FELDMAN FINANCIAL ADVISORS, INC.
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1725 K STREET, NW O SUITE 205
WASHINGTON, DC 20006
202-467-6862
(FAX) 202-467-6963
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Community First Bank
Madisonville, Kentucky
Conversion Valuation Appraisal Report
Valued as of May 5, 2003
Prepared By
Feldman Financial Advisors, Inc.
Washington, D.C.
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FELDMAN FINANCIAL ADVISORS, INC.
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1725 K Street, N.W., Suite 205
Washington, D.C. 20006
(202) 467-6862 o FAX (202) 467-6963
May 5, 2003
Board of Directors
Community First Bank
240 South Main Street
Madisonville, Kentucky 42431
Gentlemen:
Feldman Financial Advisors, Inc. ("Feldman Financial") has completed
and hereby provides an updated independent appraisal of the aggregate estimated
pro forma market value of Community First Bank ("Community First" or the "Bank")
in conjunction with the Bank's conversion (the "Conversion") from the mutual to
stock form of organization and simultaneous sale of common stock by its newly
formed holding company, Community First Bancorp, Inc. (the "Company"). Our
original appraisal dated March 17, 2003 is incorporated herein by reference.
This updated appraisal is being furnished in response to a review of our
original appraisal by the Office of Thrift Supervision, the current assessment
of market conditions for thrift stocks, and recently available financial results
from the Bank.
In preparing this update, we conducted an analysis of the Bank that
included discussions with its management. In addition, where appropriate, we
considered information based upon other available public sources that we believe
are reliable; however, we cannot guarantee the accuracy and completeness of such
information. We also reviewed conditions in the securities markets in general
and the market for thrift stocks in particular and discussed the Bank's recent
financial performance with management. Our update is based on representations by
the Bank that information contained in the preliminary offering prospectus and
information furnished to us by the Bank and its independent auditor are
truthful, accurate, and complete. We did not independently verify the financial
statements or any of the other information provided to us by the Bank or its
independent auditor.
This updated valuation and our previous valuation are not intended, and
must not be construed to be a recommendation of any kind as to the advisability
of purchasing shares of common stock in the Conversion. Moreover, because such
valuations are 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 stock in the Conversion will
thereafter be able to sell such shares at prices related to our estimate of the
Bank's pro forma market value. Feldman Financial is not a seller of securities
within the meaning of any federal or state securities laws and any report
prepared by Feldman Financial shall not be used as an offer or solicitation with
respect to the purchase or sale of any securities.
Board of Directors
Community First Bank
May 5, 2003
Page 2
Recent Financial Performance
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Our original appraisal discussed the Bank's financial performance
through the year ended December 31, 2002. Recent financial results indicate that
the Bank reported positive earnings of $58,000 for the quarter ended March 31,
2003, as compared to a loss of $14,000 for the quarter ended March 31, 2002.
Table 1 summarizes the Bank's income statement for the quarters ended March 31,
2002 and 2003, and Table 2 presents selected financial ratios for the Bank. Due
to its past history of operating losses and continued presence of tax loss
carryforwards, the Bank did not provide for any income tax expenses during the
March 2003 quarter. The Bank reported an annualized return on average assets
("ROAA") of 0.72% and an annualized return on average equity ("ROAE") of 13.09%
for the recent quarter. Applying the Bank's effective federal and state income
tax rate of 37% would have resulted in net income of approximately $37,000 and
ROAA and ROAE results of 0.45% and 8.25%, respectively.
Table 1
Summary Income Statement
For the Three Months Ended March 31, 2002 and 2003
(Dollars in Thousands)
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Three Months
Ended March 31,
---------------
2003 2002
---- ----
Interest income $519 $451
Interest expense 197 251
---- ----
Net interest income 322 200
Provision for loan losses 19 6
---- ----
Net interest income after provision 303 194
Other income 43 42
Other expenses 288 250
---- ----
Income (loss) before taxes 58 (14)
Income tax expense -- --
---- ----
Net income (loss) $ 58 $(14)
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Source: Community First.
Board of Directors
Community First Bank
May 5, 2003
Page 3
Table 2
Selected Financial Ratios
At or for the Three Months Ended March 31, 2002 and 2003
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At or for the Three
Months Ended Mar. 31,
---------------------
2003 2002
---- ----
Return on average assets 0.72% (0.18)%
Return on average equity 13.09 (3.00)
Net interest rate spread 4.23 3.43
Net interest margin 4.24 2.76
Noninterest expense to average total assets 3.55 3.32
Nonperforming assets to total assets 0.09 0.51
Nonperforming loans to total loans 0.10 0.70
Allowance for loan losses to total loans 0.45 0.47
Net charge-offs to average loans 0.00 0.02
Total equity to total assets 5.55 5.97
Average equity to average assets 5.49 6.18
Tangible capital ratio 5.55 5.97
Core capital ratio 5.55 5.97
Total risk-based capital ratio 10.53 13.20
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Source: Community First
The Bank's earnings turnaround was attributable to the continued
improvement in its net interest margin, which increased from 2.76% in the March
2002 quarter to 4.24% for the March 2003 quarter. The increased concentration of
assets consisting of loans, along with a decline in the overall cost of funds,
combined to produce an increase in net interest income from $200,000 in the
March 2002 quarter to $322,000 in the March 2003 quarter. While interest rates
decreased during this period, total interest income increased by $68,000 due to
higher outstanding aggregate loan balances. Net interest income also benefited
from reduced deposit costs in the lower interest rate environment as higher
costing certificates of deposit continued to roll off. Other income increased
modestly by 2.4% from $42,000 to $43,000 as the Bank has implemented efforts to
enhance fee income. Other expenses increased by 15.2% from $250,000 to $288,000
over the corresponding quarters, primarily as a result of higher occupancy and
compensation costs.
Board of Directors
Community First Bank
May 5, 2003
Page 4
Table 3 sets forth certain selected financial condition data for the
Bank as of December 31, 2002 and March 31, 2003. Total assets increased by 8.6%
from $30.0 million at year-end 2002 to $32.5 million at March 31, 2003. The
recent asset growth was largely attributable to a $2.0 million increase in total
loans, which expanded from $25.7 million at December 31, 2002 to $27.7 million
at March 31, 2003. The loan expansion was supported mainly by deposit growth.
Total deposits increased by $2.5 million from $28.1 million to $30.6 million.
Reflecting the addition of retained earnings, total equity increased from $1.75
million at December 31, 2002 to $1.81 million at March 31, 2003. However, the
ratio of total equity to total assets actually declined from 5.84% to 5.55% over
this period due to the significant asset growth. The Bank's asset quality
continued to remain favorable as evidenced by a 0.09% ratio of nonperforming
assets to total assets.
Table 3
Selected Financial Condition Data
As of December 31, 2002 and March 31, 2003
(Dollars in Thousands)
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Mar. 31, Dec. 31,
2003 2002
--------- --------
Total assets $32,534 $29,968
Loans receivable, net 27,742 25,710
Cash and cash equivalents 1,290 758
Investment securities 1,890 1,902
Total deposits 30,634 28,128
Total equity 1,807 1,749
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Source: Community First
Comparative Group Performance Analysis
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Since our original appraisal, two Comparative Group members (First
Capital Bancshares and Lenox Bancorp) de-registered their common stock
securities. Consequently, trading stock prices for these equity issues are no
longer publicly available and these thrifts have been excluded from the
Comparative Group. We have re-calculated the average and median performance
ratios for the remaining Comparative Group and present those tables in Exhibits
1 through 5. Exhibit 6 provides a summary profile of each Comparative Group
company.
Board of Directors
Community First Bank
May 5, 2003
Page 5
The revised 14-member Comparative Group contains seven companies listed
on NASDAQ, five companies quoted on the OTC Bulletin Board, and two companies
listed on the American Stock Exchange. The two excluded companies that
de-registered their stock issues had been quoted on the OTC Bulletin Board.
While there are minor changes in the Comparative Group average and
median performance ratios as a result of these exclusions, the fundamental
conclusions discussed in our original appraisal regarding the Bank's financial
performance versus the overall Comparative Group are not changed. Updated
performance data for the Comparative Group companies through the March 2003
quarter are not yet fully available.
As shown in Exhibit 1, the Bank's ROAA for the latest twelve months
("LTM") ended December 31, 2002 was -0.28%, as compared to the Comparative Group
average of -0.40% and median of 0.28%. We note that of the 14 companies in the
Comparative Group, nine were profitable during observed period. Only four
companies reported an operating deficit exceeding the Bank's negative ROAA. The
Comparative Group's average ROAA was impacted by three companies (Blue River
Bancshares, Fidelity Federal Bancorp, and Sobieski Bancorp) that reported
sizeable losses due to the establishment of significant loan loss provisions or
valuation allowances. In addition, while the Bank has reported losses for each
of its past three fiscal years, only one Comparative Group company (Blue River
Bancshares) displayed a similar pattern of prolonged earnings shortfalls. For
the LTM period ended March 31, 2003, the Bank registered a net loss of $12,000
and an ROAA of -0.04%.
The Bank's net interest margin of 3.54% for the LTM period ended
December 31, 2002 compared favorably to the Comparative Group average and median
of 2.98% and 2.90%. As noted in our prior appraisal, the Bank's relatively high
concentration of loans to assets provides it with a higher yielding base of
interest-earning assets. The Bank exhibited a weighted average yield of 7.00% on
its interest-earning assets versus the Comparative Group average and median of
6.45% and 6.36%, respectively. Relative to average total assets, the Bank's net
interest income measured 3.24% and exceeded the levels reported by nine of the
Comparative Group companies. The Bank also exhibited an advantage of lower
levels of loan loss provisioning. The Bank's loan loss provision amounted to
0.06% of average assets for the LTM period ended December 31, 2002, as compared
to the Comparative Group average and median of 0.59% and 0.16%, respectively.
Blue River Bancshares and Sobieski Bancorp reported hefty loan loss provisions
during this period.
Although the Bank exhibited a stronger net interest margin than most of
the Comparative Group, this advantage was offset by the Bank's lower level of
noninterest income and higher level of operating expenses. The Bank's ratio of
other operating income amounted to 0.24% of
Board of Directors
Community First Bank
May 5, 2003
Page 6
average assets versus the Comparative Group average and median of 0.47% and
0.26%, respectively. Eight of the Comparative Group companies reported higher
levels of other operating income as compared to the Bank. The Bank reported no
revenue contributions from gains on sale of assets, while many of the
Comparative Group companies were able to rely on this supplemental source of
income.
