EX-99.7 6 tm238313d4_ex99-7.htm EXHIBIT 99.7

 

Exhibit 99.7

 

Feldman Financial Advisors, Inc.

 

8804 Mirador Place

McLean, VA 22102

(202) 467-6862

 

 

Peru Federal Savings Bank
Peru, Illinois

 

Conversion Valuation Appraisal Update

Valued as of May 26, 2023

 

Prepared By

 

Feldman Financial Advisors, Inc.

McLean, Virginia

 

 

 

 

 

Feldman Financial Advisors, Inc.

 

8804 Mirador Place

McLean, VA 22102

202-467-6862

 

May 26, 2023

 

Board of Directors

Peru Federal Savings Bank

1730 Fourth Street

Peru, Illinois 61354

 

Members of the Board of Directors:

 

At your request, we have completed and hereby provide an independent appraisal (the “Appraisal”) of the estimated pro forma market value of Peru Federal Savings Bank (the “Bank”) as of May 26, 2023 in conjunction with the Bank’s conversion (the “Conversion”) from the mutual to stock form of organization, issuance of all of its capital stock to a newly formed stock holding company known as PFS Bancorp, Inc. (“PFS Bancorp”), and offering for sale of PFS Bancorp’s common stock to eligible depositors of the Bank and the Bank’s employee stock ownership plan (“ESOP”) in a subscription offering. Shares not purchased in the subscription offering will be offered for sale to the general public in a community offering or syndicated community offering. This updated Appraisal is being furnished in connection with a comparison of the Bank’s recent financial results with the Comparative Group through the period ended March 31, 2023 and a review of current market conditions for bank and thrift common stocks.

 

Feldman Financial Advisors, Inc. (“Feldman Financial”) is a financial consulting and advisory firm that specializes in valuations and analyses of business enterprises and securities in the thrift, banking, and mortgage industries. The background of Feldman Financial is presented in Exhibit I. In preparing the Appraisal, we conducted an analysis of the Bank that included discussions with the Bank’s management, the Bank’s legal counsel, Luse Gorman, PC, and the Bank’s independent registered public accounting firm, Wipfli, LLP. In addition, where appropriate, we considered information based on other available published sources that we believe are reliable; however, we cannot guarantee the accuracy and completeness of such information. We also reviewed, among other factors, the economy in the Bank’s primary market area and compared the Bank’s financial condition and operating performance with that of selected publicly traded thrift institutions. We reviewed conditions in the securities markets in general and in the market for thrift institution common stocks in particular. Our original Appraisal as of February 21, 2023 and previously updated Appraisal as of April 10, 2023 are incorporated and supplemented herein by reference.

 

Our Appraisal is not intended and must not be construed to be a recommendation of any kind as to the advisability of purchasing shares of common stock in the offering. Moreover, because such valuations are necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of stock in the offering will thereafter be able to sell such shares at prices related to our estimate of the Bank’s pro forma market value.

 

 

 

 

Feldman Financial Advisors, Inc.

 

Board of Directors

Peru Federal Savings Bank

May 26, 2023

Page 2

 

Recent Financial Performance

 

Table 1 summarizes the Bank’s financial data and ratios as of December 31, 2021 and 2022 and March 31, 2023. Table 2 summarizes the Bank’s recent income statement data and performance ratios for the annual and year-to-date periods. Exhibits 1 to 3 present more detailed balance sheet and income statement data for recent historical periods.

 

Table 1

Selected Financial Data and Ratios

As of December 31, 2021 and 2022 and March 31, 2023

(Dollars in Thousands)

 

   March 31,   December 31, 
   2023   2022   2021 
Selected Balance Sheet Data               
Total assets  $179,066   $174,134   $185,556 
Cash and cash equivalents   17,822    12,561    21,542 
Investment securities   67,189    66,475    74,759 
Federal Home Loan Bank stock   347    347    330 
Total loans, net   83,752    84,916    80,840 
Premises and equipment, net   2,124    2,150    2,159 
Bank-owned life insurance   3,806    3,783    3,696 
Total deposits   157,473    152,707    155,912 
Federal Home Loan Bank advances   -    -    5,000 
Total equity   20,402    20,139    23,440 
                
Capital Ratios               
Total equity to total assets   11.39%   11.57%   12.63%
Tier 1 capital as a % of average assets   13.67%   13.81%   12.55%
Tier 1 capital as a % of risk-weighted assets   28.04%   28.07%   28.14%
Total capital as a % of risk-weighted assets   28.74%   28.71%   28.84%
                
Asset Quality               
Non-performing loans to total loans (1)   2.38%   0.73%   0.96%
Non-performing assets to total assets (1)   1.12%   0.36%   0.42%
Allowance for loan losses to total loans   0.71%   0.64%   0.70%
Allowance for loan losses to non-performing loans (1)   29.99%   87.16%   72.32%

 

(1) Non-performing loans include troubled debt restructurings.  

 

Source:  Peru Federal Savings Bank, financial statements and regulatory financial reports.    

 

 

 

 

Feldman Financial Advisors, Inc.

 

Board of Directors

Peru Federal Savings Bank

May 26, 2023

Page 3

 

As discussed in our prior Appraisal, the Bank’s net income increased by $7,000 or 3.4% to $213,000 for the three months ended March 31, 2023, compared to net income of $206,000 for the three months ended March 31, 2022. The moderate increase was primarily due to a $124,000 increase in net interest income and a $32,000 decrease in the provision for loan losses, offset partially by a $143,000 increase in non-interest expense. The Bank’s annualized return on average assets (“ROA”) was 0.47% for the first quarter of 2023 as compared to 0.45% for the first quarter of 2022. The Bank’s total equity increased by $263,000 or 1.3% to $20.4 million at March 31, 2023 as compared to $20.1 million at December 31, 2022. The ratio of total equity to total assets declined from 11.57% at December 31, 2022 to 11.39% at March 31, 2023.

 

The Bank’s non-performing assets increased from $623,000 (0.36% of total assets) at December 31, 2022 to $2.0 million (1.12% of total assets) at March 31, 2023 as non-accrual loans increased from $117,000 to $1.5 million due to emerging problems with participation loans. The Bank has $1.3 million of related participation loans in which the lead lender notified the Bank in February 2023 of the borrower’s deteriorating financial position and consideration of a Chapter 11 bankruptcy. The Bank holds one loan with a principal balance of approximately $905,000, representing a 9.5% participant interest, and another loan with a principal balance of approximately $396,000, representing a 25% participant interest, both secured by commercial real estate. Once notified of the borrower’s deteriorating financial position and the potential for a Chapter 11 bankruptcy, the Bank moved the two loans to non-accrual status and classified the loans as substandard. During the quarter ended March 31, 2023, the lead lender notified participant banks that the borrower has entered into a non-disclosure agreement with several larger entities to be acquired. The following updated information was provided on these two participation loans:

 

Loan 1: The collateral value for the $905,000 loan at origination was $23.9 million with the appraisal dated as of August 12, 2015. The updated appraisal received on March 20, 2023, shows an as-is operating value of $19.1 million. The Bank owns 9.5% of this participation loan. Therefore, the Bank believes that its collateral value of $1.8 million, less estimated selling costs, would be sufficient to cover the outstanding loan balance, and, therefore, no reserve was warranted as of March 31, 2023. The appraised value is based on the continued operations of the facility and with the borrower currently in negotiations with several larger entities, the Bank believes that the borrower will make every effort to keep operations going to retain customers and staff. In the event of a facility closure, the appraised value of the collateral would decline to approximately $3.4 million with the Bank’s share of the collateral being $325,000, and the Bank currently estimates that it may incur a charge-off of approximately $612,500.

 

Loan 2: The outstanding balance on this loan is approximately $396,000. The Bank has received the updated appraisal as of March 27, 2023, showing a value of $3.6 million. The Bank owns 25% of this loan and, therefore, its share of the collateral is $915,000. Given the $396,000 balance owned by the Bank in relation to its collateral share of the appraised value of $3.6 million, the Bank has determined that no reserve was warranted as of March 31, 2023.

 

 

 

 

Feldman Financial Advisors, Inc.

