federal. Due to the duration of time that passes between the time this appraisal report is written and the time the offering closes, numerous factors could lead McAuliffe Financial to update or revise the appraised value of the Association. Some factors that could lead McAuliffe Financial to adjust the appraised value include: (1) changes in the Association’s operations and financial condition; (2) changes in the market valuation or financial condition of the Comparable Group or Supplemental Group; (3) changes in the financial markets; and (4) changes in the market for thrift conversions. Should there be material changes to any of these factors, McAuliffe Financial will prepare an appraisal update to appropriately adjust the value of the Association. At the time of closing of the stock offering, McAuliffe Financial will prepare a final appraisal to determine if the valuation range is still appropriate and determine the exact valuation amount appropriate for the Association.

 

 
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Table 5.4

St. James Federal Savings & Loan Association

As of February 13, 2015

 

            Market   Per Share Data (2)                                                                 
            Capitalization   Core   Book                       Dividends (4)   Financial Characteristics (6) 
                Market   12 Month   Value/   Pricing Ratios (3)   Amount/       Payout   Total   Equity/     Tang Eq./   NPAs/   Reported   Core 
      State  Exchange   Price (1)  Value   EPS   Share   P/E   P/B   P/TB   P/A   P/Core   Share   Yield   Ratio   Assets   Assets   Assets   Assets   ROA   ROE   ROA   ROE 
            ($)   ($Mil)   ($)   ($)   (x)   (%)   (%)   (%)   (x)   ($)   (%)   (%)   ($Mil)   (%)   (%)   (%)   (%)   (%)   (%)   (%) 
St James Federal S & LA                                                                                                             
Supermaximum                 3.04    1.31    43.04    27.55    62.97    62.97    10.38    20.61                                                        
Maximum                 2.65    1.49    45.77    24.55    59.13    59.13    9.14    18.12                                                        
Midpoint     MN      27.00    2.30    1.69    48.91    21.60    55.34    55.34    8.04    15.98    0.00    0.00    0.00    27,215    10.12    10.12    0.71    0.36    3.55    0.49    4.84 
Minimum                 1.96    1.97    53.15    18.62    50.93    50.93    6.91    13.71                                                        
All Publicly Traded Thrifts                                                                                                             
Averages            17.84    428.14    0.98    16.35    19.28    105.68    114.44    12.99    24.87    0.31    1.82    49.45    3,219,807    12.86    12.23    1.91    0.73    6.00    0.76    6.10 
Median            14.84    109.11    0.83    14.81    15.91    98.78    103.78    12.72    16.41    0.20    1.47    39.34    1,002,266    12.50    11.25    1.58    0.69    5.44    0.74    5.46 
Comparable Group                                                                                                             
Averages            13.90    55.02    0.72    16.12    23.05    84.68    86.72    13.03    27.40    0.18    1.20    34.86    418,691    15.22    14.92    1.37    0.65    4.39    0.63    4.17 
Median            12.19    55.11    0.73    15.02    19.71    87.21    88.57    11.97    16.66    0.16    1.26    27.15    423,805    13.54    13.10    1.48    0.66    3.97    0.55    4.05 
Comparable Group                                                                                                             
First Federal of Northern Michigan Bancorp, Inc.  FFNM  MI  NASDAQ   5.45    20.31    0.66    8.04    10.48    67.77    70.96    6.51    8.31    0.08    1.47    15.38    311,923    9.61    9.22    1.23    0.77    7.05    0.56    4.80 
FS Bancorp, Inc.  FSBW  WA  NASDAQ   19.36    62.64    1.53    20.35    12.74    95.15    95.15    12.29    9.27    0.24    1.24    15.79    509,754    12.92    12.92    0.24    1.01    7.17    1.01    7.22 
HMN Financial, Inc.  HMNF  MN  NASDAQ   12.01    53.69    1.23    14.77    9.76    81.33    81.33    9.46    10.01    0.00    0.00    NM    577,426    13.16    13.16    2.43    1.21    9.12    1.21    9.12 
La Porte Bancorp, Inc.  LPSB  IN  NASDAQ   12.58    71.37    0.81    14.52    15.53    86.62    96.76    13.76    16.36    0.16    1.27    19.75    518,616    15.89    14.46    2.12    0.86    5.38    0.86    5.35 
Madison County Financial, Inc.  MCBK  NE  NASDAQ   20.10    60.95    1.05    20.35    19.71    98.78    100.46    20.22    15.80    0.24    1.19    23.53    301,929    20.47    20.20    0.15    1.01    4.69    1.04    4.84 
Polonia Bancorp, Inc.  PBCP  PA  NASDAQ   10.40    34.69    0.00    11.64    NM    89.38    89.38    11.65    86.67    0.00    NA    NM    297,885    13.03    13.03    1.51    0.00    0.02    0.00    0.02 
Prudential Bancorp, Inc.  PBIP  PA  NASDAQ   12.22    113.69    0.17    13.68    61.10    89.33    89.33    21.72    61.10    0.09    0.98    45.00    527,082    24.31    24.31    1.46    0.37    1.51    0.32    1.30 
United Community Bancorp  UCBA  IN  NASDAQ   12.16    56.36    0.43    15.27    27.64    79.61    85.02    11.07    28.28    0.24    1.97    54.55    508,938    13.91    12.94    2.73    0.40    2.88    0.41    2.93 
Wolverine Bancorp, Inc.  WBKC  MI  NASDAQ   23.75    53.87    0.81    27.05    29.32    87.81    87.81    15.94    16.96    0.60    NA    74.07    338,671    18.15    18.15    1.68    0.55    2.84    0.55    2.84 
WVS Financial Corp.  WVFC  PA  NASDAQ   11.02    22.60    0.53    15.52    21.19    70.99    70.99    7.67    21.19    0.16    1.45    30.77    294,689    10.80    10.80    0.16    0.33    3.25    0.34    3.29 
Supplemental Comparable Group                                                                                                             
Averages            13.11    9.92    0.52    18.53    32.48    71.52    71.87    9.78    32.98    0.11    1.58    36.69    103,721    13.94    13.90    1.58    0.32    2.73    0.25    2.49 
Median            10.82    8.12    0.37    16.63    25.92    74.20    75.64    8.66    17.61    0.00    2.05    28.17    100,941    12.20    12.20    1.32    0.33    2.12    0.24    1.93 
CCSB Financial Corp.  CCFC  MO  OTC Pink   7.35    5.74    0.14    13.44    52.50    54.70    54.70    6.57    91.88    0.00    NA    NM    87,263    12.02    12.02    4.36    0.11    0.97    0.11    0.97 
Community Investors Bancorp, Inc.  CIBN  OH  OTC Pink   9.74    7.75    0.66    13.84    14.32    70.35    70.35    5.89    8.40    0.20    2.05    29.41    131,599    8.37    8.37    2.84    0.42    5.03    0.41    4.87 
First Niles Financial, Inc.  FNFI  OH  OTCQB   9.15    10.30    0.01    10.51    45.75    87.06    87.06    10.69    NM    0.15    2.19    75.00    96,437    12.39    12.39    1.79    0.23    1.77    0.01    0.09 
Great American Bancorp, Inc.  GTPS  IL  OTCQB   26.00    12.22    1.07    35.00    16.67    74.28    76.54    6.92    21.67    0.42    2.15    26.92    176,704    9.31    9.06    1.28    0.42    4.45    0.29    3.05 
Hibernia Bancorp, Inc.  HIBE  LA  OTCQB   17.40    16.62    0.49    22.90    NM    75.97    75.97    15.76    NM    0.00    NA    NM    105,445    20.75    20.75    0.30    0.10    0.48    0.05    2.47 
Patriot Federal Bank  PFDB  NY  OTCQB   5.80    8.49    (0.08)   7.82    NA    74.12    75.31    6.94    NM    0.00    0.00    NA    122,365    9.36    9.22    0.98    (0.01)   (0.08)   (0.04)   (0.42)
Quarry City Savings and Loan Association  QRRY  MO  OTCQB   11.90    4.85    0.56    19.42    21.07    61.26    61.26    10.38    12.40    0.00    NA    NM    46,757    16.94    16.94    0.68    0.52    2.99    0.52    2.99 
Royal Financial, Inc.  RYFL  IL  OTCQX   8.00    20.06    0.14    10.32    30.77    77.54    77.54    15.66    50.00    0.00    NA    NM    128,043    20.20    20.20    2.20    0.48    2.47    0.27    1.39 
United-American Savings Bank  UASB  PA  OTCQB   20.00    6.19    1.98    23.70    10.28    84.39    84.39    6.87    13.56    0.30    1.50    15.42    90,084    8.14    8.14    1.36    0.69    8.39    0.70    8.56 
Versailles Financial Corporation  VERF  OH  OTC Pink   15.75    6.95    0.25    28.36    68.48    55.54    55.54    12.17    NM    0.00    NA    NM    52,513    21.91    21.91    0.00    0.19    0.83    0.20    0.91 

 

(1)Closing Price.
(2)EPS (estimate core basis) is based on actual trailing 12 month data, adjusted to omit non-operating items on a tax-effective basis, and is shown on a pro forma basis where appropriate.
(3)P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; P/Core = Price to core earnings.
(4)Indicated 12 month dividend, based on last quarterly dividend declared.
(5)Indicated 12 month dividend as a percent of trailing 12 month estimated core earnings.
(6)ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing 12 month common earnings and average common equity and total asset balances.
(7)Excludes from averages and medians those companies that are subject of acutal or rumored acquisition activities or unusual operating characteristics.

 

Source: Corporate reports, offering circulars, SNL Financial, LC and McAuliffe Financial calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.

 

 
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EXHIBITS

 

 
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LIST OF EXHIBITS

St. James Federal Savings and Loan Association

 

EXHIBIT    
NUMBER   DESCRIPTION
     
I-1   Map of Branch Location
     
III-1   General Characteristics of Publicly Traded Thrifts
     
V-1   Market Value Characteristics of Publicly Traded Thrifts
V-2  

Pro Forma Calculations

V-3   Pro Forma Analysis
     
VI -1   Firm Qualifications Statement

 

 
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EXHIBIT I-1

Map of Branch Locations

 

 
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EXHIBIT III-1

General Characteristics of Public-Traded

Thrifts

 

As of February 13, 2015

 

 
 

 

Exhibit III-1

Key Financial Characteristics

 