A fundamental disadvantage of the Bank in relation to the Comparative
Group's overall profitability was the Bank's higher level of operating expenses.
The Bank's operating expense ratio measured 3.66% of average assets, versus the
Comparative Group average and median of 3.09% and 2.89%, respectively. Only
three members of the Comparative Group had an operating expense ratio above the
Bank's expense ratio. Unlike the Bank, the Comparative Group companies with high
expense ratios also exhibited high levels of noninterest income production. The
Bank is expected to experience continued earnings pressure from rising operating
expenses related to its plans to open a second office.
The Bank's emphasis on single-family residential mortgage lending is
evidenced by its large concentration of residential mortgages composing 88.3% of
its total loan portfolio, as compared to the Comparative Group average and
median of 62.1% and 62.3%, respectively. Conversely, the Bank reflected less
loan diversification than the Comparative Group companies overall, which
reflected higher concentrations of nonresidential mortgage and nonmortage loans.
The emphasis on residential mortgage lending also contributed to the Bank's
favorable asset quality ratios. The Bank's 0.29% ratio of nonperforming assets
to total assets at December 31, 2002 was lower than the Comparative Group
average and median of 1.14% and 0.76%, respectively.
Stock Market Conditions and Comparative Group Price Performance
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Since our original appraisal date as of March 17, 2003, stock
valuations of thrifts advanced firmly on the strength of emerging signs that
first quarter earnings results would not be hampered by mounting credit quality
concerns. While general economic conditions continue to remain uneven, the
market for small and mid-size financial institutions continues to remain
positive. Interests rates remain at 30-year lows and no increase is anticipated
in the near future due to the sluggish nature of the overall economy. The
overriding concern impacting the thrift market is that while net interest
margins continue to encounter pressure from low rates, loan growth is beginning
to slow down as a counterbalancing factor. Also, as expectations grow that the
current mortgage refinancing cycle is decelerating, investors are looking for
improved contributions from other revenue sources to supplement secondary market
gains.
Board of Directors
Community First Bank
May 5, 2003
Page 7
Exhibit 7 displays the net change in various market indexes between
March 17, 2003 and May 5, 2003. The S&P 500 Stock Index and NASDAQ Index
increased by 7.4% and 8.0%, respectively, during this time span. The SNL Thrift
Index outperformed the broader market indexes with an increase of 11.4%, while
the SNL Small Thrift Index lagged the SNL Thrift Index with an increase of 2.9%.
Exhibit 8 displays the stock price change of the Comparative Group companies
during this period. The Comparative Group posted an average price change of
5.1%. Nine of the Comparative Group companies experienced price changes within a
narrow band of plus or minus 3% approximately. Four of the companies posted net
price gains above 10%, led by Lawrence Financial Holdings at 17.6% and Indian
Village Bancorp at 14.3%.
Among the group of publicly traded Kentucky thrifts, the average price
change was 9.1%, led by CKF Bancorp moving up 26.2% and narrowing the trading
valuation discounts that it had previously experienced in comparison to the
other Kentucky thrifts. All of the public Kentucky thrifts are traded on NASDAQ
with the exception of Kentucky First Bancorp, which is traded on the American
Stock Exchange. There are no public Kentucky thrifts quoted on the OTC Bulletin
Board or pink sheet listings. The Kentucky public thrift group has exhibited
solid profitability, as reflected by its average LTM ROAA of 1.01%.
Recent Thrift Conversion Activity
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Since our original appraisal, one thrift completed a standard full
conversion offering. Rantoul First Bank, S.B. ("Rantoul") in Illinois, closed
its offering on April 2, 2003 and raised gross proceeds of $1.9 million. The
midpoint of Rantoul's offering range was $2.0 million with a minimum of $1.7
million, maximum of $2.3 million, and adjusted maximum of $2.6 million. The
offering was completed at an amount between the minimum and midpoint of the
valuation range. The pro forma valuation range for Rantoul reflected
price-to-book ratios of 55.2% at the minimum, 59.7% at the midpoint, 63.7% at
the maximum, and 67.6% at the adjusted maximum. Rantoul's pro forma
price-to-earnings ratios were negative due to losses for the historical period.
Similar to Community First, Rantoul is a small thrift institution
operating one office. Rantoul had total assets of $30.6 million and total equity
of $2.0 million, or 6.43% of total assets, at September 30, 2002. Also
comparable to Community First, Rantoul reported operating losses for each of its
past three fiscal years and hired a new chief executive officer within the past
two years. Rantoul closed at $11.51 per share in its first day of trading,
reflecting a 15.1% increase from its initial offering price of $10.00. On a pro
forma basis, Rantoul's closed stock offering was valued at a price-to-book ratio
of 58.5% with an accompanying price-to-assets ratio of 5.9%. As of May 5, 2003,
Rantoul's closing stock price was $12.45, marking a 24.5% increase from its
initial offering price. Rantoul's common stock issue is listed on the pink
sheets.
Board of Directors
Community First Bank
May 5, 2003
Page 8
Supplemental Appraisal Revision
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Referring to our original appraisal document dated March 17, 2003, we
note the following corrected revisions. On page 14 of the document, reference to
"net loan charge-offs were higher in 2002" should be changed to substitute
"lower" for "higher". On page 22, reference to "because of the lower level of
charge-offs in 2001" should be amended to substitute "2002" for "2001". On page
23, the table subheading "total nonaccrual loans past due 90 days or more"
should be changed to "accruing loans past due 90 days or more".
Valuation Approach
- ------------------
Community First reported dramatically improved earnings for the first
quarter of 2003, bolstered by continued advancement of its net interest margin
and steady loan growth. Total loans have increased from $22.2 million at
December 31, 2001 to $27.7 million at March 31, 2003. The Bank has leveraged its
balance sheet to achieve such asset growth as evidenced by the 5.55% ratio of
equity to assets at March 31, 2003. Future asset growth will be predicated on
the successful raising and deployment of equity capital from the Conversion.
The Bank expects to maintain positive earnings results through the
first half of 2003, but anticipates a return to operating losses later in the
year due to additional expenses related to staffing and operating its planned
new branch office. The new branch is also expected to result in negative
earnings through much of 2004 until the office generates sufficient revenue to
offset the incremental expenses.
In our prior appraisal, we concluded that the Bank should be discounted
to the Comparative Group based on factors related to earnings prospects,
dividend policy, liquidity of the issue, and the new issue discount. In light of
the positive developments concerning the Bank's profitability, we believe that
the discounts associated with earnings prospects and dividend policy have been
reduced. The Bank has demonstrated that its recent initiatives to increase
lending activity are producing enhanced bottom-line earnings results. While the
Bank will face additional earnings challenges on the horizon because of its
branch expansion and potential cost escalation from its data processing system
transition, investors are likely to have increased confidence in management's
ability to implement projected growth of the Bank's balance sheet and operating
infrastructure.
However, we believe that some magnitude of discount for earnings
prospects should still apply with regard to the Comparative Group because a
majority of these companies have demonstrated positive earnings trends over a
longer, sustained period of time. Additionally,
Board of Directors
Community First Bank
May 5, 2003
Page 9
while the Bank's positive earnings trend is a favorable indicator for the
Company's future dividend-paying capacity, the Company has made no changes in
its policy to not pay cash dividends for the foreseeable future following the
Conversion. In contrast, 11 of the 14 members of the Comparative Group are
currently paying regular cash dividends.
Based on the Bank's improved operating results, along with the
advancing market performance of the Comparative Group and thrift stocks overall,
we have concluded that the Bank's estimated pro forma market value at the
midpoint should be increased by 20.0% from the prior value of $1,750,000 to a
revised midpoint of $2,100,000. Exhibit 9 presents a comparative summary of the
Bank's pro forma valuation ratios with those of the Comparative Group. Exhibits
10 through 16 present additional detail on the pro forma valuation calculations
and comparisons. The Bank's historical financial data is presented for the
period ending March 31, 2003.
The revised midpoint valuation of $2,100,000 reflects a pro forma
price-to-book ratio of 59.4%. At the resulting maximum valuation of $2,415,000,
the Bank's pro forma price-to-book ratio is 62.9%. The adjusted maximum of
$2,777,250 results in a pro forma price-to-book ratio of 66.3%. The Bank's pro
forma price-to-book valuation range is discounted to the Comparative Group mean
and median values of 89.6% and 87.8%, respectively. Because of the Bank's net
operating loss for the LTM ended March 31, 2003, the Bank's pro forma
price-to-earnings ratios reflect extraordinarily high negative values and are
considered non-meaningful ("NM") for comparative valuation purposes.
The Bank's positive earnings base for the annualized quarter ended
March 31, 2003 produces pro forma price-to-earnings ratios ranging from 7.6x at
the valuation minimum to 11.8x at the adjusted maximum. Because the Bank did not
provide for income tax expenses on its earnings during the recent quarter, the
Bank's resulting pro forma price-to-earnings ratios are depressed by the higher
earnings base. Applying a tax-effective rate of 37% to the annualized quarterly
earnings base produces lower net income and adjusted price-to-earnings ratios
ranging from 12.0x at the valuation minimum to 18.5x at the adjusted maximum,
which intersects with the Comparative Group average of 18.1x and median of 19.0x
for the recent quarterly period.
The Bank's pro forma price-to-assets ratio ranged from 5.26% at the
valuation minimum to 7.95% at the adjusted maximum and is discounted to the
Comparative Group average of 10.15%. On a pro forma basis, the Bank's
equity-to-assets ratio is positioned below the Comparative Group average of
11.29% at the valuation minimum (9.53% equity-to-assets ratio) through the
valuation maximum (11.11% equity-to-assets ratio), but surpasses the Comparative
Group average at the adjusted maximum (11.99% equity-to-assets ratio).
Board of Directors
Community First Bank
May 5, 2003
Page 10
Valuation Conclusion
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It is our opinion that, as of May 5, 2003, the aggregate estimated pro
forma market value of the Bank should increase 20.0% from the prior midpoint
valuation of $1,750,000, with an updated valuation range of $1,785,000 at the
minimum to $2,415,000 at the maximum and a revised midpoint of $2,100,000. The
valuation range was based upon a 15% decrease from the midpoint to determine the
minimum and a 15% increase from the midpoint to establish the maximum. Assuming
an additional 15% increase above the maximum value results in an adjusted
maximum of $2,777,250.
Sincerely,
FELDMAN FINANCIAL ADVISORS, INC.
