EXHIBIT 99.3
AGREEMENT WITH XXXXXX & COMPANY, INC.
XXXXXX & COMPANY
000 XXXXX XXXXX XXXXX
XXXXX 000
XXXXXX, XXXX 00000
(000) 000-0000
(000) 000-0000 FAX
May 20, 1998
Board of Directors
First Federal Bank, a FSB
000 Xxxxxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Re: Conversion Valuation Agreement
Attn: Xx. Xxxxx X. Xxxxxxxxx, President
Xxxxxx & Company, Inc. (hereinafter referred to as XXXXXX) hereby proposes
to prepare an independent conversion appraisal of First Federal Bank, a FSB,
Corydon, Indiana, (hereinafter referred to as FIRST FEDERAL), relating to the
second step conversion of FIRST FEDERAL from a mutual holding company to a stock
institution. XXXXXX will provide a pro forma valuation of the market value of
the shares to be sold in the proposed second step conversion of FIRST FEDERAL.
XXXXXX is a financial consulting firm that primarily serves the financial
institution industry. XXXXXX is experienced in evaluating and appraising thrift
institutions and thrift institution holding companies. XXXXXX is an experienced
conversion appraiser for filings with the Office of Thrift Supervision ("OTS")
and the Federal Deposit Insurance Corporation ("FDIC"), and is also approved by
the Internal Revenue Service as an expert in thrift stock valuations.
XXXXXX agrees to prepare the conversion appraisal in the format required by
the OTS in a timely manner for prompt filing with the OTS and the Securities and
Exchange Commission. XXXXXX will provide any additional information as requested
and will complete appraisal updates in accordance with regulatory requirements.
XXXXXX will also be available to meet with any regulatory agency to review the
appraisal.
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The appraisal report will provide a detailed description of FIRST FEDERAL,
including its financial condition, operating performance, asset quality, rate
sensitivity position, liquidity level and management qualifications. The
appraisal will include a description of FIRST FEDERAL's market area, including
both economic and demographic characteristics and trends. An analysis of other
publicly-traded thrift institutions will be performed to determine a comparable
group and adjustments to the appraised value will be made based on a comparison
of FIRST FEDERAL with the comparable group.
In making its appraisal, XXXXXX will rely upon the information in the
Subscription and Community Offering Circular (Prospectus), including the
financial statements. Among other factors, XXXXXX will also consider the
following: the present and projected operating results and financial condition
of FIRST FEDERAL; the economic and demographic conditions in FIRST FEDERAL's
existing marketing area; pertinent historical financial and other information
relating to FIRST FEDERAL; a comparative evaluation of the operating and
financial statistics of FIRST FEDERAL with those of other thrift institutions;
the proposed price per share; the aggregate size of the offering of Common
Stock; the impact of the Conversion on FIRST FEDERAL's capital position and
earnings potential; FIRST FEDERAL's proposed dividend policy; and the trading
market for securities of comparable institutions and general conditions in the
market for such securities. In preparing the appraisal, XXXXXX will rely solely
upon, and assume the accuracy and completeness of, financial and statistical
information provided by FIRST FEDERAL, and will not independently value the
assets or liabilities of FIRST FEDERAL in order to prepare the appraisal.
Upon completion of the second step conversion appraisal, XXXXXX will make a
presentation to the Board of Directors of FIRST FEDERAL to review the content of
the appraisal, the format and the assumptions. A written presentation will be
provided to each board member.
For its services in making this appraisal, XXXXXX'x fee will be $18,000.
The appraisal fee will include the preparation of one valuation update. All
additional valuation updates will be subject to an additional fee of $1,000
each. Upon the acceptance of this proposal, XXXXXX shall be paid a retainer of
$3,000 to be applied to the total appraisal fee of $18,000, the balance of which
will be payable at the time of the completion of the appraisal.
2
FIRST FEDERAL agrees, by the acceptance of this proposal, to indemnify
XXXXXX and its employees and affiliates for certain costs and expenses,
including reasonable legal fees, in connection with claims or litigation
relating to the appraisal and arising out of any misstatement or untrue
statement of a material fact in information supplied to XXXXXX by FIRST FEDERAL
or by an intentional omission by FIRST FEDERAL to state a material fact in the
information so provided, except where XXXXXX has been negligent or at fault.
This proposal will be considered accepted upon the execution of the two
enclosed copies of this agreement and the return of one executed copy to XXXXXX,
accompanied by the specified retainer.
XXXXXX & COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Xxxxxxx X. Xxxxxx
President
First Federal Bank, a FSB
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------
Xxxxx X. Xxxxxxxxx
President
Date: May 29, 1998
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