Aaron Grill, Taylor Barnard Work & Capital Management Case #4

Sun Coast Savings Bank

1.

Net-to-worth-Assest Ratio Number of Shares Outstanding Book Value Per Share

6.14% 9000 $6,541.09

2. 3.

Growth Rate

17.00%

Virginia Federal Net-to-worth-Assest Ratio Growth Rates P/E Ratio Market Value/Book Value Ratio 6.79% 16.00% 6.10 105.61%

South Land Financial 6.62% 19.23% 8.50 105.26%

Texas Federal 4.71% 27.70% 4.63 64.18%

Great Southern Financial 5.19% 9.67% 4.48 49.56%

4. Based on the numbers that we came up with for each of the different saving institutions as well as 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. Market Value/Book Value Ratio Book Value Market Value Per Share 0.8 $6,541.09 $5,232.87

6.

Market Value Per Share New Price Per Share Stock Split

$5,232.87 $20.00 261.64

7.

Flotation Cost Funds Needed Shares Needed to be Sold

10.00% $3,000,000 3,333,333

8. A. Jim Evans Tony McCoy Vincent Culverhouse Total B. Amount of Shares Sold 583333 583333 333333 1500000 Amount of Money $11,666,666.67 $11,666,666.67 $6,666,666.67 $30,000,000.00

New Flotation Cost

37.93%

9. If we were to go public we would begin telling the investment banker that we would be splitting our 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% flotation cost 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 sees multiple 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

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 that even 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 take our 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.