/s/Trent R. Feldman
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By: Trent R. Feldman
President
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Exhibit 1
General Financial Performance Ratios
As of or for the Latest Twelve Months Ended December 31, 2002
====================================================================================================================================
Total Tang. Total Net
Total Total Equity/ Equity/ NPAs/ Interest LTM LTM Core Core
Assets Deposits Assets Assets Assets Margin ROAA ROAE ROAA ROAE
($mil.) ($mil.) (%) (%) (%) (%) (%) (%) (%) (%)
------ -------- ------ ------ ------ ------ ---- ---- ---- ----
Community First Bank 29,968 28,128 5.84 5.84 0.29 3.54 (0.28) (4.50) (0.28) (4.50)
Comparative Group Average 114,007 81,407 11.33 11.13 1.14 2.98 (0.40) (5.47) (0.24) (3.80)
Comparative Group Median 113,046 82,102 10.19 10.06 0.76 2.90 0.28 2.75 0.25 2.42
All Public Thrift Average 2,901,937 1,716,998 10.31 9.91 0.67 3.41 0.86 8.87 0.83 8.50
All Public Thrift Median 431,402 301,561 9.32 9.03 0.45 3.43 0.88 9.34 0.85 9.30
Comparative Group
Allied First Bancorp, Inc. 94,283 82,616 10.90 10.90 NA 3.65 0.35 3.07 0.35 3.04
Blue River Bancshares, Inc. 109,338 93,681 10.24 8.20 3.36 2.22 (3.69) (38.57) (1.38) (13.82)
Crazy Woman Creek Bancorp Inc. 75,441 46,878 17.97 17.71 0.11 3.31 0.25 1.35 0.42 2.25
Fidelity Federal Bancorp 132,290 106,791 7.25 7.25 2.31 2.40 (2.75) (36.82) (1.97) (26.38)
Grand Central Financial Corp. 113,450 76,878 15.66 15.66 1.86 3.33 0.43 2.85 0.42 2.77
Home City Financial Corporation 149,735 99,119 7.72 7.51 0.21 2.76 0.31 3.97 0.20 2.59
Homestead Bancorp, Inc. 135,472 67,124 9.98 9.98 0.27 2.36 0.48 5.05 0.42 4.40
Indian Village Bancorp Inc. 94,430 54,822 9.03 9.03 1.73 2.28 0.25 2.64 0.13 1.38
Lawrence Financial Holdings, Inc. 134,389 118,926 10.99 10.99 0.62 4.01 0.45 4.07 0.41 3.68
Mutual Community
Savings Bank, Inc., SSB 77,930 54,205 10.14 10.14 0.34 3.68 (0.79) (7.00) (0.38) (3.36)
Sobieski Bancorp, Inc. 130,867 81,587 8.02 8.02 NA 2.44 (2.11) (26.21) (2.94) (36.50)
Southern Banc Company, Inc. (The) 112,642 83,868 16.56 16.55 0.06 2.75 0.74 4.48 0.63 3.79
SouthFirst Bancshares, Inc. 136,946 98,091 10.04 9.68 0.89 3.04 0.47 4.86 0.29 3.05
StateFed Financial Corporation 98,889 75,114 14.15 14.15 1.89 3.47 (0.04) (0.28) (0.01) (0.08)
Source: Community First; SNL Financial; Feldman Financial.
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Exhibit 2
Income and Expense Analysis
For the Latest Twelve Months Ended December 31, 2002
====================================================================================================================================
As a Percent of Average Assets
------------------------------------------------------------------------------------------------
Net Other Gains & Loan Gen. & Real Amort. Pretax
Interest Interest Interest Oper. Non-rec. Loss Admin. Estate of Core
Income Expense Income Income Income Prov. Expense Expense Intang. Earnings
------ ------- ------ ------ ------ ----- ------- ------- ------- --------
Community First Bank 6.41 3.17 3.24 0.24 0.00 0.06 3.66 0.00 0.00 (0.24)
Comparative Group Average 6.11 3.28 2.82 0.47 0.29 0.59 3.09 0.01 0.06 (0.46)
Comparative Group Median 6.06 3.38 2.70 0.26 0.17 0.16 2.89 0.00 0.01 0.10
All Public Thrift Average 6.18 2.96 3.22 0.51 0.33 0.21 2.52 0.00 0.03 0.97
All Public Thrift Median 6.14 2.95 3.19 0.39 0.14 0.12 2.36 0.00 0.00 1.06
Comparative Group
Allied First Bancorp, Inc. 6.18 2.52 3.65 0.81 0.00 0.32 3.42 0.00 0.00 0.73
Blue River Bancshares, Inc. 6.06 3.94 2.11 0.36 (0.16) 1.24 3.33 0.01 0.04 (2.16)
Crazy Woman Creek Bancorp Inc. 6.07 2.91 3.16 0.16 (0.26) 0.07 2.64 0.00 0.05 0.56
Fidelity Federal Bancorp 5.85 3.77 2.08 1.21 0.63 (0.23) 5.57 0.00 0.07 (2.12)
Grand Central Financial Corp. 6.47 3.22 3.26 0.10 0.14 0.06 2.84 (0.03) 0.00 0.49
Home City Financial Corporation 6.66 4.07 2.59 0.24 0.22 0.26 2.32 0.00 0.02 0.23
Homestead Bancorp, Inc. 5.90 3.61 2.29 0.01 0.12 0.01 2.05 0.00 0.00 0.24
Indian Village Bancorp Inc. 5.92 3.74 2.18 0.26 0.18 0.61 1.85 0.00 0.00 (0.02)
Lawrence Financial Holdings, Inc. 6.50 2.78 3.71 0.50 0.07 0.69 2.94 0.00 0.00 0.59
Mutual Community
Savings Bank, Inc., SSB 5.63 2.12 3.50 0.79 0.26 0.04 4.25 0.01 0.65 (0.66)
Sobieski Bancorp, Inc. 6.10 3.75 2.35 0.20 1.64 5.10 2.43 0.15 0.00 (5.14)
Southern Banc Company, Inc. (The) 5.62 2.91 2.72 0.12 0.19 0.01 1.80 0.00 0.02 1.00
SouthFirst Bancshares, Inc. 5.76 3.07 2.69 1.57 0.82 (0.42) 4.67 0.03 0.03 (0.06)
StateFed Financial Corporation 6.81 3.54 3.26 0.25 0.16 0.50 3.17 0.01 0.00 (0.16)
Source: Community First; SNL Financial; Feldman Financial.
===================================================================================================================================
Exhibit 3
Yield-Cost Structure and Growth Rates
For the Latest Twelve Months Ended December 31, 2002
===================================================================================================================================
Avg. Avg. Net
Earn. Costing Earn. Yield on Cost Net Asset Loan Deposit
Assets/ Funds Assets/ Earn. of Interest Growth Growth Growth
Assets Assets Assets Assets Funds Spread Rate Rate Rate
------ ------ ------ ------------ ------ ---- ---- ----
Community First Bank 91.52 89.21 2.31 7.00 3.56 3.44 1.48 16.03 5.70
Comparative Group Average 94.76 85.95 8.81 6.45 3.81 2.65 (0.22) (5.79) 2.72
Comparative Group Median 95.35 85.69 6.63 6.36 3.95 2.70 2.10 (5.39) 3.75
All Public Thrift Average 91.58 83.33 8.25 6.52 3.43 3.09 8.76 5.15 10.07
All Public Thrift Median 92.02 84.02 7.59 6.51 3.47 3.05 6.72 2.15 6.67
Comparative Group
Allied First Bancorp, Inc. 99.95 79.57 20.38 6.18 3.17 3.01 10.76 24.67 10.36
Blue River Bancshares, Inc. 95.06 89.43 5.63 6.37 4.41 1.96 (27.94) (44.07) (25.24)
Crazy Woman Creek Bancorp Inc. 95.62 80.49 15.13 6.35 3.61 2.74 7.16 25.85 10.24
Fidelity Federal Bancorp 86.47 83.06 3.41 6.76 4.54 2.22 (17.14) (30.63) (11.12)
Grand Central Financial Corp. 97.71 83.13 14.58 6.63 3.87 2.76 (13.44) (20.24) 0.36
Home City Financial Corporation 93.99 91.75 2.24 7.08 4.43 2.65 3.53 10.38 2.82
Homestead Bancorp, Inc. 96.92 89.86 7.07 6.09 4.02 2.07 11.49 (15.95) 18.55
Indian Village Bancorp Inc. 95.61 90.13 5.48 6.19 4.15 2.04 20.22 1.20 17.42
Lawrence Financial Holdings, Inc. 92.64 87.55 5.10 7.01 3.18 3.83 (0.66) (8.17) 1.82
Mutual Community
Savings Bank, Inc., SSB 95.09 83.90 11.19 5.92 2.53 3.39 5.60 1.14 5.26
Sobieski Bancorp, Inc. 96.33 90.14 6.19 6.33 4.16 2.17 (3.82) (12.88) (4.78)
Southern Banc Company, Inc. (The) 98.84 82.92 15.92 5.69 3.51 2.18 9.36 (2.60) 4.67
SouthFirst Bancshares, Inc. 88.47 86.77 1.71 6.51 3.54 2.97 (8.87) (10.35) (2.08)
StateFed Financial Corporation 93.96 84.62 9.34 7.24 4.19 3.05 0.67 0.59 9.84
Source: Community First; SNL Financial; Feldman Financial.
