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The Allen C. Ewing Guide To:
SELLING YOUR BANK
Copyright © 1997 Allen C. Ewing & Co.
This guide is not intended to provide legal, tax, accounting, or investment advice. If such advice is required, the services of a competent professional should be sought.
For some bank executives and directors, the idea of selling their financial institution represents an attractive opportunity to create personal and shareholder wealth from many years of effort. For others, it represents an unfortunate transformation of a growing institution and the risk of layoffs for its officers and employees.
Regardless of how you view the prospect of selling your institution, consolidation in the banking industry is continuing on a relentless pace. Acquirors are increasingly making unsolicited acquisition proposals, sometimes targeting key directors rather than management for their initial discussions. Bank shareholders are encouraging their institutions to create liquidity and value through the acquisition process before the current wave of consolidation ends. Even where a board consensus for remaining independent apparently exists, directors are becoming swayed by the high acquisition premiums being offered by some acquirors. These factors make it increasingly likely that your board of directors will elect, or be forced, to consider a possible sale of your bank at some point in the future.
Because a decision to sell your financial institution would be a landmark event for you and your shareholders, you need to know as much as possible about the process before it begins.
Using our 30 years of experience in helping bankers create, grow, and merge their institutions, the following pages provide brief answers to some of the most commonly asked questions about selling a commercial bank or thrift. For ease of reference, the terms bank, financial institution, and thrift are used interchangeably in this presentation, as are the terms acquisition, merger, and sale.
Whether the transaction results from an unsolicited offer or a decision by your board of directors to market the bank, the best way to sell your institution is to maximize competitive interest among a carefully-selected group of qualified acquirors. To accomplish this, we encourage our banking clients to follow what we call the “managed acquisition process.”
We begin this process by explaining how potential acquirors would value your institution. We then identify a select group of acquirors that we believe should be interested in your bank. At or about the same time, we prepare a detailed confidential memorandum about your institution which includes historical information and a carefully-crafted explanation of the advantages your institution offers to a prospective acquiror. We then contact the prospective acquirors approved by you, forwarding a copy of the confidential memorandum to each party that expresses interest. In connection with this step, we work with your counsel to obtain appropriate confidentiality agreements, either at the time the confidential memorandum is distributed or prior to any on-site due diligence. We also answer questions and requests for follow-up data from prospective acquirors, seeking input and assistance from your management as required.
After reviewing the confidential memorandum, prospective acquirors advise us of their preliminary level of interest in acquiring your institution. These expressions of interest may be oral or in writing and generally include a preliminary price or range of prices. Once these expressions of interest have been received, we help your board of directors evaluate each proposal. In connection with this evaluation, we may hold discussions with one or more of the acquirors, seeking to clarify or improve their position. After evaluating the proposals, we assist you in selecting the acquirors that will be permitted to perform formal due diligence reviews of your bank. We also assist in coordinating these reviews and answer any questions your management may have about the information requested. Following completion of the due diligence, revised expressions of interest may be received from each of the parties permitted to conduct due diligence.
At this point in the process, we assist you and your other advisors in negotiating the financial terms of the transaction. Depending upon the number of favorable proposals received and the relative differences among them, these negotiations may be limited to the acquiror that submitted the best proposal or rotated among all of the finalists. In some situations, we may recommend holding exclusive negotiations with a single acquiror, falling back to another acquiror only if the initial negotiations prove unsuccessful. In other situations, we may recommend going through several rounds of negotiations with all of the acquirors that conducted due diligence, in an effort to maximize competition and, accordingly, price.
Once the transaction has been negotiated, we provide an analysis of the financial terms to your board of directors, together with our oral opinion as to the fairness of the transaction to your shareholders, from a financial point of view. We generally update and issue this opinion in writing before the acquisition proxy materials are mailed to your shareholders.
Despite its potential advantages, the managed acquisition process may not be practical or desired in every situation (for example, where an acquisition proposal has already been received from a particularly serious acquiror or the board of directors or controlling shareholders of the bank prefer to negotiate with a single pre-selected acquiror). When we are engaged as financial advisor in these situations, we help you assess and negotiate the financial terms of the acquisition, using comparable transaction data and our experience in other transactions to maximize the value obtained by your shareholders. Back To Top
The best potential acquirors of your financial institution will depend upon a number of factors unique to your bank, including its size, location, asset and deposit mix, operating results, and management. In most instances, several categories of buyers will be available.
In-market buyers are financial institutions already operating in your geographic market that want to grow by acquisition. (Not every bank holding company already represented in a market is a potential in- market acquiror in that area. Many companies that have already attained critical mass in a market may prefer to grow by de novo branching rather than pay acquisition premiums, particularly for smaller banks.) To the extent that they can effect cost savings by closing branches, reducing staff, or other consolidation measures, in-market buyers can often offer the best price for a financial institution. (Whether they do so or not will depend on how important they view the bank to be to their market fill-in strategy.) Although the potential price advantage offered by in-market buyers may be appealing to the shareholders of the bank being acquired, it can be hazardous to management and staff as the cost savings are wrung out of the consolidated institution following the closing.
Geographic expansion buyers are financial institutions from other areas that want to enter your market by acquisition. Although these buyers may not be able to effect the cost savings available to in- market buyers, they may be willing to pay a higher premium to acquire a particularly desirable institution in a growing area. Because they may need most, if not all, of the management and staff of the institution being acquired, geographic expansion buyers generally pose less risk to the acquired institution’s officers and employees after the closing. Indeed, these buyers may offer exceptional opportunities for the bank’s management if the bank will become the regional or state headquarters for the acquiror after the closing.
Peer merger partners are financial institutions that want to grow by combining with other, usually similarly-sized, institutions on a stock-for-stock basis. Because peer merger transactions, by definition, do not involve a premium to the shareholders of either participating bank, they seldom offer the short term gains of the more typical acquisition transaction. However, on a longer term basis, peer merger transactions may offer other advantages, such as improved profitability or access to the public capital markets (with corresponding improvements in liquidity and market multiples), that translate into greater shareholder value. From a management and staff standpoint, peer mergers can offer increased opportunities (as a result of greater size and growth) or layoff risks (as a result of consolidation efforts), depending upon the business strategies implemented by the combining institutions.
