Our approach to the Appraisal is market-based pricing utilizing a Guideline Group, (the “Group”) of publicly-traded banking companies to use as a basis for pricing the Subject’s stock. In building the Group we will select companies based on operational similarities including, loan portfolio structure, income and expense management, the level of nonperforming loans, and capital measurements. Also considered will be the growth and performance record over the past five years.

The Subject is ranked against the Group based on the criteria mentioned above to find those companies that most closely reflect the operations of Subject. These selected stocks will provide the weighted pricing multiples we apply to Subject’s tangible book and income. In some cases, a liquidity discount will be applied to the value resulting from this public market approach.

The comparable data will primarily be based on publicly available data including the Bank Holding Company Performance Report available through the Federal Reserve and reports filed with the SEC.

We will also utilize our proprietary database of private-market transactions to further analyze the current pricing structure in the market. This data offers guidance as to the franchise value of the whole institution and would require a discount for lack of control when valuing minority blocks of stock.

As explained above the resulting Appraisal will be based on publicly-traded bank stock comparable values and privately-traded control sale values to determine an appropriate price a willing buyer and willing seller would agree upon in an arm’s length transaction. The objective of the Appraisal will be to provide a recommendation to support a market price for Subject shares.

General Appraisal Outline

  1. Recommendation and Overview of Market Pricing
  2. Nature and History of Business
  3. Economic Summary
  4. Adequacy of Capital and Reserves
  5. Earnings Capacity
  6. Dividend Paying Capacity
  7. Goodwill or Intangible Value
  8. Marketability of Shares
  9. Activity in Company Stock
  10. Principal Shareholder Groups
  11. Analysis of Publicly Traded Bank Stock
  12. Analysis of Control Sales of Bank Stock
  13. Determination of Recommended Valuation
  14. Conclusion as to Value
  15. Representations
  16. Exhibits