-8-
minority value for Glenwood Bank by considering five methods (a
transaction value method, a net asset value method, a discounted
future earnings method using a 10-percent earnings growth and a
20-percent earnings growth, and two guideline company methods,
one using a regional peer group, the other a high-equity assets
group, and both using capitalized earnings and capitalized book
value). The transaction method recognized the two sales of
Glenwood Bank stock happening before the valuation date and
reflected the $1,500-per-share price paid in the more recent
second sale. The net asset value method reflected Glenwood
Bank’s reported equity as of June 30, 1996, as adjusted to take
into account an unrealized $128,000 gain in bond portfolio and a
38-percent related tax adjustment ($48,640). The discounted
future earnings method reflected earnings growth rates of 10
percent and 20 percent and a present value rate of 14.1 percent.
The guideline company methods reflected a regional group of 11
financial institutions similar to Glenwood Bank and a nationwide
group of 19 banks that reported total assets of less than $1
billion and an asset/equity ratio of greater than 12 percent.
The resulting values derived under these five methods were as
follows:
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Last modified: May 25, 2011