===================================================================================================================================
Exhibit 4
Balance Sheet Composition
As of the Latest Twelve Months Ended December 31, 2002
===================================================================================================================================
As a Percent of Total Assets
---------------------------------------------------------------------------------------------
Cash & Net Real Intang. Other Total Borrowed Other Total Total
Securities Loans Estate Assets Assets Deposits Funds Liabs. Liabs. Equity
---------- ------ ------ ------- ------ -------- ------ ------ ------ ------
Community First Bank 10.99 85.79 0.00 0.00 3.22 93.86 0.00 0.30 94.16 5.84
Comparative Group Average 32.12 62.93 0.42 0.23 4.29 71.44 16.07 1.16 88.67 11.33
Comparative Group Median 31.08 59.82 0.09 0.00 4.51 70.59 15.71 1.06 89.81 10.19
All Public Thrift Average 28.33 67.75 0.19 0.48 3.28 68.47 19.34 1.40 89.69 10.31
All Public Thrift Median 26.19 69.53 0.03 0.02 3.09 68.86 18.82 1.06 90.68 9.32
Comparative Group
Allied First Bancorp, Inc. 14.69 84.45 0.00 0.00 0.86 87.63 0.00 1.47 89.10 10.90
Blue River Bancshares, Inc. 38.67 55.26 1.23 2.22 2.61 85.68 2.29 1.79 89.76 10.24
Crazy Woman Creek Bancorp Inc. 26.73 67.96 0.11 0.32 4.88 62.14 18.82 1.07 82.03 17.97
Fidelity Federal Bancorp 31.48 55.25 1.62 0.00 11.65 80.72 10.27 1.76 92.75 7.25
Grand Central Financial Corp. 39.69 55.81 1.32 0.00 3.00 67.76 14.51 2.06 84.34 15.66
Home City Financial Corporation 9.77 85.09 0.00 0.23 4.91 66.20 25.71 0.37 92.28 7.72
Homestead Bancorp, Inc. 51.24 47.01 0.00 0.00 1.75 49.55 39.83 0.63 90.02 9.98
Indian Village Bancorp Inc. 40.73 54.66 0.07 0.00 4.54 58.06 32.61 0.31 90.97 9.03
Lawrence Financial Holdings, Inc. 23.16 71.77 0.11 0.00 4.95 88.49 0.00 0.52 89.01 10.99
Mutual Community
Savings Bank, Inc., SSB 45.24 50.86 0.00 0.00 3.90 69.56 19.25 1.06 89.86 10.14
Sobieski Bancorp, Inc. 30.67 63.82 0.00 0.00 5.51 62.34 27.51 2.12 91.98 8.02
Southern Banc Company, Inc. (The) 66.30 31.88 0.00 0.01 1.81 74.46 8.14 0.85 83.44 16.56
SouthFirst Bancshares, Inc. 25.17 68.90 0.38 0.40 5.16 71.63 16.91 1.41 89.96 10.04
StateFed Financial Corporation 6.20 88.34 0.97 0.00 4.48 75.96 9.10 0.79 85.85 14.15
Source: Community First; SNL Financial; Feldman Financial.
====================================================================================================================================
Exhibit 5
Regulatory Capital, Credit Risk, and Loan Composition
As of or for the Latest Twelve Months Ended December 31, 2002
====================================================================================================================================
Tier 1 Total
Tangible Risk- Risk- Total Resid. Other Nonmtg.
Capital based based NPLs/ NPAs/ Resrvs./ Resrvs./ Mtgs./ Mtgs./ Loans/
Ratio Capital Capital Loans Assets NPAs Loans Loans Loans Loans
------ ------- ------- ----- ------- ----- ------ ------ ----- -----
Community First Bank 5.83 10.48 11.12 0.33 0.29 123.26 0.41 88.34 5.60 6.06
Comparative Group Average 11.13 18.66 20.69 1.54 1.14 121.79 1.08 62.09 18.37 19.55
Comparative Group Median 10.06 15.12 17.04 0.77 0.76 94.18 0.84 62.26 14.95 15.15
All Public Thrift Average 9.91 15.83 16.94 1.02 0.67 188.96 1.04 59.17 27.26 13.59
All Public Thrift Median 9.03 13.72 14.94 0.50 0.45 116.59 0.93 60.44 29.64 9.93
Comparative Group
Allied First Bancorp, Inc. 10.90 12.88 NA NA NA NA 0.84 37.92 0.00 62.08
Blue River Bancshares, Inc. 8.20 11.94 13.20 3.74 3.36 48.31 2.86 47.34 34.89 17.77
Crazy Woman Creek Bancorp Inc. 17.71 21.93 22.68 0.00 0.11 436.90 0.71 47.70 38.49 13.81
Fidelity Federal Bancorp 7.25 9.95 NA 1.24 2.31 27.36 1.13 67.04 7.59 25.37
Grand Central Financial Corp. 15.66 35.90 36.60 0.96 1.86 16.96 0.57 76.98 2.65 20.37
Home City Financial Corporation 7.51 10.00 10.40 0.14 0.21 158.18 0.39 54.10 32.72 13.18
Homestead Bancorp, Inc. 9.98 23.32 24.00 0.57 0.27 94.18 0.54 80.44 7.53 12.03
Indian Village Bancorp Inc. 9.03 16.83 17.64 3.00 1.73 23.11 0.73 79.17 14.08 6.75
Lawrence Financial Holdings, Inc. 10.99 14.28 15.19 0.70 0.62 133.37 1.14 45.52 10.52 43.96
Mutual Community
Savings Bank, Inc., SSB 10.14 18.33 19.23 0.66 0.34 144.87 0.95 59.30 29.11 11.59
Sobieski Bancorp, Inc. 8.02 10.70 12.00 6.29 NA NA 2.78 65.21 15.82 18.97
Southern Banc Company, Inc. (The) 16.55 47.45 47.88 0.20 0.06 180.82 0.37 83.31 0.21 16.48
SouthFirst Bancshares, Inc. 9.68 15.95 16.45 0.77 0.89 75.61 1.00 58.65 33.40 7.95
StateFed Financial Corporation 14.15 11.83 12.98 1.70 1.89 NA NA 66.53 30.12 3.35
Source: Community First; SNL Financial; Feldman Financial.
Exhibit 6
Profile of Comparative Group Companies
Allied First Bancorp, Inc. ("Allied First")
- -------------------------------------------
On September 1, 2001, Allied Pilots Association Federal Credit Union
converted from a federal credit union charter to an Illinois state-chartered
mutual savings bank. Allied First Bank, SB was originally formed in January 1994
as Allied Pilots Association Federal Credit Union and expanded rapidly through
2001. Until conversion to the mutual savings bank charter (effective September
1, 2001), the customers were restricted to current and past members of the
Allied Pilots Association (American Airlines and American Eagle Union Pilots),
certain related organizations, and their immediate family members. Given the
geographic dispersion of the customer base, products and services are offered
through various channels such as direct payroll deposit, credit cards, debit
cards, 24-hour telephone access, home banking services, and access through ATM
networks located worldwide. Allied First maintains a consumer lending
orientation, offering various secured and unsecured forms of consumer credit
(vehicle loans, lines of credit, home equity loans, first mortgages, and other
consumer installment credit).
As of December 31, 2002, Allied First had total assets of $94.3 million
and total equity to assets of 10.90%. Net income for the twelve-month period
ended December 31, 2002 was $308,000, or 0.35% of average assets and 3.07% on
average equity. Net interest income for the twelve-month period ended December
31, 2002, was $3.2 million, or 3.65% of average assets. Net interest margin for
the period was 3.65%. Yield on earning assets was 6.18% and the cost of funds
was 3.17%. Noninterest income totaled $574,000, or 0.81% of average assets while
non-interest expense totaled $3.0 million, or 3.42% of average assets.
As of December 31, 2002, Allied First had $80.3 million in total loans
outstanding, or 84.5% of total assets. Approximately 37.9% of Allied First's
total loan portfolio was comprised of 1-4 family residential loans and 62.1% of
the loan portfolio was comprised of commercial and consumer loans.
Blue River Bancshares, Inc. ("Blue River")
- ------------------------------------------
Blue River Bancshares, Inc. is the bank holding company for Shelby
County Bank (the Bank), a federally chartered savings association. The Bank's
primary service area is Shelby County, Indiana. The Bank's investment portfolio
consists of U.S. government agency-issued debt securities, mortgage-backed
securities with both fixed and adjustable interest rates, municipal bonds, and
corporate debt issues. The Bank's primary funding source is its base of core
customer deposits, which includes interest-bearing and noninterest-bearing
demand deposits, savings accounts, money market accounts and certificates of
deposit.
As of December 31, 2002, Blue River had total assets of $109.3 million
and total equity to assets of 10.24%. Net income for the twelve-month period
ended December 31, 2002 was a negative $4.5 million, or (3.69)% of average
assets and (38.57)% on average equity. Net interest income for the twelve-month
period ended December 31, 2002, was $2.4 million, or 2.11% of
Exhibit 6 (continued)
Summary Profile of Comparative Group Companies
average assets. Net interest margin for the period was 2.22%. Yield on earning
assets was 6.37% and the cost of funds was 4.41%. Noninterest income totaled
$410,000, or 0.36% of average assets while noninterest expense totaled $3.9
million, or 3.33% of average assets.
As of December 31, 2002, Blue River had $58.3 million in total loans
outstanding, or 55.3% of total assets. Approximately 47.3% of Blue River's total
loan portfolio was comprised of 1-4 family residential loans, other real estate
loans comprised 34.9% of the total loan portfolio, and commercial and consumer
loans totaled 17.8% of the total loan portfolio.
Crazy Woman Creek Bancorp, Inc. ("Crazy Woman Creek")
- -----------------------------------------------------
Crazy Woman Creek Bancorp, Inc. is a unitary savings and loan holding
company for Buffalo Federal Savings Bank (the Bank). The Bank attracts deposits
from the general public in its primary market areas of Johnson, Campbell and
Sheridan counties in Wyoming. The Bank uses such deposits primarily to originate
loans secured by first mortgages on one- to four-family residences in its market
areas, consumer loans, commercial loans, and loans secured by savings accounts.
The principal sources of funds for the Bank's lending activities are deposits,
the amortization, repayment and maturity of loans, and Federal Home Loan Bank
(FHLB) advances.
As of December 31, 2002, Crazy Woman Creek had total assets of $75.4
million and total equity to assets of 17.97%. Net income for the twelve-month
period ended December 31, 2002 was $181,000, or 0.25% of average assets and
1.35% on average equity. Net interest income for the twelve-month period ended
December 31, 2002, was $2.3 million, or 3.16% of average assets. Net interest
margin for the period was 3.31%. Yield on earning assets was 6.35% and the cost
of funds was 3.61%. Noninterest income totaled $115,000, or 0.16% of average
assets while noninterest expense totaled $1.9 million, or 2.64% of average
assets.
As of December 31, 2002, Crazy Woman Creek had $51.6 million in total
loans outstanding, or 68.0% of total assets. Approximately 47.7% of Crazy Woman
Creek's total loan portfolio was comprised of 1-4 family residential loans,
other real estate loans comprised 38.5% of the total loans, and commercial and
consumer loans totaled 13.8% of the loan portfolio.
Fidelity Federal Bancorp ("Fidelity Federal")
- ---------------------------------------------
Fidelity Federal Bancorp is a savings and loan holding company that
operates through its savings bank subsidiary, United Fidelity Bank, FSB
(United). United was organized in 1914 and is a federally chartered stock
savings bank located in Evansville, Indiana. United is engaged in the business
of obtaining funds in the form of savings deposits and other borrowings and
investing such funds in consumer, commercial and mortgage loans, as well as in
investment and money market securities. United primarily serves the Evansville
metropolitan area.
