Capital Advisors, Inc. · enterprise risk management (“ERM”)assessment of the target. Cost savings are performed at a GL account level basis and ... Summit Federal Savings Bank

© 2016 – FinPro, Inc. 158 Route 206 Gladstone, NJ 07934 P: (908) 234-9398 [email protected] www.finprocapitaladvisors.com

About the Firm - FCA

158 Route 206, Gladstone, NJ 07934 P: (908) 234-9398 [email protected] www.finprocapitaladvisors.com

FinPro Capital Advisors, Inc. (Member FINRA/SIPC) is a wholly owned subsidiary of FinPro, Inc.

Capital Advisors, Inc.


FINPRO CAPITAL ADVISORS, INC.

FINPRO CAPITAL ADVISORS, INC. (“FCA”) is a registered broker dealer

and is a wholly-owned subsidiary of FinPro, Inc. FCA serves our clients

throughout their lifecycle providing institution specific advice.

As a long time industry consultant, FinPro recognized that FinPro’s

community bank and thrift clients were not properly served by the

investment banking industry. The industry was misguided, focusing on

executing a deal at all costs regardless of merit.

In response to this observation, FCA was founded to provide merger and

acquisition advisory and capital raising services to financial institutions in a

proactive and objective manner.

Over the past 15 years, FCA’s Principals have executed over 55 merger

transactions with an aggregate deal value of $1.5 billion and appraised over

65 IPOs with aggregate gross proceeds of over $5.0 billion.

Although FCA is pleased about the mergers we have successfully

executed, we are even more proud of the deals that we have advised our

clients to pass on.

With its parent company’s extensive consulting and regulatory expertise,

FCA can address all the factors of deal making in the heavily regulated

financial industry including: M&A advisory, strategic advice, valuation, due

diligence, accounting, mark-to-market, enterprise risk management,

business planning and regulatory advice.


PRINCIPALS

DONALD J. MUSSO, President and CEO

[email protected]

Donald founded FinPro, Inc. in 1987. He is a sought after speaker for various trade association functions and teaches at Stonier Graduate

School of Banking, Graduate School of Banking at Colorado and Graduate School of Bank Investments and Financial Management. Donald

is also a founder of de novo banks in Pennsylvania and New York and a significant investor in many others. He has served in Board,

Managerial and advisory roles with all types of financial institutions. Donald holds Series 24, 79 & 63 licenses.

_______________________________________________________________________________________________________________

SCOTT C. MARTORANA, Principal

[email protected]

Scott has expertise in capital markets engagements including mergers and acquisitions, stock valuations and fairness opinions. His

experience with FinPro’s consulting division provided him with extensive experience managing consulting engagements including enterprise

risk management, strategic planning, de novo bank formation, and asset/liability management. Scott holds series 24, 7, 79 & 63 licenses.

_______________________________________________________________________________________________________________

SCOTT POLAKOFF, Principal

[email protected]

Scott joined FinPro to co-lead its regulatory practice after serving over 22 years with the Federal Deposit Insurance Corporation (8 years as

the Chicago Regional Director) and 4 years with Office of Thrift Supervision as its Chief Operating Officer. From 2009 to 2011 he was a

Principal at Booz Allen Hamilton as a leader in the core financial services group. Scott holds series 24, 79 & 63 licenses.

_______________________________________________________________________________________________________________

JOHN P. MAURO, ESQ., Corporate Counsel and Chief Compliance Officer

[email protected]

John has been with FinPro since 2008 and serves as legal advisor and in house counsel for FCA. He is responsible for overseeing and

managing all Regulatory Compliance requirements. He is admitted to practice law in both New York and New Jersey. In addition to his Juris

Doctorate, he holds series 24, 79 & 63 licenses.


INVESTMENT BANKING REPRESENTATIVES

GREGORY S. GARCIA

[email protected]

Since joining FinPro, Greg has gained extensive industry experience in asset liability management, strategic planning, capital planning,

voluntary supervisory conversions, mutual-to-stock conversions, mergers and acquisitions, de novo banking, and investment advisory. Greg

manages client relationships and engagements in all service areas for the firm. Greg holds his series 79 & 63 licenses.

_______________________________________________________________________________________________________________

MATTHEW K. MILLER

[email protected]

Matthew currently manages many of the partnership, strategic planning, asset liability, and branch profitability/improvement engagements.

Matthew also has extensive experience on mergers and acquisitions, stock valuation, appraisals, and market feasibility engagements. He is

responsible for the refinement of FinPro's strategic planning model and integration of FinPro's branch profitability and asset liability models.

Matt holds series 79 & 63 licenses.

_______________________________________________________________________________________________________________

STEVEN P. MUSSO

[email protected]

Steve has extensive experience in a wide range of banking practices including strategic planning, capital planning, asset liability

management, mutual-to-stock conversions, mergers and acquisitions, branch profitability and improvement, and CRA. Steven holds series

79 & 63 licenses.