Individual investors are private investors or investor groups that want to acquire a financial institution in your market. Although some individuals can put forth highly competitive bank acquisition proposals, individual investors face significant disadvantages when trying to acquire a financial institution. During periods when financial institution stocks are trading at high market multiples, few individual investors are willing or able to match the acquisition prices paid by publicly-traded bank holding companies. The reason, very simply, is that the individual investors cannot expect to match the returns achieved by the publicly-traded bank holding companies. The regulatory burden on individual investors is also quite high, requiring extensive disclosures that many investors are simply unwilling to make, and effective regulatory approval timeframes that are often longer than those faced by competing bank holding companies. If a competitive acquisition proposal from an individual investor group can be obtained, it may be favorably considered by the bank’s officers and employees as most investor groups need continuity of personnel following the closing. Back To Top
With the accelerating pace of consolidation in the financial industry, banks are increasingly receiving unsolicited acquisition inquiries from potential acquirors. Although the legal rules governing how your bank should respond to unsolicited offers are in constant flux, several key points should be kept in mind. First, your bank should have a clear procedure for handling acquisition inquiries. This procedure should indicate who is authorized to receive any acquisition inquiries (often the president and an outside chairman or director or a board committee may be designated for this purpose) and when and how inquiries should be discussed by the full board (many banks require that the board be advised promptly of all inquiries, no matter how informal). Second, your bank should develop a procedure for considering inquiries and offers. This process should include a discussion of whether your bank intends to remain independent or whether it is prepared to sell. If your board decides it is prepared to sell the bank, the procedure should include steps (such as the managed acquisition process, discussed above) to ensure that your shareholders receive the best price for their shares. Although the rules in this area are complex and should be discussed with your counsel, in general once your bank shifts its position from remaining independent to being willing to sell, the board’s obligation becomes obtaining the best price for your shareholders. Third, in considering any unsolicited offer, your board should assess, among other things, the financial aspects of the offer (comparing it against the premiums paid in other recent transactions and against the prospects of remaining independent), the prospects of obtaining potentially higher acquisition proposals from other acquirors, the prospects of negotiating better terms, the quality of any stock consideration, the likelihood and timing of closing, and any legal or regulatory impediments. Fourth, in considering these and other factors, your board should ensure that it meets its duty of care by seeking appropriate legal and financial advice from qualified advisors before making a binding or nonbinding commitment to the acquiror. Fifth, you should not alter your acquisition procedures just because you receive a particularly high unsolicited offer. With the increase in prices that is taking place in the current acquisition environment, what appears to be a preemptive offer today may prove to be at the low end of the scale if competing proposals are accepted from other potential acquirors. Back To Top
In theory, the current value of a bank or any other business should approximate the discounted present value of the future benefits that will accrue from it. Under this textbook approach, the future benefits of the business (e.g., earnings, cash flow, or dividends) to a particular buyer are projected over a period of years and, often with use of an estimated terminal value at the end of the projection period, discounted back to a present value using a discount or capitalization rate that reflects the buyer’s desired rate of return (which will reflect both the buyer’s cost of capital and its risk/reward premium).
Unfortunately, the problem with this approach is that the valuation depends upon the accuracy of the projections (and, in turn, the underlying assumptions) and the amount of the discount rate, none of which may be easily agreed upon. While many buyers use some form of discounted value (in general, discounted cash flow) analysis in valuing a business, these buyers may also use other valuation methodologies (e.g., multiple of earnings) that utilize historical financial information to arrive at the valuation. Most buyers employ several different valuation methodologies to establish and test their acquisition prices.
In the banking industry, acquisition prices are usually analyzed against several benchmarks: acquisition price as a multiple of book value; acquisition price as a multiple of trailing twelve months’ earnings; and acquisition price as a percentage of assets and deposits.
Although bankers tend to talk about acquisition prices in terms of a multiple of book value, book value is normally more relevant as an expression of value than as a valuation methodology itself. Thus, while the price may be discussed or presented as a multiple of book value, the price is generally determined by reference to factors in addition to book value.
The premium paid above book value is likely to be relevant to an acquiror in several respects. First, the premium over book affects the amount of book dilution that the acquiror will incur in the transaction, although the impact of this dilution is generally negligible when the acquiror is much larger than the institution to be acquired. Second, if the transaction will be accounted for as a purchase rather than a pooling, the book value premium will affect the amount of goodwill that must be written off against the acquiror’s earnings in future years. Third, some acquirors have difficulty offering book value premiums substantially above recent market comparables, regardless of whether a higher price is justified by other valuation models.
When book value multiples are considered, two points must be kept in mind. First, adjusted tangible book value is the important figure to an acquiror, not stated book. To determine adjusted tangible book value, the acquiror will subtract goodwill and other intangible assets and make other adjustments necessary to mark the balance sheet to market. Second, an acquiror generally will not pay a premium for excess capital. Consequently, an acquiror using a book value multiple to establish or present an acquisition price will usually offer to pay an acquisition premium only on the bank’s “normalized” capital and then pay dollar-for-dollar for any capital in excess of this normalized amount.
For most publicly-traded acquirors, the net income of the bank to be acquired and the price/earnings multiple of the acquiror’s stock are the most important factors in the valuation process. When these factors are being analyzed, the questions usually turn around what earnings period should be used and what adjustments to net income should be made. Typically, acquirors like to price off of the most recent audited income statement or, if the interim financials appear reliable, earnings for the most recent twelve months (or four quarters). If the current year is well underway and the bank has a record of stable earnings performance, the acquiror may be willing to price off of the current year’s earnings. Because of the time required to obtain regulatory approvals, the bank being acquired can make a logical argument in favor of using current year’s earnings.
Regardless of the earnings period selected, both parties will be best served if the earnings used for pricing purposes reflect the bank’s recurring earnings power. To achieve this, adjustments may need to be made to the bank’s reported earnings. In making these adjustments, several realities must be kept in mind. First, adjustments are not a one-way street. If the seller argues for adjustments in its favor, it must be prepared to consider adjustments that favor the buyer. Second, to be credible, earnings adjustments need to involve nonrecurring items of income or expense in excess of normalized levels. Arguing for adjustments that reflect recurring weaknesses or adverse trends is seldom productive. Third, for earnings adjustments based upon projected expense savings to be seriously considered by an acquiror, the acquiror must be able to realize the savings net of any offsetting expenses or transitional costs.
Although the size and mix of a bank’s assets and deposits are relevant to its profitability, and therefore its value, deposit and asset premiums (i.e., acquisition price as a percentage of total assets or deposits) tend even more than book value multiples to be used as expressions of price rather than valuation methodologies.