 

Board of Directors

Peru Federal Savings Bank

May 26, 2023

Page 4

 

Table 2

Income Statement and Performance Ratios

For the Years Ended December 31, 2021 and 2022

And the Three Months Ended March 31, 2022 and 2023

(Dollars in Thousands)

 

   Three Months Ended   Year Ended 
   March 31,   December 31, 
   2023   2022   2022   2021 
Total interest and dividend income  $1,417   $1,096   $4,803   $4,584 
Total interest expense   317    120    640    611 
Net interest income   1,100    976    4,163    3,973 
Provision (credit) for loan losses   5    37    61    (6)
Net interest income after provision   1,095    939    4,102    3,979 
                     
Total non-interest operating income   149    153    730    660 
Total non-interest expense   984    841    3,625    3,362 
                     
Realized loss on sale of available-for-sale securities   -    -    (221)   - 
                     
Income before income taxes   260    251    986    1,277 
Provision for income taxes   47    45    155    275 
Net income  $213   $206   $831   $1,002 
                     
Selected Performance Ratios (1)                    
Return on average assets   0.47%   0.45%   0.46%   0.56%
Return on average equity   4.20%   3.58%   3.99%   4.29%
Net interest rate spread   2.48%   2.11%   2.35%   2.19%
Net interest margin   2.65%   2.18%   2.42%   2.28%
Total non-interest expense to average assets   2.19%   1.84%   2.00%   1.87%
Efficiency ratio   78.78%   74.49%   74.09%   72.57%

 

(1) Annualized ratios for the quarterly period.

 

Source:  Peru Federal Savings Bank, financial data.

 

 

 

 

Feldman Financial Advisors, Inc.

 

Board of Directors

Peru Federal Savings Bank

May 26, 2023

Page 5

 

Comparative Group: Recent Financial Comparisons

 

Exhibits 4 through 8 summarize recent financial comparisons of the Bank with the Comparative Group for the last twelve months (“LTM”) ended March 31, 2023. For the LTM ended March 31, 2023, the Bank’s ROA was 0.47% and similar to the Comparative Group’s median ROA of 0.46%. Relative to the Comparative Group, the Bank’s profitability continues to be characterized by a lower net interest margin and a lower operating expense ratio. The Bank’s lower net interest margin is attributable primarily to its high concentration of cash and securities on the balance sheet and lower level of higher-yielding assets in the form of loans receivable.

 

The Bank net interest margin advanced to 2.55% for the LTM ended March 31, 2023, but still trailed the Comparative Group’s median net interest margin of 3.10%. The Bank’s 1.12% ratio of total non-performing assets to total assets as of March 31, 2023 exceeded the Comparative Group’s median ratio of 0.44%. The Bank’s 0.71% ratio of loan loss reserves to total loans remained below the corresponding Comparative Group’s median of 1.19% at March 31, 2023. The Bank’s ratio of tangible equity to assets (before the effect of the Conversion) was 11.39% at March 31, 2023, moderately below the Comparative Group’s median of 13.15%.

 

Comparative Group: Recent Stock Price Performance

 

Since our prior Appraisal as of April 10, 2023, market prices of bank and thrift stocks continue to display volatility and have extended their downward trend. On March 8, 2023, Silvergate Bank (La Jolla, California) announced its decision to voluntarily liquidate its assets and wind down operations. On March 10, 2023, Silicon Valley Bank (Santa Clara, California) was closed by the California Department of Financial Protection and Innovation. On March 12, 2023, Signature Bank (New York, New York) was closed by the New York State Department of Financial Services. Additionally, on May 1, 2023, First Republic Bank (San Francisco, California) was closed by the Federal Deposit Insurance Corporation and sold to JP Morgan Chase & Co.

 

These events led to increased uncertainty and declines in the market for bank and thrift stocks and questions about depositor confidence in depository institutions. Deposit outflows from small and mid-sized banks largely stopped in late March and April. Although equity prices for regional banks fell further over the period, for the vast majority of banks these declines appeared primarily to reflect expectations for lower profitability rather than solvency concerns. Equity prices at such banks broadly declined because of higher funding costs and a possible deterioration in commercial real estate loans. Market participants indicated apprehension about the possibility of another intensification of banking stress and the simmering debt ceiling crisis. In early May, the Federal Reserve Board attempted to calm concerns by announcing that the U.S. banking system remained sound and resilient. Concurrently, on May 3, 2023, the Federal Open Market Committee decided to raise the target range for the federal funds rate by 25 basis points to 5.0% to 5.25%, the highest level in nearly 16 years, but suggested it might soon be hitting pause on its most aggressive efforts to slow the economy in four decades.

 

 

 

 

Feldman Financial Advisors, Inc.

 

Board of Directors 

Peru Federal Savings Bank

May 26, 2023

Page 6

 

Exhibit 9 summarizes the net change of the Comparative Group’s stock prices and selected market indexes between the April 10, 2023 (the date of our prior Appraisal) and May 26, 2023 (date of our current Appraisal). The S&P U.S. Broad Market Index (“BMI”) for all banks and thrifts decreased by 0.3% over this interim period of approximately seven weeks. In contrast, the S&P 500 Stock Index advanced by 2.3% between April 10, 2023 and May 26, 2023. The U.S. Banks BMI is weighted by market capitalization and, therefore, heavily influenced by the large money center banks and super-regional banks, whose stock prices plummeted earlier in March 2023 after the failures of Silicon Valley Bank Signature Bank but have generally reversed direction and stabilized in recent weeks. Conversely, stock prices of small to mid-sized banks continued their downward slide. The NASDAQ Bank Index declined by 6.1% over this period, and the S&P SmallCap Banks Index and S&P Midwest Banks Index fell by 6.6% and 10.2%, respectively.

 

Stock prices of the Comparative Group have also continued to decline. The Comparative Group posted an average price decline of 8.1% and a median price decline of 7.8% between April 10, 2023 and May 26, 2023. The median price-to-book value (“P/B”) ratio for the Comparative Group decreased from 76.9% at April 10, 2023 to 69.6% at May 26, 2023. The median price-to-tangible book value (“P/TB”) ratio for the Comparative Group decreased from 77.1% at April 10, 2023 to 69.8% at May 26, 2023. The median core price-to-earnings (“P/E”) ratio for the Comparative Group decreased from 19.2x at April 10, 2023 to 18.5x at May 26, 2023.

 

Valuation Review and Analysis

 

Since our prior Appraisal, there has been no material change in the Bank’s operating performance. The Bank reported net income of $838,000 for the LTM ended March 31, 2023, as compared to $831,000 for the LTM ended December 31, 2022. The Bank’s ROA measured 0.47% for the LTM ended March 31, 2023 and 0.46% for the LTM ended December 31, 2022. The Bank’s non-performing assets increased from 0.36% of total assets at December 31, 2022 to 1.12% at March 31, 2023, above the Comparative Group’s median ratio of 0.44%. The Bank continues to monitor the status of the $1.3 million in commercial real estate participation loans that were recently placed on non-accrual status.

 

Market conditions for bank and thrift stocks have continued to decline sharply as evidenced by the market price changes experienced by the Comparative Group. The Comparative Group’s stock prices decreased by an average of 8.1% and a median of 7.8% between April 10, 2023 and May 26, 2023. Since February 21, 2023 (the date of our original Appraisal), the Comparative Group’s stock prices have declined by an average of 18.2% and a median of 19.2%. In our previous Appraisals, we concluded that the Bank’s pro forma market value should be discounted to the Comparative Group’s trading ratios due to factors related to earnings growth and viability, market area, liquidity of the issue, and the new issue discount underlying current stock market conditions. Because of the continued decline in the trading market prices and valuation ratios of the Comparative Group, we believe that a downward adjustment is necessary to the Bank’s current pro forma market value.

 

 

 

 

Feldman Financial Advisors, Inc.

 

Board of Directors

Peru Federal Savings Bank

May 26, 2023

Page 7

 

We have concluded that the Bank’s estimated pro forma market value should be decreased by 8.5% or $1.4 million from $16.4 million to $15.0 million. The prior midpoint valuation of $16.4 million included $400,000 in shares to be issued to a charitable foundation that was being formed by the Bank. The Bank has now decided to exclude formation of a charitable foundation as part of the Conversion. Therefore, the midpoint of the stock offering is being reduced by $1.0 million or 6.3% from $16.0 million to $15.0 million. Updating for the decrease in pro forma market value and the elimination of the charitable foundation, we have calculated pro forma P/B and P/TB ratios of 47.0% and 47.0%, respectively, for the Bank as shown below in Table 3.