SERVICES

MERGERS & ACQUISITIONS

• Buy-Side Advisory

• Sell-Side Advisory

• Fairness Opinions

• Branch Evaluations, Acquisitions, Sales, Consolidation

and Swaps

• ASC 805 Purchase Accounting Mark-to-Market

• Due Diligence

CAPITAL RAISING

VALUATION

• Stock Valuation and ESOP

• Intangible Impairment

INTEGRATION AND PLANNING

• Integration

• Buy-Side or Sell-Side ERM

• Strategic Alternative Evaluation


MERGERS AND ACQUISITIONS - Buy-Side Advisory

PLANNING AHEADFCA works with management and the board of directors of itsclients to develop M&A plans. The plan and analysis includesdetailed pro formas and market data so management and theboard can determine which targets are attractive and which onesmay be undesirable.

DETAILED EVALUATIONManagement and directors are charged with exercising due careas part of their fiduciary duties. FCA’s modeling and duediligence is performed on a detailed basis that includes anenterprise risk management (“ERM”) assessment of the target.Cost savings are performed at a GL account level basis andrestructuring charges are itemized. This approach preventssurprises and allows management to track performance.

GETTING APPROVALFor a transaction to obtain regulatory approval, the combinedinstitution needs to be a pro forma CAMELS “2”. FCA’sCAMELS+ approach allows clients to understand and presentthe combined entity’s risk profile. FCA is able to leverageFinPro’s former regulators’ experience, knowledge and contactsto assess the approvability of a transaction pre-announcementand offer guidance through the regulatory environment.

PURCHASE ACCOUNTINGIn order to provide an accurate pro forma impact of a transaction,an advisor needs to be an expert in ASC 805 accounting. FCAprovides purchase accounting valuations for its buy-side clients(excluding limited scope engagements) as part of engagements.This helps minimize transaction expenses by eliminating anadditional advisor and provides comfort that your financialadvisor truly understands the pro forma impact.

Equity Banchsares Polonia Bank

advisor to advisor to advisor to advisor to

FinPro served as

exclusive financial advisor

to Roma Financial Corp.

to First Commerce Bank

Saddle River, New Jersey

Exclusive financial advisor to Exclusive financial

advisor to advisor to

Center Bancorp, Inc. to Kearny Financial Corp.

Union, New Jersey

has acquired all assets and

certain liabilities of

Huntingdon Valley, Pennsylvania

has acquired:

Southampton, Pennsylvania

Orem, UT Mt. Laurel, New Jersey

Exclusive financial Exclusive financial Exclusive financial Exclusive financial

Cheshire, Connecticut

Robbinsville, New Jersey

to the Investor Group New England Bancshares Equity Bancshares, Inc.

Putnam Bank

has acquired:

Ellis, KansasHaddam, Kansas

Equity Bancshares, Inc.

Investor

advisor to advisor to advisor to advisor to

BCB Bancorp, Inc. Investors Bancorp, Inc.

Andover, KansasGroup Andover, Kansas

has acquired:Provo, UT Enfield, Connecticut

acquired control of:

Exclusive financial

Exclusive financial Exclusive financial

advisor to advisor to Exclusive financial advisor

Oakhurst, New Jersey

Albany, New York

Wichita, KS Kearny, New Jersey

has acquired:

Overland Park, KS

has acquired:

via FDIC Receivership Transaction

Lakewood, New Jersey

has acquired

Closter, New JerseyClosed December 2010

Exclusive financial Exclusive financial Exclusive financial

South Orange, New Jersey

has acquired:

Bayonne, New Jersey

Summit, New Jersey

has agreed to acquire:

West Orange, NJ

FinPro Capital Advisors,

Inc. as exclusive financial

advisor to Glen Rock Savings

Bank

via FDIC Receivership Transaction


BCB Bancorp, Inc. North Jersey Community Bank

Englewood Cliffs, New Jersey

has merged with:

Union, New Jersey

Fairfield, New Jersey

advisor to Greenfield Co-

operative Bank

Greenfield, MA


Brooklyn, New York Northampton, MA

Brewster, NY

has agreed to acquire:has agreed to acquire:

Summit, New Jersey Englewood Cliffs, New Jersey

FinPro served as FinPro Capital Advisors,

exclusive financial advisor to Inc. as exclusive financial

FinPro Capital Advisors, Inc.

served as exclusive financial

advisor to ConnectOne

Bancorp and initiated the

Transaction

FinPro Capital Advisors, Inc. as

exclusive financial advisor to

Kearny Financial Corp. (MHC)

in the Transaction

Bayonne, New Jersey

assumed deposits of:

has acquired:has acquired:has acquired:

Summit Federal

Savings BankRidgewood, New Jersey

Bayonne, New Jersey

Glen Rock, NJ

Wichita, KS


Independence, KS


served as primary financial

advisor to Equity Bancshares,

Inc. and provided the

Fariness Opinion


MERGERS AND ACQUISITIONS - Sell-Side Advisory

EXPERIENCED

FCA regularly represents financial institutions that are

seeking a partner. Managing Directors serve as

management’s direct contact on all engagements unlike our

competitors that use recent college graduates to manage

the process. One of FCA’s Principals will oversee each

transaction.

