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United Tennessee Bankshares Inc, et al. – ‘SC 13E3/A’ on 12/16/05 re: United Tennessee Bankshares Inc

On:  Friday, 12/16/05, at 6:14pm ET   ·   As of:  12/19/05   ·   Accession #:  1005794-5-980   ·   File #:  5-53331

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

12/19/05  United Tennessee Bankshares Inc   SC 13E3/A  12/16/05    1:3.1M United Tennessee Bankshares Inc   Baker Donel… Caldwell/FA
          Ben W. Hooper, III
          J. William Myers
          Richard G. Harwood
          Robert D. Self
          Robert L. Overholt
          Tommy C. Bible
          United Tennessee Bankshares, Inc.
          United Tennessee Merger Corp.
          William B. Henry

Amendment to Tender-Offer Statement — Going-Private Transaction   —   Schedule 13E-3
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: SC 13E3/A   Amendment to Tender-Offer Statement --              HTML    180K 
                          Going-Private Transaction --                           
                          utbi13e3a121605                                        


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  UTBI 13E3/A 12-16-05  
 

 
Securities and Exchange Commission
 
Washington, DC 20549

Rule 13e-3 Transaction Statement

Under Section 13(e) of the Securities Exchange Act of 1934


Amendment No. 6
to
Schedule 13E-3


United Tennessee Bankshares, Inc.
(Name of the Issuer)


United Tennessee Bankshares, Inc.

United Tennessee Merger Corp.

Richard G. Harwood

J. William Myers

Tommy C. Bible

William B. Henry

Ben W. Hooper, III

Robert L. Overholt

Robert D. Self

(Name of Person(s) Filing Statement)


Common Stock, no Par Value

(Title of Class of Securities)

 
Not Applicable

(CUSIP Number of Class of Securities)
 
 



Richard G. Harwood
President
United Tennessee Bankshares, Inc.
344 W. Broadway
Newport, Tennessee 37821-0249
(423) 623-6088

(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Person(s) Filing Statement)
 
 
With Copies To:
Linda M. Crouch-McCreadie, Esq.
Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
207 Mockingbird Lane, Suite 300
Johnson City, Tennessee 37604
(423) 921-0181


This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.

Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies: [X]

Check the following box if the filing is a final amendment reporting the results of the transaction: [ ]



INTRODUCTION


    This Amendment No. 6 to Rule 13e-3 Transaction Statement (the "Statement") on Schedule 13E-3 (the "Schedule 13E-3") is being filed by United Tennessee Bankshares, Inc., a Tennessee corporation ("United Tennessee" or the "Company"), United Tennessee Merger Corp., a Tennessee corporation and the Company's wholly-owned subsidiary (the "Merger Corp."), Richard G. Harwood, J. William Myers, Tommy C. Bible, William B. Henry, Ben W. Hooper, III, Robert L. Overholt and Robert D. Self (collectively, the "Individuals"), who are the directors and executive officers of both the Company and Merger Corp., pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended, and Rule 13e-3 thereunder in connection with the Agreement and Plan of Merger dated as of June 17, 2005 (the "Merger Agreement"), by and between the Company and the Merger Corp. A copy of the Merger Agreement is attached as Annex A to the amended definitive proxy statement filed by the Company (the "Proxy Statement"). The Company has filed with the Securities and Exchange Commission the definitive Proxy Statement under Regulation 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), relating to the Annual Meeting of Shareholders of the Company at which the shareholders would have considered and voted upon a proposal to approve and adopt the Merger Agreement. This meeting was scheduled for November 10, 2005.
 
    On November 8, 2005, shortly before the scheduled annual meeting, the Company received verbal notification from its independent registered accounting firm, Pugh & Company P.C., that the financial statements contained in its annual reports on Form 10-KSB for the year ended December 31, 2003 and 2004 and the quarterly reports on Form 10-QSB for the quarters ended March 31, 2005 and June 30, 2005 must be restated to correct the recording of expense associated with the repurchase of its common stock from employees and directors for the affected periods.  The annual meeting was called to order on November 10, 2005 but was immediately adjourned without any action being taken so that the Company could prepare the restated financial statements. The Company has now restated those financials and on December 6, 2005, filed the required amendments with the Securities and Exchange Commission. 