Exhibit 6 (continued)
Summary Profile of Comparative Group Companies
As of December 31, 2002, Fidelity Federal had total assets of $132.3
million and total equity to assets of 7.25%. Net income for the twelve-month
period ended December 31, 2002 was a negative ($4.4) million, or (2.75)% of
average assets and (36.82)% on average equity. Net interest income for the
twelve-month period ended December 31, 2002, was $3.0 million, or 2.08% of
average assets. Net interest margin for the period was 2.40%. Yield on earning
assets was 6.76% and the cost of funds was 4.54%. Noninterest income totaled
$3.3 million, or 1.21% of average assets while noninterest expense totaled $8.1
million, or 5.57% of average assets.
As of December 31, 2002, Fidelity Federal had $51.6 million in total
loans outstanding, or 55.3% of total assets. Approximately 69.0% of Fidelity
Federal's total loan portfolio was comprised of 1-4 family residential loans,
other real estate loans comprised 7.6% of the total loan portfolio, and
commercial and consumer loans totaled 25.4% of the total loan portfolio.
Grand Central Financial Corp. ("Grand Central")
- -----------------------------------------------
Grand Central Financial Corp. is the holding company of Central Federal
Savings and Loan Association (the Association), a community-oriented savings
institution. The Association's principal business consists of attracting
deposits from the general public in its primary market area and investing those
deposits and other funds, generated from operations, and from FHLB advances,
primarily in conventional mortgage loans secured by single-family residences.
The Association also invests in consumer loans, primarily indirect automobile
loans and loans originated directly or on its behalf by automobile dealers at
the time of sale. To a lesser extent, the Association invests in home equity,
multi-family, commercial real estate, construction and land loans. The
Association also invests in mortgage-backed securities, primarily those
guaranteed or insured by government agencies such as Ginnie Mae, Fannie Mae and
Freddie Mac, and other investment grade securities.
As of December 31, 2002, Grand Central had total assets of $113.5
million and total equity to assets of 15.66%. Net income for the twelve-month
period ended December 31, 2002 was $641,000, or 0.43% of average assets and
2.85% on average equity. Net interest income for the twelve-month period ended
December 31, 2002, was $3.6 million, or 3.26% of average assets. Net interest
margin for the period was 3.33%. Yield on earning assets was 6.63% and the cost
of funds was 3.87%. Noninterest income totaled $624,000, or 0.24% of average
assets, including $200,000, or 0.14% of average assets related to the gain on
sale of loans, while noninterest expense totaled $3.3 million, or 2.84% of
average assets.
As of December 31, 2002, Grand Central had $62.9 million in total loans
outstanding, or 55.8% of total assets. Approximately 77.0% of Grand Central's
total loan portfolio was comprised of residential real estate loans, other real
estate loans comprised 2.7% of the total loan portfolio, and commercial and
consumer loans totaled 20.4% of the total loan portfolio.
Exhibit 6 (continued)
Summary Profile of Comparative Group Companies
Home City Financial Corp. ("Home City")
- ---------------------------------------
Home City Financial Corporation is a unitary savings and loan holding
company that owns Home City Federal Savings Bank of Springfield (Home City
Federal) and Home City Insurance Agency, Inc. (HCIA) a local insurance agency.
Home City Federal is a savings association principally engaged in the business
of making permanent first and second mortgage loans secured by one- to
four-family residential real estate and nonresidential real estate located in
its primary lending area and investing in U.S. Government and federal agency
obligations, interest-bearing deposits in other financial institutions,
mortgage-backed securities, and municipal securities. Home City Federal also
originates loans for the construction of residential real estate and loans
secured by multifamily real estate (over four units), commercial loans, and
consumer loans. Home City Federal conducts business from its two offices located
in Springfield, Ohio.
As of December 31, 2002, Home City had total assets of $149.7 million
and total equity to assets of 7.72%. Net income for the twelve-month period
ended December 31, 2002 was $457,000, or 0.31% of average assets and 3.97% on
average equity. Net interest income for the twelve-month period ended December
31, 2002, was $3.8 million, or 2.59% of average assets. Net interest margin for
the period was 2.76%. Yield on earning assets was 7.08% and the cost of funds
was 4.43%. Noninterest income totaled $634,000, or 0.24% of average assets,
while noninterest expense totaled $3.7 million, or 2.32% of average assets.
As of December 31, 2002, Home City had $127.9 million in total loans
outstanding, or 85.1% of total assets. Approximately 54.1% of Home City's total
loan portfolio was comprised of residential real estate loans, other real estate
loans comprised 32.7% of the total loan portfolio, and commercial and consumer
loans totaled 13.2% of the total loan portfolio.
Homestead Bancorp, Inc. ("Homestead Bancorp")
- ---------------------------------------------
Homestead Bancorp, Inc. is the holding company for Homestead Bank (the
Bank). The Bank is a federally chartered savings bank that conducts business
through two full-service offices located in Ponchatoula and Amite, Louisiana.
Through the Bank, Homestead Bancorp is primarily engaged in attracting deposits
from the general public through its offices and using such funds to originate
loans secured by single-family residences located primarily in Tangipahoa,
Livingston and St. Helena Parishes, Louisiana, and to purchase mortgage-backed
securities. To a much lesser extent, Homestead Bancorp originates construction
loans secured by single-family residential real estate, as well as consumer
loans. Homestead Bancorp also originates, to a limited extent, commercial real
estate loans and land loans, and invests in interest-bearing deposits in other
financial institutions and U.S. Government and federal agency obligations.
Exhibit 6 (continued)
Summary Profile of Comparative Group Companies
As of December 31, 2002, Homestead Bancorp had total assets of $135.5
million and total equity to assets of 9.98%. Net income for the twelve-month
period ended December 31, 2002 was $644,000, or 0.48% of average assets and
5.05% on average equity. Net interest income for the twelve-month period ended
December 31, 2002, was $3.0 million, or 2.29% of average assets. Net interest
margin for the period was 2.36%. Yield on earning assets was 6.09% and the cost
of funds was 4.02%. Noninterest income totaled $509,000, or 0.38% of average
assets, while noninterest expense totaled $2.7 million, or 2.05% of average
assets.
As of December 31, 2002, Homestead Bancorp had $64.0 million in total
loans outstanding, or 47.0% of total assets. Approximately 80.4% of Homestead
Bancorp's total loan portfolio was comprised of residential real estate loans,
other real estate loans comprised 7.5% of total loans, and commercial and
consumer loans totaled 12.0% of the loan portfolio.
Indian Village Bancorp, Inc. ("Indian Village Bancorp")
- -------------------------------------------------------
Indian Village Bancorp, Inc. is the holding company for Indian Village
Community Bank (the Bank) and is the sole member of Delaware Valley Title, LLC
(Title Company). The Bank's principal business is attracting deposits from the
general public and originating loans secured by one- to four-family residential
real estate properties located in its market area, Tuscarawas County in east
central Ohio, although it also originates loans to borrowers and accepts
deposits from individuals residing in contiguous counties.
As of December 31, 2002, Indian Village Bancorp had total assets of
$94.4 million and total equity to assets of 9.03%. Net income for the
twelve-month period ended December 31, 2002 was $220,000, or 0.25% of average
assets and 2.64% on average equity. Net interest income for the twelve-month
period ended December 31, 2002, was $1.9 million, or 2.18% of average assets.
Net interest margin for the period was 2.28%. Yield on earning assets was 6.19%
and the cost of funds was 4.15%. Noninterest income totaled $228,000, or 0.26%
of average assets, while noninterest expense totaled $1.6 million, or 1.85% of
average assets.
As of December 31, 2002, Indian Village Bancorp had $52.1 million in
total loans outstanding, or 47.0% of total assets. Approximately 79.2% of Indian
Village Bancorp's total loans was comprised of residential real estate loans,
other real estate loans comprised 14.1% of the loan portfolio, and commercial
and consumer loans totaled 6.8% of the loan portfolio.
Lawrence Financial Holdings, Inc. ("Lawrence Financial")
- --------------------------------------------------------
Lawrence Financial Holdings, Inc. is the holding company for Lawrence
Federal Savings Bank (Lawrence Federal), a federally chartered savings bank
headquartered in Ironton, Ohio. Lawrence Federal operates a total of five
full-service banking offices in Ironton, Chesapeake,
Exhibit 6 (continued)
Summary Profile of Comparative Group Companies
South Point, Rome and Wheelersburg in southeastern Ohio. Lawrence Federal
operates as a community-oriented financial institution focused on meeting the
financial service needs of consumers in its market area. To accomplish this
objective, Lawrence Federal offers a variety of mortgage and consumer loans and
retail deposit products. It has historically extended its lending activities
outside of its market area through programs for originating mobile home and
automobile loans through a network of dealers. These indirect lending programs
have helped Lawrence Federal originate a larger amount of consumer loans, which
typically have shorter terms and higher yields than mortgage loans, than it
would otherwise be able to originate.
As of December 31, 2002, Lawrence Financial had total assets of $134.4
million and total equity to assets of 10.99%. Net income for the twelve-month
period ended December 31, 2002 was 606,000, or 0.45% of average assets and 4.07%
on average equity. Net interest income for the twelve-month period ended
December 31, 2002, was $5.0 million, or 3.71% of average assets. Net interest
margin for the period was 4.01%. Yield on earning assets was 7.01% and the cost
of funds was 3.18%. Noninterest income totaled $689,000, or 0.50% of average
assets, while noninterest expense totaled $4.0 million, or 2.94% of average
assets.
As of December 31, 2002, Lawrence Financial had $97.0 million in total
loans outstanding, or 71.8% of total assets. Approximately 45.5% of Lawrence
Financial's total loan portfolio was comprised of residential real estate loans,
other real estate loans comprised 10.5% of the loan portfolio, and commercial
and consumer loans totaled 44.0% of total loans.
Mutual Community Savings Bank, Inc. SSB ("Mutual Community")
- ------------------------------------------------------------
Mutual Community Savings Bank, Inc. SSB (the Bank) is a North
Carolina-chartered stock savings bank. The Bank's primary business is to solicit
deposit accounts and invest those funds by originating loans for the purchase or
refinancing of one- to four-family residences. The Bank's loans are originated
and deposits are attracted through two branches in Durham and one branch in
Greensboro, North Carolina.
