-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FgZoqvJRvbwgct513mxxBLSzme7ybMWbnqEF4TsCZrs6/EpUDsaZaGS/Lt5EEPr/ AK/pjbqjKI8xLnROSY+hSQ== 0000904211-97-000013.txt : 19970222 0000904211-97-000013.hdr.sgml : 19970222 ACCESSION NUMBER: 0000904211-97-000013 CONFORMED SUBMISSION TYPE: SC 13D/A CONFIRMING COPY: PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19970213 SROS: NASD GROUP MEMBERS: DAVIS JEROME H GROUP MEMBERS: SUSAN B. DAVIS SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MITCHELL BANCORP INC CENTRAL INDEX KEY: 0001009873 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 561966011 STATE OF INCORPORATION: NC FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-46703 FILM NUMBER: 00000000 BUSINESS ADDRESS: STREET 1: 210 OAK AVE CITY: SPRUCE PINE STATE: NC ZIP: 28777 BUSINESS PHONE: 7047657324 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DAVIS JEROME H CENTRAL INDEX KEY: 0000904211 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 11 BALDWIN FARMS NORTH CITY: GREENWICH STATE: CT ZIP: 06831 BUSINESS PHONE: 2036221177 MAIL ADDRESS: STREET 1: 11 BALDWIN FARMS NORTH CITY: GREENWICH STATE: CT ZIP: 06831 SC 13D/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 1)* Mitchell Bancorp, Inc. (Name of Issuer) Common Stock, par value $.01 per share (Title of Class of Securities) 606503100 (CUSIP Number) Jerome H. Davis c/o David M. Perlmutter, Esq. 200 Park Ave., Suite 4515, New York, NY 10166 (212) 986-4900 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 18, 1996 (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with this statement / /. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class). (See Rule 13d-7.) Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing of this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 10 Pages CUSIP No. 606503100 1. Name of Reporting Person Jerome H. Davis S.S. or I.R.S. Identification ###-##-#### No. of Above Person 2. Check the Appropriate Box (a) if a Member of a Group (b) X (See Instructions) 3. SEC Use Only 4. Source of Funds (See Instructions) PF 5. Check Box if Disclosure of Legal Proceedings is Required / / Pursuant to Items 2(d) or 2(e) 6. Citizenship or Place of Organization United States Number of 7. Sole Voting Power 12,190 Shares 8. Shared Voting Beneficially Power 85,690* Owned by 9. Sole Dispositive Each Report- Power 12,190 ing Person 10. Shared Dispositive with Power 85,690* 11. Aggregate Amount Beneficially Owned by Each Reporting Person 97,880* 12. Check Box if the Aggregate Amount in Row (11) Excludes Certain / / Shares (See Instructions) 13. Percent of Class Represented by amount in Row (11) 9.98% 14. Type of Reporting Person IN (See Instructions) * See Items 5(a) and 5(b) of this Statement. Page 2 of 10 Pages CUSIP No. 606503100 1. Name of Reporting Person Susan B. Davis S.S. or I.R.S. Identification ###-##-#### No. of Above Person 2. Check the Appropriate Box (a) if a Member of a Group (b) X (See Instructions) 3. SEC Use Only 4. Source of Funds (See Instructions) PF 5. Check Box if Disclosure of Legal Proceedings is Required / / Pursuant to Items 2(d) or 2(e) 6. Citizenship or Place of Organization United States Number of 7. Sole Voting Power -0- Shares 8. Shared Voting Beneficially Power 97,880* Owned by 9. Sole Dispositive Each Report- Power -0- ing Person 10. Shared Dispositive with Power 97,880* 11. Aggregate Amount Beneficially Owned by Each Reporting Person 97,880* 12. Check Box if the Aggregate Amount in Row (11) Excludes Certain / / Shares (See Instructions) 13. Percent of Class Represented by amount in Row (11) 9.98% 14. Type of Reporting Person IN (See Instructions) * See Items 5(a) and 5(b) of this Statement. For purposes of this Statement, Susan B. Davis may be deemed, pursuant to Rules 13d-3(a)(1) and 13d-3(a)(2) under the Securities Exchange Act of 1934, as amended, to be the beneficial owner of 12,190 shares of the Company's Common Stock, par value $.01 per share, held in the name of her husband, Jerome H. Davis. Page 3 of 10 Pages The Statement on Schedule 13D (the "Statement") of Jerome H. Davis, with respect to the Common