PROACTIVE FAIR APPROACH

FCA takes a proactive approach to managing of a sale

process to remain two steps ahead of merger partners and

their advisors. Furthermore, FCA believes in a structured,

detailed, fair process which allows partners to put their “best

foot forward” with confidence in the process and information

provided.

MAXIMIZING VALUE FOR CLIENTS

FCA focuses on the best way to maximize value for the

seller. Specifically, FCA performs an upfront due diligence

review in order to identify and correct detractors from value.

This upfront review will allow management and the board to

view their institution the way a potential partner will and

correct any weaknesses. This upfront due diligence review

is performed by a team of FCA personnel and FinPro’s

seasoned ex-regulators. Recommendations for improvements

will be provided to the Board.

Farmington Hills, MI

will be acquired by:

Philadelphia, Pennsylvania

has merged with:

Naugatuck, CT

Elmwood Park, NJ

has agreed to purchase

will be acquired by: assets and liabilities of:Frederick, Maryland

Butler, Pennsylvania

advisor to Naugatuck Valley

Financial Corporation

financial advisor to NJM Bank financial advisor to Bank of

Michigan

Pascack Bancorp, Inc.

FinPro Capital Advisors, Inc. FinPro Capital Advisors, Inc. FinPro Capital Advisors, Inc. FinPro served as

Vineland, New Jerseyhas agreed to merge with:

Darien Rowayton Bank Roebling Bank Brandon Financial Corp.

served as exclusive financial served as exclusive served as exclusive financial advisor to

Darien, Connecticut

connection with the

transaction to Colonial

rendered a fairness opinion in

Converse, Indiana

FinPro Capital Advisors, Inc. Finpro Capital Advisors, Inc. Exclusive financial

Vermont, VT

advisor to advisor toserved as exclusive financial

advisor to NexTier, Inc. Minotola National Bank First Citizens of Paris

Enfield, ConnecticutRoebling, New Jersey

exclusive financial advisor to advisor to

Stamford Bank

Corp.

Stamford, New York

has merged with:

Walton, New York

has agreed to merge with:

Alcar, LLC

has merged with:has agreed to merge with:

advisor to advisor to advisor to

Albany, New York

Carnegie, Pennsylvania

Skibo Financial Corp.

(MHC)

Newport, New Hampshire

has merged with:

BUCS Financial Corp.

Owings Mills, Maryland


Exclusive financial FinPro served as Exclusive financial FinPro served as

advisor to exclusive financial advisor to advisor to exclusive financial advisor

to Stamford Bank Corp. Fort Orange Financial Corp. Skibo Financial Corp. to Stissing National Bank

Elmira, New York

Warren, PennsylvaniaHarrisburg, Pennsylvania

Community

Banks, Inc.MillBrook, New York



advisor to

Exclusive financial

Twin Oaks Savings Bank

Marseilles, IL

Exclusive financial

has merged with:

Vineland, NJ Lititz, Pennsylvania

has merged with:

Financial Corp.

BUCS

Pine Plains, New York


NewEngland Bancshares

Exclusive financial Exclusive financial Exclusive financial Exclusive financial FinPro served as

New York, New York Newtown, PA

Kittanning, Pennsylvania

Cape May Court House, NJ


Middletown, CT Ewing, NJ Farmington Hills, MI


Waldwick, New Jersey

will be aquired by:

Oak Ridge, New Jersey Laurel, Maryland


served as exclusive financial

advisor to BlueRidge Bank

Springfield, Massachusetts

Paris, Illinois

Philadelphia, Pennsylvania

Ottawa, IL


exclusive financial advisor

to SE Financial Corp.

FinPro served as


MERGERS AND ACQUISITIONS - Process

1a. Strategic Plan

2b. Develop

Bidder List

3a. Distribute

Confidentiality

Agreement

3b. Distribute

Process Letter

And Bid Book

1g. Determine

Deal Team

3d. Receive,

Analyze, and

Rank Bids

2c. Build Bid Book

1. Background 2. Preparation 3. Bid Process 4. Legal/Reg.

5. Implementation

2a. Determine

Sale Approach

1e. Develop

Wish List

1b. M&A Plan and

Strategic Alternative

Review

1f. (Sell-Side) Pre-Due

Diligence & ERM

1c. Run Initial Pro

Formas

4g. Deal

Announcement

4b. Draft

Definitive

Agreement &

Investor

Presentation

4f. Fairness

Opinion

4c. Regulatory

“Fly By”

4a. Negotiate

Deal Terms

4e. Detailed

Budget Projection

4d. Develop

Integration Plan

4h. Draft

Proxy

Statement

5a. Execute

Integration

Plan

5b. Regulatory

Approval

5c. Obtain

Shareholder Vote

5d. Close the

Deal

2d. Organize and

Manage a Digital

Data Room for

Potential Bidders

1d. Build

Value Book

3e. Due

Diligence

3c. Update

Pro Formas and

Mark-to-Market B/S

2e. (Buy Side) If

Private Negotiation;

Perform High Level

Due Diligence and

Determine Major

Deal Terms

3f. Pro Forma

Refinement with

Management

Sign Off

Old World New World


MERGERS AND ACQUISITIONS - Process (continued)