    All information contained in this Schedule 13E-3 concerning the Company and the Merger Corp. has been supplied by the Company and all information concerning the Individuals has been supplied by the Individuals.

    The information contained in the Proxy Statement, including all annexes thereto, is hereby expressly incorporated herein by reference. As of the date hereof, the Proxy Statement is in preliminary form and is subject to completion or amendment. This Statement will be amended to reflect such completion or amendment of the preliminary Proxy Statement. Capitalized terms used but not defined herein shall have the meanings given to them in the Proxy Statement.
 
    All parenthetical references under the various Items contained in this Schedule 13E-3 are references to the corresponding Items contained in Regulation M-A under the Exchange Act.



 




ITEM 1.   SUMMARY TERM SHEET

The information set forth in the Proxy Statement under "Summary Term Sheet Regarding the Going Private Merger" is incorporated herein by reference.

ITEM 2.  SUBJECT COMPANY INFORMATION.
 
(a).     The name of the subject company is United Tennessee Bankshares, Inc. The address of the principal executive offices of the Company is 170 W.  Broadway, Newport, Tennessee 37821-0249.  The Company is a registered bank  holding company.
 
(b).    The information set forth in the Proxy Statement under "NOTICE OF ANNUAL MEETING OF SHAREHOLDERS" and "Information About the Annual Meeting -  Who Can Vote?" is incorporated herein by reference.
 
(c).-(d).  The information set forth in the Proxy Statement under "Per Share Market Price" is incorporated herein by reference.

(e).     Not applicable.
 
(f).    The information set forth in the Proxy Statement under "Per Share Market
Price" is incorporated herein by reference.


ITEM 3.  IDENTITY AND BACKGROUND OF FILING PERSON.

(a).-(b).  The information set forth in the Proxy Statement under "Directors and Executive Officers of United Tennessee and Merger Corp." and "Determination of Fairness by Merger Corp. and the Directors and Officers of United Tennessee and Merger Corp." is incorporated herein by reference.
 
(c).  The information set forth in the Proxy Statement under "Proposal 2 -- Election of Directors" and "Directors and Executive Officers of United Tennessee and Merger Corp." is incorporated herein by reference.
 
(d).  Not applicable.

ITEM 4.  TERMS OF THE TRANSACTION.

(a).  The information set forth in the Proxy Statement under "Summary Term Sheet Regarding the Going Private Merger"; "Background of the Going Private Merger Proposal"; "Reasons for the Going Private Merger"; "Effects of the Going Private Merger"; "Opinion of Financial Advisor"; "Material U.S. Federal Income Tax Consequences of the Going Private Merger"; and "The Merger Agreement" is incorporated herein by reference.
 
(b).  Not applicable.
 
(c).  The information set forth in the Proxy Statement under "Background of the Going Private Merger Proposal"; "Reasons for the Going Private Merger"; "Effects of the Going Private Merger"; "Recommendation of the Board of Directors; Fairness of the Going Private Merger Proposal"; and "The Merger Agreement" is incorporated herein by reference.

 





(d).  The information set forth in the Proxy Statement under "Dissenters Rights" is incorporated herein by reference.
 
(e).  No provision is being made in connection with the Going Private Merger to grant unaffiliated shareholders access to the filing persons' files or to obtain counsel or appraisal services at the expense of the filing persons.
 
(f).  Not applicable.

ITEM 5.  PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.

(a).  Not applicable.

(b)-(c).   The information set forth in the Proxy Statement under "Background of the Going Private Merger Proposal" and "Recommendation of the Board of Directors; Fairness of the Going Private Merger Proposal" is incorporated herein by reference.
 
(e). The information set forth in the Proxy Statement under "Stock Ownership of  United Tennessee" is incorporated herein by reference.