As of December 31, 2002, Mutual Community had total assets of $77.9
million and total equity to assets of 10.14%. Net income for the twelve-month
period ended December 31, 2002 was a negative $592,000, or (0.79)% of average
assets and (7.00)% on average equity. Net interest income for the twelve-month
period ended December 31, 2002, was $2.6 million, or 3.50% of average assets.
Net interest margin for the period was 3.68%. Yield on earning assets was 5.92%
and the cost of funds was 2.53%. Noninterest income totaled $593,000, or 0.79%
of average assets, while noninterest expense totaled $3.2 million, or 4.25% of
average assets.
As of December 31, 2002, Mutual Community had $40.0 million in total
loans, or 50.9% of total assets. Residential real estate loans were 59.3% of
Mutual Community's total loans, other real estate loans composed 29.1%, and
commercial and consumer loans totaled 11.6%.
Sobieski Bancorp, Inc. ("Sobieski Bancorp")
- -------------------------------------------
Sobieski Bancorp, Inc. is a unitary savings and loan holding company
for Sobieski Bank (the Bank), a community-oriented financial institution
offering financial products and services to meet the needs of the communities it
serves. The Bank attracts deposits from the general public and uses such
deposits, together with other funds, to originate primarily one- to four-family,
fixed-rate and variable-rate residential mortgage loans for retention in its
portfolio or for sale. In addition, the Bank originates construction loans,
consumer loans, real estate-backed small business commercial loans, and other
commercial loans.
As of December 31, 2002, Sobieski Bancorp had total assets of $130.9
million and total equity to assets of 8.02%. Net income for the twelve-month
period ended December 31, 2002 was a negative $2.9 million, or (2.11)% of
average assets and (26.21)% on average equity. Net interest income for the
twelve-month period ended December 31, 2002, was $3.2 million, or 2.35% of
average assets. Net interest margin for the period was 2.44%. Yield on earning
assets was 6.33% and the cost of funds was 4.65%. Noninterest income totaled
$787,000, or 0.57% of average assets, while noninterest expense totaled $3.4
million, or 2.43% of average assets. Sobieski Bancorp recorded provisions for
loan losses of $7.0 million, or 5.10% of average assets for the twelve months
ended December 31, 2002.
As of December 31, 2002, Sobieski Bancorp had $84.9 million in total
loans outstanding, or 63.8% of total assets. Approximately 65.2% of Sobieski
Bancorp's total loan portfolio was comprised of residential real estate loans,
other real estate loans comprised 15.8% of the total loan portfolio, and
commercial and consumer loans totaled 19.0% of the total loan portfolio.
Southern Banc Company, Inc. ("Southern Banc")
- ---------------------------------------------
The Southern Banc Company, Inc. is the holding company for The Southern
Bank Company (the Bank), an independent community-oriented savings institution
dedicated to providing customer service. The Bank is primarily engaged in the
business of obtaining funds in the form of various savings deposit products and
investing those funds in mortgage loans or single-family real estate, and, to a
lesser extent, in consumer loans. It operates from its four offices in the
northeast portion of Alabama and originates the majority of its loans in this
market area. The Bank considers its primary market area to consist of the
counties of Etowah, Cherokee and Marshall in northeast Alabama.
As of December 31, 2002, Southern Banc had total assets of $112.6
million and total equity to assets of 16.56%. Net income for the twelve-month
period ended December 31, 2002 was $810,000, or 0.74% of average assets and
4.48% on average equity. Net interest income for the twelve-month period ended
December 31, 2002, was $3.0 million, or 2.72% of average assets. Net interest
margin for the period was 2.75%. Yield on earning assets was 5.69% and the
Exhibit 6 (continued)
Summary Profile of Comparative Group Companies
cost of funds was 3.51%. Noninterest income totaled $152,000, or 0.14% of
average assets, while noninterest expense totaled $2.0 million, or 1.80% of
average assets.
As of December 31, 2002, Southern Banc had $35.8 million in total loans
outstanding, or 31.9% of total assets. Approximately 83.3% of Southern Banc's
total loan portfolio was comprised of residential real estate loans, other real
estate loans comprised 0.21% of the total loan portfolio, and commercial and
consumer loans totaled 16.5% of the total loan portfolio.
SouthFirst Bancshares, Inc. ("SouthFirst")
- ------------------------------------------
SouthFirst Bancshares, Inc. is the holding company for First Federal of
the South (the Bank). The Bank operates two wholly owned subsidiaries, Pension
and Benefit Financial Services, Inc., doing business as Pension and Benefit
Trust Company, and SouthFirst Mortgage, Inc. The Bank is a federally chartered
savings association engaged in attracting retail deposits from the general
public and investing those deposits, together with funds generated from
operations, primarily in one- to four-family mortgage loans, residential
construction loans, mortgage-backed securities, and investment securities. The
Bank's primary deposit gathering and lending area covers Talladega, Chilton and
Bibb Counties in central Alabama.
As of December 31, 2002, SouthFirst had total assets of $136.9 million
and total equity to assets of 10.04%. Net income for the twelve-month period
ended December 31, 2002 was $661,000, or 0.47% of average assets and 4.86% on
average equity. Net interest income for the twelve-month period ended December
31, 2002, was $3.8 million, or 2.69% of average assets. Net interest margin for
the period was 3.04%. Yield on earning assets was 6.51% and the cost of funds
was 3.54%. Noninterest income totaled $3.0 million, or 1.57% of average assets,
while noninterest expense totaled $6.6 million, or 4.67% of average assets.
As of December 31, 2002, SouthFirst had $94.8 million in total loans
outstanding, or 68.9% of total assets. Approximately 58.7% of SouthFirst's total
loan portfolio was comprised of residential real estate loans, other real estate
loans comprised 33.4% of the total loan portfolio, and commercial and consumer
loans totaled 8.0% of the total loan portfolio.
StateFed Financial Corporation ("StateFed")
- -------------------------------------------
StateFed Financial Corporation is the holding company for State Federal
Savings and Loan Association of Des Moines (the Bank), which is headquartered in
Clive, Iowa. The Bank's principal business consists of attracting retail
deposits from the general public and investing those funds primarily in
residential mortgage and commercial and multi-family real estate loans, and, to
a lesser extent, construction and consumer loans in the Bank's market area. The
Bank also invests in U.S. government and agency obligations and other
permissible investments.
Exhibit 6 (continued)
Summary Profile of Comparative Group Companies
As of December 31, 2002, StateFed had total assets of $98.9 million and
total equity to assets of 14.15%. Net income for the twelve-month period ended
December 31, 2002 was $188,000, or 0.19% of average assets and 1.33% on average
equity. Net interest income for the twelve-month period ended December 31, 2002,
was $3.3 million, or 3.26% of average assets. Net interest margin for the period
was 3.47%. Yield on earning assets was 7.24% and the cost of funds was 4.19%.
Noninterest income totaled $373,000, or 0.25% of average assets, while
noninterest expense totaled $3.4 million, or 3.17% of average assets.
As of December 31, 2002, StateFed had $83.9 million in total loans
outstanding, or 68.9% of total assets. Approximately 66.5% of StateFed's total
loan portfolio was comprised of residential real estate loans, other real estate
loans comprised 30.1% of the total loan portfolio, and commercial and consumer
loans totaled 3.4% of the total loan portfolio.
================================================================================
Exhibit 7
Comparative Market Index Change
March 17, 2003 to May 5, 2003
================================================================================
3/17/03 5/5/03 3/17/03-
Index Index 5/5/03
Value Value Change
S&P 500 Stock Index 862.8 926.6 7.4%
NASDAQ Index 1,392.3 1,504.0 8.0%
SNL All Public Thrift Index 1,085.3 1,209.2 11.4%
SNL Thrift Southeast Index 911.5 934.8 2.6%
SNL Small Public Thrift Index 1,062.7 1,094.0 2.9%
- --------------------------------------------------------------------------------
Source: SNL Financial.
================================================================================================================
Exhibit 8
Comparative Group Stock Price Change
March 17, 2003 to May 5, 2003
================================================================================================================
Stock Stock Price/
Price Stock LTM EPS (1) Book Value
----------------- Price ---------------- --------------------
3/17/03 5/5/03 Change 3/17/03 5/5/03 3/17/03 5/5/03
($) ($) (%) (x) (x) (%) (%)
- ----------------------------------------------------------------------------------------------------------------
Comparative Group Average NA NA 5.1% 19.7 20.6 84.9 89.6
Comparative Group Median NA NA 2.3% 20.2 18.4 86.0 87.8
- ----------------------------------------------------------------------------------------------------------------
Kentucky Group Average NA NA 9.1% 14.8 16.2 107.1 115.6
Kentucky Group Median NA NA 5.2% 15.4 16.8 109.3 121.6
- ----------------------------------------------------------------------------------------------------------------
Allied First Bancorp, Inc. 11.85 13.25 11.8% 23.2 26.0 70.2 78.5
Blue River Bancshares, Inc. 4.68 4.75 1.5% NM NM 77.7 89.5
Crazy Woman Creek Bancorp Inc. 13.98 14.41 3.1% 60.8 62.7 83.7 86.2
Fidelity Federal Bancorp 1.61 1.60 -0.6% NM NM 113.4 114.3
Grand Central Financial Corp. 10.39 11.82 13.8% 33.5 NM 98.4 110.7
Home City Financial Corporation 13.10 13.00 -0.8% 21.1 17.8 88.9 88.2
Homestead Bancorp, Inc. 13.25 12.92 -2.5% 19.2 18.7 90.6 88.4
Indian Village Bancorp Inc. 17.50 20.00 14.3% 30.7 46.5 76.5 87.4
Lawrence Financial Holdings, Inc. 18.70 22.00 17.6% 21.3 27.2 89.3 104.6
Mutual Community Savings Bank, Inc., SSB 11.00 12.00 9.1% NM NM 50.5 55.1
Sobieski Bancorp, Inc. 13.45 13.49 0.3% NM NM 85.9 86.2
Southern Banc Company, Inc. (The) 13.65 14.00 2.6% 15.3 15.7 70.4 72.2
SouthFirst Bancshares, Inc. 14.84 14.80 -0.3% 18.1 18.1 86.1 85.9
StateFed Financial Corporation 11.65 11.89 2.1% NM 79.3 106.5 106.9
CKF Bancorp, Inc. 19.61 24.75 26.2% 9.9 12.4 96.4 124.8
Frankfort First Bancorp, Inc. 18.03 18.23 1.1% 17.5 18.2 124.3 126.0
Harrodsburg First Financial Bancorp, Inc. 14.26 15.00 5.2% 20.1 21.1 84.4 88.8
HopFed Bancorp, Inc. 13.94 15.10 8.3% 11.1 12.4 109.3 117.0
Kentucky First Bancorp, Inc. 17.20 17.99 4.6% 15.4 16.8 121.2 121.6
- ---------------------------------------------------------------------------------------------------------------------
(1) P/E means and medians exclude values greater than 30.
