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Aaron Grill, Taylor Barnard
Work & Capital Management
Case #4
Sun Coast Savings Bank
1.
2.3.
Virginia
Federal
South Land
Financial
Texas
Federal
Great Southern
Financial
Net-to-worth-Assest
Ratio 6.79% 6.62% 4.71% 5.19%
Growth Rates 16.00% 19.23% 27.70% 9.67%
P/E Ratio 6.10 8.50 4.63 4.48
Market Value/Book ValueRatio 105.61% 105.26% 64.18% 49.56%
4. Based on the numbers that we came up with for each of the
different saving institutions as wellas our own company, we were
able to see that our numbers were fairly close to those of
Virginia
Federal. A general range that we would set for our Market to
Book Value Ratio would be
between 105% to 64% simply because our Net-to-worth-asset ratio
fell in between both Texas
Federal and Virginia Federals ratios. However, since Virginia
had a higher growth rate, we
would say that a more accurate market to book value ratio for us
would be 100%.
5.
Net-to-worth-Assest Ratio 6.14%
Number of Shares Outstanding 9000
Book Value Per Share $6,541.09
Growth Rate 17.00%
Market Value/Book Value
Ratio 0.8
Book Value $6,541.09
Market Value Per Share $5,232.87
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6.
7.
8. A.
B.
9. If we were to go public we would begin telling the investment
banker that we would be splittingour stock 262:1 making 2,358,000
shares available for sale. Now in order to acquire 3 million we
need to expand our business we would have to sell 3,333,333
shares considering a 10% flotationcost as well. In order to have as
many shares available our majority stock holders would have to
sell half of their stock holdings which will accumulate another
1.5 million shares available for
sale. Now combining both available shares for sale that would be
3,858,000 shares to sell which
would give us enough shares to sell to make what we need to
expand. After we have outlined
our plan and our company IPOed we would take the cash that we
earned and use it to expand.
10.Yes we can see why there are personal differences between
Evans and McCoy. McCoy seesmultiple benefits by going public, he
could possibly sell his shares for the market price, getting
the better price, as oppose to selling to close friends or
relatives. By going public he would also
be able to use his shares as collateral for a loan or at any
time that he would need cash he could
sell his shares making cash quickly. Other advantages for going
public would include: being able
to spread out their assets so that all of their money is not
solely invested in their own company.
Also, it would make it easier for the company to grow more
quickly in the future due to more
investments from different investors. As for Evans is makes more
sense for him to keep the
company private because he would be able to offer the sale to
whomever he wanted. By going
Market Value Per Share $5,232.87
New Price Per Share $20.00
Stock Split 261.64
Flotation Cost 10.00%
Funds Needed $3,000,000
Shares Needed to be Sold 3,333,333
Amount of Shares Sold Amount of Money
Jim Evans 583333 $11,666,666.67
Tony McCoy 583333 $11,666,666.67
Vincent
Culverhouse 333333 $6,666,666.67Total 1500000 $30,000,000.00
New Flotation Cost 37.93%
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public Evans would not have as much as a say in things because
the amount of shareholders that
there would be. Because of his outside ventures with the company
some of those companies
that he also owns might not be used due to what other
shareholders might have to say.
11.Some of the factors that we found to be important that tend
to invalidate the comparison is thateven though each of these
companies essentially do the same thing business could vary
from
company to company due to geographic location, cultural
differences, and size of the firm. They
are all savings banks, the way they operate they could be
focusing on different aspects of that
business. The information that we acquired from those four
different banks could be outdated
and no longer apply and regulations could vary as well.
12.Because we needed to raise $3 million to expand our company,
we decided that it is best to takeour company public. By taking our
company public we will be able to quickly generate money
that is needed to expand. We feel that by entering into the
market and splitting our stock in
order to have a more desirable stock price we will attract more
investors and thus have more
potential to grow. Also the advantages of going public will give
us a better chance to grow in
the future. Going public will make us more known in the industry
giving the opportunity to
other investors to invest into our company. Therefor making it
easier for shareholders to trade
their shares within the market.