 

Table 3

Comparative Pro Forma Market Valuation Ranges

(Dollars in Thousands)

 

   Prior   Current     
   Appraisal   Appraisal     
   As of   As of     
Pro Forma Valuation Range  4/10/23   5/26/23   Change 
Pro Forma Minimum Value  $14,000   $12,750    -8.9%
Pro Forma Midpoint Value   16,400    15,000    -8.5%
Pro Forma Maximum Value   18,800    17,250    -8.2%
Pro Forma Adjusted Maximum Value   21,560    19,838    -8.0%
                
Pro Forma Minimum -- P/B Ratio   45.35%   42.54%   -6.2%
Pro Forma Midpoint -- P/B Ratio   49.73%   46.95%   -5.6%
Pro Forma Maximum -- P/B Ratio   53.59%   50.84%   -5.1%
Pro Forma Adjusted Maximum -- P/B Ratio   57.47%   54.79%   -4.7%

 

The Bank’s pro forma P/B ratio at the midpoint value has been reduced from 49.7% to 47.0%. Employing a range of approximately 15% above and below the updated midpoint, the revised minimum of $12.75 million reflects a 42.5% P/B ratio and the resulting maximum of $17.25 million reflects a 50.8% P/B ratio. The adjusted maximum, computed as an additional 15% above the maximum, is equal to approximately $19.8 million and a P/B ratio of 54.8%. The Bank’s pro forma P/B and P/TB ratios are equivalent since the Bank had no intangible assets as of March 31, 2023.

 

Table 4 summarizes the relative differences between the Bank’s pro forma valuation ratios and the Comparative Group’s median ratios. As illustrated, the differential levels observed in the prior Appraisal are relatively similar to those evident in the current Appraisal based on key market valuation ratio comparisons. The Bank’s pro forma midpoint P/B and P/TB ratios of 47.0% reflect a discount of 32.5% to the Comparative Group median P/B ratio of 69.6% and a discount of 32.8% to the Comparative Group’s median P/TB ratio of 69.8%. The Bank’s pro forma midpoint core P/E ratio of 12.8x is discounted 27.9% to the Comparative Group’s median core P/E ratio of 17.8x.

 

 

 

 

Feldman Financial Advisors, Inc.

 

Board of Directors

Peru Federal Savings Bank

May 26, 2023

Page 8

 

Table 4

Comparative Valuation Ratios at the Pro Forma Midpoint Value

(Dollars in Thousands)

 

   Prior Appraisal   Current Appraisal 
   Peru Federal Savings Bank   Peru Federal Savings Bank 
   As of April 10, 2023   As of May 26, 2023 
   Pro Forma   Comp.   Difference   Pro Forma   Comp.   Difference 
   Midpoint   Group   vs. Comp.   Midpoint   Group   vs. Comp. 
   $16,400   Median   Group   $15,000   Median   Group 
Price / Book Ratio   49.73%   76.92%   -35.3%   46.95%   69.60%   -32.5%
Price / Tangible Book Ratio   49.73%   77.12%   -35.5%   46.95%   69.84%   -32.8%
Price / Core EPS   13.70x   18.52x   -26.0%   12.82x   17.78x   -27.9%

 

Valuation Conclusion

 

It is our opinion that, as of May 26, 2023, the estimated pro forma market value of the Bank was within a range of $12,750,000 to $17,250,000 with a midpoint of $15,000,000 (the “Valuation Range”). Pursuant to applicable appraisal guidelines, the Valuation Range is based upon a 15% decrease from the midpoint value to determine the minimum value and a 15% increase from the midpoint value to establish the maximum value. Assuming an additional increase of 15% above the maximum value would result in an adjusted maximum of $19,837,500.

 

Based on the Valuation Range and assuming an initial offering price of $10.00 per share, the number of shares to be sold in the stock offering is as follows: 1,275,000 at the minimum, 1,500,000 at the midpoint, 1,725,000 at the maximum, and 1,983,750 at the adjusted maximum. Exhibit 9 compares the Bank’s pro forma valuation ratios to the market valuation ratios of the Comparative Group.

 

Exhibit 10 compares the Bank’s pro forma market valuation ratios to those of the Comparative Group. Exhibit 11 displays the assumptions utilized in calculating the pro forma financial consequences of the stock offering. Exhibit 12 displays pro forma financial data at the minimum, midpoint, maximum, and adjusted maximum levels of the Valuation Range. Exhibit 13 provides more detailed data and calculations at the pro forma midpoint level of the Valuation Range. Exhibit 14 computes the percentage differences between the Bank’s pro forma valuation ratios and the averages and medians reported by the Comparative Group. Exhibit 15 provides supporting data on financial performance ratios and trading market valuation ratios for all publicly traded thrift institutions.

 

 

 

 

Feldman Financial Advisors, Inc.

 

Board of Directors

Peru Federal Savings Bank

May 26, 2023

Page 9

 

Sincerely,

 

Feldman Financial Advisors, Inc.  
   
   
By: Trent R. Feldman  
  President  
   
   
By: Peter W. L. Williams  
  Principal  

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 1

Consolidated Balance Sheets

Peru Federal Savings Bank

As of December 31, 2021 and 2022 and March 31, 2023

(Dollars in Thousands)

 

   March 31,   December 31, 
   2023   2022   2021 
Assets            
Cash and cash equivalents  $17,822   $12,651   $21,542 
Available-for-sale debt securities   61,348    63,329    71,705 
Held-to-maturity debt securities   5,841    3,146    3,054 
Equity securities   89    88    112 
Federal Home Loan Bank stock   347    347    330 
                
Loans   84,355    85,459    81,407 
Allowance for loan losses   (603)   (543)   (567)
Loans, net   83,752    84,916    80,840 
                
Premises and equipment, net   2,124    2,150    2,159 
Interest receivable   529    592    566 
Bank-owned life insurance   3,806    3,783    3,696 
Other assets   3,406    3,132    1,552 
Total Assets  $179,066   $174,134   $185,556 
                
Liabilities and Equity               
Deposits:               
Demand accounts  $18,080   $17,248   $18,611 
Savings, NOW, and money market accounts   84,477    87,120    90,320 
Certificate of deposit accounts   54,916    48,339    46,981 
Total Deposits   157,473    152,707    155,912 
                
Federal Home Loan Bank advances   -    -    5,000 
Deferred compensation   705    687    635 
Interest payable and other liabilities   485    601    569 
Total Liabilities   158,663    153,995    162,116 
                
Retained earnings   24,001    23,828    22,997 
Accumulated other comprehensive income (loss)   (3,599)   (3,689)   443 
Total Equity   20,402    20,139    23,440 
                
Total Liabilities and Equity  $179,066   $174,134   $185,556 

 

Source:  Peru Federal Savings Bank, financial statements.

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 2
Consolidated Income Statements

Peru Federal Savings Bank

For the Three Months Ended March 31, 2022 and 2023

(Dollars in Thousands)

 

   Three Months Ended 
   March 31, 
   2023   2022 
Total interest and dividend income  $1,417   $1,096 
Total interest expense   317    120 
Net interest income   1,100    976 
           
Provision for loan losses   5    37 
Net interest income after provision   1,095    939 
           
Commission income   4    5 
Customer service fees   94    81 
Net realized gain on loan sales   2    18 
Loan servicing fees   19    20 
Realized loss on sale of available-for-sale securities   -    - 
Other income   30    29 
Total non-interest income   149    153 
           
Salaries and employee benefits   521    487 
Occupancy   74    65 
Depreciation   37    37 
Data processing   131    122 
Professional fees   75    24 
Marketing   36    33 
Printing and office supplies   22    15 
Foreclosed assets, net   1    - 
Deposit insurance premiums   35    35 
Other expense   50    24 
Total non-interest expense   984    841 
           
Income before income taxes   260    251 
Provision for income taxes   47    45 
           
Net income  $213   $206 

 

Source:  Peru Federal Savings Bank, financial statements.  

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 3
Consolidated Income Statements

Peru Federal Savings Bank

For the Years Ended December 31, 2021 and 2022

(Dollars in Thousands)

 

   Year Ended 
   December 31, 
   2022   2021 
Total interest and dividend income  $4,803   $4,584 
Total interest expense   640    611 
Net interest income   4,163    3,973 
           
Provision for loan losses   61    (6)
Net interest income after provision   4,102    3,979 
           
Commission income   28    28 
Customer service fees   368    339 
Net realized gain on loan sales   140    144 
Loan servicing fees   78    81 
Realized loss on sale of available-for-sale securities   (221)   - 
Other income   116    68 
Total non-interest income   509    660 
           
Salaries and employee benefits   2,002    1,962 
Occupancy   244    232 
Depreciation   145    152 
Data processing   573    434 
Professional fees   152    100 
Marketing   129    124 
Printing and office supplies   69    63 
Foreclosed assets, net   13    - 
Deposit insurance premiums   140    163 
Other expense   158    132 
Total non-interest expense   3,625    3,362 
           
Income before income taxes   986    1,277 
Provision for income taxes   155    275 
           
Net income  $831   $1,002 

 

Source:  Peru Federal Savings Bank, financial statements.