COMPONENTS OF THE M&A PROCESS

Social issues

Transaction structure

Pro forma analysis

Enterprise Risk Management

Balance sheet mark-to-market

Integration

Negotiation

Tax issues

Fairness opinion

Regulatory correspondence

Combined strategic/business plan

Accounting

Legal

Legal

Legal

Legal

Legal

I-Bank

Consultant #1

Consultant #2

Accounting

I-Bank

Consultant #4

I-Bank

Consultant #3

Old World New World

I-Bank Legal

Not Performed


MERGERS AND ACQUISITIONS - Fairness Opinions

INDEPENDENT AND OBJECTIVE

FCA’s fairness opinions offer our clients’ boards of directors,

management and shareholders, a professional independent

analysis of sophisticated transactions involving banks and

thrifts. FCA prides itself in the thoroughness of its analytics and

each fairness opinion is approved by our internal fairness

opinion committee.

FCA believes that the independence of fairness opinions will

provide clients with additional coverage when confronted with

shareholder legal scrutiny.

For buy-side and sell-side merger and acquisition transactions,

capital transactions and other corporate transactions, our

professionals independently advise clients on the strategic

merits and financial fairness of transactions.

We are regularly engaged to render fairness opinions to banks

and thrifts in mergers and acquisitions, repurchases, capital

raising and other corporate transactions.


MERGERS AND ACQUISITIONS - Branch Evaluations, Acquisitions, Sales, Consolidations, & Swaps

LEVERAGING OUR STRENGTHS

As market feasibility and valuation experts, FCA is well suited to

assist institutions in branch sales and acquisitions. Through our

in depth analysis of markets, we can predict the ability of an

institution to succeed in any market area.

FRANCHISE SOLUTIONS

In this highly competitive environment, franchise building has

become increasingly difficult. In response, FCA has advised

clients in various transactions including:

• Branch network rationalization

• Branch swaps

• Market share acquisitions

• Interstate branching

• Branch network in-fill

WORKING FOR YOU

FCA’s services include:

• Managing a confidential bid process

• Preparing and evaluating confidential bid materials

• Modeling the pro forma financial impact of various

transactions and deal structures

• Negotiating deal terms

• Providing fairness opinions

Union, South Carolina

has agreed to sell its Chesnee and

Anderson branches to:

Franklin, North CarolinaFinPro served as

FinPro served as


Arthur State BankStoneham Saving Bank

Arlington, Massachusetts

Arlington, Massachusetts

has acquired a Belmont

branch from:

Stoneham, Massachusetts

FinPro served as


Harvest Bank of Maryland

Gaithersburg, Maryland

has aquired a Frederick

branch from:

Lancaster, Pennsylanvia

FinPro served as



Andover, Kansas

has aquired two branches

from:

Overland Park, Kansas

FinPro served as


Andover, Kansas

Chillicothe, Missouri



FinPro served as

has agreed to acquire four

branches in Topeka, Kansas

from:




Woronoco Savings Bank

Westfield, Massachusetts

has sold its Springfield branch

to:

Porto, Portugal

FinPro served as


Woronoco Savings Bank

Westfield, Massachusetts

has sold its West Springfield

and Amherst Branches to:

Southbridge, Massachusetts

FinPro served as


Banco Comercial Portugues

Porto, Portugual

has acquired a New York

branch from:

New York, New York

FinPro served as


Millennium bcpbank

Newark, New Jersey

Stamford, Connecticut

FinPro served as


has sold

its New York branch to:

Peoples National

Ambac

Holding Co., Inc.

Amsterdam, NY

has agreed to sell its Norwich

branch to:

Hallstead, Pennsylvania

FinPro served as


Northfield Bank

Staten Island, New York

has agreed to sell its Edison

and Port Richmond branches

to:

Chicago, Illnois

FinPro served as


Platte Valley Bank

Torrington, Wyoming

has acquired a Wyoming

branch from:

Buffalo, Wyoming

FinPro served as


Americas United Bank

provided a fairness opinion to

the Lancaster Office and

Deposits of:

Glendale, California

has agreed to acquire

La Jolla, Caifornia

FinPro served as

exclusive financial advisor and

NorthEast Community Bank

White Plains, New York

Bronx, New York

FinPro served as


has sold its

Brooklyn branch to:

U.S.B. Holding Co., Inc.

Fourth Federal

Savings Bank

Fourth Federal Saving Bank

White Plains, New York

Orangeburg, New York

FinPro served as


has sold its Yonkers

branch to:


MERGERS AND ACQUISITIONS - ASC 805 Purchase Accounting Mark-to-Market

According to ASC 805 Business Combinations, companies must

apply the purchase method of accounting for business

combinations, including the mark-to-market of the target’s balance

sheet. Securities, loans, fixed assets, deposits, borrowings and

leases are all marked-to-market. Part of the purchase method of

accounting requires a core deposit study to determine the

estimated useful life, amount of the core deposit intangible, and the

appropriate method for amortizing the core deposit intangible.

These accounting adjustments have a critical impact on gauging

the financial success of a transaction.

