Banking Institution - Southeast Kansas

This community bank has been in existence since the late 1800's and has a proud history of supporting the local community. The bank currently has Assets Under Management (AUM) in excess of $65M. It has low fixed costs due to the home office location in rural Kansas. The business has had almost no loan charge offs (loan losses/bad debts) and only one non-performing loan over the past 10 years. This is partly attributable to the bank concentrating on commercial lending. Loan volumes and therefore interest income has been declining due to the recession and new compliance regulations in the industry have meant reduced margins due to increased staff requirements and time pressures. However, the business believes that the existing capital structure and processing personnel can accommodate a large upside ($20M) in loans. It may be that an additional sales/marketing person could easily achieve this growth and is estimated to contribute a 3.5% margin increase (or $700k) to net income. The company is debt free which could be beneficial to a partly debt financed purchase deal. Regulations require the owner to stay on for transition and this echo's the owners' desire to mentor new management. Prior to the financial crisis the bank generated business revenue or net interest income in excess of $3 million per year and is currently about $2.2 million. Non-interest Income is estimated to be more than $200K per year. Annual discretionary cash flow earnings to the new owner, i.e. adjusted EBITDA, is estimated to be more than $1.2 million. The company currently employs 10 people. The estimated value or asking price of this business is between $8.75 million and $10.5 million and is based on a rudimentary discounted cash flow analysis and price-to-book (equity) multiple (this excludes transferrable assets).