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 4

General Operating Characteristics

As of March 31, 2023

 

                                 Tang.   
                   Total       Total       Total     Common 
            No. of   IPO   Assets      Deposits    Equity    Equity 
City/State Ticker Exchange Offices Date ($000s) ($000s) ($000s) ($000s)
Peru Federal Savings Bank  Peru, IL     NA  NA  2  NA   179,066    157,473    20,402   20,402 
                                   
Comparative Group Average                  480,809    372,977    69,150   68,610 
Comparative Group Median                  417,773    316,696    74,844   74,844 
                                   
Comparative Group                                  
1895 Bancorp of Wisconsin, Inc.  Greenfield, WI  BCOW  NASDAQ  6  01/08/19   551,587    371,966    75,939   75,939 
Catalyst Bancorp, Inc.  Opelousas, LA  CLST  NASDAQ  6  10/12/21   275,828    179,712    86,126   86,126 
Cullman Bancorp, Inc.  Cullman, AL  CULL  NASDAQ  4  10/08/09   417,535    276,457    100,580   100,580 
Generations Bancorp NY, Inc.  Seneca Falls, NY  GBNY  NASDAQ  10  07/10/06   389,202    337,033    37,521   36,027 
Home Federal Bancorp, Inc.  Shreveport, LA  HFBL  NASDAQ  11  01/18/05   685,985    614,374    50,123   45,497 
IF Bancorp, Inc.  Watseka, IL  IROQ  NASDAQ  8  07/07/11   842,968    691,568    73,749   73,749 
Magyar Bancorp, Inc.  New Brunswick, NJ  MGYR  NASDAQ  7  01/23/06   839,857    697,891    101,165   101,165 
Mid-Southern Bancorp, Inc.  Salem, IN  MSVB  NASDAQ  3  04/08/98   266,368    205,637    34,943   34,943 
NSTS Bancorp, Inc.  Waukegan, IL  NSTS  NASDAQ  3  01/18/22   259,560    172,252    82,069   82,069 
PB Bankshares, Inc.  Coatesville, PA  PBBK  NASDAQ  4  07/14/21   393,066    295,437    46,291   46,291 
TC Bancshares, Inc.  Thomasville, GA  TCBC  NASDAQ  3  07/20/21   429,742    335,915    85,844   85,844 
Texas Community Bancshares, Inc.  Mineola, TX  TCBS  NASDAQ  6  07/14/21   418,011    297,476    55,449   55,085 

 

Source:  Peru Federal Savings Bank; S&P Global.  

 

 

 

FELDMAN FINANCIAL ADVISORS, INC. 

 

Exhibit 5

General Financial Performance Ratios

As of or For the Last Twelve Months Ended March 31, 2023

 

           Total   Tang.   Net                     
   Total   Total   Equity/   Equity/   Interest   Effcy.   LTM   LTM   Core   Core 
   Assets   Deposits   Assets   Assets   Margin   Ratio   ROA   ROE   ROA   ROE 
   ($000s)   ($000s)   (%)   (%)   (%)   (%)   (%)   (%)   (%)   (%) 
Peru Federal Savings Bank   179,066    157,473    11.39    11.39    2.55    75.15    0.47    4.14    0.57    5.04 
                                                   
Comparative Group Average   480,809    372,977    16.38    16.29    3.20    80.34    0.47    3.72    0.50    4.02 
Comparative Group Median   417,773    316,696    13.19    13.15    3.10    77.45    0.46    2.92    0.45    3.75 
                                                   
All Public Thrift Average   5,956,519    4,306,217    13.32    12.77    3.39    71.42    0.69    5.94    0.72    6.16 
All Public Thrift Median   1,702,153    1,244,581    11.78    10.72    3.14    67.75    0.75    6.38    0.76    6.71 
                                                   
Comparative Group                                                  
1895 Bancorp of Wisconsin, Inc.   551,587    371,966    13.77    13.77    2.79    101.46    (0.08)   (0.59)   (0.04)   (0.30)
Catalyst Bancorp, Inc.   275,828    179,712    31.22    31.22    2.85    95.96    0.14    0.44    0.18    0.55 
Cullman Bancorp, Inc.   417,535    276,457    24.09    24.09    4.14    66.72    1.05    4.22    1.05    4.22 
Generations Bancorp NY, Inc.   389,202    337,033    9.64    9.29    3.24    89.40    0.14    1.39    0.16    1.60 
Home Federal Bancorp, Inc.   685,985    614,374    7.31    6.68    3.71    64.84    0.92    11.01    1.00    12.02 
IF Bancorp, Inc.   842,968    691,568    8.75    8.75    2.89    70.90    0.62    7.09    0.66    7.58 
Magyar Bancorp, Inc.   839,857    697,891    12.05    12.05    3.66    59.93    1.01    8.20    1.01    8.20 
Mid-Southern Bancorp, Inc.   266,368    205,637    13.12    13.12    3.10    74.60    0.66    5.14    0.66    5.12 
NSTS Bancorp, Inc.   259,560    172,252    31.62    31.62    2.45    101.34    0.18    0.58    0.03    0.10 
PB Bankshares, Inc.   393,066    295,437    11.78    11.78    3.11    72.28    0.59    4.84    0.44    3.61 
TC Bancshares, Inc.   429,742    335,915    19.98    19.98    3.61    86.36    0.33    1.63    0.33    1.62 
Texas Community Bancshares, Inc.   418,011    297,476    13.26    13.19    2.83    80.31    0.09    0.75    0.46    3.89 

 

Source:  Peru Federal Savings Bank; S&P Global.

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 6

Income and Expense Analysis

For the Last Twelve Months Ended March 31, 2023

 

   As a Percent of Average Assets 
           Net   Other   Gains &   Loan   Gen. &   Intang.       Pre-tax 
   Interest   Interest   Interest   Oper.   Non-rec.   Loss   Admin.   Amort.   Non-rec.   Core 
   Income   Expense   Income   Income   Income   Prov.   Expense   Expense   Expense   Earnings 
Peru Federal Savings Bank   2.88    0.47    2.41    0.41    (0.12)   0.02    2.12    0.00    0.00    0.68 
                                                   
Comparative Group Average   3.64    0.62    3.04    0.41    (0.02)   0.08    2.73    0.01    0.01    0.64 
Comparative Group Median   3.63    0.59    2.97    0.42    (0.00)   0.08    2.61    0.00    0.00    0.57 
                                                   
All Public Thrift Average   3.93    0.72    3.21    0.50    0.07    0.18    2.75    0.02    0.04    1.21 
All Public Thrift Median   3.73    0.59    3.06    0.39    0.00    0.07    2.56    0.00    0.00    1.02 
                                                   
Comparative Group                                                  
1895 Bancorp of Wisconsin, Inc.   3.22    0.58    2.64    0.45    (0.05)   0.04    3.13    0.00    0.00    (0.08)
Catalyst Bancorp, Inc.   3.00    0.30    2.70    0.47    (0.02)   (0.11)   3.05    0.00    0.06    0.23 
Cullman Bancorp, Inc.   4.40    0.47    3.93    0.40    (0.00)   0.10    2.88    0.00    0.00    1.35 
Generations Bancorp NY, Inc.   3.66    0.75    2.91    0.56    (0.01)   0.17    3.10    0.02    0.00    0.20 
Home Federal Bancorp, Inc.   3.98    0.53    3.45    0.36    0.00    0.16    2.47    0.01    0.09    1.18 
IF Bancorp, Inc.   3.61    0.81    2.79    0.55    (0.05)   0.11    2.37    0.00    0.00    0.87 
Magyar Bancorp, Inc.   4.12    0.65    3.48    0.33    0.00    0.08    2.28    0.00    0.00    1.44 
Mid-Southern Bancorp, Inc.   3.54    0.60    3.11    0.45    0.00    0.08    2.66    0.00    0.00    0.83 
NSTS Bancorp, Inc.   2.56    0.29    2.27    0.26    0.19    (0.10)   2.56    0.00    0.00    0.06 
PB Bankshares, Inc.   4.00    0.96    3.04    0.18    0.19    0.33    2.33    0.00    0.00    0.56 
TC Bancshares, Inc.   4.06    0.59    3.48    0.39    0.00    0.03    3.37    0.00    0.00    0.47 
Texas Community Bancshares, Inc.   3.59    0.86    2.73    0.48    (0.44)   0.06    2.57    0.03    0.00    0.58 

 

Source:  Peru Federal Savings Bank; S&P Global.