ITEM 6.  PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.

(a).  The information set forth in the Proxy Statement under "Background of the Going Private Merger Proposal"; "Reasons for the Going Private Merger"; "Recommendation of the Board of Directors; Fairness of the Going Private Merger Proposal"; and "The Merger Agreement" is incorporated herein by reference.

(b).  The information set forth in the Proxy Statement under "Effects of the Going Private Merger"; "Conduct of United Tennessee's Business after the Going Private Merger"; and "The Merger Agreement" is incorporated herein by reference.

(c).  The information set forth in the Proxy Statement under "Background of the Going Private Merger Proposal"; "Reasons for the Going Private Merger"; "Effects of the Going Private Merger"; "Recommendation of the Board of Directors; Fairness of the Going Private Merger Proposal"; and "The Merger Agreement" is incorporated herein by reference.
 
(d).  Not applicable.

ITEM 7.  PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.

(a).  The information set forth in the Proxy Statement under "Background of the Going Private Merger Proposal"; "Reasons for the Going Private Merger"; "Effects of the Going Private Merger"; "Recommendation of the Board of Directors; Fairness of the Going Private Merger Proposal"; and "The Merger Agreement" is incorporated herein by reference.
 
(b).-(c).The information set forth in the Proxy Statement under "Background of the Going Private Merger Proposal"; "Reasons for the Going Private Merger"; and "Recommendation of the Board of Directors; Fairness of the Going Private Merger Proposal" is incorporated herein by reference.
 
 





(d).      The information set forth in the Proxy Statement under "Effects of the Going Private Merger" and "Material U.S. Federal Income Tax Consequences of the Going Private Merger" is incorporated herein by reference.
 
ITEM 8.  FAIRNESS OF THE TRANSACTION.

(a)-(e).  The information set forth in the Proxy Statement under "Background of the Going Private Merger Proposal"; "Reasons for the Going Private Merger"; "Recommendation of the Board of Directors; Fairness of the Going Private Merger Proposal"; "Determination of Fairness by Merger Corp. and the Directors and Officers of United Tennessee and Merger Corp."; "Per Share Market Price"; and "Opinion of Financial Advisor" is incorporated herein by reference.
 
(f).    Not applicable.

ITEM 9.  REPORTS, OPINIONS, APPRAISALS, AND CERTAIN NEGOTIATIONS
(a)-(b).  The information set forth in the Proxy Statement under "Background of the Going Private Merger Proposal"; "Recommendation of the Board of Directors; Fairness of the Going Private Merger Proposal"; and "Opinion of  Financial Advisor" is incorporated herein by reference.
 
(c).     The Opinion of Financial Advisor, attached as Annex B to the Proxy Statement is incorporated herein by reference. The report of Howe Barnes Investments, Inc. dated December 7, 2005 is filed herewith as an exhibit.
 
ITEM 10.  SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
 
(a)-(b).  The information set forth in the Proxy Statement under "Source and Amount of Funds for the Going Private Merger" is incorporated herein by reference. No alternative financing arrangements or plans have been made to finance the Going Private Merger.
 
(c).  The information set forth in the Proxy Statement under "Fees and Expenses of the Going Private Merger" is incorporated herein by reference.
 
(d).  Not applicable.

ITEM 11.  INTERESTS IN SECURITIES OF THE SUBJECT COMPANY.

(a). The information set forth in the Proxy Statement under "Per Share Market Price"; "Interests of Officers and Directors in the Going Private Merger"; and "Stock Ownership of United Tennessee" is incorporated herein by reference.

(b). Not applicable.

ITEM 12. THE SOLICITATION OR RECOMMENDATION.

(d)-(e). The information set forth in the Proxy Statement under "Recommendation of the Board of Directors; Fairness of the Going Private Merger Proposal" is incorporated herein by reference.

 





ITEM 13.  FINANCIAL STATEMENTS.