Ultimately the value of your bank will depend upon what a potential acquiror is willing and able to pay. Behind this simple statement is the reality that two different buyers may view the value of a financial institution quite differently. The value of a bank or thrift must be considered not in a vacuum but as the value of the institution to a particular acquiror. The key question, therefore, is not what your bank is worth in an appraisal, but what it is worth to a specific acquiror.
Most bank holding companies price a bank acquisition by assessing what the bank’s assets, liabilities, and franchise can contribute to the acquiror’s earnings. To determine this, the acquiror will break apart the bank’s existing balance sheet and rearrange the assets and liabilities in a manner that fits the acquiror’s existing business and business strategy. In the process, the acquiror will make and price various assumptions about transition costs, expense savings, staffing, investment management, goodwill amortization (in a purchase transaction), and similar items to produce the bank’s anticipated contribution to the acquiror’s bottom line. Using this information, the acquiror will determine whether the bank’s earnings contribution would be accretive or dilutive to the acquiror’s earnings per share, given a particular acquisition price and mix of cash or stock consideration.
Earnings dilution is a sensitive topic for most acquirors. Even in today’s highly competitive acquisition environment, most acquirors want all but the most critical acquisitions to be antidilutive (and preferably mildly accretive) soon after the closing and increasingly accretive thereafter. Whenever earnings dilution is involved, the acquiror will generally expect to earn back the dilution and achieve earnings accretion within a reasonable period after the closing. Back To Top
To maximize the value that you receive for your bank, you must be prepared to negotiate aggressively but realistically. The following points can be helpful in this regard.
First, competition has a great deal to do with pricing. The fact that an acquiror has determined that it can pay a certain amount for your bank does not mean that it will offer to pay this amount. Experienced acquirors try to assess the level of competition and adjust their offers accordingly. Even an acquiror making an apparently high preemptive offer may not put its highest and best price on the table if it senses a lack of competition.
Second, the cost and impact of stock options, employment contracts, severance arrangements, and other transitional items (such as the cost of terminating data processing contracts) will be taken into account when an acquiror decides what price to offer. Put another way, there is no free lunch. The cost of these items will reduce the amount to be paid to the shareholders of your bank. Because of this fact, the confidential memorandum on your bank should advise each prospective acquiror of the amount and terms of all options, severance arrangements, and transitional costs.
Third, pressing too hard for an unrealistically high acquisition price can be counterproductive in a stock-for-stock transaction where the bank being acquired will represent a significant part of a publicly- traded acquiror’s business. If the stock market reacts adversely to the price being paid, the acquiror’s stock price will fall, which may (depending on the exchange ratio formula employed) adversely affect the aggregate value received by the shareholders of the bank being acquired.
Fourth, in stock-for-stock transactions, exchange ratio terms, collars, and termination rights can be as important as the base price that the acquiror offers to pay. In a stock deal, the consideration to be received is generally expressed as a certain ratio of the acquiror’s shares for each share of the bank being acquired (for example, 2.0 to 1.0 or 0.58 to 1.0). An important question is whether this exchange ratio should be fixed or adjustable. If the ratio remains fixed, your shareholders will receive the same number of acquiror shares regardless of whether the acquiror’s stock price moves up or down between the date of the contract and the date of the closing. Therefore, if the per share value of these shares changes during this period, the total value of the shares (and the transaction as a whole) to your shareholders will also change. If the exchange ratio adjusts as the acquiror’s stock price changes, the total value of the transaction will be held constant, but the number of shares received will decrease as the acquiror’s stock price rises, and will increase as the acquiror’s stock price falls, between the date of the contract and the date of the closing.
The risks associated with adjustable exchange ratios are different for the acquiror and the shareholders of your bank. For the acquiror, the risk is that a decrease in its stock price prior to the closing will cause it to issue so many shares that an otherwise antidilutive transaction will become dilutive to its earnings. For the shareholders of your bank, the risk is that the price of the acquiror’s stock will increase prior to the closing, decreasing the number of shares received. In this situation, even though the value of the transaction will be maintained at the closing date, the aggregate value of the lesser number of shares will decrease if the per share price of the acquiror’s stock declines after the closing.
To minimize these risks, bank acquisition agreements often build a collar around the acquiror’s stock price at the time the agreement is signed. This collar places limits on the maximum permissible increase and decrease in the exchange ratio. For example, the exchange ratio may be allowed to adjust within a range equal to 10% above and 10% below the price of the acquiror’s stock when the agreement is signed. Within this range, the number of shares received will change as the acquiror’s stock price changes. Outside this range, the exchange ratio will be fixed at the collar points, allowing the value of the transaction to increase or decrease as the number of shares remains fixed by the upper or lower collar. This approach may be coupled with a termination right allowing one side or the other to terminate if the acquiror’s stock price moves too far outside the collar. Back To Top
The acquiror’s accounting treatment of the acquisition can have an impact on the price that the acquiror can afford to pay for your bank. Under generally accepted accounting principles, an acquisition is usually accounted for as a “purchase” or as a “pooling of interests.” In very general terms, transactions where the purchase price is paid in cash, notes, or a combination of cash and notes, cash and stock, or notes and stock usually must be accounted for as a purchase. Transactions where voting stock of the acquiror is exchanged solely for voting stock of the bank being acquired may be eligible to be accounted for as a pooling of interests, assuming a number of technical requirements are met.
In an acquisition accounted for as a purchase, the transaction is treated as a purchase of assets (even if legally structured as a merger) and the total purchase price paid by the buyer (e.g., the cash price paid plus the value of any debt or other liabilities assumed) is allocated among the assets that are acquired in an amount up to the fair value (at the closing) of each asset. Any amount that the buyer pays in excess of the fair value (at the closing) of the net assets of the bank being acquired must be recorded as goodwill and written off against earnings over a period of years. The write-off of this goodwill creates an expense that reduces the acquiror’s earnings during the amortization period. If the buyer is concerned about post- closing earnings (as a public bank holding company would be), the negative earnings impact of the goodwill amortization may reduce the amount that the buyer can afford to pay for your institution. In a purchase transaction, pre-closing income statements of the acquiror are not restated and, therefore, the pre-closing operating results of the institution being acquired do not have any effect on the pre-closing operating results of the acquiror.
In an acquisition accounted for as a pooling, no goodwill is created, and the assets and liabilities of the institution being acquired are simply carried over to the acquiring entity, without any write-up or write-down. The pre-closing income statements of the acquiror are restated after the closing to include the pre-closing operating results of the institution being acquired.
