EXHIBIT 99.1
XXXXXX & COMPANY, INC.
FINANCIAL INSTITUTION CONSULTANTS
000 XXXXX XXXXX XXXXX
XXXXX 000
XXXXXX, XXXX 00000
(000) 000-0000
(000) 000-0000 FAX
January 4, 2006
The Boards of Directors
First Federal Financial Services, MHC
First Federal Financial Services, Inc.
000 Xx. Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Re: Conversion Valuation Agreement
Attn: Xxxxx X. Xxxxx
Xxxxxx & Company, Inc. (hereinafter referred to as XXXXXX) hereby
proposes to prepare an independent conversion appraisal of First Federal
Financial Services, Inc.("First Federal Financial"), the 100% stock holding
company of First Federal Savings and Loan Association ("First Federal"),
relating to the second stage conversion (the "Conversion") of First Federal
Financial Services, MHC ("First Federal MHC"). XXXXXX will provide a pro forma
valuation of the market value of the shares of First Federal Financial to be
sold in connection with the Conversion.
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 approved 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 bank and thrift
stock valuations. XXXXXX has completed conversion appraisals related to standard
conversions, mutual holding company reorganizations, second stage mutual holding
company conversions and conversions involving foundations and acquisitions.
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 and based on market conditions.
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 and
recognizing the risk related to the Conversion.
In making its appraisal, XXXXXX will rely upon the information in the
subscription and community offering prospectus, including the audited 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 Financial's proposed dividend, if any; and the trading
market for securities of comparable institutions and general conditions in the
market for such securities. The conversion appraisal will also recognize the
proposed merger/acquisition with Clover Leaf Financial Corp. 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 conversion appraisal, XXXXXX will make a
presentation to the boards of directors of First Federal MHC and First Federal
Financial to review the content of the appraisal, the format and the
assumptions. A written presentation will be provided to each board member as a
part of the overall presentation.
For its services in making this appraisal, XXXXXX'x fee will be $32,000,
plus out-of-pocket expenses not to exceed $1,000. The appraisal fee will include
the preparation of one valuation update and any requested analysis regarding the
financial impact of a charitable foundation in the conversion appraisal. 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 $32,000, the balance of which
will be payable at the time of the completion of the appraisal.
First Federal Financial 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 Financial or by an intentional omission by First Federal Financial to
state a material fact in the information so provided, except where XXXXXX or its
employees and affiliates have been negligent or at fault.
XXXXXX agrees to indemnify First Federal Financial and First Federal MHC
and its employees and affiliates for certain cost and expenses, including
reasonable legal fees, in connection with claims or litigation relating to or
based upon the negligence or willful misconduct of XXXXXX or its employees or
affiliates.
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. FIRST FEDERAL FINANCIAL SERVICES, MHC
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx
---------------------------- ----------------------------
Xxxxxxx X. Xxxxxx Xxxxx X. Xxxxx
President President
FIRST FEDERAL FINANCIAL SERVICES, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Xxxxx X. Xxxxx
President
Date: January 23, 2006
----------------