Source: SNL Financial.
========================================================================================================================
Exhibit 9
Comparative Market Valuation Analysis
Community First Bank and the Comparative Group
Market Price Data as of May 5, 2003
========================================================================================================================
Current Total Price/ Price/ Price/ Price/ Price/ Total Current
Stock Market LTM Qtr.Ann. Book Tang. Total Equity/ Dividend
Price Value EPS(1) EPS(2) Value Book Assets Assets Yield
Company ($) ($mil.) (x) (x) (%) (%) (%) (%) (%)
- ------------------------------------------------------------------------------------------------------------------------
Community First Bank
Pro Forma Minimum 10.00 1.79 (166.7) 7.6 55.2 55.2 5.26 9.53 0.00
Pro Forma Midpoint 10.00 2.10 (200.0) 9.0 59.4 59.4 6.13 10.33 0.00
Pro Forma Maximum 10.00 2.42 (250.0) 10.3 62.9 62.9 6.99 11.11 0.00
Pro Forma Adj. Maximum 10.00 2.78 (333.3) 11.8 66.3 66.3 7.95 11.99 0.00
Comparative Group Average NA 11.48 20.6 18.1 89.6 90.1 10.15 11.29 2.08
Kentucky Thrift Average NA 26.33 16.2 16.2 115.6 121.8 15.05 13.10 3.97
All Public Thrift Average NA 414.92 14.4 13.9 128.7 137.8 12.80 10.29 2.13
Comparative Group
Allied First Bancorp, Inc. 13.25 8.06 26.0 20.7 78.5 78.5 8.55 10.90 0.00
Blue River Bancshares, Inc. 4.75 11.43 NM NM 89.5 89.5 9.29 10.38 0.00
Crazy Woman Creek Bancorp Inc. 14.41 11.70 62.7 19.0 86.2 87.8 15.49 17.97 3.33
Fidelity Federal Bancorp 1.60 10.95 NM 40.0 114.3 114.3 7.70 6.75 0.00
Grand Central Financial Corp. 11.82 19.36 NM NM 110.7 110.7 17.60 15.91 3.05
Home City Financial Corporation 13.00 10.20 17.8 14.8 88.2 90.9 6.81 7.72 3.38
Homestead Bancorp, Inc. 12.92 11.95 18.7 17.0 88.4 88.4 8.82 9.98 1.86
Indian Village Bancorp Inc. 20.00 8.09 46.5 23.8 87.4 87.4 8.57 9.03 1.60
Lawrence Financial Holdings, Inc. 22.00 14.91 27.2 27.5 104.6 104.6 10.96 10.47 1.27
Mutual Community
Savings Bank, Inc., SSB 12.00 4.35 NM NM 55.1 55.1 5.58 10.14 2.25
Sobieski Bancorp, Inc. 13.49 9.05 NM 3.0 86.2 86.2 6.92 8.02 2.52
Southern Banc Company, Inc. (The) 14.00 13.46 15.7 21.9 72.2 72.2 11.95 16.56 2.50
SouthFirst Bancshares, Inc. 14.80 12.03 18.1 33.6 85.9 89.4 8.79 10.04 4.05
StateFed Financial Corporation 11.89 15.21 79.3 15.6 106.9 106.9 15.10 14.12 3.36
Kentucky Thrifts
CKF Bancorp, Inc. 24.75 18.21 12.4 12.6 124.8 135.5 12.20 9.77 3.23
Frankfort First Bancorp, Inc. 18.23 22.72 18.2 19.8 126.0 126.0 16.34 12.97 6.14
Harrodsburg First
Financial Bancorp, Inc. 15.00 20.01 21.1 15.0 88.8 91.4 12.94 14.57 4.00
HopFed Bancorp, Inc. 15.10 54.82 12.4 14.0 117.0 134.8 12.82 10.97 2.91
Kentucky First Bancorp, Inc. 17.99 15.88 16.8 19.6 121.6 121.6 20.93 17.22 3.56
====================================================================================================================
(1) P/E ratios greater than 30.0 are excluded from group averages.
(2) P/E ratios greater than 30.0 are excluded from group averages; tax-effected
P/E ratios for Community First are 12.0x, 14.1x, 16.1x, and 18.5x.
Source: Community First; SNL Financial; Feldman Financial.
Exhibit 10
Pro Forma Assumptions
1. The total amount of the net offering proceeds was fully invested at the
beginning of the applicable period.
2. The net offering proceeds are invested to yield a return of 1.16%, which
represented the one-year U.S. Treasury bill rate as of March 31, 2003. The
effective income tax rate was assumed to be 37.0%, resulting in an
after-tax yield of 0.73%.
3. It is assumed that 4.0% of the shares offered for sale at the initial
offering price will be acquired by the Bank's Management Recognition Plan
("MRP"). Pro forma adjustments have been made to earnings and equity to
reflect the impact of the MRP. The annual expense is estimated based on a
five-year vesting period. No reinvestment is assumed on proceeds used to
fund the MRP.
4. Offering expenses are estimated at $285,000.
5. No effect has been given to withdrawals from deposit accounts for the
purpose of purchasing common stock in the offering.
6. No effect has been given in the pro forma equity calculation for the
assumed earnings on the net proceeds.
Exhibit 11
Pro Forma Valuation Range
Community First Bank
Historical Financial Data as of March 31, 2003
(Dollars in Thousands, Except Per Share Data)
Adjusted
Minimum Midpoint Maximum Maximum
================================================================================================
Shares offered 178,500 210,000 241,500 277,725
Offering price $ 10.00 $ 10.00 $ 10.00 $ 10.00
- ------------------------------------------------------------------------------------------------
Gross proceeds $ 1,785 $ 2,100 $ 2,415 $ 2,777
Less: estimated expenses (285) (285) (285) (285)
--------- --------- --------- ---------
Net offering proceeds 1,500 1,815 2,130 2,492
Less: ESOP purchase 0 0 0 0
Less: MRP purchase (71) (84) (97) (111)
--------- --------- --------- ---------
Net offering proceeds $ 1,429 $ 1,731 $ 2,033 $ 2,381
- ------------------------------------------------------------------------------------------------
Net Income: (LTM 3/31/03)
Historical net income ($ 12) ($ 12) ($ 12) ($ 12)
Pro forma income on net proceeds 10 13 15 17
Pro forma ESOP adjustment 0 0 0 0
Pro forma MRP adjustment (9) (11) (12) (14)
--------- --------- --------- ---------
Pro forma net income ($ 11) ($ 10) ($ 9) ($ 9)
--------- --------- --------- ---------
Pro forma earnings per share ($ 0.06) ($ 0.05) ($ 0.04) ($ 0.03)
- ------------------------------------------------------------------------------------------------
Net Income: (Qtr. annlzd. 3/31/03) 17,094
Quarter ended 3/31/03 annualized $ 232 $ 232 $ 232 $ 232
Pro forma income on net proceeds 10 13 15 17
Pro forma ESOP adjustment 0 0 0 0
Pro forma MRP adjustment (9) (11) (12) (14)
--------- --------- --------- ---------
Pro forma net income $ 233 $ 234 $ 235 $ 235
--------- --------- --------- ---------
Pro forma earnings per share $ 1.31 $ 1.11 $ 0.97 $ 0.85
- ------------------------------------------------------------------------------------------------
Total Equity $ 1,807 $ 1,807 $ 1,807 $ 1,807
Net proceeds 1,500 1,815 2,130 2,492
Less: ESOP purchase 0 0 0 0
Less: MRP purchase (71) (84) (97) (111)
--------- --------- --------- ---------
Pro forma total equity $ 3,236 $ 3,538 $ 3,840 $ 4,188
--------- --------- --------- ---------
Pro forma book value $ 18.13 $ 16.85 $ 15.90 $ 15.08
- ------------------------------------------------------------------------------------------------
Tangible Equity $ 1,807 $ 1,807 $ 1,807 $ 1,807
Net proceeds 1,500 1,815 2,130 2,492
Less: ESOP purchase 0 0 0 0
Less: MRP purchase (71) (84) (97) (111)
--------- --------- --------- ---------
Pro forma tangible equity $ 3,236 $ 3,538 $ 3,840 $ 4,188
--------- --------- --------- ---------
Pro forma tangible book value $ 18.13 $ 16.85 $ 15.90 $ 15.08
- ------------------------------------------------------------------------------------------------
Total Assets $ 32,534 $ 32,534 $ 32,534 $ 32,534
Net proceeds 1,500 1,815 2,130 2,492
Less: ESOP purchase 0 0 0 0
Less: MRP purchase (71) (84) (97) (111)
--------- --------- --------- ---------
Pro forma total assets $ 33,963 $ 34,265 $ 34,567 $ 34,915
- ------------------------------------------------------------------------------------------------
Pro Forma Valuation Ratios:
Price / EPS - 3/31/03 LTM (166.67) (200.00) (250.00) (333.33)
Price / EPS - 3/31/03 Qtr. annlzd 7.63 9.01 10.31 11.76
Price / Book Value 55.2% 59.4% 62.9% 66.3%
Price / Tangible Book Value 55.2% 59.4% 62.9% 66.3%
Price / Total Assets 5.26% 6.13% 6.99% 7.95%
================================================================================================
Exhibit 12
Pro Forma Conversion Analysis at Maximum
Community First Bank
Historical Financial Data as of March 31, 2003
==========================================================================================================
Valuation Parameters Symbol Data
-------------------- ------ -----
Net income -- 3/31/03 LTM Y $ (12,000)
Net income -- 3/31/03 Qtr. ann. Y 232,000
Net worth B 1,807,000
Tangible net worth B 1,807,000
Total assets A 32,534,000
Expenses in conversion X 285,000
Other proceeds not reinvested O 96,600
ESOP purchase E 0.0% -
ESOP expense (pre-tax) F 0.0% -
MRP purchase M 4.0% 96,600
MRP expense (pre-tax) N 20.0% 19,320
Re-investment rate (after-tax) R 0.73%
Tax rate T 37.00%
Shares for EPS S 100.00%
Pro Forma Valuation Ratios at Maximum Value
-------------------------------------------
Price / EPS -- 3/31/03 LTM P/E -250.00 x
Price / EPS -- 3/31/03 Qtr. ann. P/E 10.31 x
Price / Book Value P/B 62.89%
Price / Tangible Book P/B 62.89%
Price / Assets P/A 6.99%
Pro Forma Calculation at Maximum Value Based on
-------------------------------------- --------
V = (P/E / S)*((Y-R*(O+X)-(F+N)*(1-T))) = $2,385,600 [LTM earnings]
-----------------------------------
1 - (P/E / S) * R
V = (P/E / S)*((Y-R*(O+X)-(F+N)*(1-T))) = $2,419,651 [Qtr. annlzd.]