         IPO  Total   Total   Total   Equity/            
Company  Ticker  St  Date  Assets   Deposits   Equity   Assets   ROA   Exchange  Branches 
Cullman Bancorp, Inc. (MHC)  CULL  AL  10/9/2009   232,483    144,082    43,175    18.57    0.98   OTCQB   4 
SouthFirst Bancshares, Inc.  SZBI  AL  2/14/1995   92,407    79,901    8,059    8.72    NA   OTC Pink   3 
BofI Holding, Inc.  BOFI  CA  3/14/2005   5,194,721    4,005,395    450,422    8.67    1.56   NASDAQ   1 
Broadway Financial Corporation  BYFC  CA  1/9/1996   337,993    217,092    27,442    8.12    0.53   NASDAQ   3 
First ULB Corp.  FUBP  CA      352,374    307,925    31,308    8.88    NA   OTCQX   9 
Malaga Financial Corporation  MLGF  CA      947,000    709,000    104,225    11.01    1.22   OTCQB   5 
Provident Financial Holdings, Inc.  PROV  CA  6/28/1996   1,112,390    905,512    144,350    12.98    0.74   NASDAQ   15 
Simplicity Bancorp, Inc.  SMPL  CA  11/19/2010   863,351    656,542    137,541    15.93    0.61   NASDAQ   8 
First Connecticut Bancorp, Inc.  FBNK  CT  6/30/2011   2,484,352    1,733,041    233,555    9.40    0.41   NASDAQ   25 
Naugatuck Valley Financial Corporation  NVSL  CT  6/30/2011   489,125    376,911    59,433    12.15    -0.42   NASDAQ   10 
People's United Financial, Inc.  PBCT  CT  4/16/2007   35,997,100    26,138,200    4,633,100    12.87    0.75   NASDAQ   406 
PSB Holdings, Inc. (MHC)  PSBH  CT  10/5/2004   471,918    348,937    51,870    10.99    0.23   NASDAQ   8 
SI Financial Group, Inc.  SIFI  CT  1/13/2011   1,350,533    1,010,713    157,739    11.68    0.33   NASDAQ   26 
United Financial Bancorp, Inc.  UBNK  CT  3/4/2011   5,476,809    4,035,311    602,408    11.00    0.16   NASDAQ   58 
WSFS Financial Corporation  WSFS  DE  11/26/1986   4,853,320    3,649,235    489,051    10.08    1.17   NASDAQ   46 
Atlantic Coast Financial Corporation  ACFC  FL  2/4/2011   706,498    440,780    72,336    10.24    0.19   NASDAQ   12 
EverBank Financial Corp  EVER  FL  5/2/2012   21,617,788    15,508,697    1,747,594    8.08    0.77   NYSE   12 
Sunshine Bancorp, Inc.  SBCP  FL  7/15/2014   222,852    155,689    63,704    28.59    NA   NASDAQ   5 
Sunshine Financial, Inc.  SSNF  FL  4/6/2011   149,569    125,067    23,468    15.69    0.00   OTCQB   6 
Charter Financial Corporation  CHFN  GA  4/9/2013   979,777    701,475    213,186    21.76    0.58   NASDAQ   17 
Heritage Financial Group, Inc.  HBOS  GA  11/30/2010   1,705,614    1,322,109    160,017    9.38    0.50   NASDAQ   37 
Territorial Bancorp Inc.  TBNK  HI  7/13/2009   1,691,897    1,359,679    216,378    12.79    0.85   NASDAQ   29 
Webster City Federal Bancorp (MHC)  WCFB  IA  8/15/1994   113,693    97,251    15,682    13.79    NA   OTCQB   2 
AJS Bancorp, Inc.  AJSB  IL  10/10/2013   216,309    163,009    34,852    16.11    1.03   OTCQB   3 
Allied First Bancorp, Inc.  AFBA  IL  12/31/2001   119,986    109,053    1,939    1.62    NA   OTC Pink   1 
BankFinancial Corporation  BFIN  IL  6/24/2005   1,465,410    1,211,713    216,121    14.75    2.83   NASDAQ   20 
Ben Franklin Financial, Inc.  BFFID  IL  1/23/2015   92,094    81,976    9,100    9.88    -1.34   OTC Pink   2 
First BancTrust Corporation  FIRT  IL  4/19/2001   429,318    344,184    39,593    9.22    0.76   OTCQX   7 
Great American Bancorp, Inc.  GTPS  IL  6/30/1995   176,704    151,958    16,457    9.31    0.42   OTCQB   2 
Harvard Illinois Bancorp, Inc.  HARI  IL  4/9/2010   169,347    134,626    15,600    9.21    -2.74   OTCQB   3 
IF Bancorp, Inc.  IROQ  IL  7/8/2011   549,833    405,393    83,721    15.23    0.62   NASDAQ   6 
Jacksonville Bancorp, Inc.  JXSB  IL  7/15/2010   311,900    245,900    45,000    14.43    0.95   NASDAQ   6 
Midland Capital Holdings Corporation  MCPH  IL  6/30/1993   120,197    107,178    12,208    10.16    -0.18   OTC Pink   4 
Mutual Federal Bancorp, Inc. (MHC)  MFDB  IL  4/6/2006   80,541    65,902    14,862    18.45    NA   OTCQB   1 
Ottawa Savings Bancorp, Inc. (MHC)  OTTW  IL  7/15/2005   160,769    135,111    22,402    13.93    0.57   OTCQB   3 
Park Bancorp, Inc.  PFED  IL  8/12/1996   163,670    127,375    5,947    3.63    -1.04   OTCQB   4 
Royal Financial, Inc.  RYFL  IL  1/21/2005   128,043    85,366    25,866    20.20    0.49   OTCQX   3 

 

 
 

 

  

Exhibit III-1

Key Financial Characteristics

         IPO  Total   Total   Total   Equity/            
Company  Ticker  St  Date  Assets   Deposits   Equity   Assets   ROA   Exchange  Branches 
Sugar Creek Financial Corp.  SUGR  IL  4/9/2014   91,411    72,586    13,156    14.39    0.35   OTCQB   2 
DSA Financial Corporation  DSFN  IN  7/30/2004   119,697    90,037    18,260    15.26    0.83   OTC Pink   2 
FFW Corporation  FFWC  IN  4/5/1993   341,177    288,845    34,504    10.11    1.27   OTC Pink   5 
Fidelity Federal Bancorp  FDLB  IN  8/31/1987   195,651    130,202    22,349    11.42    NA   OTCQB   9 
First Capital, Inc.  FCAP  IN  1/4/1999   472,761    412,636    NA    NA    1.23   NASDAQ   12 
La Porte Bancorp, Inc.  LPSB  IN  10/5/2012   518,616    340,768    82,388    15.89    0.86   NASDAQ   7 
Mid-Southern Savings Bank, FSB (MHC)  MSVB  IN  4/9/1998   192,991    171,637    20,567    10.66    -0.23   OTCQB   4 
NorthWest Indiana Bancorp  NWIN  IN      775,044    633,946    76,165    9.83    0.98   OTCQB   14 
Peoples Bancorp, Inc.  PBNI  IN  7/7/1987   486,555    368,702    61,325    12.60    0.74   OTC Pink   16 
Third Century Bancorp  TDCB  IN  6/30/2004   123,938    93,395    15,539    12.54    0.19   OTCQB   5 
United Community Bancorp  UCBA  IN  1/10/2013   508,938    420,552    70,788    13.91    0.40   NASDAQ   8 
West End Indiana Bancshares, Inc.  WEIN  IN  1/11/2012   257,693    201,711    30,611    11.88    0.47   OTCQB   5 
Capitol Federal Financial, Inc.  CFFN  KS  12/22/2010   9,056,356    4,705,012    1,465,929    16.19    0.81   NASDAQ   47 
First Independence Corporation  FFSL  KS  10/8/1993   135,958    91,741    13,881    10.21    0.42   OTC Pink   5 
Kentucky First Federal Bancorp (MHC)  KFFB  KY  3/3/2005   295,740    211,716    67,217    22.73    0.63   NASDAQ   7 
Poage Bankshares, Inc.  PBSK  KY  9/13/2011   411,774    318,190    66,807    16.22    0.22   NASDAQ   8 
Century Next Financial Corporation  CTUY  LA  10/1/2010   169,697    135,812    21,618    12.74    0.80   OTCQB   2 
FPB Financial Corp.  FPBF  LA  7/1/1999   226,672    176,887    23,291    10.28    0.95   OTCQB   5 
Hibernia Bancorp, Inc.  HIBE  LA  1/28/2009   103,176    78,820    21,756    21.09    0.10   OTCQB   3 
Home Bancorp, Inc.  HBCP  LA  10/3/2008   1,221,415    993,573    154,144    12.62    0.81   NASDAQ   27 
Home Federal Bancorp, Inc. of Louisiana  HFBL  LA  12/22/2010   346,307    252,764    43,292    12.50    0.95   NASDAQ   5 
Louisiana Bancorp, Inc.  LABC  LA  7/10/2007   333,346    193,098    58,397    17.52    0.88   NASDAQ   4 
State Investors Bancorp, Inc.  SIBC  LA  7/7/2011   268,880    157,970    41,527    15.44    0.39   NASDAQ   4 
Blue Hills Bancorp, Inc.  BHBK  MA  7/22/2014   1,728,148    1,212,716    411,606    23.82    -0.01   NASDAQ   10 
BSB Bancorp, Inc.  BLMT  MA  10/5/2011   1,335,717    932,583    135,132    10.12    0.31   NASDAQ   6 
Chicopee Bancorp, Inc.  CBNK  MA  7/20/2006   639,222    483,558    88,134    13.79    -0.10   NASDAQ   9 
Georgetown Bancorp, Inc.  GTWN  MA  7/12/2012   271,020    182,354    30,712    11.33    0.55   NASDAQ   3 
Hampden Bancorp, Inc.  HBNK  MA  1/17/2007   711,101    488,892    85,722    12.05    0.51   NASDAQ   10 
Hingham Institution for Savings  HIFS  MA  12/20/1988   1,552,205    1,089,217    121,515    7.83    1.52   NASDAQ   13 
Meetinghouse Bancorp, Inc.  MTGB  MA  11/20/2012   109,163    87,483    10,450    9.57    -0.15   OTC Pink   2 
Melrose Bancorp, Inc.  MELR  MA  10/22/2014   212,698    189,965    21,628    10.17    NA   NASDAQ   1 
Meridian Bancorp, Inc.  EBSB  MA  7/29/2014   3,278,526    2,503,935    577,710    17.62    0.75   NASDAQ   27 
Peoples Federal Bancshares, Inc.  PEOP  MA  7/7/2010   597,020    430,213    104,466    17.50    0.17   NASDAQ   8 
Pilgrim Bancshares, Inc.  PLRM  MA  10/13/2014   194,530    180,194    13,056    6.71    NA   OTC Pink   3 
Wellesley Bancorp, Inc.  WEBK  MA  1/26/2012   535,115    422,245    49,346    9.22    0.36   NASDAQ   4 
Westfield Financial, Inc.  WFD  MA  1/4/2007   1,320,096    834,218    142,543    10.80    0.48   NASDAQ   14 
American Bank Holdings, Inc.  ABKH  MD      456,676    318,223    45,941    10.06    NA   OTCQB   5 

 

 
 

  

