EXHIBIT 99.3
Appraisal Agreement with Keller & Company, Inc.
KELLER & COMPANY, INC.
555 Metro Place North
Suite 524
Dublin, Ohio 43017
(614) 766-1426
(614) 766-1459 FAX
July 24, 1996
The Board of Directors
Empire Federal Savings and Loan
Association
123 S. Main Street
PO Box 1099
Livingston, MT 59047-1099
Re: Conversion Valuation Agreement
Attn: Beverly D. Harris, President
Keller & Company, Inc. (hereinafter referred to as KELLER) hereby
proposes to prepare an independent conversion appraisal of Empire Federal
Savings and Loan Association, Livingston, Montana (hereinafter referred to as
EMPIRE FEDERAL), relating to the conversion of EMPIRE FEDERAL from a mutual to a
stock institution. KELLER will provide a pro forma valuation of the market value
of the shares to be sold in the proposed conversion of EMPIRE FEDERAL.
KELLER is a financial consulting firm that primarily serves the
financial institution industry. KELLER is experienced in evaluating and
appraising thrift institutions and thrift institution holding companies. KELLER
is an experienced conversion appraiser for filings with the Federal Deposit
Insurance Corporation ("FDIC") and the Office of Thrift Supervision ("OTS"), and
is also approved by the Internal Revenue Service as an expert in thrift stock
valuations.
KELLER agrees to prepare the conversion appraisal in the format
required by the OTS in a timely manner for prompt filing with the OTS and the
Securities and Exchange Commission. KELLER will provide any additional
information as requested and will complete appraisal updates in accordance with
regulatory requirements.
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The appraisal report will provide a detailed description of EMPIRE
FEDERAL, including its financial condition, operating performance, asset
quality, rate sensitivity position, liquidity level and management
qualifications. The appraisal will include a description of EMPIRE FEDERAL's
market area, including both economic and demographic characteristics and trends.
An analysis of other publicly-traded thrift institutions will be performed to
determine a comparable group, and adjustments to the appraised value will be
made based on a comparison of EMPIRE FEDERAL with the comparable group.
In making its appraisal, KELLER will reply upon the information in the
Subscription and Community Offering Circular (Prospectus), including the
financial statements. Among other factors, KELLER will also consider the
following: the present and projected operating results and financial condition
of EMPIRE FEDERAL; the economic and demographic conditions in EMPIRE FEDERAL's
existing marketing area; pertinent historical financial and other information
relating to EMPIRE FEDERAL; a comparative evaluation of the operating and
financial statistics of EMPIRE FEDERAL with those of other thrift institutions;
the proposed price per share; the aggregate size of the offering of common
stock; the impact of the conversion on EMPIRE FEDERAL's capital position and
earnings potential; EMPIRE FEDERAL's proposed dividend policy; and the trading
market for securities of comparable institutions and general conditions in the
market for such securities. In preparing the appraisal, KELLER will rely solely
upon, and assume the accuracy and completeness of, financial and statistical
information provided by EMPIRE FEDERAL, and will not independently value the
assets or liabilities of EMPIRE FEDERAL in order to prepare the appraisal.
Upon completion of the conversion appraisal, KELLER will make a
presentation to the board of directors of EMPIRE FEDERAL to review the content
of the appraisal, the format and the assumptions. A written presentation will be
provided to each board member.
For its services in making this appraisal, KELLER's fee will be
$17,000, plus out-of-pocket expenses not to exceed $1,000. The appraisal fee
will include the preparation of two valuation updates. All additional valuation
updates will be subject to an additional fee of $1,000 each. Upon the acceptance
of this proposal, KELLER shall be paid a retainer of $3,000 to be applied to the
total appraisal fee of $17,000, the balance of which will be payable at the time
of the completion of the appraisal.
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EMPIRE FEDERAL agrees, by the acceptance of this proposal, to indemnify
KELLER and its employees and affiliates for certain costs and expenses,
including reasonable legal fees, in connection with claims or litigation
relating to the appraisal and arising out of any misstatement or untrue
statement of a material fact in information supplied to KELLER by EMPIRE FEDERAL
or by an intentional omission by EMPIRE FEDERAL to state a material fact in the
information so provided, except where KELLER has been negligent or at fault.