-----------------------------------
1 - (P/E / S) * R
V = P/B * (B - X - E - M) = $2,415,678 [Book value]
---------------------
1 - P/B
V = P/B * (B - X - E - M) = $2,415,678 [Tangible book]
---------------------
1 - P/B
V = P/A * (B - X - E - M) = $2,415,030 [Total assets]
---------------------
1 - P/A
Pro Forma Valuation Range
Minimum = $2,100,000 x 0.85 = $1,785,000
Midpoint = $2,100,000 x 1.00 = $2,100,000
Maximum = $2,100,000 x 1.15 = $2,415,000
Adj. Max. = $2,415,000 x 1.15 = $2,777,250
==========================================================================================================
Exhibit 13
Comparative Valuation Ratios
Market Price Data as of May 5, 2003
===================================================================================================================================
Nationwide Kentucky
Comparative Public Thrift Public Thrift
Valuation Community Group Aggregate(1) Aggregate(2)
--------------------- ---------------------- ---------------------
Ratio Symbol First Mean Median Mean Median Mean Median
------ ------ --- ------ ---- ------ ---- ------ ---- ------
Price / LTM EPS (3) P/E
------------
Minimum (X) -166.7 20.6 18.4 14.4 13.5 16.2 16.8
Midpoint -200.0
Maximum -250.0
Adj. Maximum -333.3
------------
Price / Qtr. Ann. EPS (3) P/E
------------
Minimum (X) 7.6 18.1 19.0 13.9 12.8 16.2 15.0
Midpoint 9.0
Maximum 10.3
Adj. Maximum 11.8
------------
Price / Book Value P/B
------------
Minimum (%) 55.2 89.6 87.8 128.7 120.0 115.6 121.6
Midpoint 59.4
Maximum 62.9
Adj. Maximum 66.3
------------
Price / Tang. Book P/B
------------
Minimum (%) 55.2 90.1 88.9 137.8 128.3 121.8 126.0
Midpoint 59.4
Maximum 62.9
Adj. Maximum 66.3
------------
Price / Total Assets P/A
------------
Minimum (%) 5.26 10.15 8.81 12.80 12.01 15.05 12.94
Midpoint 6.13
Maximum 6.99
Adj. Maximum 7.95
------------
===================================================================================================================================
(1) Includes 244 publicly-traded, non-MHC, non-acquired thrifts nationwide.
(2) Includes 5 publicly-traded, non-MHC, non-acquired thrifts based in
Kentucky.
(3) P/E means and medians exclude values greater than 30.
Exhibit 14
Comparative Discount and Premium Analysis
Market Price Data as of May 5, 2003
=============================================================================================================================
Relative Premiums (Discounts)
----------------------------------------------
Comp. All All
Valuation Community Group Public Kentucky
Ratio Symbol First Average Thrifts(1) Thrifts(2)
------ ------ --- ------ ------- ---------- ----------
----------------------------------------------
Price / LTM EPS (3) P/E 20.6 14.4 16.2
------------- ----------------------------------------------
Minimum (X) (166.7) NM NM NM
Midpoint (200.0) NM NM NM
Maximum (250.0) NM NM NM
Adj. Maximum (333.3) NM NM NM
-------------
----------------------------------------------
Price / Qtr. Ann. EPS (3) P/E 18.1 13.9 16.2
------------- ----------------------------------------------
Minimum (X) 7.6 -62.9% -47.0% -52.8%
Midpoint 9.0 -56.2% -37.4% -44.3%
Maximum 10.3 -49.9% -28.4% -36.3%
Adj. Maximum 11.8 -42.8% -18.3% -27.3%
-------------
----------------------------------------------
Price / Book Value P/B 89.6 128.7 115.6
------------- ----------------------------------------------
Minimum (%) 55.2 -38.4% -57.1% -52.3%
Midpoint 59.4 -33.7% -53.9% -48.7%
Maximum 62.9 -29.8% -51.1% -45.6%
Adj. Maximum 66.3 -26.0% -48.5% -42.6%
-------------
----------------------------------------------
Price / Tangible Book P/B 90.1 137.8 121.8
------------- ----------------------------------------------
Minimum (%) 55.2 -38.8% -60.0% -54.7%
Midpoint 59.4 -34.1% -56.9% -51.3%
Maximum 62.9 -30.2% -54.4% -48.4%
Adj. Maximum 66.3 -26.4% -51.9% -45.6%
-------------
----------------------------------------------
Price / Total Assets P/A 10.2 12.8 15.0
------------- ----------------------------------------------
Minimum (%) 5.26 -48.2% -58.9% -65.1%
Midpoint 6.13 -39.6% -52.1% -59.3%
Maximum 6.99 -31.2% -45.4% -53.6%
Adj. Maximum 7.95 -21.6% -37.9% -47.1%
-------------
=============================================================================================================================
(1) Average for 244 publicly-traded, non-MHC, non-acquired thrifts nationwide.
(2) Average for 5 publicly-traded, non-MHC, non-acquired thrifts based in
Kentucky. (3) P/E means and medians exclude values greater than 30.
Table 12
Comparative Group Operating Summary
As of the Latest Period Ended December 31, 2002
Total Equity/
No. of Conv. Assets Assets
Company City State Ticker Exchange Offices Date ($000) (%)
------- ---- ----- ------ -------- -------- ----- ------ ---
Community First Bank Madisonville KY -- -- 1 -- 29,968 5.84
Comparative Group
Allied First Bancorp, Inc. Naperville IL AFBA OTC BB 1 12/31/01 94,283 10.90
Blue River Bancshares, Inc. Shelbyville IN BRBI NASDAQ 4 06/24/98 109,338 10.24
Crazy Woman Creek Bancorp Incorporated Buffalo WY CRZY NASDAQ 3 03/29/96 75,441 17.97
Fidelity Federal Bancorp Evansville IN FFED NASDAQ 5 08/31/87 132,290 7.25
First Capital Bancshares, Inc. Bennettsville SC FCPB OTC BB 2 10/29/99 38,544 9.85
Grand Central Financial Corp. Wellsville OH GCFC NASDAQ 3 12/30/98 113,450 15.66
Home City Financial Corporation Springfield OH HCFC NASDAQ 2 12/30/96 149,735 7.72
Homestead Bancorp, Inc. Ponchatoula LA HSTD OTC BB 3 07/20/98 135,472 9.98
Indian Village Bancorp Inc. Gnadenhutten OH IDVB OTC BB 2 07/02/99 94,430 9.03
Lawrence Financial Holdings, Inc. Ironton OH LWFH OTC BB 5 12/29/00 134,389 10.99
Lenox Bancorp, Inc. Cincinnati OH LNXC OTC BB 2 07/18/96 59,374 9.08
Mutual Community Savings Bank, Inc., SSB Durham NC MTUC OTC BB 3 06/29/93 77,930 10.14
Sobieski Bancorp, Inc. South Bend IN SOBI NASDAQ 3 03/31/95 130,867 8.02
Southern Banc Company, Inc. (The) Gadsden AL SRN AMEX 4 10/05/95 112,642 16.56
SouthFirst Bancshares, Inc. Sylacauga AL SZB AMEX 5 02/14/95 136,946 10.04
StateFed Financial Corporation Clive IA SFFC NASDAQ 3 01/05/94 98,889 14.15
Source: Community First; SNL Securities
Table 13
Key Financial Comparisons
Community First and the Comparative Group
As of or for the Latest Twelve Months Ended December 31, 2002
Comp.
Community Group
First Average
Profitability
- -------------
LTM Return on Average Assets (0.28)% (0.40)%
Core Return on Average Assets (0.28) (0.24)
LTM Return on Average Equity (4.50) (5.47)
Core Return on Average Equity (4.50) (3.80)
Income and Expense (% of avg. assets)
- ------------------
Total Interest Income 6.41 6.11
Total Interest Expense 3.17 3.28
Net Interest Income 3.24 2.82
Provision for Loan Losses 0.06 0.59
Other Operating Income 0.24 0.47
Net Gains & Nonrecurring Income 0.00 0.29
General & Administrative Expense 3.66 3.09
Real Estate Expense (Income) 0.00 0.01
Nonrecurring Expense 0.00 0.06
Yield-Cost Data
- ---------------
Yield on Earning Assets 7.00 6.45
Cost of Funds 3.56 3.81
----- -----
Net Interest Spread 3.44 2.65
Asset Utilization (% of avg. assets)
- -----------------
Avg. Interest-earning Assets 91.52 94.76
Avg. Interest-bearing Liabilities 89.21 85.95
----- -----
Net Interest-earning Assets 2.31 8.81
Table 13 (continued)
Key Financial Comparisons
Community First and the Comparative Group
As of or for the Latest Twelve Months Ended December 31, 2002
Comp.
Community Group
First Average
Balance Sheet Composition (% of assets)
Cash and Securities 10.99 % 32.12 %
Loans Receivable, net 85.79 62.93
Real Estate 0.00 0.42
Intangible Assets 0.00 0.23
Other Assets 3.22 4.29
Total Deposits 93.86 71.44
Borrowed Funds 0.00 16.07
Other Liabilities 0.30 1.16
Total Equity 5.84 11.33
Loan Portfolio (% of total loans)
Residential Mortgage Loans 88.34 62.09
Other Real Estate Mortgage Loans 5.60 18.37
Nonmortgage Loans 6.06 19.55
Growth Rates
Total Assets 1.48 (0.22)
Total Loans 16.03 (5.79)
Total Deposits 5.70 2.72
Credit Risk Ratios
Nonperforming Loans / Total Loans 0.33 1.54
Nonperforming Assets / Total Assets 0.29 1.14
Reserves / Nonperforming Loans 123.26 121.79
Reserves / Total Loans 0.41 1.08