Exhibit III-1

Key Financial Characteristics

         IPO  Total   Total   Total   Equity/            
Company  Ticker  St  Date  Assets   Deposits   Equity   Assets   ROA   Exchange  Branches 
BV Financial, Inc. (MHC)  BVFL  MD  1/14/2005   173,899    146,548    20,528    11.80    0.45   OTC Pink   5 
Colombo Bank  IFSB  MD  6/6/1985   199,575    143,463    20,421    10.23    -1.72   OTCQB   5 
Fraternity Community Bancorp, Inc.  FRTR  MD  4/1/2011   162,812    113,880    27,215    16.72    -0.16   OTCQB   3 
Hamilton Bancorp, Inc.  HBK  MD  10/10/2012   288,655    223,841    60,405    20.93    -0.25   NASDAQ   5 
MB Bancorp, Inc.  MBCQ  MD  12/30/2014   136,116    100,473    17,348    12.75    NA   OTC Pink   3 
Severn Bancorp, Inc.  SVBI  MD      776,681    543,814    83,810    10.79    0.37   NASDAQ   4 
Auburn Bancorp, Inc. (MHC)  ABBB  ME  8/18/2008   73,041    51,329    5,760    7.89    -0.49   OTC Pink   2 
Edgewater Bancorp, Inc.  EGDW  MI  1/17/2014   116,958    91,838    13,466    11.51    -0.88   OTCQB   5 
First Federal of Northern Michigan Bancorp, Inc.  FFNM  MI  4/4/2005   311,923    258,506    29,973    9.61    0.77   NASDAQ   9 
Flagstar Bancorp, Inc.  FBC  MI  4/30/1997   9,839,851    7,068,606    1,372,821    13.95    -0.70   NYSE   107 
Sturgis Bancorp, Inc.  STBI  MI  11/10/1988   312,455    234,296    30,350    9.71    NA   OTCQX   11 
Wolverine Bancorp, Inc.  WBKC  MI  1/20/2011   338,671    220,510    61,461    18.15    0.55   NASDAQ   4 
HMN Financial, Inc.  HMNF  MN  6/30/1994   577,426    496,750    76,013    13.16    1.21   NASDAQ   11 
Redwood Financial, Inc.  REDW  MN  7/10/1995   227,713    192,551    25,365    11.14    NA   OTC Pink   8 
CCSB Financial Corp.  CCFC  MO  1/9/2003   87,114    72,889    10,414    11.95    0.22   OTC Pink   3 
Farmers & Merchants Bancorp, Inc.  FMBA  MO      126,650    94,048    12,352    9.75    NA   Grey Mkt   5 
Liberty Bancorp, Inc.  LBCP  MO  7/24/2006   468,755    384,772    65,498    13.97    0.85   OTC Pink   12 
NASB Financial, Inc.  NASB  MO  9/27/1985   1,168,083    773,762    199,892    17.11    1.42   OTCQX   9 
Pulaski Financial Corp.  PULB  MO  12/3/1998   1,426,456    1,098,333    114,512    8.03    0.89   NASDAQ   13 
Quarry City Savings and Loan Association  QRRY  MO  7/26/2013   46,757    37,660    7,919    16.94    0.52   OTCQB   1 
ASB Bancorp, Inc.  ASBB  NC  10/12/2011   760,050    603,379    94,397    12.42    0.33   NASDAQ   13 
Entegra Financial Corp.  ENFC  NC  10/1/2014   903,648    703,117    107,319    11.88    0.71   NASDAQ   12 
KS Bancorp, Inc.  KSBI  NC  12/30/1993   318,451    248,915    21,768    6.84    0.41   OTCQB   10 
LifeStore Financial Group (MHC)  LSFG  NC  10/7/1996   254,961    175,741    17,906    7.02    0.34   OTC Pink   5 
Little Bank, Inc.  LTLB  NC      339,169    277,432    32,534    9.59    0.88   OTCQB   7 
Wake Forest Bancshares, Inc. (MHC)  WAKE  NC  4/3/1996   112,533    88,697    22,354    19.86    0.78   OTC Pink   1 
Equitable Financial Corp. (MHC)  EQFC  NE  11/9/2005   181,939    149,979    19,692    10.82    NA   OTC Pink   6 
Madison County Financial, Inc.  MCBK  NE  10/4/2012   301,929    210,307    61,807    20.47    1.01   NASDAQ   5 
Guaranty Bancorp, Inc.  GUAA  NH      393,898    300,754    39,470    10.02    0.77   OTCQB   10 
New Hampshire Thrift Bancshares, Inc.  NHTB  NH  5/27/1986   1,503,786    1,152,714    139,836    9.30    0.68   NASDAQ   36 
Cape Bancorp, Inc.  CBNJ  NJ  2/1/2008   1,079,894    797,056    140,878    13.05    0.62   NASDAQ   15 
Clifton Bancorp Inc.  CSBK  NJ  4/2/2014   1,211,527    731,070    357,693    29.52    0.54   NASDAQ   12 
Colonial Financial Services, Inc.  COBK  NJ  7/13/2010   552,709    477,861    62,811    11.36    0.18   NASDAQ   9 
Delanco Bancorp, Inc.  DLNO  NJ  10/18/2013   126,720    109,053    13,641    10.76    -0.73   OTC Pink   2 
Hudson City Bancorp, Inc.  HCBK  NJ  6/7/2005   36,569,082    19,376,544    4,781,410    13.08    0.42   NASDAQ   136 
Investors Bancorp, Inc.  ISBC  NJ  5/8/2014   18,773,639    12,172,326    3,577,855    19.06    0.76   NASDAQ   136 
Kearny Financial Corp. (MHC)  KRNY  NJ  2/24/2005   3,547,869    2,464,845    493,234    13.90    0.28   NASDAQ   42 

 

 
 

  

Exhibit III-1

Key Financial Characteristics

         IPO  Total   Total   Total   Equity/            
Company  Ticker  St  Date  Assets   Deposits   Equity   Assets   ROA   Exchange  Branches 
Lincoln Park Bancorp (MHC)  LPBC  NJ  12/20/2004   224,925    111,500    17,100    7.60    0.48   OTCQB   2 
Magyar Bancorp, Inc. (MHC)  MGYR  NJ  1/24/2006   524,545    445,842    46,184    8.80    0.12   NASDAQ   6 
MSB Financial Corp. (MHC)  MSBF  NJ  1/5/2007   345,491    269,263    41,116    11.90    0.28   NASDAQ   5 
Northfield Bancorp, Inc.  NFBK  NJ  1/25/2013   3,020,869    1,620,665    593,928    19.66    0.73   NASDAQ   30 
Ocean Shore Holding Co.  OSHC  NJ  12/21/2009   1,024,754    787,078    105,811    10.33    0.61   NASDAQ   11 
OceanFirst Financial Corp.  OCFC  NJ  7/3/1996   2,356,714    1,720,135    218,259    9.26    0.86   NASDAQ   24 
Oritani Financial Corp.  ORIT  NJ  6/24/2010   3,250,934    1,792,867    507,713    15.62    1.31   NASDAQ   26 
Provident Financial Services, Inc.  PFS  NJ  1/16/2003   8,523,377    5,792,523    1,144,099    13.42    0.92   NYSE   90 
Wawel Bank (MHC)  WAWL  NJ  4/1/2004   76,513    63,505    12,057    15.76    -1.56   OTCQB   2 
Alamogordo Financial Corp. (MHC)  ALMG  NM  5/16/2000   253,968    204,665    30,570    12.04    0.99   OTCQB   4 
Astoria Financial Corporation  AF  NY  11/18/1993   15,640,021    9,504,909    1,580,070    10.10    0.61   NYSE   87 
Carver Bancorp, Inc.  CARV  NY  10/25/1994   644,115    520,410    53,131    8.25    -0.27   NASDAQ   10 
CMS Bancorp, Inc.  CMSB  NY  4/4/2007   273,344    226,782    23,876    8.73    0.25   NASDAQ   6 
Dime Community Bancshares, Inc.  DCOM  NY  6/26/1996   4,497,107    2,659,792    459,725    10.22    1.03   NASDAQ   25 
FSB Community Bankshares, Inc. (MHC)  FSBC  NY  8/15/2007   245,960    175,307    21,204    8.62    0.27   OTCQB   5 
Gouverneur Bancorp, Inc. (MHC)  GOVB  NY  3/23/1999   142,190    82,500    28,200    19.83    1.19   OTC Pink   3 
Greene County Bancorp, Inc. (MHC)  GCBC  NY  12/30/1998   712,422    583,181    64,464    9.05    0.97   NASDAQ   14 
Hometown Bancorp, Inc. (MHC)  HTWC  NY  6/29/2007   130,686    116,645    8,591    6.57    -3.12   OTCQB   4 
Lake Shore Bancorp, Inc. (MHC)  LSBK  NY  4/4/2006   487,471    386,939    71,630    14.69    0.65   NASDAQ   11 
New York Community Bancorp, Inc.  NYCB  NY  11/23/1993   48,559,217    28,328,734    5,781,815    11.91    1.01   NYSE   278 
NorthEast Community Bancorp, Inc. (MHC)  NECB  NY  7/6/2006   502,062    364,116    103,567    20.63    0.26   NASDAQ   9 
Oneida Financial Corp.  ONFC  NY  7/7/2010   798,169    689,170    95,833    12.01    0.66   NASDAQ   14 
Pathfinder Bancorp, Inc.  PBHC  NY  10/17/2014   561,024    415,568    69,204    12.34    0.52   NASDAQ   17 
Patriot Federal Bank  PFDB  NY  12/31/2005   122,365    93,840    11,452    9.36    -0.01   OTCQB   3 
Seneca-Cayuga Bancorp, Inc. (MHC)  SCAY  NY  7/11/2006   279,558    198,882    30,549    10.93    0.84   OTCQB   10 
Sunnyside Bancorp, Inc.  SNNY  NY  7/16/2013   94,505    81,391    12,102    12.81    -0.25   OTCQB   1 
TrustCo Bank Corp NY  TRST  NY      4,644,439    4,032,241    393,444    8.47    0.97   NASDAQ   144 
ASB Financial Corp.  ASBN  OH  5/11/1995   246,837    199,995    26,118    10.58    0.50   OTC Pink   7 
Central Federal Corporation  CFBK  OH  12/30/1998   307,630    250,963    34,357    11.17    0.37   NASDAQ   4 
Cheviot Financial Corp.  CHEV  OH  1/18/2012   571,237    451,784    96,182    16.84    0.53   NASDAQ   12 
Community Investors Bancorp, Inc.  CIBN  OH  2/7/1995   131,599    94,419    11,009    8.37    0.42   OTC Pink   5 
First Defiance Financial Corp.  FDEF  OH  10/2/1995   2,178,952    1,760,813    278,954    12.80    1.10   NASDAQ   33 
First Niles Financial, Inc.  FNFI  OH  10/27/1998   97,154    60,354    11,596    11.94    0.22   OTCQB   1 
Greenville Federal Financial Corporation (MHC)  GVFF  OH  1/5/2006   149,547    101,063    19,890    13.30    0.58   OTCQB   2 
Home City Financial Corporation  HCFL  OH  12/30/1996   151,552    106,825    15,755    10.40    0.87   OTCQX   2 
Home Loan Financial Corporation  HLFN  OH  3/26/1998   178,355    131,305    23,147    12.98    1.68   OTC Pink   4 
MW Bancorp, Inc.  MWBC  OH  1/30/2015   90,373    61,547    8,811    9.75    NA   OTC Pink   1 

 

 
 

  