Stock, par value $.01 per share (the "Common Stock"), of Mitchell Bancorp, Inc., a North Carolina corporation ("Mitchell") is hereby amended as set forth below. Item 4. Purpose of Transaction. Item 4 of the Statement is hereby supplemented by the addition of the following: "Mr. and Mrs. Davis originally acquired the shares of Common Stock for investment and without any purpose of changing or influencing the control of Mitchell. However, based on Mr. Davis' review of Mitchell's financial results for the quarter ending September, 1996, Mr. and Mrs. Davis now believe that Mitchell must consider several options which will enhance shareholder value, including a merger transaction. This view along with Mr. Davis' several concerns regarding Mitchell's poor financial performance are discussed in his November 18, 1996 letter to Mitchell's Board of Directors, a copy of which is attached hereto as Exhibit No. 2. In his letter, Mr. Davis sets forth the following specific concerns and suggestions regarding Mitchell's poor financial results: 1) Inferior Rate of Earnings. Excluding the SAIF charge, Mitchell's earnings for the September quarter reflect an earnings rate of only $.13 per share, and an annualized rate of only $.52 per share. Such earnings do not support Mitchell's current stock price of $12.25 per share, which is very rich at 23.6 times earnings. The value of the Common Stock must be enhanced in other ways. 2) Full Valuation of Common Stock. The Common Stock trades at 82% of its book value of $14.93 per share. Other steps must be taken to improve the price of the Common Stock, since it already reflects its "full" value. 3) Substandard return on equity. Mitchell's current book value per share of $14.93 along with its expected earnings of $.52 produce a ROE of just 3.5%. This amount similarly does not support an increase in the price of the Common Stock. Mr. Davis cautions that when a ROE does not exceed an institution's passbook rate, shareholders will suffer. 4) Excessive Capital Ratio. Mitchell maintains an enormous capital ratio of 39.8%. Such a ratio supports an immediate increase in Mitchell's regular yearly dividend rate of $.40 per share (which reflects a current yield of only 3.27%). More significantly, it justifies a special dividend of $7.00 to $10.00 per share. Numerous thrifts have already issued special Page 4 of 10 Pages dividends between $3.00 and $10.00. For example, Hillsborough Savings in North Carolina recently announced a special dividend of $7.00 per share, based on its capital ratio of 28.2% - just 70% of Mitchell's capital ratio. Mr. Davis questions whether Mitchell has entered into an agreement with regulators to not issue a special dividend for at least a year. 5) Lack of share repurchase. The price (discount to book) of the Common Stock and Mitchell's capital ratio warrant a substantial share repurchase. Mr. Davis notes that Mitchell will have been public for 6 months in January, 1997 and requests that its Board of Directors state its position on a share repurchase. 6) Excessive NPA. Although Mitchell's NPAs are down 86 basis points from March, 1996, they are still extremely elevated at 2.54%. Mr. Davis asks Mitchell's Board of Directors to identify the steps it is taking to reduce this figure below 1.00%. Mr. Davis concludes his letter by strongly advising Mitchell to explore opportunities to merge with a larger financial institution upon its one year anniversary, if it can not triple its substandard 3.5% return on equity. Mr. Davis states that such a transaction would produce a substantial premium over the current price of the Common Stock of $12.25 per share. However, Mitchell's first step should be to substantially reduce its capital, such as through a special dividend of $9.25 per share, which still leaves a capital ratio of 15.1%. Other than as described above, Mr. and Mrs. Davis do not have any plan or proposal which relates to or would result in any of the actions enumerated in Item 4 of Schedule 13D, except that Mr. and Mrs. Davis may dispose of some or all of the Common Stock or may acquire additional shares of Common Stock, from time to time, depending upon price and market conditions, evaluation of alternative investments, and other factors." Item 7. Materials to be filed as Exhibits. Item 7 of the Statement is hereby supplemented by the addition of the following: "2. Letter dated November 18, 1996 from Jerome H. Davis to the Board of Directors of Mitchell Bancorp., Inc." Page 5 of 10 Pages Signature. After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certify that the information set forth in this amendment is true, complete and correct. 