EXHIBIT 13.2
EXHIBIT FROM 2002 ANNUAL REPORT
MARKET INFORMATION
Shares of common stock of Bancorp were held by 422 shareholders of record as of
December 31, 2002 according to Bancorp's transfer agent. Bancorp's shares are
traded on the NASDAQ exchange under the symbol of "STBI". Trading activity has
been infrequent, and previous price information had not been regularly
published.
The range of high and low trade prices for each quarterly period during the past
two years is presented below:
Year ended December 31,
---------------------------------------
2002 2001
---------------- -----------------
High Low High Low
------ ------ ----- -----
First quarter $10.00 $ 7.57 $6.50 $4.88
Second quarter 11.00 9.07 7.00 5.84
Third quarter 11.00 10.16 8.99 6.27
Fourth quarter 11.00 10.19 9.49 7.25
The trade prices listed above are based on actual transactions obtained from
public Internet sources obtained by Bancorp.
The following table summarizes cash dividends paid per share of common stock for
each quarterly period during 2001 and 2000.
2002 2001
------ ------
First quarter $ .07 $ .06
Second quarter .07 .06
Third quarter .07 .07
Fourth quarter .07 .07
------ ------
$ .28 $ .26
On December 11, 2001, the shareholders of the Bank approved the reorganization
of the Bank to become a wholly owned subsidiary of Sturgis Bancorp, Inc., a
financial holding company. Sturgis Bancorp, Inc. is a financial holding company
under the Bank Holding Company Act of 1956, as amended (the "Bancorp"). This
reorganization was approved at a special meeting of the shareholders of the Bank
on December 11, 2001. The necessary affirmative vote of the holders of at least
two-thirds (2/3) of the Bank common stock (of which 3,101,534 shares were
outstanding on October 30th, 2001 the record date for the meeting) was obtained.
Prior to the special meeting of the shareholders of the Bank, Bancorp received
the necessary approvals from the Board of
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Governors of the Federal Reserve and the Federal Deposit Insurance Corporation.
On December 21, 2001, the Michigan Department of Consumer and Industry Services,
Office of Financial and Insurance Services, Division of Financial Institutions
approved the consolidation to complete the consummation of Bancorp acquiring one
hundred percent of the issued and outstanding common stock of the Bank.
This reorganization became effective as of the opening of business on January 1,
2002. Bancorp is a legal entity separate and distinct from its subsidiaries.
Substantially all of Bancorp's revenues result from dividends paid to it by the
Bank and from earnings on investments. There are statutory and regulatory
requirements applicable to the payment of dividends by the Bank to Bancorp, as
well as by Bancorp to its shareholders.
Under the Michigan Savings Bank Act, Bancorp may not declare a cash dividend or
a dividend of any kind except out of net income then on hand after deducting all
losses and bad debts, and then only if it will have a surplus amounting to not
less than 20% of its capital after the payment of the dividend. Moreover, the
Bank may not declare or pay any cash dividend or dividend in kind until the
cumulative dividends on its preferred stock, if any, have been paid in full.
Further, if the surplus of the Bank is at any time less than the amount of its
capital, before the declaration of a cash dividend or dividend in kind, it must
transfer to surplus not less than 10% of its net income for the preceding 6
months (in the case of quarterly or semi-annual dividends) or the preceding two
consecutive 6 month periods (in the case of annual dividends).
Pursuant to the Michigan Business Corporation Act, Bancorp may not make
distributions to its shareholders if, after giving effect to the distribution,
the corporation would not be able to pay its debts as they become due in the
usual course of business, or the corporation's total assets would be less than
the sum of it total liabilities plus, unless the corporation's articles of
incorporation permit otherwise, the amount that would be needed, if the
corporation were to be dissolved at the time of the distribution, to satisfy the
preferential rights upon dissolution of shareholders whose preferential rights
are superior to those receiving the distribution.
The payment of dividends by Bancorp and its subsidiaries may also be affected or
limited by other factors, such as the requirements to maintain adequate capital
above regulatory guidelines. In addition, if, in the opinion of the applicable
regulatory authority, a bank under its jurisdiction is engaged in or is about to
engage in an unsafe or unsound practice (which, depending on the financial
condition of the Bank, could include the payment of dividends), such authority
may require, after notice and hearing, that such bank cease and desist from such
practice or prohibit the payment of future dividends. The Federal Reserve has
indicated that paying dividends that deplete a bank's capital base to an
inadequate level would be an unsafe and unsound banking practice. The Federal
Reserve, the FDIC and the Division of Financial Institutions of the
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Michigan Department of Consumer & Industry Services Office of Financial and
Insurance Services ("DFI") have issued policy statements which provide that bank
holding companies and insured banks should generally only pay dividends out of
current operating earnings.
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