This proposal will be considered accepted upon the execution of the two
enclosed copies of this agreement and the return of one executed copy to KELLER,
accompanied by the specified retainer.
KELLER & COMPANY, INC.
(signature of Michael R. Keller)
By: /s/Michael R. Keller
Michael R. Keller
President
EMPIRE FEDERAL SAVINGS AND LOAN
ASSOCIATION
(signature of Beverly D. Harris)
By: /s/Beverly D. Harris
Beverly D. Harris
President
Date: August 7, 1996
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KELLER & COMPANY, INC.
555 Metro Place North
Suite 524
Dublin, Ohio 43017
(614) 766-1426
(614) 766-1459 FAX
July 24, 1996
The Board of Directors
Empire Federal Savings and Loan
Association
123 S. Main Street
PO Box 1099
Livingston, MT 59047-1099
Re: Business Plan Proposal
Attn: Beverly D. Harris, President
This letter represents our proposal to prepare a complete Business Plan
for Empire Federal Savings and Loan Association ("Empire Federal" or the
"Association") to fulfill the requirements of the Office of Thrift Supervision
relating to the Association's stock conversion. The Plan will focus on Empire
Federal's new three-year pro formas, the conversion impact on the Association
and the planned use of proceeds.
Keller & Company is experienced in preparing business plans for filing
with and approval by all regulatory agencies. We prepared thirty business plans
in 1994, thirty-two in 1995 and twenty to date in 1996, and all have been
approved. Your Plan will be based on the established format and guidelines
incorporated in the attached Exhibit A. We will prepare the three-year pro
formas and each discussion section in accordance with those requirements and
based on your input. Our objective is to ensure that your Business Plan is in
compliance with all applicable requirements, and that management and directorate
are knowledgeable of and comfortable with the assumptions, commitments and
projections contained in the Plan, making the Plan useful for the future.
Exhibit B provides a sample set of typical pro formas. Your pro formas
will incorporate the most current interest rate projections available. Our
procedure is to request key financial information, including recent lending
activity, savings activity, costs and yields and other data from Empire Federal.
Based on a review of this information, I will then meet with management to
discuss your plans and expectations for 1996, 1997 and 1988, focusing on items
including use of proceeds, deposit growth expectations, loan origination
projections, new products and services, increases in general valuation
allowance, new branches or capital improvements, increases in fixed assets,
investment strategy, increases in board fees and total compensation. We will
then prepare financial projections tying the beginning figures to your most
recent quarterly balances, incorporating your current yields on asset items and
your current costs of
Board of Directors
July 24, 1996
Page 2
interest-bearing liabilities. Assets and liabilities will
be repriced based on their maturity period, with such items tied to rate indices
and their yields and costs adjusting based on interest rate trends. The
projections will be based on your actual performance in 1995 and 1996, in
conjunction with the input from our discussions. We can introduce numerous
scenarios for internal use as part of the preparation of the business plan to
show the impact of alternative strategies, the impact of the one-time SAIF
assessment and subsequent reduced insurance premiums.
With each set of pro formas, we will send you a discussion summary of
the assumptions for easy review and comments (Exhibit C). After your review of
the pro formas, we will make any adjustments that are required. When the pro
formas are complete, we will provide you with the final pro forma financial
statements, as well as formas for the holding company (Exhibit D).
With regard to the Business Plan text, we will complete each section in
draft form for your review,a nd revise each section based on your comments and
requests. We will also send copies to your accounting firm and counsel for their
input and comments. The Plan will be in full compliance with all regulatory
requirements. We also prepare a quarterly comparison chart each quarter for
presentation to the board showing the quarterly variance in actual performance
relative to projections and provide comments on the variance.
Our fee for the preparation of the Business Plan text and pro formas is
$5,000, including out-of-pocket expense for travel, copying and binding.
I look forward to possibly working with you and would be pleased to
meet with you to discuss our proposal and provide samples of our work.
Sincerely,
KELLER & COMPANY, INC.
(signature of Michael R. Keller)
By: /s/Michael R. Keller
Michael R. Keller
President
MRK/gf
Enclosure
Accepted this 7th day of August, 1996.
(signature of Beverly D. Harris)
By: /s/Beverly D. Harris
Beverly D. Harris
President