THOROUGH ANALYSIS = SOUND DECISIONS

Appropriate determination of premiums and discounts applied to

the balance sheet has significant regulatory capital and earnings

ramifications to the acquirer. Thorough analysis of the mark-to-

market adjustments on a transaction allows the management team

of the acquirer to feel comfortable with its pricing and deal structure

decisions. These decisions could potentially make or break a

transaction.

EXTENSIVE EXPERTISE

FinPro has been performing core deposit intangible studies for over

20 years. FinPro’s ASC 805 analyses have been approved by

many regional and national accounting firms.

CAPACITY FOR TIMELY EXECUTION

With a group of experienced managing directors, all skilled in asset

and liability valuation, FinPro has the ability to provide a complete

and timely analysis to meet challenging timelines. FinPro provides

ASC 805 valuations as part of its financial advisory services on a

transaction or as an independent third party.

Core Deposit Category

Acquired

Deposits $ Premium

%

Premium

Personal DDA 8,132,745$ 601,011$ 7.39%

Business DDA 9,484,955 700,939 7.39%

Government DDA 856,520 50,421 5.89%

NOW 6,185,935 318,813 5.15%

Non-profit 1,133,906 76,130 6.71%

Savings Personal/Non-Pers 10,736,242 728,056 6.78%

Public Savings 5,410,323 79,554 1.47%

Corporate Savings 428,408 27,155 6.34%

Club 141,985 6,434 4.53%

Money Market 3,834,353 35,473 0.93%

Totals 46,345,372$ 2,623,986$ 5.66%

Pre-tax acquisition expense 1,852,230$

Value of the Core Deposits

(NPV Yr. 1 - 40) 771,756$

Intangible Amortization Period 10 Sum-of-digits

Value as a % DEPOSITS 1.67% Sum-of-digits

AMORTIZATION TABLE

Amortization Amortization

Period Percent Dollars

YEAR 1 18.18% 140,319$

YEAR 2 16.36% 126,287

YEAR 3 14.55% 112,255

YEAR 4 12.73% 98,223

YEAR 5 10.91% 84,192

YEAR 6 9.09% 70,160

YEAR 7 7.27% 56,128

YEAR 8 5.45% 42,096

YEAR 9 3.64% 28,064

YEAR 10 1.82% 14,032

100.00% 771,756$


MERGERS AND ACQUISITIONS - Due Diligence

Due diligence preparation and execution is more than just setting up a data room.

FCA organizes, coordinates and manages the due diligence process. FCA is on-site with potential partners’ advisors and consultants at all

times. This allows FCA to determined the level of interest and assist management is addressing any concerns. By coordinating the various

professionals, FCA’s goal is to ensure a smooth process, identify issues and minimize the risk of a leak.

For potential sellers, FCA performs pre-due diligence to ensure that credit files are in order, identify weakness and ensure that appropriate

detail is provided to potential acquirers. This gives sellers the opportunity to correct weaknesses and develop a mitigation strategies. Using

this approach, FCA limits the situation of due diligence surprises and renegotiation of the deal terms.

Count Balance Deficiency $ Count Balance Deficiency $ Count Balance Deficiency $ Count Balance Deficiency $

0% 10% 2 34,424 - 0% 10% 2 34,424 - 0% 10% 2 34,424 - 0% 10% 2 34,424 -

10% 20% 6 1,232,749 - 10% 20% 5 1,011,096 - 10% 20% 5 1,011,096 - 10% 20% 5 1,011,096 -

20% 30% 6 946,535 - 20% 30% 5 752,647 - 20% 30% 5 752,647 - 20% 30% 5 752,647 -

30% 40% 7 2,437,320 - 30% 40% 8 2,612,644 - 30% 40% 7 1,986,819 - 30% 40% 5 1,398,529 -

40% 50% 6 2,034,667 - 40% 50% 6 1,941,377 - 40% 50% 4 1,712,474 - 40% 50% 5 1,577,243 -

50% 60% 10 4,876,648 - 50% 60% 9 3,008,706 - 50% 60% 8 3,000,772 - 50% 60% 7 3,010,546 -

60% 70% 10 7,278,648 - 60% 70% 8 5,258,714 - 60% 70% 8 3,564,071 - 60% 70% 7 3,106,954 -

70% 80% 9 5,767,331 - 70% 80% 10 7,534,049 - 70% 80% 12 9,030,778 - 70% 80% 9 4,580,796 -

80% 90% 3 2,985,358 - 80% 90% 5 3,642,552 - 80% 90% 7 4,703,130 - 80% 90% 8 6,681,422 -

90% 100% 1 4,350,988 - 90% 100% 2 6,148,459 - 90% 100% 1 1,797,471 - 90% 100% 5 3,642,552 -

100% 110% 1 1,137,496 (17,496) 100% 110% 1 1,137,496 (73,496) 100% 110% 1 4,350,988 (8,488) 100% 110% 2 6,148,459 (279,740)

110% 120% - - - 110% 120% - - - 110% 120% 1 1,137,496 (129,496) 110% 120% 1 1,137,496 (185,496)