The accounting treatment of a bank acquisition transaction as a purchase or a pooling is not dependent on whether the transaction is deemed to be taxable or tax deferred for federal income tax purposes. Although most taxable transactions tend to be accounted for as purchases, and many poolings are tax-deferred, not all tax-deferred transactions qualify as poolings.
The requirements necessary to treat a transaction as a pooling of interests are complex. Although a detailed discussion of the pooling requirements is outside the scope of this presentation, several points deserve brief mention. First, because even indirect cash payments can preclude pooling treatment, most acquirors will require that any dissenting shares of your bank not exceed 5% or 10% of the bank’s total outstanding shares. Although seldom a problem, this limitation could allow bank shareholders owning 10% or 15% of the bank’s stock to dissent, preclude the pooling, and possibly destroy the deal. Second, poolings may also be precluded by any transactions in the bank’s stock made within the past two years that are presumed to be “in anticipation of” the acquisition transaction. Stock option grants and amendments, and sales and repurchases by the bank of its stock, can fall into this category and cause pooling problems. Third, as discussed in the following section, pooling transactions impose a restriction on resales shortly after the closing. Fourth, recent Securities and Exchange Commission (SEC) pronouncements have eliminated pooling treatment in certain situations where the acquiror has repurchased its shares in the open market.
The future use and value of pooling transactions may be in doubt. The principal accounting rule making body in the United States is studying whether to eliminate pooling as an acceptable accounting treatment. In addition, several bank holding companies have recently structured very large transactions as purchases rather than poolings, encouraging analysts to view the benefits of the transactions in terms of cash flow per share rather than earnings per share. Whether this approach will filter down to acquisitions of community banks remains to be seen. Back To Top
The consideration received by your shareholders will probably be cash, stock, or a combination of the two. The choice of consideration will be driven by the preferences of your shareholders and the acquiror.
Acquirors have differing views as to whether they prefer to issue cash or stock in acquiring a bank. An acquiror having stock that is trading at a high market multiple may prefer to issue stock in an acquisition, recognizing that the strength of its currency may give it an edge in pricing its offer. On the other hand, an acquiror that believes its stock is trading below its present or future value may prefer to use cash. The size of a transaction can also affect an acquiror’s willingness to issue stock. Because of the increased complexities, costs, and potential delays associated with registering the shares issued in a bank acquisition, some publicly-traded buyers prefer not to issue stock in smaller transactions. The accounting treatment of the transaction can also be relevant, as acquisitions accounted for as poolings of interest must be structured as exchanges of voting common stock for voting common stock.
The consideration preferences of your shareholders will probably be driven by three issues: (i) their preference for a taxable or tax-free exchange of shares; (ii) their confidence in the stability and future value (and possible “double dip” potential) of the acquiror’s stock; and (iii) their ability to resell any shares they receive.
An all cash deal will generally be fully taxable to your shareholders. In contrast, an all stock deal (i.e., stock of the acquiror exchanged for stock of your bank) will generally be “tax free” until the stock received in the transaction is resold (thereby giving rise to the more precise statement that stock-for- stock transactions are “tax deferred” rather than “tax free”). In a transaction where the purchase price involves a mixture of both stock and cash, the stock portion of the consideration will generally be tax deferred (provided that a minimum percentage of stock is issued, which is usually stated as at least 51%, but can be less in some instances), and the cash portion of the consideration will be taxable immediately. Capital gains treatment may be available if the stock being sold is a capital asset in the hands of your shareholder and has been held for the necessary period. Special rules apply where the bank being sold is taxed for federal income tax purposes as a “Subchapter S” corporation.
Whether an acquiror’s shares appear attractive to your shareholders will depend upon both objective and subjective factors. Among the relevant objective factors will be the particular stock’s historical price performance and volatility, its trading volume, and its likely future performance in comparison to other stocks and investments (including the acquiror’s possible status as a future acquisition target). These factors must be considered in the context of the market for bank stocks and the stock market generally. The subjective factors are more difficult to identify and assess, as different individuals have differing comfort levels about the risks, opportunities, and analytical factors associated with any investment.
The ability of your shareholders to resell the shares they receive will depend upon several factors: (i) whether the shares are registered by the acquiror under applicable securities laws; (ii) whether the transaction is accounted for as a pooling of interests; and (iii) whether the person receiving the shares is a director, executive officer, or other “affiliate” of the acquiror or your bank for purposes of the federal securities laws.
The shares issued by the acquiror will probably be registered with the SEC before they are issued to the shareholders of your bank. (Although we speak of registering the shares, technically it is the offering of the shares by the acquiror that is actually registered.) However, if your bank has very few shareholders, some acquirors may suggest issuing unregistered shares at the closing and agree to register the shares within a specified time after they are issued. Because unregistered shares generally cannot be resold in the absence of an exemption from registration, the interim illiquidity and market risk associated with this approach is not beneficial for your shareholders.
If the acquisition of your bank is being treated as a pooling of interests, the acquiror will probably require that your officers, directors, and principal shareholders refrain from selling any acquiror shares for a limited period of time following the closing, in order to ensure compliance with applicable accounting rules. These rules restrict resales until the acquiror has published financial results showing at least 30 days of combined operations of the acquiror and the bank being acquired. Because these combined results are normally published by way of the acquiror’s quarterly earnings release, the practical effect of these rules will depend upon when the acquisition closes in comparison to the date of the acquiror’s earnings report.
If one of your directors, officers, or shareholders becomes a director, executive officer, or other affiliate of a publicly-traded acquiror in connection with the acquisition or otherwise, that individual will be required to comply with SEC rules that govern resales of securities owned by directors and executive officers of public companies. One of these rules requires compliance with the public information, volume limitation on the amount of securities sold, and manner of sale provisions of SEC Rule 144. Others require reporting to the SEC of certain transactions in the acquiror’s shares and impose recovery of any profits made on sales and purchases of the acquiror’s shares within a six-month period.