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 7

Balance Sheet Composition

As of March 31, 2023

 

   As a Percent of Total Assets 
   Cash and   Net   Real   Intang.   Other   Total   Borrowed   Other   Total   Total 
   Securities   Loans   Estate   Assets   Assets   Deposits   Funds   Liabs.   Liabs.   Equity 
Peru Federal Savings Bank   47.72    46.77    0.00    0.00    5.51    87.94    0.00    0.67    88.61    11.39 
                                                   
Comparative Group Average   26.94    67.12    0.02    0.10    5.82    75.68    6.83    1.11    83.62    16.38 
Comparative Group Median   25.29    69.85    0.01    0.00    5.45    76.18    5.67    1.18    86.81    13.19 
                                                   
All Public Thrift Average   22.07    72.21    0.03    0.68    4.91    74.63    10.73    1.29    86.91    13.32 
All Public Thrift Median   19.29    74.23    0.01    0.05    4.67    75.11    9.39    1.14    88.38    11.78 
                                                   
Comparative Group                                                  
1895 Bancorp of Wisconsin, Inc.   27.27    66.48    0.00    0.00    6.25    67.44    16.68    2.12    86.23    13.77 
Catalyst Bancorp, Inc.   44.14    47.36    0.12    0.00    8.39    65.15    3.35    0.27    68.78    31.22 
Cullman Bancorp, Inc.   14.38    79.70    0.01    0.00    5.90    66.21    8.38    1.32    75.91    24.09 
Generations Bancorp NY, Inc.   10.99    79.23    0.04    0.38    9.35    86.60    2.65    1.12    90.36    9.64 
Home Federal Bancorp, Inc.   24.22    71.07    0.05    0.67    3.99    89.56    2.79    0.35    92.69    7.31 
IF Bancorp, Inc.   26.37    68.63    0.00    0.00    5.01    82.04    7.98    1.23    91.25    8.75 
Magyar Bancorp, Inc.   15.03    79.45    0.03    0.00    5.48    83.10    3.04    1.82    87.95    12.05 
Mid-Southern Bancorp, Inc.   40.48    55.26    0.01    0.00    4.25    77.20    9.39    0.30    86.88    13.12 
NSTS Bancorp, Inc.   52.11    39.89    0.00    0.00    8.00    66.36    0.00    2.02    68.38    31.62 
PB Bankshares, Inc.   17.92    78.56    0.00    0.00    3.52    75.16    12.36    0.70    88.22    11.78 
TC Bancshares, Inc.   16.89    77.67    0.01    0.00    5.42    78.17    0.45    1.40    80.02    19.98 
Texas Community Bancshares, Inc.   33.49    62.17    0.00    0.09    4.25    71.16    14.91    0.66    86.74    13.26 

 

Source:  Peru Federal Savings Bank; S&P Global.

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 8

Growth Rates, Credit Risk, and Loan Composition

As of or For the Last Twelve Months Ended March 31, 2023

 

                       Loan   Loan   Resid.   Other   Non- 
   Asset   Loan   Deposit   NPLs(1)/   NPAs(1)/   Loss   Loss   Real Est.   Real Est.   Real Est. 
   Growth   Growth   Growth   Total   Total   Allow./   Allow./   Loans(2)/   Loans/   Loans/ 
   Rate   Rate   Rate   Loans   Assets   NPLs(1)   Loans   Loans   Loans   Loans 
Peru Federal Savings Bank   (5.14)   1.83    (2.16)   2.38    1.12    29.99    0.71    71.85    22.30    5.85 
                                                   
Comparative Group Average   5.82    15.15    3.72    0.66    0.46    246.81    1.18    45.80    34.24    19.97 
Comparative Group Median   5.41    14.29    3.52    0.62    0.44    141.30    1.19    41.98    38.49    18.26 
                                                   
All Public Thrift Average   10.86    16.05    5.24    0.62    0.47    244.77    1.07    34.25    42.90    22.86 
All Public Thrift Median   6.43    15.50    1.81    0.42    0.34    207.88    1.00    30.58    51.38    18.04 
                                                   
Comparative Group                                                  
1895 Bancorp of Wisconsin, Inc.   0.97    12.96    (4.86)   0.31    0.21    326.53    1.00    23.97    58.05    17.97 
Catalyst Bancorp, Inc.   (4.05)   0.42    (1.84)   1.55    0.90    100.58    1.56    65.16    16.92    17.92 
Cullman Bancorp, Inc.   18.12    24.28    10.42    0.76    0.61    124.73    0.92    52.21    28.99    18.81 
Generations Bancorp NY, Inc.   3.11    12.35    7.02    1.14    0.95    74.56    0.85    46.20    5.49    48.31 
Home Federal Bancorp, Inc.   19.39    33.50    18.86    0.48    0.39    207.88    1.00    35.30    37.27    27.43 
IF Bancorp, Inc.   7.19    15.74    3.68    0.10    0.07     NM     1.29    26.65    50.83    22.52 
Magyar Bancorp, Inc.   4.11    9.49    3.35    0.97    0.78    141.30    1.31    32.99    58.02    9.00 
Mid-Southern Bancorp, Inc.   1.86    15.63    (1.92)   0.87    0.49    10.02    1.55    41.79    42.14    16.07 
NSTS Bancorp, Inc.   (8.90)   6.18    (8.45)   0.14    0.06    661.49    0.94    90.89    6.51    2.61 
PB Bankshares, Inc.   6.71    12.44    3.26    0.44    0.35    300.29    1.31    31.30    50.27    18.42 
TC Bancshares, Inc.   8.00    23.15    9.48    0.21    0.18    645.34    1.37    42.18    39.71    18.11 
Texas Community Bancshares, Inc.   13.29    15.73    5.61    0.89    0.56    122.18    1.09    60.91    16.66    22.43 

 

(1) Includes accruing troubled debt restructurings.                  
(2) Includes home equity and second mortgage loans.                
                     
Source:  Peru Federal Savings Bank; S&P Global.                  

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 9

Comparative Group Market Price and Ratio Change

Market Price Data as of April 10, 2023 and May 26, 2023  

 

   4/10/23   5/26/23       4/10/23   5/26/23       4/10/23   5/26/23       4/10/23   5/26/23     
   Closing   Closing       Price/   Price/       Price/   Price/       Price/   Price/     
   Stock   Stock       Core   Core       Book   Book       Tang.   Tang.     
   Price   Price   Change   EPS   EPS   Change   Value   Value   Change   Book   Book   Change 
Company  ($)   ($)   (%)   (x)   (x)   (%)   (%)   (%)   (%)   (%)   (%)   (%) 
Comparative Group Average   NA     NA     (8.1)   18.4    19.8    7.5    78.0    70.3    (9.8)   78.2    71.4    (8.8)
Comparative Group Median   NA     NA     (7.8)   18.5    17.8    (4.0)   76.9    69.6    (9.5)   77.1    69.8    (9.5)
                                                             
Comparative Group                                                            
1895 Bancorp of Wisconsin, Inc.   7.92    6.77    (14.5)    NA      NA     NA     64.6    55.2    (14.5)   64.6    55.2    (14.5)
Catalyst Bancorp, Inc.   11.50    10.50    (8.7)    NA      NA     NA     69.1    61.7    (10.7)   69.1    61.7    (10.7)
Cullman Bancorp, Inc.   10.98    10.67    (2.8)   18.5    17.8    (4.0)   81.0    78.3    (3.3)   81.0    78.3    (3.3)
Generations Bancorp NY, Inc.   9.85    8.32    (15.5)   20.1    31.4    56.2    64.7    51.9    (19.8)   67.5    54.1    (19.9)
Home Federal Bancorp, Inc.   17.06    16.25    (4.7)   9.8    8.6    (11.5)   109.5    101.3    (7.5)   109.5    111.6    1.9 
IF Bancorp, Inc.   15.26    14.10    (7.6)   8.4    8.3    (1.0)   73.2    64.1    (12.4)   73.2    64.1    (12.4)
Magyar Bancorp, Inc.   10.54    10.10    (4.2)   8.8    8.2    (6.4)   71.1    66.8    (6.0)   71.1    66.8    (6.0)
Mid-Southern Bancorp, Inc.   11.40    9.40    (17.5)   16.9    14.5    (14.4)   99.7    77.6    (22.2)   99.7    77.6    (22.2)
NSTS Bancorp, Inc.   9.10    8.86    (2.6)    NA      NA     NA     58.3    58.3    (0.1)   58.3    58.3    (0.1)
PB Bankshares, Inc.   13.25    12.22    (7.8)   22.1    18.4    (17.0)   82.0    74.1    (9.6)   82.0    74.1    (9.6)
TC Bancshares, Inc.   14.02    14.11    0.6    38.9    50.7    30.3    81.8    81.8    (0.0)   81.8    81.8    (0.0)
Texas Community Bancshares, Inc.   13.36    11.90    (10.9)   22.0    20.0    (8.8)   80.6    72.4    (10.2)   81.2    72.9    (10.2)
                                                             
Index Values                                                            
S&P 500 Stock Index   4,109.1    4,205.5    2.3                                              
S&P Broad Market Index Banks   126.1    125.8    (0.3)                                             
NASDAQ Bank Index   3,105.1    2,914.8    (6.1)                                             
S&P SmallCap Banks   184.3    172.2    (6.6)                                             
S&P Midwest Banks   507.4    455.6    (10.2)                                             

 

Source:  S&P Global.