120% 130% - - - 120% 130% - - - 120% 130% - - - 120% 130% - - -

130% 140% - - - 130% 140% - - - 130% 140% - - - 130% 140% - - -

140% 150% 1 897,582 (289,293) 140% 150% - - - 140% 150% - - - 140% 150% - - -

150% 160% - - - 150% 160% 1 897,582 (319,708) 150% 160% - - - 150% 160% - - -

160% 170% - - - 160% 170% - - - 160% 170% 1 897,582 (350,122) 160% 170% - - -

170% 180% - - - 170% 180% - - - 170% 180% - - - 170% 180% 1 897,582 (380,537)

180% 190% - - - 180% 190% - - - 180% 190% - - - 180% 190% - - -

190% 200% - - - 190% 200% - - - 190% 200% - - - 190% 200% - - -

200% 1E+19 1 756,749 (588,749) 200% 1E+19 1 756,749 (597,149) 200% 1E+19 1 756,749 (605,549) 200% 1E+19 1 756,749 (613,949)

Total 63 34,736,496 Total 63 34,736,496 Total 63 34,736,496 Total 63 34,736,496

Total Above 100% LTV 3 2,791,827 (895,539) Total Above 100% LTV 3 2,791,827 (990,353) Total Above 100% LTV 4 7,142,816 (1,093,656) Total Above 100% LTV 5 8,940,286 (1,459,723)

Total Above 80% LTV 7 10,128,174 Total Above 80% LTV 10 12,582,838 Total Above 80% LTV 12 13,643,416 Total Above 80% LTV 18 19,264,261

Not Classified 4 2,088,584 Not Classified 4 2,088,584 Not Classified 4 2,088,584 Not Classified 4 2,088,584

Total 67 36,825,081 Total 67 36,825,081 Total 67 36,825,081 Total 67 36,825,081

Estimated Current Stress 1 -5% Stress 2 -10% Stress 3 -15%

LTV SUMMARY LTV SUMMARY LTV SUMMARY LTV SUMMARYShocks

Payment % Increase Shock 40%

Additional % Vacancy Shock 0%

Expenses % Increase 0%

Stress Test Loan Data

DSC Range Count of Loans Balance of Loans

(1,000.00) 0.50 20 6,800,223

0.50 0.60 21 8,458,615

0.60 0.70 30 14,317,591

0.70 0.80 47 32,390,158

0.80 0.90 49 29,858,339

0.90 1.00 56 19,838,649

1.00 4.00 143 51,234,898

Total 366 162,898,473

Count of Loans Balance of Loans

Under 1.0 223 111,663,575

Percent 60.9% 68.5%

*If adjustable rate loan then payment shock is applied 100%,

otherwise no adjustment to payment


CAPITAL RAISING

FCA IS NOW ASSISTING ITS COMMUNITY BANK

CLIENTS IN CAPITAL RAISING

• FCA will analyze, negotiate, structure and act as

placement agent in offerings

• FCA specializes in placements of common equity,

preferred stock and debt with a deal value less than $30

million and larger institutional/PE placements

Situation Assessment Preparation Due Diligence & Drafting

• Risk assessment

• Strategic alternatives review

o Decision tree review

o Value assessment

• Strategic plan development

• Capital raise leverage analysis

• “Pre-due diligence” process

• Determine structure including size

range, pricing and type (common/

preferred/debt)

• Development of calendar and

designation of responsibilities

• Underwriter due diligence

• Online data room setup

• Document drafting (NDA, PPMT,

Reg. Rights)

• Develop investor presentation

• Set roadshow calendar

Marketing Follow On Support

• Unique targeted approach

o Leverage current shareholder base

o Convert current non-shareholder customers

o Utilize FCA accredited investor network

• Attend and/or host investor meetings

• Manage offering document distribution process

• Ongoing stock valuations

• Shareholder communication

development

• Continued access to accredited

investor

network for follow on offerings

CURRENTLY THERE IS AN UNMET NEED FOR CAPITAL

IN THE COMMUNITY BANKING INDUSTRY

• Fund organic and M&A growth initiatives

• Fix and optimize capital structure

• Refinance or redemption of TARP, trust preferred debt,

bank stock loans or other debt

• Fund balance sheet restructuring opportunities

• Capitalize de novo bank formations when they return


VALUATION - Stock Valuation and ESOP

Implied Valuation Levels

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

Price to EPS Price to Proj. EPS Price to Tang. Book DCF

Pri

ce p

er

Share

Implied Value

Appraised Value

There are numerous reasons for a financial institution to

require a valuation of its stock. In today’s litigious society, it is

prudent for managers and boards of directors to carefully

exercise their fiduciary Duty of Care by hiring an expert in the

field.

EXPERIENCE IS KEY

It is important that the firm you choose is experienced and

follows appropriate appraisal standards. FinPro has valued

stock offerings with aggregate value in excess of $5.0 billion.

COMMUNITY BANK OFFERINGS

FinPro is experienced in providing valuations for community

bank private placements and public offerings.

SELF TENDER OFFERS

FinPro provides valuations and fairness opinions for

institutions undertaking self tender offers and “going private

transactions”.

