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    Federal Finance Bank

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    CASE-75M Student Version 12/9/2010

    Federal Finance Bank
    Going Public

    Note: Only questions 1, 2, 5, 6, 7, 8 and 9 are addressed.

    This model was developed using Microsoft Excel 5.0 for windows.

    If you are using the student version of the model, some of the cells have been blanked out.
    Before using the model, it is necessary to fill in the empty cells with the appropriate formulas.
    Once this is done, the model is ready for use.

    The following cells have been blanked out:
    D21, D22, D47, D48, D89, E90, F88, F91, C107, C112, C116, D119, E117, F119, C123, C133, C142, D145
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    INPUT DATA: OUTPUT DATA:

    Amount Needed to Raise Return on Assets 1.50%
    Floatation Costs Original Share Price #DIV/0!
    # shares to raise capital (@$20) 0
    Stock Offer Price $20.00 Net per share $20.00
    Market Value/Book Value Ratio 1.15 Capital Asset Ratio 5.04%
    Risk Based Capital Asset Ratio 0.00%
    (Dollars in thousands) Annual Growth in Assets 0.00%
    ASSETS
    Cash $7,387
    U.S. Treasuries 12,477
    Mortgage-backed Securities 110,684
    Municipal Bonds 25,970
    Government Agency Securities 34,740
    TOTAL CASH & SECURITIES $191,258

    Residential Mortgage Loans $189,164
    Consumer Loans 36,583
    Business Loans 77,693
    TOTAL LOANS $303,440

    Fixed Assets $31,128

    TOTAL ASSETS $525,826

    LIABILITIES
    Passbook Savings $58,693
    Non-interest Checking
    N.O.W. Accounts
    Money Market Accounts 115,268
    Certificate of Deposits 185,561
    TOTAL SAVINGS $359,522

    Borrowed Money $68,701
    Other Liabilities 23,878
    TOTAL LIABILITIES $452,101

    Capital Stock ($100 par value) $12,155
    Retained Earnings 14,335
    TOTAL EQUITY $26,490

    TOTAL CLAIMS $478,591

    Loan Loss Reserve Allow. $2,680

    Risk Adjustment Weights:
    No default risk 0%
    Low default risk 20%
    Residential loans & muni. bonds 50%
    Other assets 100%

    Year Net Profit Assets
    (thousands) (thousands)
    2000 $7,863 $525,826
    1999 $6,732 $461,119
    1998 $5,959 $402,667
    1997 $5,450 $360,954
    1996 $4,745 $312,172
    1995 $4,077 $273,617

    Data on Publicly Traded Banks:
    Assets Equity Book Value Price Net Profit Assets 1995
    (thousands) (thousands) per Share (thousands) (thousands)
    Maryland Financial $220,000 $11,800 $31.35 $3,322 $109,400
    Great Northern Bank 486,000 21.08 20.84 6,172 241,600
    First Bank of California 305,000 15,400 36.54 2,745 239,000
    Omaha Federal 238,000 12,900 25.75 3,546 123,609

    Owner % Owned
    Brown 33%
    Zudlum 31%
    Jones 20%
    Others 16%
    = = = = = = = =

    MODEL GENERATED DATA:

    KEY RATIOS:

    Capital Asset Ratio 5.04%

    Total Capital ($1,000)
    Risk Adj. Asset Value ($1,000) $274,265

    Risk Based Capital Ratio 0.00%
    Return on Assets 1.50%
    Asset (1995-2000) growth

    Capital Asset Asset Growth ROA Market Val/
    Ratio Rate Ratio Book Val Ratio
    Maryland Financial 15.00% 1.51% 0.000
    Great Northern Bank 0.00% 15.00% 0.989
    Bank of California 5.05% 5.00% 0.90% #DIV/0!
    Omaha Federal 5.42% 1.49%
    Federal Finance 5.04% 0.00% 1.50%

    Original # shares

    Book Value per share #DIV/0!

    Market Value per Share #DIV/0!

    Size of Stock Split #DIV/0!
    Necessary

    Post split # shares

    Net per share $20.00
    New # shares need 0

    % Owned # Shares Owned
    Brown 33% 0
    Zudlum 31%
    Jones 20% 0

    $ raised in offering of 1/2 of Zudlum's stock

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    Solution Summary

    The posting has the solution to questions 1,2,5,6,7,8 and 9 for Federal Finance Bank case.

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