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

  Exhibit 10

  Comparative Pro Forma Market Valuation Analysis

  Computed from Market Price Data as of May 26, 2023  

 

   Current   Total   Price/   Price/   Price/   Price/   Price/   Total   Tang.   Current 
   Stock   Market   LTM   Core   Book   Tang.   Total   Equity/   Equity/   Dividend 
   Price   Value   EPS   EPS   Value   Book   Assets   Assets   Assets   Yield 
Company  ($)   ($Mil.)   (x)   (x)   (%)   (%)   (%)   (%)   (%)   (%) 
PFS Bancorp, Inc. (1)                                                  
   Pro Forma Minimum   10.00    12.8    13.16    11.11    42.54    42.54    6.76    15.89    15.89    0.00 
   Pro Forma Midpoint   10.00    15.0    15.38    12.82    46.95    46.95    7.87    16.76    16.76    0.00 
   Pro Forma Maximum   10.00    17.3    17.24    14.49    50.84    50.84    8.96    17.62    17.62    0.00 
   Pro Forma Adj. Maximum   10.00    19.8    19.61    16.39    54.79    54.79    10.18    18.58    18.58    0.00 
                                                   
Comparative Group Average   NA      46.5    19.90    19.77    70.29    71.37    11.23    16.38    16.29    1.03 
Comparative Group Median   NA      46.2    14.10    17.78    69.60    69.84    9.17    13.19    13.15    0.86 
                                                   
All Public Thrift Average (2)   NA      474.3    12.43    12.42    75.48    83.16    9.51    13.32    12.77    2.23 
All Public Thrift Median (2)   NA      123.4    9.38    9.01    72.40    75.30    8.45    11.78    10.72    1.25 
                                                   
Comparative Group                                                  
1895 Bancorp of Wisconsin, Inc.   6.77    40.7     NA      NA     55.20    55.20    7.60    13.77    13.77    0.00 
Catalyst Bancorp, Inc.   10.50    52.2     NA      NA     61.67    61.67    18.91    31.22    31.22    0.00 
Cullman Bancorp, Inc.   10.67    78.8    17.78    17.78    78.32    78.32    18.87    24.09    24.09    1.12 
Generations Bancorp NY, Inc.   8.32    19.5    36.17    31.36    51.91    54.07    5.00    9.64    9.29    0.00 
Home Federal Bancorp, Inc.   16.25    48.7    9.45    8.63    101.27    111.57    7.40    7.31    6.68    2.95 
IF Bancorp, Inc.   14.10    45.1    8.87    8.29    64.14    64.14    5.61    8.75    8.75    2.84 
Magyar Bancorp, Inc.   10.10    67.6    8.21    8.21    66.79    66.79    8.05    12.05    12.05    1.19 
Mid-Southern Bancorp, Inc.   9.40    25.7    14.46    14.51    77.61    77.61    10.18    13.12    13.12    2.55 
NSTS Bancorp, Inc.   8.86    47.4     NA      NA     58.28    58.28    18.43    31.62    31.62    0.00 
PB Bankshares, Inc.   12.22    31.9    13.73    18.36    74.14    74.14    8.73    11.78    11.78    0.00 
TC Bancshares, Inc.   14.11    63.3    50.39    50.74    81.76    81.76    16.33    19.98    19.98    0.71 
Texas Community Bancshares, Inc.   11.90    37.4     NA     20.02    72.40    72.88    9.60    13.26    13.19    1.01 

 

(1)  Pro forma ratios assume an estimated pro forma market value of $12.8 million at the minimum, $15.0 million at the midpoint, $17.3 million at the maximum, and $19.8 million at the adjusted maximum.
(2)   All public thrifts traded on a major exchange, excluding mutual holding companies and companies being acquired in announced merger transactions.

 

Source:  Peru Federal Savings Bank; S&P Global.

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 11

 

Pro Forma Assumptions for the Conversion Stock Offering

 

1.The total amount of the net offering proceeds was fully invested at the beginning of the applicable period.

 

2.The net offering proceeds are invested to yield a return of 3.60%, which represented the yield on five-year U.S. Treasury securities at March 31, 2023. The effective income tax rate was assumed to be 28.5%, resulting in a net after-tax yield of 2.57%.

 

3.It is assumed that 8.0% of the total shares of common stock to be issued in the Conversion (including shares issued to the charitable foundation) will be acquired by the Bank’s employee stock ownership plan (“ESOP”). Pro forma adjustments have been made to earnings and equity to reflect the impact of the ESOP. The annual expense is estimated based on a 25-year loan to the ESOP from the Bank. No re-investment is assumed on proceeds used to fund the ESOP.

 

4.It is assumed that that the Bank’s restricted stock plan (“RSP”) will purchase in the open market a number of shares equal to 4.0% of the total shares issued in the Conversion (including shares issued to the charitable foundation). Also, it is assumed that these shares are acquired at the initial public offering price of $10.00 per share. Pro forma adjustments have been made to earnings and equity to reflect the impact of the RSP. The annual expense is estimated based on a five-year vesting period. No re-investment is assumed on proceeds used to fund the RSP.

 

5.It is assumed that an additional 10.0% of the total shares sold in the stock offering will be reserved for issuance by the Bank’s stock option plan. The pro forma net income has been adjusted to reflect the expense associated with the granting of options at an assumed options value of $3.93 per option. It is further assumed that options for all shares reserved under the plan were granted to plan participants at the beginning of the period and 25.0% were non-qualified options for income tax purposes, the options would vest at a rate of 20.0% per year, and compensation expense will be recognized on a straight-line basis over the five-year vesting period

 

6.The fair value of stock options has been estimated at $3.93 per option using the Black-Scholes option pricing model with the following assumptions: a grant-date share price and option exercise price of $10.00; dividend yield of 0.00%; an expected option life of 10 years; a risk-free interest rate of 3.48%; and a volatility rate of 20.48% based on the performance of a selected bank stock index.

 

7.Total offering expenses are estimated at $1,650,000.

 

8.No effect has been given to withdrawals from deposit accounts for the purpose of purchasing common stock in the stock offering.

 

9.No effect has been given in the pro forma equity calculation for the assumed earnings on the net proceeds.

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 12
Peru Federal Savings Bank
Pro Forma Conversion Valuation Range
Historical Financial Data as of March 31, 2023
(Dollars in Thousands, Except Per Share Data)

 