(a).  The financial statements, and the notes thereto, of United Tennessee set forth in United Tennessee's annual report on Form 10-KSB, as amended, for the year ended December 31, 2004, filed with the SEC on December 6, 2005, and the financial statements, and the notes thereto, of United Tennessee set forth in United Tennessee's quarterly report on Form 10-QSB for the quarter ended September 30, 2005, filed with the SEC on November 21, 2005, are incorporated herein by reference.

(b).  The information set forth in the Proxy Statement under "Summary Unaudited Pro Forma Consolidated Financial Information"; "Selected Per Share Financial Information"; "Effects of the Going Private Merger"; and "Index to Financial Statements" is incorporated herein by reference.
 
(c).   The information in the Proxy Statement under "Summary Financial Information" is incorporated herein by reference.

ITEM 14.  PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
 
(a)-(b).  The information set forth in the Proxy Statement under "Cost of Solicitation" is incorporated herein by reference.

ITEM 15.ADDITIONAL INFORMATION.

(b).  The information contained in the Proxy Statement, including all appendices attached thereto, is incorporated herein by reference.

ITEM 16.EXHIBITS.
 
(a)(1).   Amended Definitive Proxy Statement on Schedule 14A, of the Company, as filed with the Commission on December 16, 2005.*
 
(a)(2).  Current Report on Form 8-K containing press release issued April 14, 2005, incorporated herein by reference.
 
(c)(1).  Form of opinion of Howe Barnes Investments, Inc. (included as Annex B to the Company's Proxy Statement filed as part of the
Schedule 14A included as Exhibit (a)(1) to this Schedule 13E-3).*
 
(c)(2). Report of Howe Barnes Investments, Inc. to United Tennessee Bankshares, Inc., dated December 7, 2005.
 
(c)(3).  Triangle Capital Partners presentation to United Tennessee Bankshares, Inc., dated January 15, 2005 (previously filed).
 
(c)(4).  Triangle Capital Partners presentation to United Tennessee Bankshares, Inc., dated April 12, 2005 (previously filed).
 
(c)(5).  Triangle Capital Partners presentation to United Tennessee Bankshares, Inc. dated November 4, 2004 (previously filed).
 
(d)(1).  Agreement and Plan of Merger dated as of June 17, 2005 by and between the Company and United Tennessee Merger Corp. (included as Annex A to the Company's Proxy Statement filed as part of the Schedule 14A included as Exhibit (a)(1) to this Schedule 13E-3).*
 
(e)(1).  Form of Tax Opinion of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC (previously filed).
 
(f)(1). Sections 48-21-101 through 48-23-302 of Tennessee Business Corporation  Act (included as Annex C to the Company's Proxy Statement filed as part of the Schedule 14A included as Exhibit (a)(1) to this Schedule 13E-3).*
 
*Incorporated by reference to the Company's Definitive Proxy Statement, on Schedule 14A, as filed with the Commission on October 7, 2005.


 







SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct.
 
 
                                                                            UNITED TENNESSEE BANKSHARES, INC.
 
 
                                                                            /s/ Richard G. Harwood
                                                                            President and Chief Executive Officer
                                                                            Dated: December 16, 2005
                                                                            Printed Name: Richard G. Harwood
























SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct.
 
                                                                        UNITED TENNESSEE MERGER CORP.
                                                                        /s/ Richard G. Harwood
                                                                        President and Chief Executive Officer
                                                                        Dated: December16, 2005  
                                                                                                                  Printed Name: Richard G. Harwood

 

 

 







SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct.

                                                                            /s/ Richard G. Harwood
                                                                            Dated: December 16, 2005
                                                                            Printed Name: Richard G. Harwood








SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct.

                                                                           /s/ J. William Myers
                                                                            Dated: December 16, 2005
                                                                            Printed Name: J. William Myers











SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct.

                                                                            /s/ Tommy C. Bible
                                                                            Dated: December 16, 2005
                                                                            Printed Name: Tommy C. Bible










SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct.

                                                                            /s/ William B. Henry
                                                                            Dated: December 16, 2005
                                                                            Printed Name: William B. Henry









SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct.