11/19/96 Jerome H. Davis Date (Signature) 11/19/96 Susan B. Davis Date (Signature) Page 6 of 10 Pages EX-99 2 Exhibit No. 2 November 18, 1996 VIA FEDERAL EXPRESS Board of Directors Mitchell Bancorp, Inc. 210 Oak Avenue Spruce Pine, North Carolina 28777 Gentlemen: I have reviewed your financial results for the September quarter and I have a number of concerns. All numbers and ratios which follow reflect the back-out of the September quarter SAIF charge. I. Rate of Earnings. Ex the SAIF charge, our company earned about $.13 per share for the quarter. This rate is only $.52 per share per year, which does not warrant the current $12.25 stock price. It's 23.6 times earnings - too rich. You need to support and enhance stock price in other ways, while building earnings. II. Fully Priced to Book. Present book value is $14.93 per share. Our stock presently trades at a "full" value of 82% of book. There is no room for price improvement by this measure either. Other steps must be taken. III. Return on Equity. With book of $14.93 and expected earnings of $.52 (6/97), the ROE is a paltry 3.5%. Our stock price can not go higher by this measure either. Rule of thumb: if your ROE is no higher than your passbook rate, shareholders are in big trouble! Page 7 of 10 Pages Mitchell Bancorp, Inc. November 18, 1996 Page 2 IV. Excessive Capital Ratio. Your capital ratio is a whopping 39.8%. What do you intend to do about it? Your regular dividend rate is only $.40 per share per year for a current yield of only 3.27%. You could increase that now. More importantly, you need to pay a special dividend of $7.00 to $10.00 per share. You have seen numerous examples of $3.00-$10.00 special dividends paid by thrifts recently. Hillsborough Savings in North Carolina just announced a $7.00 special dividend - they had only a 28.2% capital ratio, only 70% of yours. Have you made any agreement with regulators which would preclude you from moving forward on a special dividend (return of capital) for a minimum of one year? V. Share Repurchase. Our stocks price (discount to book) and company capital ratio call for substantial share repurchase. Your first six months are over in January. What is your philosophy on the subject? See the enclosed Trident article regarding IV and V above. VI. Excessive NPA's. Although down 86 basis points from March, current NPA's at 2.54% of assets remain way too high. What measures, aggressive I trust, are you taking to reduce these below 1.00%? If you cannot triple, at least, the paltry 3.5% ROE in the near future, I urge you to explore the strategic alternative of aligning Mitchell with a larger financial institution upon your one year anniversary. A substantial premium over the current stock price could be obtained for all shareholders by such sale of the company. You should first reduce capital considerably. A $9.25 special dividend would get you to a 15.1 capital ratio. Page 8 of 10 Pages Mitchell Bancorp, Inc. November 18, 1996 Page 3 I hope to hear from you soon regarding my concerns. Additionally, please advise me how much of your $20.3 million in deposits were in CD's? Sincerely, Jerome H. Davis (Signature) cc: Calvin F. Hall, President/Director Edward Ballew, Jr. Executive VP/CEO/Director Emma Lee M. Wilson, Assistant Managing Officer Baxter D. Johnson, Director Lloyd Hise, Jr. Director Page 9 of 10 Pages This page contains a copy of an article published by Trident Securities, Inc. on October 29, 1996 and contained in its investment bankers trade circular (Vol. 1, No. 3). Page 10 of 10 Pages -----END PRIVACY-ENHANCED MESSAGE-----