Exhibit III-1

Key Financial Characteristics

         IPO  Total   Total   Total   Equity/            
Company  Ticker  St  Date  Assets   Deposits   Equity   Assets   ROA   Exchange  Branches 
Peoples-Sidney Financial Corporation  PPSF  OH  4/28/1997   110,781    93,804    14,883    13.43    -0.06   OTC Pink   5 
Perpetual Federal Savings Bank  PFOH  OH  4/19/1991   349,143    277,921    61,883    17.72    0.80   OTC Pink   1 
TFS Financial Corporation (MHC)  TFSL  OH  4/23/2007   12,067,843    8,539,214    1,812,693    15.02    0.56   NASDAQ   38 
United Community Financial Corp.  UCFC  OH  7/9/1998   1,833,550    1,347,836    240,135    13.10    2.82   NASDAQ   32 
Versailles Financial Corporation  VERF  OH  1/11/2010   52,513    33,697    11,503    21.91    0.19   OTC Pink   1 
Wayne Savings Bancshares, Inc.  WAYN  OH  1/9/2003   417,519    348,922    40,002    9.58    0.64   NASDAQ   12 
Alliance Bancorp, Inc. of Pennsylvania  ALLB  PA  1/18/2011   423,472    348,708    65,650    15.50    0.46   NASDAQ   8 
Beneficial Bancorp, Inc.  BNCL  PA  1/13/2015   4,359,892    3,443,174    611,650    14.03    0.37   NASDAQ   60 
ESB Financial Corporation  ESBF  PA  6/13/1990   1,938,923    1,267,432    213,623    11.02    0.94   NASDAQ   23 
ESSA Bancorp, Inc.  ESSA  PA  4/4/2007   1,567,754    1,106,454    169,486    10.81    0.60   NASDAQ   28 
Eureka Financial Corporation  EKFC  PA  3/1/2011   154,451    129,437    23,049    14.92    1.03   OTC Pink   2 
Fox Chase Bancorp, Inc.  FXCB  PA  6/29/2010   1,094,616    711,909    175,911    16.07    0.76   NASDAQ   10 
Harleysville Savings Financial Corporation  HARL  PA  8/4/1987   773,588    495,572    62,640    8.10    0.61   OTCQX   9 
Malvern Bancorp, Inc.  MLVF  PA  10/12/2012   603,170    440,625    77,885    12.91    0.10   NASDAQ   8 
Northwest Bancshares, Inc.  NWBI  PA  12/18/2009   7,775,033    5,632,542    1,062,647    13.67    0.79   NASDAQ   165 
Polonia Bancorp, Inc.  PBCP  PA  11/13/2012   297,885    195,682    38,815    13.03    0.00   NASDAQ   5 
Prudential Bancorp, Inc.  PBIP  PA  10/10/2013   527,082    391,442    128,131    24.31    0.37   NASDAQ   8 
Quaint Oak Bancorp, Inc.  QNTO  PA  7/5/2007   155,643    124,405    17,575    11.29    0.88   OTCQX   2 
Standard Financial Corp.  STND  PA  10/7/2010   446,731    309,561    74,116    16.59    0.75   OTCQX   11 
United-American Savings Bank  UASB  PA  8/6/2010   90,084    75,594    7,336    8.14    0.69   OTCQB   1 
William Penn Bancorp, Inc. (MHC)  WMPN  PA  4/16/2008   315,265    175,501    60,023    19.04    0.91   OTC Pink   3 
WVS Financial Corp.  WVFC  PA  11/29/1993   294,689    141,537    31,829    10.80    0.33   NASDAQ   6 
Coastway Bancorp, Inc.  CWAY  RI  1/15/2014   451,480    344,102    70,394    15.59    -0.29   NASDAQ   11 
First Federal of South Carolina, FSB (MHC)  FSGB  SC  11/14/1994   72,829    66,143    4,938    6.78    0.07   OTCQB   3 
Oconee Federal Financial Corp. (MHC)  OFED  SC  1/14/2011   357,096    277,948    77,431    21.68    1.05   NASDAQ   7 
HF Financial Corp.  HFFC  SD  4/8/1992   1,263,013    946,787    101,862    8.07    0.35   NASDAQ   27 
Meta Financial Group, Inc.  CASH  SD  9/20/1993   2,108,063    1,788,879    183,683    8.71    0.76   NASDAQ   12 
Athens Bancshares Corporation  AFCB  TN  1/7/2010   302,404    248,572    42,680    14.11    0.90   NASDAQ   7 
SFB Bancorp, Inc.  SFBK  TN  5/30/1997   56,951    42,841    14,094    24.75    NA   OTCQB   2 
United Tennessee Bankshares, Inc.  UNTN  TN  1/5/1998   191,692    169,518    19,391    10.12    0.79   OTCQB   3 
BancAffiliated, Inc.  BAFI  TX  6/1/2001   437,391    309,954    37,626    8.60    1.01   OTC Pink   4 
Anchor Bancorp  ANCB  WA  1/26/2011   377,454    298,772    62,702    16.61    2.47   NASDAQ   11 
First Financial Northwest, Inc.  FFNW  WA  10/10/2007   936,997    614,127    181,412    19.36    1.17   NASDAQ   1 
First Northwest Bancorp  FNWB  WA  1/30/2015   924,151    740,824    83,009    8.98    0.35   NASDAQ   9 
FS Bancorp, Inc.  FSBW  WA  7/10/2012   509,754    420,444    65,836    12.92    1.01   NASDAQ   8 
HomeStreet, Inc.  HMST  WA  2/10/2012   3,535,090    2,445,430    302,238    8.55    0.69   NASDAQ   34 
Riverview Bancorp, Inc.  RVSB  WA  10/1/1997   828,435    689,330    102,430    12.36    2.39   NASDAQ   17 

 

 
 

  

Exhibit III-1

Key Financial Characteristics

         IPO  Total   Total   Total   Equity/            
Company  Ticker  St  Date  Assets   Deposits   Equity   Assets   ROA   Exchange  Branches 
Timberland Bancorp, Inc.  TSBK  WA  1/13/1998   749,917    617,986    84,267    11.24    0.81   NASDAQ   22 
Anchor BanCorp Wisconsin Inc.  ABCW  WI  7/16/1992   2,106,520    1,858,807    214,709    10.19    0.62   NASDAQ   53 
Bank Mutual Corporation  BKMU  WI  10/30/2003   2,328,446    1,718,756    284,491    12.22    0.63   NASDAQ   77 
Guaranty Financial Corp. (MHC)  GFCJ  WI  6/21/1993   1,096,748    1,040,489    NA    NA    NA   OTC Pink   153 
Home Bancorp Wisconsin, Inc.  HWIS  WI  4/24/2014   119,432    97,685    12,766    10.69    -1.03   OTC Pink   4 
Waterstone Financial, Inc.  WSBF  WI  1/23/2014   1,799,325    875,151    448,513    24.93    0.70   NASDAQ   11 
Westbury Bancorp, Inc.  WBB  WI  4/10/2013   594,614    472,688    86,526    14.55    -0.19   NASDAQ   9 

 

 
 

  

EXHIBIT V-1

Market Value Characteristics of Public-Traded

Thrifts

 

As of February 13, 2015

 

 
 

  

Exhibit V-1

Selected Financial and Pricing Characteristics

 

                 Core   Price   Price   Price   Div.   Market   Qtrly   YTD       NPA   Equity   Int.   Effic.   Net Oper.         
Company  Ticker  St  Price   P/E   P/E   BV   Tang. BV   Assets   Yield   Value   Chng   Chng   Assets   Assets   Assets   Margin   Ratio   Exp.   ROA   ROE 
Cullman Bancorp, Inc. (MHC)  CULL  AL   18.00    NA    NA    106.9    106.9    19.86    1.39    46.2    -10.00    -10.00    232,483    NA    18.57    NA    64.66    2.66    0.98    5.33 
SouthFirst Bancshares, Inc.  SZBI  AL   4.15    NA    NA    56.4    NA    3.25    0.00    2.9    6.41    6.41    92,407    NA    8.72    NA    NA    NA    NA    NA 
BofI Holding, Inc.  BOFI  CA   91.39    20.1    18.3    308.3    308.3    26.45    NA    1,377.8    17.45    17.45    5,194,721    0.70    8.67    3.93    34.40    1.53    1.56    18.31 
Broadway Financial Corporation  BYFC  CA   1.28    14.2    8.0    94.4    94.4    7.67    0.00    37.2    -2.29    -2.29    337,993    8.13    8.12    3.59    103.43    3.94    0.53    6.76 
First ULB Corp.  FUBP  CA   15.15    NA    NM    80.6    79.9    7.16    NA    21.5    0.00    0.00    352,374    2.40    8.88    NA    NA    NA    NA    NA 
Malaga Financial Corporation  MLGF  CA   21.50    11.6    11.4    124.4    124.4    13.69    3.72    129.6    -1.15    -1.15    947,000    NA    11.01    3.30    NA    1.18    1.22    11.07 
Provident Financial Holdings, Inc.  PROV  CA   15.85    18.4    15.9    98.8    98.8    12.82    2.78    142.6    4.76    4.76    1,112,390    1.38    12.98    2.86    82.29    4.88    0.74    5.57 
Simplicity Bancorp, Inc.  SMPL  CA   17.70    26.4    29.0    94.7    97.4    15.16    2.03    131.0    3.21    3.21    863,207    1.79    16.01    3.08    75.55    2.72    0.56    3.52 
First Connecticut Bancorp, Inc.  FBNK  CT   15.20    24.5    18.1    104.3    104.3    9.81    1.32    243.6    -6.86    -6.86    2,484,352    NA    9.40    2.90    79.46    2.51    0.41    3.98 
Naugatuck Valley Financial Corporation  NVSL  CT   9.14    NM    39.3    107.7    107.7    13.08    0.00    64.0    6.78    6.78    489,125    1.65    12.15    3.45    105.21    4.29    -0.42    -3.54 
People's United Financial, Inc.  PBCT  CT   14.95    17.8    16.4    99.3    181.8    12.78    4.41    4,601.6    -1.52    -1.52    35,997,100    NA    12.87    3.09    64.91    2.49    0.75    5.44 
PSB Holdings, Inc. (MHC)  PSBH  CT   7.62    47.6    74.5    96.2    111.0    10.46    1.57    49.8    -2.06    -2.06    476,321    NA    10.88    2.29    85.46    2.39    0.20    1.84 
SI Financial Group, Inc.  SIFI  CT   11.32    31.4    NA    91.7    104.0    10.71    1.41    144.7    -0.09    -0.09    1,350,533    NA    11.68    3.11    82.71    3.07    0.33    2.82 
United Financial Bancorp, Inc.  UBNK  CT   12.78    NM    13.3    103.3    127.5    NA    3.13    652.7    -11.00    -11.00    5,476,809    NA    11.00    3.54    64.33    2.46    0.16    1.28 
WSFS Financial Corporation  WSFS  DE   79.54    13.8    14.4    152.9    173.3    15.41    0.75    747.9    3.45    3.45    4,853,320    1.08    10.08    3.68    62.88    3.03    1.17    12.22 
Atlantic Coast Financial Corporation  ACFC  FL   3.95    43.9    40.2    86.9    86.9    NA    0.00    61.3    -0.50    -0.50    706,498    NA    10.24    2.58    88.94    3.01    0.19    1.89 
EverBank Financial Corp  EVER  FL   18.26    16.6    NA    141.4    146.0    10.52    0.88    2,258.4    -4.20    -4.20    21,617,788    0.52    8.08    3.14    70.60    3.31    0.77    8.82 
Sunshine Bancorp, Inc.  SBCP  FL   12.03    NA    NA    82.6    82.6    22.15    NA    50.9    -1.64    -1.64    229,820    NA    26.81    2.91    118.78    3.82    -1.11    -5.90 
Sunshine Financial, Inc.  SSNF  FL   18.05    NM    71.7    89.0    89.6    13.97    NA    20.9    0.28    0.28    149,569    NA    15.69    3.88    98.28    4.97    0.00    -0.03 
Charter Financial Corporation  CHFN  GA   11.55    36.1    28.1    91.9    94.0    20.00    1.73    194.8    0.87    0.87    979,777    1.05    21.76    3.26    81.44    3.45    0.58    2.43 
Heritage Financial Group, Inc.  HBOS  GA   24.84    26.1    18.7    143.4    155.0    13.46    1.13    229.5    -4.09    -4.09    1,705,614    0.88    9.38    4.70    80.11    4.87    0.50    5.46 
Territorial Bancorp Inc.  TBNK  HI   21.70    14.4    15.3    99.5    99.7    12.72    2.95    215.2    0.70    0.70    1,691,897    NA    12.79    3.37    61.47    2.14    0.85    6.56 
Webster City Federal Bancorp (MHC)  WCFB  IA   7.65    NA    NA    155.1    166.7    21.39    0.00    24.3    4.08    4.08    113,693    NA    13.79    NA    NA    NA    NA    NA 
AJS Bancorp, Inc.  AJSB  IL   13.60    13.5    25.5    90.5    90.5    14.58    1.47    30.2    0.00    0.00    216,309    2.63    16.11    2.33    93.51    1.99    1.03    6.79 
Allied First Bancorp, Inc.  AFBA  IL   0.05    NA    NA    NM    NM    NA    NA    0.0    0.00    0.00    119,986    NA    1.62    NA    NA    NA    NA    NA 
BankFinancial Corporation  BFIN  IL   11.75    5.8    1.7    114.7    115.7    16.92    1.36    247.9    -0.93    -0.93    1,465,410    NA    14.75    3.41    80.09    3.10    2.83    22.58 
Ben Franklin Financial, Inc.  BFFID  IL   10.40    NM    NM    79.4    79.4    7.84    NA    7.2    5.84    5.84    92,094    6.05    9.88    3.16    122.65    4.06    -1.34    -13.01 
First BancTrust Corporation  FIRT  IL   16.15    NA    NA    86.3    87.7    NA    0.99    34.2    -0.31    -0.31    433,751    NA    9.35    NA    NA    NA    NA    NA 
Great American Bancorp, Inc.  GTPS  IL   26.00    16.7    21.7    74.3    76.5    6.92    2.15    12.2    16.85    16.85    176,704    NA    9.31    3.06    87.27    4.05    0.42    4.45 
Harvard Illinois Bancorp, Inc.  HARI  IL   10.50    NA    NA    NA    NA    NA    NA    8.8    -26.06    -26.06    NA    NA    NA    NA    NA    NA    NA    -58.59 
IF Bancorp, Inc.  IROQ  IL   16.70    19.6    20.8    86.6    86.6    13.18    0.60    72.5    -1.24    -1.24    549,833    1.10    15.23    2.93    68.17    2.34    0.62    4.18 
Jacksonville Bancorp, Inc.  JXSB  IL   23.00    13.9    17.9    91.9    97.9    13.26    1.39    41.4    0.00    0.00    311,900    NA    14.43    3.61    73.20    3.28    0.95    6.81 
Midland Capital Holdings Corporation  MCPH  IL   11.82    NM    NM    36.1    36.1    3.66    1.35    4.4    -0.25    -0.25    120,197    NA    10.16    2.86    102.76    3.08    -0.18    -1.77 
Mutual Federal Bancorp, Inc. (MHC)  MFDB  IL   2.55    NA    NA    56.5    NA    10.42    0.00    8.4    13.33    13.33    80,541    NA    18.45    NA    NA    NA    NA    NA 
Ottawa Savings Bancorp, Inc. (MHC)  OTTW  IL   10.00    22.2    24.4    94.5    94.5    13.17    0.00    28.9    0.00    0.00    160,769    4.69    13.93    3.58    62.86    2.34    0.57    4.43 
Park Bancorp, Inc.  PFED  IL   0.49    NM    NM    9.8    9.8    0.36    0.00    0.6    -14.04    -14.04    163,670    6.27    3.63    2.76    142.08    4.10    -1.04    -26.15 
Royal Financial, Inc.  RYFL  IL   8.00    30.8    50.0    77.5    77.5    15.66    NA    20.1    4.58    4.58    128,043    NA    20.20    4.14    83.24    3.36    0.48    2.47 
Sugar Creek Financial Corp.  SUGR  IL   9.90    31.8    30.9    71.0    71.0    10.24    0.00    9.4    4.21    4.21    91,740    2.29    14.43    2.98    84.56    2.69    0.31    2.35 
DSA Financial Corporation  DSFN  IN   10.60    17.7    18.7    95.0    95.0    14.50    4.15    17.4    1.92    1.92    119,697    0.99    15.26    NA    69.18    2.53    0.83    5.54 
FFW Corporation  FFWC  IN   23.00    6.6    9.5    87.6    91.3    7.77    2.35    26.2    6.98    6.98    341,177    NA    10.11    3.49    67.34    2.88    1.27    12.92 
Fidelity Federal Bancorp  FDLB  IN   6.70    NA    NA    64.5    NA    4.03    0.00    7.4    0.00    0.00    195,651    NA    11.42    NA    NA    NA    NA    NA 
First Capital, Inc.  FCAP  IN   24.50    12.1    NA    119.5    132.2    NA    3.43    67.1    0.66    0.66    472,761    1.08    NA    3.99    63.83    3.08    1.23    NA 
La Porte Bancorp, Inc.  LPSB  IN   12.58    15.5    16.4    86.6    96.8    13.76    1.27    71.4    0.72    0.72    518,616    NA    15.89    3.17    71.48    2.42    0.86    5.38 
Mid-Southern Savings Bank, FSB (MHC)  MSVB  IN   9.65    NA    NA    69.5    69.5    NA    0.00    14.2    -3.50    -3.50    192,991    5.83    10.66    3.17    73.65    2.76    -0.23    -2.30 
NorthWest Indiana Bancorp  NWIN  IN   27.50    10.6    11.3    102.7    105.0    10.09    3.64    78.2    3.77    3.77    775,044    1.63    9.83    3.81    68.06    2.78    0.98    10.27 
Peoples Bancorp, Inc.  PBNI  IN   25.75    17.4    NA    97.1    100.9    12.24    3.11    59.5    -0.19    -0.19    486,555    NA    12.60    NA    73.16    2.53    0.74    5.75 
Third Century Bancorp  TDCB  IN   7.75    43.1    22.9    NA    NA    NA    1.55    9.9    1.17    1.17    123,938    1.49    12.54    3.36    92.30    3.49    0.19    1.55 
United Community Bancorp  UCBA  IN   12.16    27.6    NA    79.6    85.0    11.07    1.97    56.4    4.56    4.56    508,938    NA    13.91    2.58    82.03    2.53    0.40    2.88 
West End Indiana Bancshares, Inc.  WEIN  IN   20.30    21.6    15.4    90.7    90.7    10.78    1.18    27.4    -2.40    -2.40    257,693    NA    11.88    4.08    70.08    3.13    0.47    4.07 