                                                                            /s/ Ben W. Hooper, III
                                                                            Dated: December 16, 2005
                                                                            Printed Name: Ben W. Hooper, III








SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct.

                                                                            /s/ Robert L. Overholt
                                                                            Dated: December 16, 2005
                                                                            Printed Name: Robert L. Overholt










SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct.

                                                                            /s/ Robert D. Self
                                                                            Dated: December 16, 2005
                                                                            Printed Name: Robert D. Self



Exhibit (c)(2)
 
William J. Wagner
Managing Director
John F. Schramm
Managing Director
Highly Confidential
Presentation to:
United Tennessee Bankshares, Inc.
Newport, Tennessee
HOWE BARNES INVESTMENTS, INC.
4000 WestChase Boulevard, Suite 110
Phone:  919-424-0100
Fax: 919-424-0110
 
1

 
 
1
 
2
 
 
Valuation Analysis
 
Pro Forma Analysis
   
AGENDA
 
2

 
1. Valuation Analysis
 
3

 
Methodologies
Ø
To establish a range of fair value for the common stock of United Tennessee Bankshares, Inc.
(“UTBI”), Howe Barnes Investments, Inc. (“HBI”) utilized three valuation methodologies:
§
Comparison to market multiples of selected peer groups (“Comparable Company Analysis”)
§
Dividend discount analysis
§
Premium to market analysis
Ø
In addition, HBI reviewed the historic trading activity of UTBI’s common stock
Ø
HBI reconciled the results of these analyses to establish a range of fair values for UTBI
 
4

 
Financial Institution Indexed Market Performance
As of the market close on 11/30/2005
Source: SNL Financial, LC
46%
38%
38%
 
5

 
Small Company Indexed Market Performance
As of the market close on 11/30/2005
Source: SNL Financial, LC
27%
65%
91%
 
6

 
UTBI 3-Year Price / Volume Analysis
As of the market close on 11/30/2005
Source: SNL Financial, LC
 
7

 
UTBI Stock Trading – Twelve Months Prior to Announcement of Going Private Transaction
(1) Prior to announcement of going private transaction on 4/14/2005
Source: SNL Financial, LC
 
8

 
Analysis of Trading History Prior to Announcement of Going Private Transaction
Source: SNL Financial, LC
 
9

 
Selection of Peer Groups
Ø
To help establish  the range of fair value for the common stock of  UTBI, HBI reviewed the trading
prices of the following peer groups:
§
All publicly traded thrifts nationwide as identified by SNL Financial, LC              
§
All publicly traded Southeast thrifts
§
All publicly traded thrifts nationwide with assets between $100 million and $200 million
§
All publicly traded thrifts nationwide with market capitalizations between $15 million and $35 million
§
All publicly traded thrifts nationwide with returns on average assets between 1.25% and 1.75%
§
All publicly traded thrifts nationwide with returns on average equity between 8.0% and 11.0%
§
All publicly traded thrifts nationwide with ratios of tangible equity / tangible assets between 12% and 20%
Ø
The following pricing ratios for each peer group were reviewed:
§
Price / book value
§
Price / tangible book value
§
Price / earnings – reported last twelve months
§
Price / earnings – core last twelve months
*Core earnings are net income minus after tax net non-operating income (assuming a 35% marginal tax rate)
 
10

 
Comparison to Thrift Industry Median Ratios
Ø
UTBI has more capital and is more profitable than
the median for all publicly traded U.S. thrifts (“U.S.
Thrifts”
)
Ø
On 11/30/2005, U.S. Thrifts were trading for a
median of 132% of book value, 148% of tangible
book value, and approximately 17 times last twelve
month’s earnings
 
11

 
Comparison to Southeast Thrifts
Ø
UTBI is smaller, has higher capital, and is more
profitable than the median ratios for Southeastern
thrifts
Ø
Southeastern thrifts tend to trade at price to book
value ratios similar to U.S. Thrifts and at higher price
to earnings ratios than U.S. Thrifts
 