In addition, if your acquisition involves a statutory merger (and most bank transactions do), SEC Rule 145 will restrict resales of the acquiror’s stock for a period of time by anyone who is a director, executive officer, or other affiliate of your institution at the time of the meeting at which your shareholders approve the merger, even though that person does not become an affiliate of the acquiror as a result of the acquisition. This rule requires that any resales made during the first year after the closing of the acquisition comply with the public information, volume limitation, and manner of sale provisions of SEC Rule 144. After the shares have been held for one year, they generally may be sold free of all but the public information requirement. After the shares have been held for two years, the restriction generally goes away. An acquiror may place a legend on the stock certificates issued to your shareholders, noting the trading restrictions. When the acquiror is a regional bank holding company having a large number of shares outstanding, the volume limitations imposed by Rule 144 usually have no practical effect on most shareholders of the bank being acquired. Back To Top
One of the key items to be negotiated is how the outstanding stock options of your bank will be treated in the transaction. Among the issues to be considered are: (i) whether any unvested options will become vested and exercisable in connection with the transaction; and (ii) whether the acquiror will agree to assume or pay for any exercisable options that are not exercised prior to the closing.
Most bank stock option plans include a provision that accelerates the vesting of any unvested options in the event of a merger, acquisition, or other change in control. (To the surprise of some option holders, the gain on any accelerated options may be considered in calculating whether any federal excise tax is due on the aggregate “excess parachute payments” received by the holder in connection with the acquisition.) Once vested, all of the exercisable options can be exercised by the holder prior to the closing. If the options are exercised, any bank shares received from the exercise will be converted into the cash or stock consideration issued in the acquisition.
The difficulty with this approach is that it requires the option holder to produce the cash necessary to exercise the options prior to the closing. Although the option holder may be able to borrow the necessary cash under a brokerage firm’s cashless option exercise program or otherwise, the holder may be forced to sell some or all of the bank shares received in order to repay the loan. To preclude these problems, most acquirors will agree to assume or pay the imputed value of any outstanding stock options of the bank being acquired. Some acquirors may allow option holders the alternative of having their options assumed or the value of the options paid to them. If the options are assumed by the acquiror, they will usually be converted (in accordance with the exchange ratio) into options to purchase shares of the acquiror. When this approach is used, you will want to ensure that the acquiror shares issued upon exercise of the assumed options will be registered under the federal securities laws. If the value of the options is paid to the option holders, the payment will usually be equal to the difference between the per share option exercise price and the consideration per share being paid in the acquisition. This amount will usually be paid in cash in a cash acquisition and, depending upon the acquiror, may be paid in cash or acquiror stock in a stock-for-stock transaction. The gain will generally be taxable to the holder at ordinary income rates.
The tax treatment of stock options that are exercised will depend upon whether the options are incentive options or nonqualified (sometimes called compensatory) options. In general, the gain realized on exercising incentive stock options will not become taxable until the shares received in the exercise are sold. (However, the exercise of incentive stock options can create liability for the alternative minimum tax.) Any gain realized on the exercise of incentive options will be ordinary income unless the shares are held for certain minimum periods after the option was granted and after it was exercised, in which event the gain will become capital gain. In contrast, the gain realized on exercising any nonqualified options will become taxable at the time the option is exercised, even if the shares received upon exercising the option are not sold at that time (and even if the value of the shares subsequently declines). This gain will be taxed as ordinary income. Of course, any gain attributable to increases in share value occurring after the incentive or nonqualified options are exercised may qualify as capital gain if the shares are held for the requisite holding period. The tax regulations governing stock options are highly complex and should be carefully reviewed with your tax advisor. Back To Top
One of the issues that your board of directors will likely discuss is how to protect your key managers and staff in connection with the acquisition. Several points need to be considered in connection with this topic.
First, for a variety of reasons, any steps to compensate or protect your bank’s employees should be completed before the bank becomes involved in acquisition discussions. Delaying this matter until acquisition negotiations are underway may raise fiduciary duty issues, create conflicts between your board and management, and make it difficult or impossible to provide your key people with the protection they deserve. Second, any payments in excess of normal compensation will be considered by the acquiror in calculating the acquisition price it is prepared to pay and, therefore, reduce the amount received by your shareholders. If the aggregate executive compensation arrangements are excessive (either because of amounts paid to a single individual or amounts paid across a broad management team), the impact on your shareholders may be material. Third, stock option, severance, and similar arrangements involve important legal, accounting, and tax issues, particularly when they are implemented in connection with an acquisition transaction. Consequently, these arrangements should be adopted only after consultation with the bank’s professional advisors. Fourth, some acquirors have strong objections to certain executive compensation arrangements and may be unwilling to proceed unless the arrangements are modified. Because these situations can create serious conflicts between the interests of the manager involved and the interests of the bank’s shareholders, every effort should be made to identify and resolve the issues as soon as possible. Sometimes resolution is only possible by having the executive agree to amend the offending arrangement.
Some of the issues that should be considered in connection with specific compensation arrangements are highlighted below.
If stock options will be used to provide acquisition-related protection, care should be taken to ensure that the grant and acceleration of the options does not adversely affect the bank’s ability to enter into an acquisition accounted for as a pooling of interests. In this regard, any grants of options or plan amendments within two years prior to the acquisition may be problematic.
If employment contracts will be used, they should be reasonable in time and scope and allow the acquiror to calculate the aggregate amount that will be due if the executive is terminated or resigns. In this regard, acquirors generally prefer to make cash severance payments rather than continue in-kind perquisites. Many acquirors are also concerned about making any severance payments if the executive can compete with the acquiror during the severance period. If the acquiror views the executive as an integral part of the bank’s franchise, the lack of a noncompete may reduce the amount that the acquiror is willing to pay, or even preclude a deal. The structure of any severance arrangements can also be important. Acquirors are generally more concerned about the potential cost of severance that will become due if the executive simply elects to resign (in comparison to severance that will become due if the executive is terminated, demoted, or relocated without consent). If the severance arrangements are limited to the latter situations, and the acquiror wants to retain the individuals involved, the acquiror may not consider the severance costs in calculating the price it is willing to pay.
In some transactions, “stay bonuses” may be used to encourage key individuals to remain with the bank through the closing of the acquisition and for a specified period thereafter. Under these arrangements, the individual receives the bonus, assuming the acquisition occurs, upon remaining with the bank for the specified period of time. Although sometimes used for more senior managers, these arrangements can be very helpful in retaining middle management and operations personnel who might otherwise seek other employment because of uncertainties about the acquisition.
