NEWS RELEASE
For Additional Information, contact:
Union Community Bancorp Montgomery Financial Corporation
Joseph E. Timmons, President J. Lee Walden, President
(765) 362-2400 (765) 362-4710
UNION COMMUNITY BANCORP AND MONTGOMERY
FINANCIAL CORPORATION
ANNOUNCE SIGNING OF MERGER AGREEMENT
CRAWFORDSVILLE, INDIANA - (JULY 24, 2001) Union Community Bancorp
(Nasdaq-NM--UCBC), and Montgomery Financial Corp. (Nasdaq-SCM--MONT), both
savings and loan holding companies headquartered in Crawfordsville, Indiana,
jointly announced today that they have signed a definitive agreement providing
for the merger of Montgomery into Union and the simultaneous merger of
Montgomery's savings association subsidiary, Montgomery Savings, A Federal
Association, into Union's savings association subsidiary, Union Federal Savings
and Loan Association.
Under the terms of the agreement, shareholders of Montgomery would have the
right to elect to receive either 1.1244 shares of Union common stock (valued at
$15.18, based on Union's July 23, 2001 closing price), or $15.00 in cash for
each share of Montgomery common stock owned by them. However, 50% of the
aggregate consideration must be paid in shares of Union common stock, and there
may be pro rata allocations of cash or stock made to shareholders to ensure that
this requirement is satisfied. It is expected that approximately 679,000 Union
shares will be issued in the transaction. Including the anticipated cash out of
Montgomery options, the transaction value is estimated at $18.5 million.
Under the agreement, three Montgomery directors, Messrs. C. Rex Henthorn, Joseph
M. Malott and Mark E. Foster would be added to the current seven-member Union
Board of Directors. Mr. J. Lee Walden, president and chief executive officer of
Montgomery, will become chief financial officer of Union, joining the leadership
team headed by President & CEO Joseph E. Timmons and Vice President Alan L.
Grimble.
The merger will be accounted for as a purchase transaction and is expected to
close in the fourth quarter of 2001.
Union management estimates that the transaction will result in general and
administrative cost reductions of approximately $850,000. Union intends to
resume immediately its previously announced stock repurchase program, and
increase the number of shares to be purchased under the program to 679,000, the
number of shares expected to be issued to Montgomery shareholders in the merger.
These repurchases are expected to be completed during calendar year 2002,
subject to required regulatory approvals. The transaction is expected to be
accretive to Union core cash earnings per share (excluding amortization of
intangibles and one-time charges associated with the consolidation) during 2002.
The transaction is expected to be accretive to cash and accounting earnings per
share during 2003.
Union and Montgomery are the only locally headquartered FDIC-insured depository
institutions in Crawfordsville. Upon completion of the merger, Union will have
total assets of approximately $270 million and will operate four locations in
Crawfordsville as well as locations in Lafayette, Covington and Williamsport,
Indiana. As of June 30, 2001, Union had total assets of $127.4 million and
shareholders' equity of $35.6 million, while as of March 31, 2001, Montgomery
had total assets of $142.9 million and stockholders' equity of $16.9 million.
The proposed merger is subject to the approval of the shareholders of Union and
Montgomery and of the Office of Thrift Supervision and other customary
conditions. It is anticipated that the stock portion of the consideration will
be treated as a tax-free exchange. Directors of Union and Montgomery have agreed
to vote their shares in favor of the merger. Edelman & Co., Ltd. advised Union
on the transaction, and Keefe Bruyette & Woods, Inc. advised Montgomery on the
transaction.
"This transaction is consistent with Union's philosophy of building shareholder
value while providing top-notch customer service in an efficient manner," said
Union President and CEO Joseph E. Timmons. "The efficiencies we will be able to
achieve by bringing together our institutions will facilitate significant
earnings growth as we continue our stock repurchase program. It is a highly
appropriate way for Union to leverage the high capital position it has enjoyed
since converting from mutual to stock ownership in 1997."
Timmons added, "Union Federal has been assisting Crawfordsville residents with
their financial needs since 1913. Bringing talented people from Montgomery and
Union together cements Union's position as the preeminent bank in our local
market. Customers of both institutions in Crawfordsville and in Williamsport,
Covington and Lafayette will have more products, services and convenient banking
locations available to them in the process."
J. Lee Walden, president and CEO of Montgomery, said the two financial
institutions have had a sizeable presence in Montgomery and the surrounding
counties. "Now we can combine expertise and accelerate our strategic planning.
We are also extremely pleased to announce this transaction for our shareholders,
who will have the opportunity to take cash or stock in Union," Walden said.
"Union and Montgomery have been the county's leading lending institutions for
home financing," stated Earl F. Elliot, Chairman of Montgomery Savings. This
combination will enable us to continue the tradition of home financing, while
creating a larger base of assets and dedicated employees in order to provide a
high level of services including growth in commercial banking."
Statements contained in this press release that are not historical facts may
constitute forward-looking statements (within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended) which involve significant risks and
uncertainties. The companies intend such forward-looking statements to be
covered in the Private Securities Litigation Reform Act of 1995, and are
including this statement for purposes of invoking these safe harbor provisions.
The companies' ability to predict results or the actual effect of future plans
or strategies is inherently uncertain and involves a number of risks and
uncertainties, some of which have been set forth in the companies' most recent
annual reports on Form 10-K, which disclosures are incorporated by reference
herein. The fact that there are various risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance should
not be placed on such statements.
Union will be filing a Registration Statement on Form S-4 concerning the
merger with the Securities and Exchange Commission ("SEC"), which will include
the joint merger proxy statement/prospectus that will be mailed to Union and
Montgomery shareholders. WE URGE INVESTORS TO READ THESE DOCUMENTS BECAUSE THEY
CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain the documents
free of charge, when filed, at the SEC's website, In addition, documents filed
with the SEC by Union will be available free of charge from the Secretary of
Union at 221 East Main Street, Crawfordsville, Indiana 47933, telephone (765)
362-2400. Documents filed with the SEC by Montgomery will be available free of
charge from the Secretary of Montgomery at 119 East Main Street, Crawfordsville,
Indiana 47933. INVESTORS SHOULD READ THE JOINT MERGER PROXY STATEMENT/PROSPECTUS
CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER. Copies of all recent
proxy statements and annual reports are also available free of charge from the
respective companies by contacting the company secretary.
Union and Montgomery and their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies to approve the
Merger. INFORMATION ABOUT THE PARTICIPANTS MAY BE OBTAINED THROUGH THE SEC'S
WEBSITE FROM THE DEFINITIVE PROXY STATEMENT FILED WITH THE SEC ON MARCH 14,
2001, WITH RESPECT TO UNION AND THE DEFINITIVE PROXY STATEMENT FILED WITH THE
SEC ON SEPTEMBER 15, 2000, WITH RESPECT TO MONTGOMERY.