12

 
Comparison to Nationwide Peer Groups based on Size
Ø
Smaller thrifts tend to have higher levels of capital
and lower profitability than the typical publicly traded
thrift
Ø
UTBI has a higher level of capital and is more
profitable than these peer groups
Ø
Smaller thrifts typically trade at a discount to U.S.
Thrifts in terms of price to book value ratios
Ø
Smaller thrifts typically trade at higher price to
earnings ratios than U.S. Thrifts
 
13

 
Comparison to Nationwide Peer Groups based on Profitability
Ø
UTBI is smaller than these peer groups of thrifts with
above average profitability
Ø
UTBI has a much higher level of capital than the
medians for these peer groups
Ø
Thrifts with above average profitability tend to trade at
higher price to book value ratios but lower price to
earnings multiples than U.S. Thrifts
 
14

 
Comparison to Nationwide Peer Groups based on Capital Level
Ø
Highly capitalized thrifts tend to be smaller in size
than the average thrift
Ø
UTBI is much more profitable than the peer group of
overcapitalized thrifts
Ø
Thrifts with high levels of capital trade at lower price
to book value ratios, but they trade at above average
price to earnings multiples
 
15

 
Observations on Nationwide Peer Groups
Ø
The data clearly indicates that smaller thrifts tend to trade at lower price to book value ratios
Ø
Thrifts with above average profitability tend to trade at higher multiples of book value, but they trade
at lower multiples of earnings
Ø
Thrifts with above average profitability are typically much larger than UTBI
Ø
The data also indicates that highly capitalized thrifts trade at lower price to book value ratios
Ø
We believe that the stocks of small, over-capitalized thrifts generally trade on the basis of book
value rather than earnings
Ø
Small thrifts are generally perceived to have a high level of earnings volatility which can partially be
attributed to interest rate risk
 
16

 
Guideline Company Selection
Ø
We reviewed all thrifts identified as public companies by SNL Financial, LC and selected a group of
thrift institutions that met the following criteria (the “Guideline Companies”):
§
Total assets between $50 million and $500 million
§
Return on average equity for the last twelve months between 7.0% and 13.0%
§
Tangible equity to tangible assets ratio greater than 8.0%
§
Non-performing assets / total assets ratio less than 1.50%
Ø
We excluded companies that:
§
Were mutual holding companies
§
Did not have available pricing ratios
§
Were targets of merger transactions
§
Were pursuing a going private transaction
§
Were traded on the pink sheets
§
Were in the high-growth states of Florida, Texas or California
Ø
The criteria resulted in the selection of 9 Guideline Companies
 
17

 
Financial Comparison to Guideline Companies
 
18

 
Pricing Ratios for Guideline Companies
Source: SNL Financial, LC
 
19

 
Observations on Guideline Companies
Ø
The Guideline Companies consist of 9 thrifts which are smaller than the average actively traded
thrift but are more profitable
Ø
The median pricing ratios for these Guideline Companies on a price to book value and price to
earnings basis are lower than national medians
 
20

 
Valuation of UTBI Based on Guideline Companies(1)
(1) Pricing for UTBI implied by ratios of the 9 peers selected; Blue bars represent the inter-quartile range, medians boxed
$22.22
$22.21
$19.54
$19.96
3rd Quartile
15.4x
16.7x
134%
148%
Median
13.3x
16.1x
118%
125%
1st Quartile
12.7x
12.8x
108%
112%
 
21

 
Comparable Company Analysis
Ø
In comparison to the typical publicly traded thrift, UTBI is smaller, more profitable and has a higher level of
capital
Ø
The nationwide peer groups and the Guideline Companies indicate that small and overcapitalized thrifts trade
at below average price to book value ratios
Ø
UTBI had a large securities gain in the last twelve months, so we focused more on core earnings when
establishing our range of indicated value
Ø
Based on a review of the trading data for thrifts with similar financial characteristics, HBI selected the following
pricing ratios to apply to UTBI:
Range implied by trading market analysis - $19.25 - $23.25
 