If the acquiror’s employee benefit plans include vesting or related eligibility requirements, the acquisition agreement should provide that your employees will receive credit for their service with your bank. If your bank lacks a formal severance policy for all employees, it may be advisable to adopt one prior to entering into acquisition discussions, with a goal of having the acquisition agreement provide that your employees will be eligible to receive severance under your bank’s plan or the acquiror’s plan (whichever would provide greater benefits). Back To Top
The financial terms of a bank acquisition cannot be finalized until the acquiror has completed a formal due diligence review of your institution. When the managed acquisition process described earlier is being followed, the acquiror’s due diligence is usually conducted after the preliminary expressions of interest have been received and before the final price negotiations have occurred. Due diligence can also be scheduled during other timeframes. Because of confidentiality concerns, some community banks postpone the final due diligence process until a single apparently-winning bidder has been selected. Where this approach is used, all of the prospective acquirors may be allowed to conduct limited preliminary due diligence off-site prior to submitting their acquisition proposals. In yet another approach, some acquirors (typically those hopeful of completing a transaction on a sole source or noncompetitive basis) encourage delaying any formal due diligence until after a letter of intent has been signed and announced. When this approach is used, due diligence is conducted while the definitive agreement is being negotiated. This approach can even be extended so that the due diligence is not conducted until after the definitive agreement has been signed. In this alternative, the acquiror retains the right to terminate the definitive agreement if it is not satisfied with the results of its review. Regardless of when the due diligence is conducted, you should always sign a mutual confidentiality agreement before exchanging information with an acquiror.
From your perspective, there are strong reasons to conduct due diligence before the final price negotiations are held and before any letter of intent or definitive agreements are signed or announced. When the due diligence process is conducted before the final price discussions are held, each prospective acquiror has an equal opportunity to put its highest and best price on the table, without holding dollars back due to uncertainties or contingencies. This maximizes competition and shareholder value. If due diligence is delayed until after the letter of intent or definitive agreement has been announced and the acquiror discovers (or purports to discover) adverse conditions in its due diligence review, your bank could be forced to announce the termination or unfavorable amendment of the agreement. This would put your institution in an untenable bargaining position. It would also expose you to the risk of customer, employee, and shareholder unrest as well as a damaged reputation.
The acquiror due diligence process is relatively straightforward and, with proper planning, can be conducted with little risk of premature disclosure. Each participating acquiror will generally furnish your bank with a due diligence checklist outlining the materials that should be provided to the acquiror or made available for review at the bank. Due diligence checklists can be quite extensive, requiring considerable copying and preparation, particularly when several competing acquirors are involved. After the requested information has been compiled, each acquiror will be given a scheduled period to conduct due diligence of your bank. Depending upon the space available and the level of concern about confidentiality, this due diligence can be conducted on-site at the bank or off-site at a nearby office or hotel. When the latter approach is used, people and files may be shuttled to the off-site location, with any on-site due diligence being held on a limited basis after hours. Other alternatives may also be employed, such as conducting the due diligence at night or on weekends.
From a substantive standpoint, the most time-consuming part of the acquiror due diligence process will involve detailed reviews of your bank’s loan files and reserve for possible loan losses. These reviews will usually include loan-by-loan analyses of all problem loans and loan relationships above a certain amount, together with less extensive testing of other credits. In most situations, the due diligence process will also include reviews of your bank’s personnel policies and operating procedures, a reconcilement of its general ledger, a line-by-line review of its balance sheet, an evaluation of any litigation, claims, or contingencies, and a review of all employment contracts, agreements with related parties, and long term contracts for real estate, equipment, and services.
In a stock-for-stock transaction, your bank should also conduct its own due diligence of the acquiror. This due diligence may range from a review of the SEC reports, press releases, and stock trading history of a large publicly-traded bank holding company to a much more extensive on-site review of a smaller acquiror or peer merger partner. Back To Top
Under the laws of most jurisdictions, corporate directors are required to discharge their duties in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner that they reasonably believe to be in the best interests of the corporation. In discharging those duties, directors are generally permitted to rely upon information, opinions, and reports prepared or presented by legal counsel, accountants, and other persons as to matters that the directors reasonably believe are within the persons’ professional or expert competence. Obtaining legal advice from competent counsel and a fairness opinion from an experienced investment banking firm helps demonstrate that an institution’s directors met their required duty of care in an acquisition transaction. Conversely, the failure to obtain competent legal and financial advice may expose the directors to personal liability, particularly if they will derive personal benefits from the transaction. For these reasons, experienced directors generally insist on obtaining an opinion from a qualified investment banking firm that the conversion ratio or other terms of an acquisition transaction are fair, from a financial point of view, to the shareholders of the institution being acquired. Back To Top
Once your bank and the acquiror have agreed upon the business terms of the transaction, the necessary legal documentation will have to be prepared and negotiated. In some bank acquisitions, the parties may use a terms sheet or letter of intent to document the preliminary terms of the deal. In other situations, the parties may go straight to a definitive agreement.
Bank acquisition experts have differing views about whether to use a letter of intent. On the positive side, letters of intent can be helpful in outlining the anticipated terms of the deal and confirming the parties’ intention to proceed. Some buyers and sellers refuse to allow due diligence without having a letter of intent signed. On the negative side, because letters of intent create at least a moral obligation to proceed, but do not set forth all the details of the transaction, they can weaken your bargaining position in negotiating the definitive agreement. This is particularly true if the letter of intent is announced to your shareholders. Another hazard associated with letters of intent involves the degree to which they are legally binding on either or both parties. Although many bankers assume letters of intent are just that— nonbinding expressions of intention—various courts from time to time have held all or parts of these letters to be legally binding, with adverse consequences that were clearly unintended when the letters were signed. Because of the moral commitments and possibly legally-binding obligations contained in these documents, your bank should never sign a letter of intent without review and participation by your attorney and investment banker or financial advisor.
Regardless of whether a letter of intent is used, a definitive acquisition or reorganization agreement will need to be prepared. Depending upon the parties and legal structure involved, this document may be accompanied by a shorter merger agreement between your bank and one or more of the other parties (often an interim bank formed as a subsidiary of the acquiror to facilitate the deal).
In connection with the definitive agreement, the acquiror may also ask your bank to enter into a binding option or break-up agreement intended to discourage competing acquirors from breaking up the deal and assuring the contracting acquiror of a break-up fee or other profit if the transaction is topped by another bidder. Although generally accepted as appropriate, these option agreements are complex documents that deserve careful review by your lawyer.