 

 
 

  

Exhibit V-1

Selected Financial and Pricing Characteristics

 

                 Core   Price   Price   Price   Div.   Market   Qtrly   YTD       NPA   Equity   Int.   Effic.   Net Oper.         
Company  Ticker  St  Price   P/E   P/E   BV   Tang. BV   Assets   Yield   Value   Chng   Chng   Assets   Assets   Assets   Margin   Ratio   Exp.   ROA   ROE 
Capitol Federal Financial, Inc.  CFFN  KS   12.74    22.0    21.2    122.2    122.2    19.79    2.67    1,791.9    -0.31    -0.31    9,056,356    0.62    16.19    1.94    43.23    0.91    0.81    5.29 
First Independence Corporation  FFSL  KS   14.50    21.0    14.5    87.2    87.2    8.91    0.00    12.1    -17.61    -17.61    135,958    NA    10.21    3.25    86.24    3.46    0.42    4.29 
Kentucky First Federal Bancorp (MHC)  KFFB  KY   8.02    34.9    NA    100.9    128.7    22.38    4.99    67.8    -1.83    -1.83    303,114    NA    22.17    NA    70.50    2.83    0.63    2.84 
Poage Bankshares, Inc.  PBSK  KY   14.95    NM    15.4    86.9    89.9    14.09    1.34    58.0    0.54    0.54    411,774    0.97    16.22    3.92    82.19    3.46    0.22    1.30 
Century Next Financial Corporation  CTUY  LA   18.00    14.3    NA    86.4    86.4    11.00    NA    18.7    0.00    0.00    169,697    NA    12.74    NA    73.04    3.48    0.80    5.91 
FPB Financial Corp.  FPBF  LA   16.10    9.4    8.6    83.4    83.4    8.57    1.74    19.4    0.63    0.63    226,672    1.99    10.28    4.88    74.08    4.05    0.95    9.44 
Hibernia Bancorp, Inc.  HIBE  LA   17.40    NM    NA    76.0    76.0    15.76    NA    16.6    0.00    0.00    105,445    NA    20.75    3.36    91.65    3.04    0.10    0.48 
Home Bancorp, Inc.  HBCP  LA   21.42    15.1    13.4    99.0    104.1    12.49    1.31    152.6    -6.63    -6.63    1,221,415    1.99    12.62    4.66    65.00    3.25    0.81    6.67 
Home Federal Bancorp, Inc. of Louisiana  HFBL  LA   19.45    13.1    11.9    98.4    98.4    12.30    1.44    42.1    -0.41    -0.41    346,307    NA    12.50    3.87    66.78    2.88    0.95    6.90 
Louisiana Bancorp, Inc.  LABC  LA   20.59    19.4    17.2    102.3    102.3    17.92    1.36    59.7    -8.28    -8.28    333,346    NA    17.52    3.23    65.01    2.30    0.88    4.87 
State Investors Bancorp, Inc.  SIBC  LA   21.10    39.8    29.3    115.9    115.9    17.91    NA    48.7    1.83    1.83    271,900    NA    15.46    3.52    75.26    2.57    0.48    3.06 
Blue Hills Bancorp, Inc.  BHBK  MA   12.97    NA    NA    89.7    92.7    21.36    NA    369.2    -4.49    -4.49    1,728,148    0.27    23.82    2.78    80.82    2.52    -0.01    -0.07 
BSB Bancorp, Inc.  BLMT  MA   18.88    38.5    29.5    125.0    125.0    12.01    NA    171.2    1.34    1.34    1,425,550    NA    9.61    2.64    75.91    2.15    0.35    3.24 
Chicopee Bancorp, Inc.  CBNK  MA   16.33    NM    68.0    97.7    97.7    13.46    1.71    86.1    -2.51    -2.51    639,222    1.92    13.79    3.65    77.99    3.15    -0.10    -0.64 
Georgetown Bancorp, Inc.  GTWN  MA   17.55    20.6    17.6    104.4    104.4    11.83    0.97    32.1    6.69    6.69    271,020    NA    11.33    3.79    77.31    3.14    0.55    5.04 
Hampden Bancorp, Inc.  HBNK  MA   21.40    31.9    35.1    138.3    138.3    16.68    1.50    118.9    0.90    0.90    711,101    1.36    12.05    3.11    69.62    2.38    0.51    4.20 
Hingham Institution for Savings  HIFS  MA   87.30    8.4    NA    152.9    152.9    11.97    1.28    185.8    0.33    0.33    1,552,205    NA    7.83    3.23    41.53    1.37    1.52    19.30 
Meetinghouse Bancorp, Inc.  MTGB  MA   12.56    NM    157.0    81.7    81.7    7.82    NA    8.3    -4.85    -4.85    109,163    0.02    9.57    3.08    103.88    3.88    -0.15    -1.08 
Melrose Bancorp, Inc.  MELR  MA   13.99    NA    NA    NA    NA    NA    NA    39.6    5.66    5.66    212,698    NA    10.17    NA    NA    NA    NA    NA 
Meridian Bancorp, Inc.  EBSB  MA   12.34    29.4    35.0    116.9    119.7    20.59    NA    675.1    9.98    9.98    3,278,526    NA    17.62    3.19    66.15    2.26    0.75    5.69 
Peoples Federal Bancshares, Inc.  PEOP  MA   21.62    NM    139.5    129.1    129.1    22.59    0.93    134.9    -4.08    -4.08    597,020    NA    17.50    3.13    80.43    2.58    0.17    1.01 
Pilgrim Bancshares, Inc.  PLRM  MA   11.00    NA    NA    NA    NA    NA    NA    24.7    0.73    0.73    194,530    3.50    6.71    NA    84.10    NA    NA    NA 
Wellesley Bancorp, Inc.  WEBK  MA   18.75    24.4    NA    93.4    93.4    8.62    0.53    46.1    -2.30    -2.30    535,115    NA    9.22    3.37    79.38    2.77    0.36    3.71 
Westfield Financial, Inc.  WFD  MA   7.41    21.8    20.9    97.4    97.4    10.51    1.62    138.8    0.95    0.95    1,320,096    NA    10.80    2.60    72.44    2.01    0.48    4.18 
American Bank Holdings, Inc.  ABKH  MD   11,100.00    NA    NA    43.3    NA    4.36    0.00    19.9    -7.50    -7.50    456,676    NA    10.06    NA    NA    NA    NA    NA 
BV Financial, Inc. (MHC)  BVFL  MD   6.80    21.9    NA    98.1    98.9    11.92    0.00    20.4    6.25    6.25    171,093    NA    12.15    NA    75.13    2.87    0.45    3.94 
Colombo Bank  IFSB  MD   0.39    NA    NM    657.4    657.4    67.27    0.00    134.3    25.81    25.81    199,575    5.03    10.23    4.76    132.35    7.65    -1.72    -17.02 
Fraternity Community Bancorp, Inc.  FRTR  MD   16.00    NM    NM    81.2    81.2    13.57    NA    22.1    1.27    1.27    162,812    3.44    16.72    2.79    102.89    2.90    -0.16    -0.99 
Hamilton Bancorp, Inc.  HBK  MD   12.89    NM    224.4    72.8    76.4    15.24    NA    44.1    -0.85    -0.85    288,655    3.04    20.93    2.84    106.53    3.21    -0.25    -1.24 
MB Bancorp, Inc.  MBCQ  MD   10.80    NA    NA    NA    NA    NA    NA    22.9    2.37    2.37    136,116    7.08    12.75    NA    NA    NA    NA    NA 
Severn Bancorp, Inc.  SVBI  MD   4.45    NM    NA    78.3    78.8    5.97    0.00    44.8    -1.96    -1.96    776,681    5.47    10.79    3.30    86.46    3.07    0.37    3.54 
Auburn Bancorp, Inc. (MHC)  ABBB  ME   8.00    NM    20.1    69.9    69.9    5.51    NA    4.0    0.00    0.00    73,041    3.47    7.89    3.79    89.46    3.47    -0.49    -5.80 
Edgewater Bancorp, Inc.  EGDW  MI   10.10    NA    NM    50.1    50.1    5.77    NA    6.7    -0.49    -0.49    116,958    4.28    11.51    3.29    115.78    4.57    -0.88    -9.40 
First Federal of Northern Michigan Bancorp, Inc.  FFNM  MI   5.45    10.5    8.3    67.8    71.0    6.51    1.47    20.3    -0.73    -0.73    311,923    1.23    9.61    3.46    91.62    3.67    0.77    7.05 
Flagstar Bancorp, Inc.  FBC  MI   14.85    NM    NA    75.6    75.6    8.74    0.00    836.5    -5.59    -5.59    9,839,851    NA    13.95    2.92    90.19    5.54    -0.70    -4.94 
Sturgis Bancorp, Inc.  STBI  MI   10.00    NA    NA    68.7    83.0    NA    1.20    20.7    12.36    12.36    312,455    NA    9.71    NA    NA    NA    NA    NA 
Wolverine Bancorp, Inc.  WBKC  MI   23.75    29.3    17.0    87.8    87.8    15.94    NA    53.9    -0.84    -0.84    338,671    1.68    18.15    3.57    69.01    2.73    0.55    2.84 
HMN Financial, Inc.  HMNF  MN   12.01    9.8    10.0    81.3    81.3    9.46    0.00    53.7    -3.15    -3.15    577,426    NA    13.16    3.48    84.68    3.51    1.21    9.12 
Redwood Financial, Inc.  REDW  MN   29.75    NA    NA    70.1    101.2    6.00    0.00    13.3    0.00    0.00    227,713    NA    11.14    NA    NA    NA    NA    NA 
CCSB Financial Corp.  CCFC  MO   7.35    52.5    91.9    54.7    54.7    6.57    NA    5.7    5.00    5.00    87,263    NA    12.02    3.55    95.69    3.69    0.11    0.97 
Farmers & Merchants Bancorp, Inc.  FMBA  MO   20.00    NA    NA    90.4    90.5    8.82    NA    11.2    0.00    0.00    126,650    NA    9.75    NA    NA    NA    NA    NA 
Liberty Bancorp, Inc.  LBCP  MO   15.50    NA    NA    90.9    97.7    NA    0.97    46.1    0.00    0.00    468,755    4.18    13.97    4.44    63.48    3.06    0.85    6.33 
NASB Financial, Inc.  NASB  MO   28.60    11.7    NA    105.8    107.0    16.36    1.40    212.8    18.18    18.18    1,300,256    NA    15.46    3.78    72.90    5.04    1.58    9.44 
Pulaski Financial Corp.  PULB  MO   11.79    12.4    11.3    120.5    124.8    9.67    3.22    142.2    -4.38    -4.38    1,426,456    3.35    8.03    3.52    65.69    2.68    0.89    10.34 
Quarry City Savings and Loan Association  QRRY  MO   11.90    21.1    12.4    61.3    61.3    10.38    NA    4.9    10.70    10.70    46,757    0.68    16.94    4.07    80.31    3.64    0.52    2.99 
ASB Bancorp, Inc.  ASBB  NC   19.90    33.7    31.2    92.3    92.3    11.46    NA    87.1    -7.44    -7.44    760,050    2.15    12.42    2.82    88.55    3.14    0.33    2.51 
Entegra Financial Corp.  ENFC  NC   15.40    16.9    NA    93.9    93.9    11.16    NA    100.8    7.02    7.02    903,648    NA    11.88    3.33    74.42    2.85    0.71    10.59 
KS Bancorp, Inc.  KSBI  NC   13.00    17.1    10.9    78.2    78.2    5.35    1.85    17.0    18.18    18.18    318,451    NA    6.84    3.42    83.83    3.33    0.41    5.30 
LifeStore Financial Group (MHC)  LSFG  NC   10.80    11.4    NA    60.1    69.1    4.23    0.00    11.0    0.00    0.00    260,076    NA    7.04    3.39    79.64    4.69    0.38    5.44 

