Estate of Frank A. Branson - Page 35




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          percent.  Spiro concluded that the fair market values of                    
          petitioner's stock was $293 per share.                                      
               We reject part of respondent's expert's opinion and accept             
          part.  In the market method section of his written report, Spiro            
          stated that the "P/E ratio[17] is principally influenced by                 
          earnings growth, with higher-growth companies trading on average            
          at higher P/E ratios."  Spiro chose a price-to-earnings ratio for           
          Savings by comparing Savings' 1-year and 3-year growth trends to            
          the average of the selected companies' growth trends, and derived           
          a share price of $373.41 from that ratio.                                   
               In analyzing the data Spiro used to derive this value, we              
          find no statistically significant correlation between the seven             
          selected companies' growth trends and their price-to-earnings               
          ratios.18  Using the average of these companies' growth trends to           


               17Price-to-earnings ratio.                                             
               18The selected companies and their growth trends and price-            
          to-earnings ratios are as follows:                                          
                                             Growth Trends                            
               Company                  1-Year    3-Year    P/E Ratios                
          California Bancshares, Inc. -18.73      5.58      11.02                     
          Civic Bancorp                 -32.32    22.91     7.95                      
          First Commercial Bancorp      -25.91    11.64     5.75                      
          The Pacific Bank              2.11      -1.24     8.01                      
          Redwood Empire Bankcorp       148.56    32.22     9.02                      
          University National Bank      1.54      3.21      9.64                      
          Westamerica Bancorporation    14.35     38.99     9.05                      
               There is no significant correlation between the companies'             
          growth rates and price-to-earnings ratios.  Spiro's data does not           
                                                             (continued...)           




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