Estate of Helen J. Smith, Deceased, Frederic L. Foill II and Cassandra F. Vallery, Co-Executors - Page 29




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               Mr. Egan’s Report                                                      
               Mr. Egan’s report used an approach similar to Mr. Hitt’s:              
          Finding comparable companies, calculating various ratios, and               
          then applying the ratios to FNBW to determine its market value.             
          Mr. Egan relied on four ratios, two of which were also used by              
          Mr. Hitt:16  P/E, P/Eqt, price/5-year earnings (P/E5),17 and                
          price/dividends (P/D).  However, because Mr. Egan used sales of             
          minority interests rather than acquisitions of entire banks (as             
          Mr. Hitt did), he did not apply a minority interest discount.               
                    Comparable Companies                                              
               To create a list of comparable companies, Mr. Egan started             
          with a list of commercial banks based in Ohio and chose banks               
          that satisfied four criteria:  (1) Publicly available financial             
          statements, (2) publicly held and actively traded common stock,             
          (3) common stock price exceeding $2 per share, and (4) assets               
          under $1 billion.  Seven banks met these criteria.                          
                    Ratios                                                            
               To calculate the P/E, P/E5, and P/Eqt ratios, Mr. Egan used            
          the per-share traded price of each company on the date of                   
          decedent’s death and obtained figures for earnings during 1992,             


               16 Although Mr. Hitt also employed P/E and P/Eqt ratios, his           
          numerical values were different because he used different                   
          comparables.                                                                
               17 For this ratio, Mr. Egan calculated a weighted average of           
          FNBW’S earnings from 1988 to 1992 using the same method used in             
          calculating a weighted average of JFI’s earnings.                           





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