 

 
 

  

Exhibit V-1

Selected Financial and Pricing Characteristics

 

                 Core   Price   Price   Price   Div.   Market   Qtrly   YTD       NPA   Equity   Int.   Effic.   Net Oper.         
Company  Ticker  St  Price   P/E   P/E   BV   Tang. BV   Assets   Yield   Value   Chng   Chng   Assets   Assets   Assets   Margin   Ratio   Exp.   ROA   ROE 
Little Bank, Inc.  LTLB  NC   11.88    12.5    NA    112.2    112.2    10.77    1.26    36.5    -6.31    -6.31    339,169    NA    9.59    NA    63.87    2.46    0.88    9.29 
Wake Forest Bancshares, Inc. (MHC)  WAKE  NC   14.85    19.2    18.6    76.4    76.4    15.18    1.62    17.1    -7.19    -7.19    112,533    0.92    19.86    2.76    51.55    1.38    0.78    4.01 
Equitable Financial Corp. (MHC)  EQFC  NE   6.00    NA    NA    97.0    NA    10.50    NA    19.1    6.76    6.76    181,939    NA    10.82    NA    NA    NA    NA    NA 
Madison County Financial, Inc.  MCBK  NE   20.10    19.7    15.8    98.8    100.5    20.22    1.19    61.0    3.93    3.93    301,929    NA    20.47    3.80    57.19    2.52    1.01    4.69 
Guaranty Bancorp, Inc.  GUAA  NH   18.50    6.0    NA    55.4    55.4    4.65    0.00    18.0    0.00    0.00    393,898    0.87    10.02    3.50    81.94    3.25    0.77    7.93 
New Hampshire Thrift Bancshares, Inc.  NHTB  NH   15.43    13.0    10.7    96.7    163.5    8.52    3.37    127.4    -1.22    -1.22    1,503,786    NA    9.30    3.08    74.59    3.17    0.68    6.81 
Cape Bancorp, Inc.  CBNJ  NJ   8.82    14.5    21.2    71.8    85.7    9.37    2.72    101.2    -6.27    -6.27    1,079,894    NA    13.05    3.58    64.19    2.53    0.62    4.80 
Clifton Bancorp Inc.  CSBK  NJ   13.46    51.8    42.1    100.4    100.4    30.49    1.78    365.5    -0.96    -0.96    1,198,171    NA    30.36    2.38    61.47    1.39    0.54    2.09 
Colonial Financial Services, Inc.  COBK  NJ   13.41    49.7    86.9    82.4    82.4    9.37    NA    51.9    0.07    0.07    552,709    3.74    11.36    2.57    82.16    2.37    0.18    1.64 
Delanco Bancorp, Inc.  DLNO  NJ   7.00    NM    NM    48.5    48.5    5.22    NA    6.6    1.16    1.16    126,720    6.17    10.76    3.30    91.42    3.44    -0.73    -6.86 
Hudson City Bancorp, Inc.  HCBK  NJ   9.92    31.0    123.8    109.7    113.3    14.35    1.61    5,246.8    -1.98    -1.98    36,569,082    NA    13.08    1.19    65.01    0.77    0.42    3.28 
Investors Bancorp, Inc.  ISBC  NJ   11.70    30.8    24.7    117.1    121.2    22.31    1.71    4,188.8    4.23    4.23    18,773,639    0.81    19.06    3.23    54.87    1.83    0.76    4.71 
Kearny Financial Corp. (MHC)  KRNY  NJ   13.48    NM    99.0    184.1    236.6    25.60    0.00    908.2    -1.96    -1.96    3,547,869    NA    13.90    2.40    75.83    1.85    0.28    2.01 
Lincoln Park Bancorp (MHC)  LPBC  NJ   7.00    11.5    13.5    73.8    74.0    5.61    0.00    12.6    4.48    4.48    224,925    1.39    7.60    NA    63.19    1.69    0.48    6.31 
Magyar Bancorp, Inc. (MHC)  MGYR  NJ   8.45    NM    78.6    106.4    106.4    9.37    NA    49.1    0.12    0.12    524,545    NA    8.80    3.32    84.38    2.88    0.12    1.37 
MSB Financial Corp. (MHC)  MSBF  NJ   10.25    51.3    51.3    124.9    124.9    14.86    0.00    51.4    0.00    0.00    345,491    5.65    11.90    2.97    80.34    2.40    0.28    2.39 
Northfield Bancorp, Inc.  NFBK  NJ   14.53    35.4    33.3    118.4    121.8    23.28    1.93    703.3    -1.82    -1.82    3,020,869    1.29    19.66    2.97    60.04    1.84    0.73    3.07 
Ocean Shore Holding Co.  OSHC  NJ   14.07    14.4    NA    85.0    91.1    8.78    1.71    90.0    -1.75    -1.75    1,024,754    NA    10.33    3.15    67.72    2.11    0.61    5.90 
OceanFirst Financial Corp.  OCFC  NJ   16.85    14.2    14.2    130.5    130.5    12.08    3.09    284.8    -1.69    -1.69    2,356,714    1.89    9.26    3.28    64.04    2.50    0.86    9.18 
Oritani Financial Corp.  ORIT  NJ   14.48    15.1    15.1    126.8    126.8    19.80    4.83    639.1    -5.97    -5.97    3,250,934    0.67    15.62    3.30    38.31    1.32    1.31    7.81 
Provident Financial Services, Inc.  PFS  NJ   18.64    15.3    13.4    105.7    166.8    14.19    3.43    1,209.8    3.21    3.21    8,523,377    NA    13.42    3.27    58.00    2.01    0.92    6.75 
Wawel Bank (MHC)  WAWL  NJ   3.50    NM    NM    62.3    62.3    9.81    NA    7.5    7.36    7.36    76,513    4.86    15.76    3.66    218.91    5.68    -1.56    -9.70 
Alamogordo Financial Corp. (MHC)  ALMG  NM   16.00    14.4    5.5    87.9    89.3    10.58    0.00    26.9    6.67    6.67    253,968    1.53    12.04    3.71    100.27    5.40    0.99    7.45 
Astoria Financial Corporation  AF  NY   13.18    15.0    15.7    90.8    104.1    8.49    1.21    1,317.2    -1.35    -1.35    15,640,021    NA    10.10    2.30    71.64    1.82    0.61    6.12 
Carver Bancorp, Inc.  CARV  NY   5.68    NM    20.2    215.9    215.9    3.50    0.00    21.0    -9.12    -9.12    644,373    3.07    8.41    3.05    112.16    4.41    -0.11    -1.32 
CMS Bancorp, Inc.  CMSB  NY   13.19    50.7    27.9    109.0    109.0    9.23    NA    24.6    2.41    2.41    267,832    NA    8.98    3.49    83.93    2.95    0.19    2.21 
Dime Community Bancshares, Inc.  DCOM  NY   15.63    12.7    12.5    125.3    142.6    12.81    3.58    576.0    -3.99    -3.99    4,497,107    0.49    10.22    3.03    46.29    1.42    1.03    9.83 
FSB Community Bankshares, Inc. (MHC)  FSBC  NY   9.15    24.1    NA    NA    NA    NA    NA    16.3    -5.18    -5.18    245,960    NA    8.62    2.95    88.39    3.44    0.27    3.22 
Gouverneur Bancorp, Inc. (MHC)  GOVB  NY   13.75    17.6    22.4    108.4    108.4    21.51    2.47    30.6    14.58    14.58    142,190    NA    19.83    NA    63.55    3.02    1.19    6.46 
Greene County Bancorp, Inc. (MHC)  GCBC  NY   29.50    18.8    16.2    193.1    193.1    17.47    2.44    124.6    -1.99    -1.99    712,422    1.11    9.05    3.37    61.15    2.52    0.97    10.83 
Hometown Bancorp, Inc. (MHC)  HTWC  NY   1.20    NM    NM    32.5    34.7    2.14    0.00    2.8    9.09    9.09    130,686    NA    6.57    4.03    126.82    5.87    -3.12    -41.37 
Lake Shore Bancorp, Inc. (MHC)  LSBK  NY   13.50    24.5    NA    111.2    111.2    16.34    2.07    79.7    -0.44    -0.44    487,471    NA    14.69    3.21    76.46    2.63    0.65    4.58 
New York Community Bancorp, Inc.  NYCB  NY   16.37    15.0    14.1    125.3    217.1    14.92    6.11    7,245.2    2.31    2.31    48,559,217    NA    11.91    2.66    43.74    1.22    1.01    8.41 
NorthEast Community Bancorp, Inc. (MHC)  NECB  NY   6.96    69.6    56.5    83.2    84.0    17.16    1.72    86.1    -3.60    -3.60    502,062    4.97    20.63    3.72    88.82    3.48    0.26    1.17 
Oneida Financial Corp.  ONFC  NY   13.15    18.0    19.7    97.4    134.8    NA    3.65    92.3    1.15    1.15    798,169    NA    12.01    2.95    86.95    5.72    0.66    5.44 
Pathfinder Bancorp, Inc.  PBHC  NY   9.87    15.7    NA    77.0    83.8    7.84    1.22    42.9    0.67    0.67    561,024    NA    12.34    3.40    76.45    2.92    0.52    5.89 
Patriot Federal Bank  PFDB  NY   5.80    NA    NM    74.1    75.3    6.94    0.00    8.5    9.43    9.43    122,365    0.98    9.36    3.51    90.42    3.25    -0.01    -0.08 
Seneca-Cayuga Bancorp, Inc. (MHC)  SCAY  NY   10.60    12.0    NA    98.1    99.4    8.89    NA    24.5    4.95    4.95    281,022    NA    10.68    4.22    74.21    3.34    0.74    6.94 
Sunnyside Bancorp, Inc.  SNNY  NY   9.95    NA    NM    65.2    65.2    8.35    NA    7.9    0.40    0.40    94,505    0.45    12.81    2.59    119.09    3.12    -0.25    -1.89 
TrustCo Bank Corp NY  TRST  NY   6.82    14.6    15.5    164.4    164.7    13.93    3.85    646.9    -6.06    -6.06    4,644,439    NA    8.47    3.16    52.55    1.85    0.97    11.54 
ASB Financial Corp.  ASBN  OH   12.81    20.0    20.0    97.1    107.9    10.27    5.62    25.4    -1.44    -1.44    246,837    1.37    10.58    3.49    83.52    3.44    0.50    4.84 
Central Federal Corporation  CFBK  OH   1.31    26.2    32.8    90.2    90.2    7.00    0.00    20.7    7.38    7.38    307,630    2.77    11.17    3.08    97.85    3.39    0.37    3.89 
Cheviot Financial Corp.  CHEV  OH   14.44    30.7    35.9    100.9    115.3    16.98    2.49    97.0    1.62    1.62    571,237    NA    16.84    2.99    72.80    2.28    0.53    3.28 
Community Investors Bancorp, Inc.  CIBN  OH   9.74    14.3    8.4    70.4    70.4    5.89    2.05    7.7    4.17    4.17    131,599    2.84    8.37    3.93    77.16    3.59    0.42    5.03 
First Defiance Financial Corp.  FDEF  OH   31.98    13.4    13.2    105.9    137.3    13.55    2.19    294.5    -6.11    -6.11    2,178,952    2.52    12.80    3.67    64.04    3.05    1.10    8.59 
First Niles Financial, Inc.  FNFI  OH   9.15    45.8    NM    87.1    87.1    10.69    2.19    10.3    -2.66    -2.66    96,437    1.79    12.39    1.91    101.11    1.98    0.23    1.77 
Greenville Federal Financial Corporation (MHC)  GVFF  OH   8.80    20.0    NA    91.7    91.7    12.05    3.18    18.3    1.50    1.50    152,215    NA    13.13    NA    79.42    3.07    0.59    4.60 
Home City Financial Corporation  HCFL  OH   16.75    10.9    10.5    85.4    85.4    8.87    1.91    13.4    3.08    3.08    151,552    NA    10.40    3.64    62.94    2.31    0.87    8.35 
Home Loan Financial Corporation  HLFN  OH   20.00    9.7    10.6    120.7    120.7    15.66    4.40    27.9    2.56    2.56    178,355    NA    12.98    NA    51.60    2.65    1.68    12.74 