22

 
Dividend Discount Analysis
Ø
A range of fair value for a common stock can be determined based on the present value of the
expected future dividends to be received
Ø
UTBI provided HBI with financial projections through 12/31/09
Ø
To determine the present value of future dividends beyond 12/31/09, assumptions were made
regarding an appropriate terminal multiple
 
23

 
Financial Projections
Ø
The management of UTBI provided HBI with the following financial projections:
 
24

 
Dividend Discount Analysis
Ø
HBI discounted UTBI’s projected dividends for 2006 to 2009 to present value at discount rates between 11%
and 13%.
Ø
HBI assumed that an appropriate terminal multiple for UTBI would be between 13x and 16x. HBI multiplied
UTBI’s 2009 estimated earnings per share by the selected terminal multiples and discounted this value using
the same discount rate selected for dividends.
Ø
The sum of these values was the implied present value per share.
              Range implied by dividend discount analysis  - $15.75 to $20.50
(1) Based on UTBI’s projections
 
25

 
Going Private Premium Study
Ø
HBI selected 23 going private transactions announced in the last two years
Ø
The analysis included only reverse stock splits and cash-out mergers
Ø
The analysis included only bank and thrift transactions
Ø
The analysis excluded transactions that could be deemed a change of control
Ø
HBI analyzed the range of premiums paid over the trading price
 
26

 
Selected Transactions
Sources: SNL Financial, LC and SEC filings
 
27

 
Premium Analysis
Ø
Based on a review of these 23 transactions, HBI concluded that a reasonable premium to be paid
was between 5% and 20%.
Range implied by trading market analysis - $19.25 - $22.75
(1) Weighted average prior to the announcement of the going private transaction
 
28

 
Reconciliation of Valuation Methodologies
 
29

 
Pricing Ratios
(1)
Based on weighted average for the last 10  trades prior to the announcement of UTBI’s going private transaction
(2)
Based on book value and earnings per share for UTBI at or for the twelve months ended September 30, 2005
Ø
HBI concludes that the $22.00 per share price selected by UTBI’s board is fair from a financial
point of view
 
30

 
2. Pro Forma Analysis
 
31

 
Registered Shareholder List Analysis
(1) Number of shareholders represented by CEDE is estimated from the number of brokers on the NOBO List.
This analysis is based on the registered shareholder list provided by the Company for the record date 9/30/2005.
 
32

 
Pro Forma 1:2,500 Cash Out Merger Analysis
 
33

 
These materials are for discussion purposes only.  They should not be construed as an offer or solicitation with respect to the
purchase or sale of any security or to enter into any particular transaction and may not be relied on in evaluating the merits of
investing in any security or entering into any transaction.
The information contained herein and any supplemental information or other documents provided in connection herewith are submitted
to you on a strictly confidential basis, should be kept confidential and should not be used other than in connection with your evaluation
of a proposed structure or transaction.  By accepting a copy of this presentation, the recipient agrees that neither it nor any of its
employees or advisors shall use the information for any purpose other than evaluating a proposed structure or transaction or divulge
the information to any other party.  The information contained herein shall not be photocopied, reproduced or distributed to others, in
whole or in part, without the prior written consent of Howe Barnes Investments, Inc.
 
34

 

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘SC 13E3/A’ Filing    Date    Other Filings
Filed as of:12/19/05DEFR14A
Filed on:12/16/05DEFR14A
12/7/05
12/6/0510-Q/A,  10KSB/A,  10QSB/A
11/21/0510QSB,  NT 10-Q/A
11/10/05
11/8/058-K,  8-K/A
10/7/05DEF 14A,  SC 13E3/A
9/30/0510QSB,  DEF 14A,  NT 10-Q,  NT 10-Q/A
6/30/0510QSB,  10QSB/A,  8-K
6/17/05
4/14/058-K
4/12/05
3/31/0510-Q/A,  10QSB
1/15/05
12/31/0410KSB,  10KSB/A,  NT 10-K
11/4/04
12/31/0310KSB,  5
 List all Filings 
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