   MINIMUM   MIDPOINT   MAXIMUM   ADJ. MAX. 
Total shares outstanding   1,275,000    1,500,000    1,725,000    1,983,750 
Shares sold in the offering   1,275,000    1,500,000    1,725,000    1,983,750 
Offering price  $10.00   $10.00   $10.00   $10.00 
Pro forma market value  $12,750   $15,000   $17,250   $19,838 
Gross offering proceeds  $12,750   $15,000   $17,250   $19,838 
Less:  estimated offering expenses   (1,650)   (1,650)   (1,650)   (1,650)
Net offering proceeds   11,100    13,350    15,600    18,188 
Less:  cash contribution to foundation   0    0    0    0 
Less:  ESOP purchase   (1,020)   (1,200)   (1,380)   (1,587)
Less:  RSP purchase   (510)   (600)   (690)   (794)
Net investable proceeds  $9,570   $11,550   $13,530   $15,807 
Net income - LTM ended 3/31/23  $838   $838   $838   $838 
Pro forma income on net proceeds   246    297    348    407 
Pro forma ESOP adjustment   (29)   (34)   (39)   (45)
Pro forma RSP adjustment   (73)   (86)   (99)   (114)
Pro forma option adjustment   (93)   (109)   (126)   (145)
Pro forma net income  $889   $906   $922   $941 
Pro forma earnings per share  $0.76   $0.65   $0.58   $0.51 
Core earnings - LTM ended 3/31/23  $1,013   $1,013   $1,013   $1,013 
Pro forma income on net proceeds   246    297    348    407 
Pro forma ESOP adjustment   (29)   (34)   (39)   (45)
Pro forma RSP adjustment   (73)   (86)   (99)   (114)
Pro forma option adjustment   (93)   (109)   (126)   (145)
Pro forma core earnings  $1,064   $1,081   $1,097   $1,116 
Pro forma core earnings per share  $0.90   $0.78   $0.69   $0.61 
Total equity - 3/31/23  $20,402   $20,402   $20,402   $20,402 
Net offering proceeds   11,100    13,350    15,600    18,188 
Less:  ESOP purchase   (1,020)   (1,200)   (1,380)   (1,587)
Less:  RSP purchase   (510)   (600)   (690)   (794)
Pro forma total equity  $29,972   $31,952   $33,932   $36,209 
Pro forma book value per share  $23.51   $21.30   $19.67   $18.25 
Tangible equity - 3/31/23  $20,402   $20,402   $20,402   $20,402 
Net offering proceeds   11,100    13,350    15,600    18,188 
Less:  ESOP purchase   (1,020)   (1,200)   (1,380)   (1,587)
Less:  RSP purchase   (510)   (600)   (690)   (794)
Pro forma tangible equity  $29,972   $31,952   $33,932   $36,209 
Pro forma tangible book value per share  $23.51   $21.30   $19.67   $18.25 
Total assets - 3/31/23  $179,066   $179,066   $179,066   $179,066 
Net offering proceeds   11,100    13,350    15,600    18,188 
Less:  ESOP purchase   (1,020)   (1,200)   (1,380)   (1,587)
Less:  RSP purchase   (510)   (600)   (690)   (794)
Pro forma total assets  $188,636   $190,616   $192,596   $194,873 
Pro Forma Ratios:                    
Price / LTM EPS   13.16x   15.38x   17.24x   19.61x
Price / Core EPS   11.11x   12.82x   14.49x   16.39x
Price / Book Value   42.54%   46.95%   50.84%   54.79%
Price / Tangible Book Value   42.54%   46.95%   50.84%   54.79%
Price / Total Assets   6.76%   7.87%   8.96%   10.18%
Total Equity / Assets   15.89%   16.76%   17.62%   18.58%
Tangible Equity / Assets   15.89%   16.76%   17.62%   18.58%

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 13
Pro Forma Conversion Analysis at the Midpoint Value
Peru Federal Savings Bank
Historical Financial Data as of March 31, 2023

 

Valuation Parameters  Symbol  Data 
Net income -- LTM  Y  $838,000 
Core earnings -- LTM  Y   1,013,000 
Net worth  B   20,402,000 
Tangible net worth  B   20,402,000 
Total assets  A   179,066,000 
Expenses in conversion  X   1,650,000 
Other proceeds not reinvested  O   1,800,000 
ESOP purchase  E   1,200,000 
ESOP expense (pre-tax)  F   47,552 
RSP purchase  M   600,000 
RSP expense (pre-tax)  N   120,280 
Stock option expense (pre-tax)  Q   117,900 
Cash contribution to foundation  C   0 
Stock contribution to foundation  K   0 
Option expense tax-deductible  D   25.00%
Re-investment rate (after-tax)  R   2.57%
Tax rate  T   28.50%
Shares for EPS  S   92.32%
         
Pro Forma Valuation Ratios at Midpoint Value        
Price / LTM EPS  P/E   15.38x
Price / Core EPS  P/E   12.82x
Price / Book Value  P/B   46.95%
Price / Tangible Book  P/TB   46.95%
Price / Assets  P/A   7.87%

 

Pro Forma Calculation at Midpoint Value Based on  

 

V =   (P/E / S)*((Y-R*(O+X)-(F+N)*(1-T)-(Q-Q*D*T))) = $15,000,000 [LTM earnings]
  1 - (P/E / S) * R      
         
V  =   (P/E / S)*((Y-R*(O+X)-(F+N)*(1-T)-(Q-Q*D*T)) = $15,000,000 [Core earnings]
  1 - (P/E / S) * R      
         
V =   P/B * (B - X - E - M - (C+K)*(1-T))) = $15,000,000 [Book value]
  1 - P/B      
         
V =   P/TB * (B - X - E - M - (C+K)*(1-T))) = $15,000,000 [Tangible book]
  1 - P/TB      
         
V =   P/A * (A - X - E - M - (C+K)*(1-T)) = $15,000,000 [Total assets]
  1 - P/A      

 

            Valuation  
            Range  
Minimum  = $15,000,000 x 0.8500 = $12,750,000  
Midpoint  = $15,000,000 x 1.0000 = $15,000,000  
Maximum = $15,000,000 x 1.1500 = $17,250,000  
Adj. Max. = $17,250,000 x 1.1500 = $19,837,500  

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 14
Comparative Valuation Ratio Analysis
Pro Forma Conversion Valuation
Computed from Market Price Data as of May 26, 2023

 

      Peru                 
      Federal   Comparative   All Public 
Valuation     Savings   Group   Thrifts (1) 
Ratio  Symbol  Bank   Average   Median   Average   Median 
Price / LTM EPS  P/E        19.90    14.10    12.43    9.38 
Minimum  (x)   13.16    -33.9%   -6.7%   5.9%   40.4%
Midpoint      15.38    -22.7%   9.1%   23.8%   64.1%
Maximum      17.24    -13.4%   22.3%   38.7%   83.9%
Adjusted Maximum      19.61    -1.5%   39.1%   57.8%   109.2%
                             
Price / Core EPS  P/E        19.77    17.78    12.42    9.01 
Minimum  (x)   11.11    -43.8%   -37.5%   -10.5%   23.3%
Midpoint      12.82    -35.2%   -27.9%   3.2%   42.2%
Maximum      14.49    -26.7%   -18.5%   16.7%   60.8%
Adjusted Maximum      16.39    -17.1%   -7.8%   32.0%   81.9%
                             
Price / Book Value  P/B        70.29    69.60    75.48    72.40 
Minimum  (%)   42.54    -39.5%   -38.9%   -43.6%   -41.2%
Midpoint      46.95    -33.2%   -32.5%   -37.8%   -35.2%
Maximum      50.84    -27.7%   -27.0%   -32.6%   -29.8%
Adjusted Maximum      54.79    -22.1%   -21.3%   -27.4%   -24.3%
                             
Price / Tangible Book  P/TB        71.37    69.84    83.16    75.30 
Minimum  (%)   42.54    -40.4%   -39.1%   -48.8%   -43.5%
Midpoint      46.95    -34.2%   -32.8%   -43.5%   -37.7%
Maximum      50.84    -28.8%   -27.2%   -38.9%   -32.5%
Adjusted Maximum      54.79    -23.2%   -21.5%   -34.1%   -27.2%
                             
Price / Total Assets  P/A        11.23    9.17    9.51    8.45 
Minimum  (%)   6.76    -39.8%   -26.3%   -28.9%   -20.0%
Midpoint      7.87    -29.9%   -14.2%   -17.2%   -6.9%
Maximum      8.96    -20.2%   -2.3%   -5.8%   6.0%
Adjusted Maximum      10.18    -9.3%   11.0%   7.1%   20.4%

 

(1) Excludes companies subject to mutual holding company ownership or pending acquisition.

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 15
Financial and Market Data for All Public Thrifts

 