 

 
 

  

Exhibit V-1

Selected Financial and Pricing Characteristics

 

                 Core   Price   Price   Price   Div.   Market   Qtrly   YTD       NPA   Equity   Int.   Effic.   Net Oper.         
Company  Ticker  St  Price   P/E   P/E   BV   Tang. BV   Assets   Yield   Value   Chng   Chng   Assets   Assets   Assets   Margin   Ratio   Exp.   ROA   ROE 
MW Bancorp, Inc.  MWBC  OH   12.00    NA    NA    NA    NA    NA    NA    10.5    NA    NA    96,006    NA    9.29    NA    100.71    NA    NA    NA 
Peoples-Sidney Financial Corporation  PPSF  OH   8.00    NM    17.1    66.9    66.9    8.99    4.00    10.0    -4.76    -4.76    110,781    4.16    13.43    3.78    78.08    3.17    -0.06    -0.46 
Perpetual Federal Savings Bank  PFOH  OH   22.00    19.5    11.2    87.8    87.8    15.56    3.45    54.3    4.76    4.76    349,143    3.70    17.72    3.26    29.84    0.99    0.80    4.57 
TFS Financial Corporation (MHC)  TFSL  OH   14.47    65.8    NA    238.8    240.1    35.87    1.94    4,316.6    -2.79    -2.79    12,067,843    2.13    15.02    2.34    57.45    1.50    0.56    3.57 
United Community Financial Corp.  UCFC  OH   5.28    5.3    22.3    108.3    108.3    14.18    0.76    260.0    -1.68    -1.68    1,833,550    NA    13.10    3.10    84.94    3.09    2.82    23.38 
Versailles Financial Corporation  VERF  OH   15.75    68.5    NA    55.5    55.5    12.17    NA    6.9    -6.80    -6.80    52,513    NA    21.91    3.18    89.84    2.76    0.19    0.83 
Wayne Savings Bancshares, Inc.  WAYN  OH   13.85    14.6    NA    97.2    101.5    9.31    2.60    38.9    3.36    3.36    417,519    NA    9.58    3.20    73.18    2.57    0.64    6.62 
Alliance Bancorp, Inc. of Pennsylvania  ALLB  PA   16.50    34.4    22.9    101.2    101.2    15.69    1.45    66.4    -10.38    -10.38    423,472    1.93    15.50    3.60    74.52    2.69    0.46    2.84 
Beneficial Bancorp, Inc.  BNCL  PA   11.54    52.9    44.1    156.0    197.5    NA    NA    954.5    3.45    3.45    4,751,522    0.40    12.86    2.84    80.26    2.57    0.40    2.95 
ESB Financial Corporation     PA   NA    NA    NA    NA    NA    NA    NA    NA    NA    NA    1,938,923    NA    11.02    2.84    59.10    1.66    0.94    9.10 
ESSA Bancorp, Inc.  ESSA  PA   12.50    14.7    12.0    84.4    91.1    9.12    2.24    142.9    4.17    4.17    1,567,754    1.83    10.81    2.97    70.64    2.31    0.60    5.35 
Eureka Financial Corporation  EKFC  PA   19.50    15.0    15.2    103.1    103.1    15.30    2.05    23.6    -2.99    -2.99    154,451    0.49    14.84    4.09    60.45    2.48    1.03    6.80 
Fox Chase Bancorp, Inc.  FXCB  PA   16.31    23.0    21.5    109.4    109.4    17.59    3.43    192.5    -2.16    -2.16    1,094,616    0.90    16.07    3.19    60.83    2.06    0.76    4.63 
Harleysville Savings Financial Corporation  HARL  PA   18.25    14.6    14.3    108.1    108.1    8.75    4.60    67.7    6.10    6.10    773,588    NA    8.10    2.57    64.06    1.75    0.61    7.72 
Malvern Bancorp, Inc.  MLVF  PA   12.30    NM    64.9    103.6    103.6    13.37    0.00    80.7    1.74    1.74    603,170    0.80    12.91    2.70    97.75    2.75    0.10    0.76 
Northwest Bancshares, Inc.  NWBI  PA   11.91    17.8    15.7    106.2    127.6    14.51    4.70    1,128.1    -4.95    -4.95    7,775,033    1.72    13.67    3.47    65.68    2.74    0.79    5.69 
Polonia Bancorp, Inc.  PBCP  PA   10.40    NM    86.7    89.4    89.4    11.65    NA    34.7    -0.48    -0.48    297,885    NA    13.03    2.88    97.91    4.23    0.00    0.02 
Prudential Bancorp, Inc.  PBIP  PA   12.22    61.1    61.1    89.3    89.3    21.72    0.98    113.7    -2.24    -2.24    527,082    1.46    24.31    2.65    81.04    2.24    0.37    1.51 
Quaint Oak Bancorp, Inc.  QNTO  PA   19.75    14.4    12.3    102.2    102.2    11.54    1.22    18.0    1.28    1.28    155,643    NA    11.29    4.18    68.44    3.77    0.88    7.31 
Standard Financial Corp.  STND  PA   21.35    17.1    NA    81.5    92.6    13.52    1.12    60.4    -1.84    -1.84    446,731    NA    16.59    2.95    68.69    2.32    0.75    4.50 
United-American Savings Bank  UASB  PA   20.00    10.3    13.6    84.4    84.4    6.87    1.50    6.2    0.00    0.00    90,084    1.36    8.14    3.45    60.93    2.57    0.69    8.39 
William Penn Bancorp, Inc. (MHC)  WMPN  PA   21.00    26.9    30.9    127.4    127.4    24.25    1.24    76.5    1.94    1.94    315,265    1.81    19.04    3.23    56.28    1.65    0.91    4.94 
WVS Financial Corp.  WVFC  PA   11.02    21.2    21.2    71.0    71.0    7.67    1.45    22.6    2.22    2.22    294,689    0.16    10.80    1.58    70.09    1.20    0.33    3.25 
Coastway Bancorp, Inc.  CWAY  RI   11.02    NA    55.1    77.5    77.5    NA    NA    54.5    -5.16    -5.16    465,826    NA    15.14    3.38    97.52    4.16    -0.22    -1.41 
First Federal of South Carolina, FSB (MHC)  FSGB  SC   1.70    28.7    NM    34.9    35.1    2.36    0.00    1.7    0.00    0.00    72,829    8.63    6.78    3.35    101.58    4.99    0.07    1.24 
Oconee Federal Financial Corp. (MHC)  OFED  SC   20.41    30.9    28.4    153.8    153.8    33.35    1.96    119.8    2.05    2.05    357,096    0.61    21.68    3.37    49.09    1.69    1.05    4.95 
HF Financial Corp.  HFFC  SD   14.82    23.5    14.2    102.6    107.7    8.28    3.04    104.5    6.24    6.24    1,263,013    1.14    8.07    2.94    74.20    2.86    0.35    4.35 
Meta Financial Group, Inc.  CASH  SD   34.34    14.0    11.0    116.1    132.2    10.12    1.51    220.5    -2.00    -2.00    2,108,063    0.10    8.71    2.73    76.32    3.99    0.76    9.28 
Athens Bancshares Corporation  AFCB  TN   24.77    16.3    NA    107.2    107.6    NA    0.81    44.6    -2.48    -2.48    302,404    2.50    14.11    4.28    75.40    4.36    0.90    6.52 
SFB Bancorp, Inc.  SFBK  TN   29.99    NA    NA    82.7    82.7    NA    1.33    11.0    17.61    17.61    56,951    NA    24.75    NA    NA    NA    NA    NA 
United Tennessee Bankshares, Inc.  UNTN  TN   16.00    8.9    7.1    68.9    68.9    6.97    3.13    13.4    5.61    5.61    191,692    0.94    10.12    3.19    57.59    2.04    0.79    8.07 
BancAffiliated, Inc.  BAFI  TX   75.00    NA    NA    168.5    168.5    NA    NA    63.4    0.00    0.00    501,412    NA    8.02    NA    NA    NA    NA    NA 
Anchor Bancorp  ANCB  WA   22.14    5.7    1.6    90.0    90.0    14.96    NA    56.5    8.53    8.53    377,454    3.41    16.61    3.97    93.81    4.32    2.47    17.61 
First Financial Northwest, Inc.  FFNW  WA   12.19    17.2    15.2    101.9    101.9    19.73    1.64    184.9    1.25    1.25    936,997    6.92    19.36    3.77    54.10    2.03    1.17    5.82 
First Northwest Bancorp  FNWB  WA   12.53    NA    NA    NA    NA    NA    NA    164.1    NA    NA    924,151    1.52    8.98    2.89    84.02    2.82    0.35    3.53 
FS Bancorp, Inc.  FSBW  WA   19.36    12.7    9.3    95.1    95.1    12.29    1.24    62.6    6.08    6.08    509,754    0.24    12.92    5.12    74.02    5.30    1.01    7.17 
HomeStreet, Inc.  HMST  WA   17.75    11.9    12.1    87.3    91.6    7.46    0.00    263.7    1.95    1.95    3,535,090    2.89    8.55    3.51    87.85    7.77    0.69    7.69 
Riverview Bancorp, Inc.  RVSB  WA   4.48    5.1    24.8    98.8    131.9    12.16    0.00    100.7    0.00    0.00    828,435    3.15    12.36    3.50    86.34    3.71    2.40    20.40 
Timberland Bancorp, Inc.  TSBK  WA   10.92    13.2    11.6    91.4    98.0    10.27    2.20    77.0    3.02    3.02    749,917    4.32    11.24    3.86    71.85    3.49    0.81    7.34 
Anchor BanCorp Wisconsin Inc.  ABCW  WI   33.49    20.9    NA    140.4    140.4    15.35    NA    319.7    -2.76    -2.76    2,082,379    NA    10.93    3.48    84.62    4.22    0.69    6.89 
Bank Mutual Corporation  BKMU  WI   7.18    23.2    NA    119.1    119.2    14.38    2.23    334.4    4.66    4.66    2,328,446    NA    12.22    3.32    73.11    2.94    0.63    5.13 
Guaranty Financial Corp. (MHC)  GFCJ  WI   3.00    NA    NA    NM    NA    0.57    0.00    5.6    0.00    0.00    1,031,003    NA    2.45    NA    NA    NA    NA    NA 
Home Bancorp Wisconsin, Inc.  HWIS  WI   7.70    NA    NM    54.9    54.9    5.61    NA    6.9    -1.79    -1.79    123,373    NA    10.22    3.21    119.95    4.18    -0.98    -11.05 
Waterstone Financial, Inc.  WSBF  WI   12.97    36.0    23.2    99.5    99.7    24.81    1.54    446.4    -1.37    -1.37    1,799,325    4.39    24.93    2.49    81.15    5.77    0.70    3.23 
Westbury Bancorp, Inc.  WBB  WI   16.13    NM    46.2    93.6    93.6    13.62    NA    79.4    -1.66    -1.66    594,614    1.18    14.55    3.45    91.80    4.26    -0.19    -1.19 