STOCK BENEFIT PLANS

For institutions with a stock that is not actively traded, the

pricing of stock benefit plans to determine a strike price of

stock options and for tax purposes is often necessary. FinPro

provides reasonably priced services to meet an institution’s

need.

ESOP PLANS

The IRS requires an independent appraisal of ESOP plans in

instances where the institution’s stock does not trade liquidly.

Different valuation methods often give conflicting answers.

It takes an experienced appraiser to hone in on the most

critical factors.


VALUATION - Intangible Impairment

FinPro has provided dozens of purchase accounting and

intangible impairment analyses for SEC reporting companies

ranging in size from $500 million to $10+ billion in assets.

The large national accounting firms and numerous regional

accounting firms have reviewed and signed-off on FinPro’s

appraisal methodology in conjunction with annual audits.

WELL POSITIONED AND COST EFFECTIVE

As a financial institution appraisal expert recognized by the

FDIC, Federal Reserve and OCC, FinPro has appraised over

$5.0 billion of bank and thrift IPOs.

COMPREHENSIVE APPROACH

FinPro performs the analysis utilizing multiple methods:

• Income Approach - Discounted cash earnings

analysis;

• Market Value Approach - Trading value analysis;

• Acquisition Market Value Approach - Control value

analysis;

• Economic Value Added Analysis.

FinPro is uniquely positioned to provide goodwill and

intangible impairment analysis in a thorough, cost effective

manner.


INTEGRATION AND PLANNING - Integration

RE-THINK THE TIMELINE

• At the outset of due diligence plans

should be developed by each

manager and third party advisor for

their respective components

COMPONENTS OF A REAL

INTEGRATION PLAN

• Product matrix

• Pro forma organizational structure

• Systems mapping

• Branding

• Enterprise Risk Management

(ERM) process to ensure all Target

risks are identified, measured,

monitored and controlled

• Combined projections & stress

testing

Third party Advisors

FCA = FinPro Capital Advisors, Inc.

L = Legal Counsel

LR = Loan Review

Buyer Co.

Responsibility

3rd Party

Advisors

1 Corporate Records COO L

2 Capitalization, Stockholders and Optionholders CFO, Treasurer,

Controller

FCA

3 Financial Statements / Internal Audit Reports COO, CFO,

Treasurer,

Controller

FCA

4 Lending Matters CLO, CCO LR

5 Credit Quality CLO, CCO LR, FCA

6 Deposits / Borrowings / Repos CFO, Treasurer,

Controller

FCA

7 Securities Portfolio, ALCO & IRR Management CFO, Treasurer,

Controller

FCA

8 Retail Banking CFO, CLO, CCO

9 Tax Matters CFO, Treasurer,

Controller

FCA

10 Employees, Benefit Plans, Salaries & Labor Disputes COO, CFO FCA

11 Data & Item Processing / Technology Platform Structure CTO

12 Other Material Contracts, Agreements & Commitments COO, CFO L

13 Government Regulations & Filings COO L

14 Insurance COO

15 Legal Disputes COO L

16 Properties CFO, COO

17 Compliance / Fair Lending / BSA / CRA COO L

Deal Team

The integration process should begin pre-announcement to identify the obstacles and develop a plan to overcome them.


INTEGRATION AND PLANNING - Buy-Side or Sell-Side ERM

WHAT GOOD IS AN ANNOUNCED TRANSACTION UNLESS IT WILL RECEIVE

REGULATORY APPROVAL?

Regulators are interested in meeting with management teams pre-announcement to

provide regulatory feedback. Proactive conversations with regulatory agencies help the

approval process. This regulatory “fly by” needs to address the hot button issues such as:

Risk Thresholds

Capital Adequacy Ratios

Tangible Equity / Tangible Assets 9.00 7.50

Tier 1 (Core) Capital / Average Total Assets 9.00 7.50

Tier 1 (Core) Capital / Risk-Weighted Assets 10.00 9.00

Risk Based Capital / Risk-Weighted Assets 11.50 10.50

Asset Quality Ratios

Nonaccrual/Total Loans 2.00 3.50

Net Charge offs/ Total Loans 0.25 0.50

Reserves/ Total Loans 1.40 1.25

Reserves/ Nonaccrual 70.00 50.00

Modified Texas Ratio (Nonaccrual Assets) 20.00 40.00

Earnings Ratios

Yield on Investments 1.75 1.00

Yield on Loans 5.00 4.00

Yield on Earning Assets 4.50 3.50

Cost of Interest Bearing Deposits 1.00 1.25

Cost of Borrowings 1.75 2.75

Cost of Interest Bearing Liab 1.00 1.50

Cost of Funds 1.00 1.50

Yield/ Cost Spread 3.75 3.00

Net Interest Margin 3.75 3.25

Tot Provision Expense/ AA 0.50 0.70

Non Interest Income/ AA 0.25 0.10

Non Interest Expense/ AA 2.00 2.75

ROAA 0.80 0.50

ROAE 8.00 5.00

Efficiency Ratio 55.00 70.00

166.24

7.54

0.87

0.25

1.42

High

RiskCurrent At

2013Q3Low Risk

Moderate

Risk

11.23

11.75

12.82

14.07

11.69

12.48

0.21

0.00

1.06

501.67

11.78

4.58

0.72

1.77

0.84

0.68

3.74

1.39

4.80

3.87

0.43

3.97 2.79

0.82

0.64

3.30

0.96

8.23

48.09

3.98

0.48

0.10

1.93

3.48

0.21

1.40

1.44

Buyer Target

Current At

2013Q3

Pro

Forma (1)