             Total   Tang.           Closing   Total   Price/  Price/   Price/   Price/   Price/     
         Total   Equity/   Equity/   LTM   LTM   Price   Market   LTM  Core   Book   Tang.   Total   Div. 
         Assets   Assets   Assets   ROA   ROE   5/26/23   Value   EPS  EPS   Value   Book   Assets   Yield 
Company  State  Ticker  ($Mil.)   (%)   (%)   (%)   (%)   ($)   ($Mil.)   (x)  (x)   (%)   (%)   (%)   (%) 
All Public Thrifts (1)                                                          
1895 Bancorp of Wisconsin, Inc.  WI  BCOW  552   13.77   13.77    (0.08)  (0.59)  6.77   40.7    NM    NM    55.2   55.2   7.60   0.00 
Affinity Bancshares, Inc.  GA  AFBI  932   12.69   10.92    0.89   6.03   12.00   78.4   11.3  11.1   66.6   79.0   8.45   0.00 
Axos Financial, Inc.  NV  AX  19,782   9.32   8.61    1.56   16.11   41.13   2,431.3   8.9  7.9   132.4   144.5   12.34   0.00 
Blue Foundry Bancorp  NJ  BLFY  2,101   18.36   18.33    0.03   0.16   9.49   250.9    NM    NM    67.4   67.5   12.37   0.00 
Broadway Financial Corporation  CA  BYFC  1,205   23.22   21.38    0.53   2.41   0.92   44.9   10.2  9.8   52.2   66.8   6.42   0.00 
Capitol Federal Financial, Inc.  KS  CFFN  10,086   10.63   10.53    0.62   6.38   6.15   819.1   11.6  11.4   78.1   78.9   8.30   5.53 
Carver Bancorp, Inc.  NY  CARV  712   6.34   6.34    (0.39)  (5.38)  3.41   14.4    NM    NM    74.2   74.2   2.13   0.00 
Catalyst Bancorp, Inc.  LA  CLST  276   31.22   31.22    0.14   0.44   10.50   52.2    NA    NA    61.7   61.7   19.26   0.00 
Cullman Bancorp, Inc.  AL  CULL  418   24.09   24.09    1.05   4.22   10.67   78.8   17.8  17.8   78.3   78.3   18.87   1.12 
ECB Bancorp, Inc.  MA  ECBK  1,157   14.10   14.10    0.25   1.65   11.95   109.6    NA    NA    67.2   67.2   9.48   0.00 
ESSA Bancorp, Inc.  PA  ESSA  1,986   11.02   10.39    1.08   9.43   14.32   139.1   6.9  6.8   68.1   72.7   7.50   4.19 
First Northwest Bancorp  WA  FNWB  2,172   7.38   7.34    0.72   8.76   11.25   99.6   6.3  6.0   66.5   66.9   5.00   2.49 
First Seacoast Bancorp, Inc.  NH  FSEA  537   9.18   9.13    (0.11)  (1.05)  8.10   41.1    NM    NM    83.2   83.7   7.64   0.00 
FS Bancorp, Inc.  WA  FSBW  2,783   8.69   7.90    1.21   11.96   28.87   220.3   7.4  6.8   92.4   102.6   8.03   3.46 
Generations Bancorp NY, Inc.  NY  GBNY  389   9.64   9.29    0.14   1.39   8.32   19.5   36.2  31.4   51.9   54.1   5.00   0.00 
HarborOne Bancorp, Inc.  MA  HONE  5,573   10.76   9.60    0.82   6.49   8.49   369.4   9.6  9.3   66.6   75.7   7.17   3.53 
Hingham Institution for Savings  MA  HIFS  4,206   9.34   9.34    0.86   8.93   201.20   432.5   13.0  9.8   110.0   110.0   10.27   1.25 
HMN Financial, Inc.  MN  HMNF  1,072   9.35   9.28    0.76   7.09   18.43   80.2   9.9  9.9   82.5   83.1   7.71   1.74 
Home Federal Bancorp, Inc.  LA  HFBL  686   7.31   6.68    0.92   11.01   16.25   48.7   9.4  8.6   101.3   111.6   7.40   2.95 
IF Bancorp, Inc.  IL  IROQ  843   8.75   8.75    0.62   7.09   14.10   45.1   8.9  8.3   64.1   64.1   5.61   2.84 
Kearny Financial Corp.  NJ  KRNY  8,349   10.37    NA     0.51   4.51   7.14   454.6   11.7  9.0   55.0   73.0   5.70   6.16 
Magyar Bancorp, Inc.  NJ  MGYR  840   12.05   12.05    1.01   8.20   10.10   67.6   8.2  8.2   66.8   66.8   8.05   1.19 
Mid-Southern Bancorp, Inc.  IN  MSVB  266   13.12   13.12    0.66   5.14   9.40   25.7   14.5  14.5   77.6   77.6   10.18   2.55 
New York Community Bancorp, Inc.  NY  NYCB  123,706   8.72   6.32    3.42   32.85   10.48   7,567.9   2.8  7.1   73.6   106.3   6.14   6.49 
Northeast Community Bancorp, Inc.  NY  NECB  1,503   17.47   17.46    2.44   12.41   12.81   176.1   6.0  5.8   74.8   74.8   13.06   1.87 
Northfield Bancorp, Inc.  NJ  NFBK  5,663   12.33   11.68    1.04   8.33   10.42   484.8   8.1  8.1   69.4   73.8   8.56   4.99 
NSTS Bancorp, Inc.  IL  NSTS  260   31.62   31.62    0.18   0.58   8.86   47.4    NM    NM    58.3   58.3   18.43   0.00 
PB Bankshares, Inc.  PA  PBBK  393   11.78   11.78    0.59   4.84   12.22   31.9   13.7  18.4   74.1   74.1   8.73   0.00 
Ponce Financial Group, Inc.  NY  PDLB  2,540   19.53   19.53    (1.09)  (5.01)  7.64   178.4    NM    NA    70.1   70.1   8.21   0.00 
Provident Bancorp, Inc.  MA  PVBC  1,702   12.42   12.42    (1.47)  (11.05)  8.15   142.5    NM    NM    68.2   68.2   8.47   0.00 
Provident Financial Holdings, Inc.  CA  PROV  1,335   9.69   9.69    0.75   7.13   12.00   84.3   9.3  9.3   65.2   65.2   6.32   4.67 

 

 

 

 

FELDMAN FINANCIAL ADVISORS, INC.

 

Exhibit 15 (continued)
Financial and Market Data for All Public Thrifts

 

             Total   Tang.           Closing   Total   Price/   Price/   Price/   Price/   Price/     
         Total   Equity/   Equity/   LTM   LTM   Price   Market   LTM   Core   Book   Tang.   Total   Div. 
         Assets   Assets   Assets   ROA   ROE   5/26/23   Value   EPS   EPS   Value   Book   Assets   Yield 
Company  State  Ticker  ($Mil.)   (%)   (%)   (%)   (%)   ($)   ($Mil.)   (x)   (x)   (%)   (%)   (%)   (%) 
Provident Financial Services, Inc.  NJ  PFS  13,779   11.90   8.86   1.26   10.74   16.36   1,226.4   7.1   6.8   75.3   104.6   8.96   5.87 
Riverview Bancorp, Inc.  WA  RVSB  1,590   9.77   8.18   1.08   11.71   4.62   98.0   5.6   5.5   63.2   76.7   6.17   5.19 
Sterling Bancorp, Inc.  MI  SBT  2,412   13.08   13.08   (0.79)  (6.04)  4.99   253.4    NM     NM    80.4   80.4   10.51   0.00 
TC Bancshares, Inc.  GA  TCBC  430   19.98   19.98   0.33   1.63   14.11   63.3   50.4   50.7   81.8   81.8   16.33   0.71 
Territorial Bancorp Inc.  HI  TBNK  2,213   11.47   11.47   0.63   5.35   11.50   99.4   7.4   7.4   40.8   40.8   4.68   8.00 
Texas Community Bancshares, Inc.  TX  TCBS  418   13.26   13.19   0.09   0.75   11.90   37.4    NM    20.0   72.4   72.9   9.60   1.01 
Third Coast Bancshares, Inc.  TX  TCBX  3,860   10.03   9.58   0.75   7.50   16.73   249.3   10.2   9.9   70.8   75.3   5.99   0.00 
Timberland Bancorp, Inc.  WA  TSBK  1,787   12.74   11.96   1.46   12.35   23.60   193.6   7.3   7.2   85.0   91.4   10.84   3.90 
Triumph Financial, Inc.  TX  TFIN  5,628   14.70   10.47   1.59   10.03   53.17   1,231.0   15.4   18.6   158.9   240.7   22.26   0.00 
TrustCo Bank Corp NY  NY  TRST  6,046   10.17   10.16   1.24   12.66   28.82   548.3   7.2   7.2   89.2   89.3   9.07   5.00 
Waterstone Financial, Inc.  WI  WSBF  2,114   17.30   17.28   0.82   4.25   13.64   308.4   18.2   18.2   81.5   81.7   14.11   5.87 
Western New England Bancorp, Inc.  MA  WNEB  2,562   9.10   8.58   1.01   11.74   5.90   131.0   5.0   5.4   56.2   59.9   5.11   4.75 
William Penn Bancorporation  PA  WMPN  862   20.18   19.68   0.39   1.80   9.90   123.4   39.6   35.2   76.9   79.4   15.53   1.21 
WSFS Financial Corporation  DE  WSFS  20,319   11.34   6.74   1.39   12.33   34.25   2,104.6   7.6   7.1   91.2   161.2   10.35   1.75 
                                                           
Average        5,957   13.32   12.77   0.69   5.94    NA     474.3   12.4   12.4   75.5   83.2   9.51   2.23 
Median        1,702   11.78   10.72   0.75   6.38    NA     123.4   9.4   9.0   72.4   75.3   8.45   1.25 

 

(1) Public thrifts traded on NYSE, NYSE American, and NASDAQ stock markets; excludes companies subject to pending acquisitions or mutual holding company ownership.

 

Source:  S&P Global.