The acquiror may ask your directors to enter into agreements confirming their intent to vote their shares in favor of the transaction and, if the acquiror will be issuing stock in the transaction, agreeing to comply with any resale restrictions on the shares received. These agreements should be reviewed by your attorney to ensure consistency with your directors’ fiduciary duties and to incorporate any necessary exceptions to the voting obligations (for example, if the acquiror’s stock is outside the exchange ratio collar or if the break-up fee is payable). Back To Top
Although the contents of a definitive acquisition agreement will vary depending upon such factors as the structure of the transaction for tax and accounting purposes and the type of consideration being used, most agreements will include: (i) a description of the transaction and the consideration being issued; (ii) representations and warranties by the institution being acquired (but generally not by its directors, officers, or shareholders unless the bank is very closely held); (iii) representations and warranties by the acquiror; (iv) a description of the conditions that must be satisfied for the closing to occur; (v) provisions governing the operation of the bank being acquired between the date of the agreement and the closing; and (vi) general covenants relating to such matters as closing procedures, termination, expenses, non-solicitation of competing offers, and indemnification. Most bank acquisition agreements will also include extensive schedules which support or list any exceptions to the representations and warranties.
The representations and warranties by your bank will probably be considerably more extensive than those by the acquiror. (The exception would be a peer merger.) The representations and warranties by the acquiror will usually be very short in cash deals and somewhat more extensive when the acquiror is issuing stock in the transaction. Although your directors and officers will probably not be personally liable for the representations and warranties made by your bank in the definitive agreement, the accuracy of these representations and warranties is still important to the successful completion of the transaction. This is because the acquisition agreement will generally require that all of your bank’s representations and warranties be true and correct at the date of closing as if they had been restated and made at that date. If this condition is not satisfied, the acquiror can terminate the transaction and refuse to close. In addition, if your bank’s representations and warranties are inaccurate when the definitive agreement is signed, the acquiror may be able to sue your institution for damages if the transaction unravels. For these reasons, your bank should carefully review the accuracy of all of its representations and warranties, including the related disclosures contained in the exhibits to the definitive agreement.
Bank acquisition agreements may also include “lock-up” provisions limiting your bank’s ability to provide information to, or negotiate with, competing acquirors and “break-up” provisions (or a separate option agreement) obligating your bank to pay an agreed upon break-up fee to the acquiror in the event your institution completes a transaction with a competing acquiror. Although frequently used, these provisions should be carefully reviewed by your attorney to ensure that they are consistent with your board’s fiduciary duties to the bank’s shareholders. Back To Top
Once the definitive agreement has been signed and the press releases have been distributed, your bank and the acquiror will work together to satisfy the conditions to the closing. In most bank acquisitions, the principal conditions will be the receipt of regulatory approvals (and the expiration of the related waiting periods) and the receipt of shareholder approvals.
The regulatory approvals required will depend upon the banking agencies having jurisdiction over the parties and the legal structure of the transaction. Principal steps in the approval process will involve preparing and submitting regulatory applications, responding to requests by the regulatory agencies for additional information, and complying with any conditions imposed with the approvals. Although the regulatory approval process has become less time-consuming during recent years for well-capitalized and well-managed acquirors, the process can be much more tedious and complex for institutions having weak capital, regulatory, or CRA ratings, as well as for individual investors having limited experience complying with the detailed federal and state regulations that govern changes of control in the banking industry.
Most bank acquisitions must be approved by the shareholders of the bank being acquired. Although the necessary shareholder vote can be taken at an annual or special meeting of shareholders, a special meeting is usually more conducive to the acquisition timetable. If the acquiror will only be issuing cash in the transaction, the bank will prepare and send a proxy statement to its shareholders to solicit votes at the meeting. If the acquiror will be issuing any stock in the transaction, the bank and the acquiror will prepare and send a much more complex proxy statement/prospectus to the bank’s shareholders. This document will be used to solicit votes at the bank shareholder meeting and also to provide the securities disclosures necessary for the shares being issued by the acquiror to be registered under the securities laws.
In some transactions, the acquisition may also have to be approved by the acquiror’s shareholders. This approval is usually necessary only if the institution being acquired is merging directly with the acquiror rather than with a subsidiary of the acquiror (although some exceptions to the approval requirement here also exist) or if the acquiror is issuing a number of shares of its stock in the transaction that is large in comparison to its existing number of outstanding shares.
While the regulatory and shareholder approvals are being sought, the acquiror will continue to monitor the business and operations of your bank to ensure that no material adverse changes have occurred and that the representations and warranties made by the bank when the definitive agreement was signed remain true and correct at the closing. (If the acquiror is issuing stock in the deal, your bank may have similar rights to monitor the business and operations of the acquiror.) The acquiror will also confirm that your bank is complying with any restrictions on its operations between the date of the definitive agreement and the date of the closing. Back To Top
Whether your bank should hire special legal counsel will depend on whether your existing counsel has experience in securities law and bank mergers and acquisitions. Bank acquisitions are complex transactions involving a unique combination of contractual, regulatory, tax, securities, and personnel issues. To protect your shareholders and ensure that your directors meet their required duty of care, your bank should be represented by counsel with the requisite level of experience. If special counsel is required, your bank may still want to involve its existing counsel for general corporate, real estate, or transitional matters. Whether you engage special counsel or use your existing attorneys or both, obtaining competent legal advice on key issues early in the acquisition process is highly advisable. Back To Top
Just as you know how to run your bank, and your lawyers and accountants know how to handle your legal, tax, and accounting matters, investment bankers know how to maximize the value of your institution in an acquisition transaction. Although most bankers have great experience in managing a financial institution, they have little experience in selling one. In contrast, most bank holding companies have significant experience in buying banks. Like professional agents in other fields, investment bankers can also negotiate aggressively while allowing your officers to build relationships with the acquiror that may be important after the closing. To negotiate effectively, protect your interests, and maximize the value of your institution to your shareholders, you need to have solid corporate finance representation on your side of the bargaining table. The bottom line benefits of competent corporate finance advice invariably outweigh the costs. Back To Top
Founded in 1939, Allen C. Ewing & Co. has been known as an expert in bank and thrift stocks for over 30 years. We have extensive experience in financial institution mergers and acquisitions, valuations, and fairness opinions. We understand how bank holding companies price and analyze acquisitions, and how they make acquisition decisions. We have strong relationships and a high level of credibility with the senior management and acquisition executives of the principal corporate acquirors. We also know how to identify and emphasize the benefits that your institution can bring to each prospective acquiror.