 

 
 

  

EXHIBIT V-2

Pro Forma Calculations

 

 
 

  

   At or For the Year Ended December 31, 2014 
   Based Upon the Sale at $27 Per Share of 
                 
               112,657 
   72,407   85,185   97,963   Shares at 
   Shares at   Shares at   Shares at   Adjusted 
   Minimum of   Midpoint of   Maximum of   Maximum 
   Offering   Offering   Offering   Offering 
   Range   Range   Range   Range (1) 
   (Dollars in thousands, except per share amounts) 
                 
Gross Proceeds  $1,955   $2,300   $2,645   $3,042 
Expenses   (715)   (715)   (715)   (723)
Estimated net proceeds   1,240    1,585    1,930    2,319 
Common stock acquired by employee stock ownership plan (2)   (156)   (184)   (212)   (243)
Estimated net proceeds  $1,084   $1,401   $1,718   $2,076 
                     
For the twelve months ended December 31, 2014                    
Net income                    
Historical (2)  $96   $96   $96   $96 
Pro Forma adjustments:                    
Income on adjusted net proceeds   12    15    18    22 
Employee stock ownership plan (2)   (10)   (12)   (14)   (16)
Pro forma income  $97   $99   $100   $102 
                     
Net income per share                    
Historical  $1.43   $1.21   $1.06   $0.92 
Pro Forma adjustments:                    
Income on net proceeds   0.17    0.19    0.20    0.21 
Employee stock ownership plan (2)   (0.15)   (0.15)   (0.15)   (0.15)
Pro forma income  $1.45   $1.25   $1.10   $0.98 
                     
Offering price to pro forma net income per share   18.62x   21.60x   24.55x   27.55x
                     
Shares considered outstanding in calculating pro forma income per share   67,194    79,052    90,910    104,546 
                     
At December 31, 2014                    
Stockholders Equity:                    
Historical (2)  $2,755   $2,755   $2,755   $2,755 
Estimated net proceeds   1,240    1,585    1,930    2,319 
Common stock acquired by employee stock ownership plan (2)   (156)   (184)   (212)   (243)
Pro forma stockholders' equity  $3,839   $4,156   $4,473   $4,831 
                     
Stockholders equity per share:                    
Historical  $38.05   $32.34   $28.12   $24.45 
Estimated net proceeds   17.13    18.61    19.70    20.59 
Common stock acquired by employee stock ownership plan (2)   (2.16)   (2.16)   (2.16)   (2.16)
Pro forma stockholders' equity  $53.01   $48.79   $45.66   $42.88 
                     
Offering price as percentage of pro forma stockholders' equity per share   50.93%   55.34%   59.13%   62.97%
                     
Shares considered outstanding in calculating offering price as a percentage of pro forma stockholders' equity per share   72,407    85,185    97,963    112,657 

 

(1) As adjusted to give effect to a 15% increase in the number of shares outstanding after the offering which could occur due to an increase in the maximum of the independent valuation as a result of regulatory considerations, demand for the shares, or changes in market conditions or general financial and economic conditions following the commencement of the offering.

 

(2) Derived from St. James Federal Savings and Loan Association’s December 31, 2014 financial statements.

 

 
 

  

EXHIBIT V-3

Pro Forma Analysis

 

 
 

  

Valuation Parameters
        
12 month earnings  Y  $96 
Pre conversion book value  B  $2,755
Pre conversion assets  A  $27,215
         
Return on Money  R   0.39%
Conversion Expenses  X   31.09%
ESOP Purchases  E   8.00%
Cost of ESOP borrowing  S   0.00%
Amort. Of ESOP borrowing  T   10 
Amort. Of MRP amount  N   5 
MRP purchases  M   0.00%
Stock Foundation Amount  F   0.00%
Tax Benefit  Z   0 
Tax Rate  TAX   34%

 

 
 

  

Pro Forma Calculation

 

Calculation of Estimated Value (V) at Midpoint Value    
3. V= P/E*Y = $2,300,000
  1-P/E*PCT*((1-X-E-M-F)*R-(1-TAX)*E/T-(1-TAX)*M/N)    
         
2. V= P/B*(B+Z) = $2,300,000
    1-P/B*PCT*(1-X-E-M-F)    
         
1. V= P/A*A = $2,300,000
    1-P/A*PCT*(1-X-E-M-F)    

 

The appraisal was performed on a market basis and not on the above formulas.

 

Conclusion

 

   Total   Price   Total 
   Shares   Per Share   Value 
             
Appraised Value - Midpoint   85,185   $27.00   $2,300,000 
                
Range:               
- Minimum   72,407   $27.00   $1,955,000 
- Midpoint   85,185   $27.00   $2,300,000 
- Maximum   97,963   $27.00   $2,645,000 
- Supermaximum   112,657   $27.00   $3,041,750 

 

 
 

  

EXHIBIT VI-1

Firm Qualifications Statement

 

 
 

  

McAuliffe Financial, LLC
A Bank Consulting Firm

 

McAuliffe Financial, LLC was founded in 2006 by Kevin McAuliffe to provide financial advisory services to the banking sector. Kevin McAuliffe has over 25 years experience advising and representing banks and has unique experience in understanding the relationships between banks and other service providers. Independent from investment banks and broker/dealers, McAuliffe Financial provides consulting that is unbiased from transactional fees that often influence consulting relationships. Proper preparation and planning for growth, whether through organic or external means, is critical to maximizing your goals. With years of building financial models that extensively quantify the financial variables of financial institutions, McAuliffe Financial is prepared to work closely with you to chart your path to success.

 

Our clients benefit from an independent array of consulting services that include:

 

Business and Strategic planning;

Strategic presentations to boards of directors;

Financial modeling;

M&A advisory;

Preparing stock valuations and fairness opinions;

 

Business and Strategic Planning – McAuliffe Financial has developed financial models that provide forecasting depth beyond traditional line items for financial institutions. The principal of the firm has developed over 100 business plans for banks and has participated in many planning retreats with senior management and board members.

 

Mergers and Acquisitions – Since 1985, the principal of McAuliffe Financial has been involved in over 40 bank merger and acquisition transactions. His involvement has included structuring financial terms of the transactions, financial forecasting, mark-to-market analyses, marketing financial institutions for sale, finding appropriate suitors and negotiating deal pricing.

 

Stock Valuations and Fairness Opinions – The principal of McAuliffe Financial has been actively involved in over 170 valuation appraisals for thrifts converting from mutual-to-stock form of ownership. Additionally, he has written over 30 fairness opinions for bank combinations. McAuliffe Financial also prepares stock valuations for ESOPs, goodwill impairment analyses and companies with illiquid stock.

 

Equity Offerings – The principal of McAuliffe Financial has been involved in over 160 mutual-to-stock conversion offerings. Additionally, he has raised over $150 million in secondary equity offerings and trust preferred securities.