9.42

9.51

9.95

10.03

12.23

0.38

0.13

0.51

136.90

0.37

1.47

1.26

12.38

44.60

0.80

0.77

3.07

3.13

0.00

1.38

2.94

4.40

10.39

3.07

2.76

4.58

4.12

0.55

Risk Thresholds

Current At

2013Q3

41.45

0.22

1. PRO FORMA ERM

2. PRO FORMA INTEREST RATE RISK

3. PRO FORMA CONCENTRATIONS

4. COMPLIANCE ISSUES, IF ANY

140+ years

of regulatory expertise

FCA clients have the benefit of

leveraging FinPro’s staff of

seasoned ex-regulators. These

individuals provide tremendous

value throughout the M&A process.


INTEGRATION AND PLANNING - Strategic Alternative Evaluation

In today’s competitive, rapidly changing market, it is important that a

Board of Directors be informed and make sound business decisions.

At times, an independent third party is required to assess all available

strategic alternatives.

FCA utilizes decision tree methodology to evaluate all alternatives and

guide management and directors to meet their strategic goals.

Can an institution build more shareholder value by remaining

independent relative to selling today?

Difficult questions require thorough independent analysis. FCA is

skilled at educating and advising management and the board of

directors. Unlike our competition, FCA does not believe that

“reviewing strategic alternatives” necessarily means that the company

should be sold.

What is the optimal capital structure?

FCA focuses on building long-term value for our clients. Utilizing our

valuation, financial modeling and research skills, FCA brings clarity to

complicated and difficult strategic issues.

How do we position to take advantage of future acquisition

opportunities?

FCA’s investment banking, consulting and regulatory expertise

provides our clients with thorough guidance on financial,

organizational and regulatory capacity as an acquirer.

What is the best use of capital?

Each financial institution is unique and has its own strategic issues.

FCA will work closely with management and the board of directors to

define the specific critical issues, provide market research, analyze

the financial impact of various strategies and moderate retreats.

Common Vs.

Preferred

IPO vs. Private

Branching

Problem Asset

or Branch Sale

B/S

Restructuring

Hire new team

Asses hold or

de-lever

Whole Bank

FDIC Assisted

Branch Deal


WHAT OUR CLIENTS SAY ABOUT US IS A TESTAMENT TO WHAT WE DO . . .

“I recently completed a very successful sale of my Bank to Liberty

Bank in CT and used FinPro as our advisors. Everyone at FinPro was

great and extremely professional…, always available and a true

partner in the process. The FinPro process help keep us focused on

what needed to be accomplished, helped me in educating and

keeping my Board fully informed and provided great documentation

that was extremely helpful in squashing the frivolous shareholder

suites that are an unfortunate reality of today’s M&A. Every company

that performed due diligence commented on how complete our

documentation was and how well prepared we were and that is a

direct result of FinPro’s guidance and process, and I know it was

instrumental in us receiving the best pricing we could for our deal.”

William C. Calderara, President and CEO

Naugatuck Valley Financial Corp.

“FCA was an integral part of the process in assisting Arthur State

Bank in the sale of some of our branches. The Bank needed to

downsize, but at the same time we had to maximize the value

received so we could position ourselves properly and achieve our

financial goals with the sale. FCA was involved in processing the

numbers and providing key advice throughout the deal. Arthur State

Bank would use them again and would recommend them highly.”

Daniel O. Cook, Jr., EVP & CFO, COO

Arthur State Bank

“FCA did an outstanding job representing BlueRidge Bank in its

recently completed sale. Our long standing relationship with FinPro

started in 2007 as the firm led us through the organizational process

to become the last de novo charter approved in Maryland and then

guided us though the sale process to merge with a larger high

performing community bank. This combination, known as Revere

Bank, creates an institution with over $1 billion in assets and is now

the seventh largest bank headquartered and operating in the State of

Maryland. FCA’s negotiation skills, attention to detail, and insightful

analytics created a clear path to striking a deal that benefited all

parties. I would highly recommend FCA for M&A representation.

Scott Martorana and his team are true professionals.”

J. Brian Gaeng, President and CEO

BlueRidge Bank

“FCA was instrumental in guiding Bank of Michigan on specific steps

that added value and then positioning the bank to maximize

shareholder return. When it comes to crunching numbers, advising

management and the Board and negotiating the deal, they are among

the best.”

Michael Sarafa, President

Bank of Michigan

Documents

Capital Advisors, Inc. · enterprise risk management (“ERM”)assessment of the target. Cost savings are performed at a GL account level basis and ... Summit Federal Savings Bank