As a registered broker dealer under the federal securities laws and a member of the National Association of Securities Dealers, Inc. (NASD), we regularly participate in public offerings and private placements of bank and thrift stocks. We also serve as a market maker for NASDAQ-traded bank and thrift stocks. We are actively involved in the bank capital markets on a daily basis.
In terms of corporate culture, we offer a high level of responsiveness and personal commitment in everything we do. When you hire Ewing to serve as your financial advisor, you can be assured that your engagement will receive the priority it deserves and will be handled by a principal of the firm having decades of experience in evaluating, structuring, and negotiating bank and thrift acquisitions. Back To Top
We can provide a number of different services in a bank acquisition transaction, depending upon the needs and preferences of your board of directors. When we are engaged to serve as financial advisor throughout the acquisition process, our services generally include the advice and assistance described below.
Valuation. At the outset, we help you assess the strengths and weaknesses of your bank and its relative attractiveness to various acquirors. We also explain the valuation methodologies that would be applicable to your bank and discuss the general range of value you might expect to receive. If appropriate, we will also provide a market valuation report on your bank.
Acquisition Process. We review and plan the acquisition process with you. Where alternative approaches are available, we help you determine the particular approach that best meets your needs.
Positioning. If we identify steps that we believe could increase the value of your bank in the short term, we review these steps and any related business strategies that may be helpful to you. Examples include deploying excess capital, improving asset mix, reducing problem assets, minimizing long term data contracts and other transition expenses, and assessing the impact of proposed branches.
Prospective Acquirors. We identify the various acquirors that may be interested in your institution. Using the factors that you deem important as well as our own acquisitions experience, we then help you draw up a potential contact list to be used in seeking expressions of interest. If your board prefers to negotiate with a single pre-selected acquiror, we help you frame your negotiating strategy and provide the industry information and experience necessary to help you maximize shareholder value.
Confidential Memorandum. If multiple acquirors will be invited to consider your bank, we prepare a confidential memorandum that provides business and financial information about your institution and emphasizes the points that make it particularly attractive to an acquiror. Because the confidential memorandum is a key part of the sales process, we work closely with you to ensure that it presents prospective buyers with a positive but objective overview of your bank. Once the confidential memorandum is approved by you, we assist you and your counsel in making appropriate confidentiality arrangements and distribute copies of the memorandum to prospective buyers. We also answer follow-up questions from prospects and coordinate any preliminary discussions that may be appropriate.
Acquisition Proposals. As prospective buyers submit acquisition proposals or “preliminary expressions of interest,” we help you evaluate each proposal and, where appropriate, seek additional information from the party submitting the proposal. If multiple expressions of interest are received, we help you decide which prospective acquirors should be allowed to conduct due diligence or otherwise proceed forward in the acquisition process. If the prospective acquiror is a public company, as is usually the case, we provide and help you assess market and other statistical data on the company.
Due Diligence. During the due diligence phase of the acquisition process, we help you schedule and prepare for due diligence. We also help you assess each prospective acquiror’s due diligence requests and assist in resolving any problems that may arise. If the acquiror is proposing to issue stock as consideration in the transaction, we may also assist you or your accountants in planning your due diligence review of the acquiror.
Negotiation. Once the acquisition proposals have been received, we help you and your other advisors negotiate the financial terms of the transaction. Depending upon the degree of competition involved, this process may involve simultaneous negotiations with several competing acquirors or one- on-one negotiations with a single acquiror. Our negotiating experience and credibility in dozens of other banking transactions can be invaluable during this critical phase of the acquisition process. Among the key roles we play in the negotiations are positioning your bank’s strengths in a manner that is most appealing to each acquiror, helping each acquiror understand how it can afford to pay an aggressive price for your bank, maximizing the competition among acquirors, and helping your representatives assess and respond to various offers and counteroffers.
Documentation. As the negotiations progress, we may assist in documenting the financial terms of the deal in a terms sheet or a preliminary letter of intent. If desired, we also review the definitive agreement prepared by counsel.
Fairness Opinion. Before the definitive agreement is signed, we present our opinion to your board of directors as to the fairness, from a financial point of view, of the transaction to your shareholders.
Closing Preparations. As the transaction moves toward the closing, we monitor the progress of the deal and assist in resolving any issues that may arise. If desired, we also review various closing documents and answer questions about the closing process.
In situations where we are not asked to serve as financial advisor throughout the complete acquisition process, we are also available to provide more limited assistance. Before the acquisition process begins, we can prepare a report describing the strategic alternatives available to your bank or a valuation report outlining the range of values that might be anticipated if your bank were acquired. Once acquisition discussions are underway, we can provide advice and assistance in assessing and negotiating the financial terms of a specific acquisition proposal. We can also review an already negotiated transaction and provide an opinion to your board of directors as to the fairness, from a financial point of view, of the terms of the transaction to the shareholders of your bank. Although we are always pleased to serve our clients in any way that can be helpful to them, our record in other transactions demonstrates the additional value we can add by serving as your financial advisor throughout the acquisition process. Back To Top
Our fees in bank acquisition transactions depend upon the services we provide. In each case, our fees are designed to reflect the value that we bring to your institution and your shareholders.
When we serve as financial advisor to your bank for the acquisition process, all or substantially all of our compensation is usually paid in the form of a success fee that is due only when the transaction is consummated. In situations where we deliver a fairness opinion we may also receive a modest interim payment upon the delivery of our opinion.
Our success fees are generally expressed as a percentage of the total consideration received by the bank’s shareholders in the sale. The percentage used to calculate the incentive fee generally depends on the size of the bank being sold (or, more precisely, the size of the purchase price expected to be received). Incentive fee percentages are generally higher for smaller banks and lower for larger banks.
When we are engaged to provide limited financial advisory services, such as rendering a fairness opinion or providing a pre-acquisition report concerning strategic alternatives or valuation ranges, we generally charge fixed fees commensurate with the work involved. We also request reimbursement for out-of-pocket expenses in accordance with usual professional practices.
Regardless of the services we provide, our job is to add value to your proposed transaction. If we are not confident that we can do so, we will decline the engagement. Back To Top
For additional information about how Allen C. Ewing & Co. can help you sell your financial institution, to arrange a consultation or board presentation, or to request copies of this booklet, contact one of the following corporate finance professionals at Ewing:
|Charles E. Harris||(407) 423-2525||(Orlando)|
|Brian C. Beach||(407) 423-2525||(Orlando)|
|Benjamin C. Bishop, Jr.||(904) 354-5573||(Jacksonville)|