Chapter 19
Problem 01
Input Area:
Part A
Acquiring
Bank
Acquired
Bank
Combined
Bank
Stock Price $25.00 $18.00
Earnings Per Share $6.00 $5.00
Shares outstanding 200,000 50,000
Most recent/expected net earnings 1,200,000 250,000 1,600,000
Part B
Acquiring
Bank
Acquired
Bank
Combined
Bank
Stock Price $25.00 $36.00
Earnings Per Share $6.00 $5.00
Shares outstanding 200,000 50,000
Most recent/expected net earnings 1,200,000 250,000 1,600,000
Output Area:
Part A Part B
0.720 1.440
36,000 72,000
Total shares outstanding post-acquisition 236,000 272,000
Post-merger EPS $6.78 $5.88
For each share held, acquired shareholder will receive __ shares
of newly issued stock
Number of additional shares issued by acquiring bank
Chapter 19
Problem 02
Input Area:
Part A
Acquiring
Bank
Acquired
Bank
Combined
Bank
Stock Price $20.00 $14.00
Shares outstanding 50,000 30,000 78,500
Most recent/expected net earnings 1,000,000 625,000 1,625,000
Bonus to target firm $5.00
Part B
Stock Price $30.00 $20.00
Shares outstanding 120,000 40,000 149,333
Most recent/expected net earnings 850,000 150,000 900,000
Bonus to target firm $2.00
Output Area:
Acquiring
Bank
Acquired
Bank
Combined
Bank
Part A – EPS $20.00 $20.83 $20.70
Part B – EPS $7.08 $3.75 $6.03
Part A Part B
Merger Premium (%) 135.71% 110.00%
0.95 0.73
28,500 29,333
Total shares outstanding post-acquisition 78,500 149,333
For each share held, acquired shareholder will
receive __ shares of newly issued stock
Number of additional shares issued by acquiring
Chapter 19
Problem 03
Input Area:
Bank
Current Deposits
(Millions)
Goldford National Bank 750.00
Goldford County Merchants Bank 500.00
Commerce National Bank of Silverton 325.00
Rocky Mountain Trust Company 250.00
Security National Bank and Trust 175.00
Output Area:
Bank
Current Deposits
(Millions)
Deposit Mkt
Share
Deposit Mkt
Share Squared
Goldford National Bank 750.00 37.50% 1406.25%
Goldford County Merchants Bank 500.00 25.00% 625.00%
Commerce National Bank of Silverton 325.00 16.25% 264.06%
Rocky Mountain Trust Company 250.00 12.50% 156.25%
Security National Bank and Trust 175.00 8.75% 76.56%
Totals 2,000.00 100.00% 2528.13%
Combining RMT and SNBT
Bank
Current Deposits
(Millions)
Deposit Mkt
Share
Deposit Mkt
Share Squared
Goldford National Bank 750.00 37.50% 1406.25%
Goldford County Merchants Bank 500.00 25.00% 625.00%
Commerce National Bank of Silverton 325.00 16.25% 264.06%
RMT combines with SNBT 425.00 21.25% 451.56%
Totals 2,000.00 100.00% 2746.88%
Combining SCMB and RMTC
Current Deposits
(Millions)
Deposit Mkt
Share
Deposit Mkt
Share Squared
Chapter 19
Problem 04
Input Area:
Courthouse County Bank
Stock Price $85.00
Shares outstanding 30,000
Gregory Savings
Stock Price $60.00
Shares outstanding 20,000
Bonus to target firm $5.00
Output Area:
Merger Premium (%) 108.33%
Exchange ratio 0.76
Number of additional shares issued by acquiring bank 15,294.12
Total shares outstanding post-acquisition combined firm 45,294.12
Chapter 19
Problem 05
Input Area:
Bank
Current Deposits
(Millions)
Bank 1 250.00
Bank 2 200.00
Bank 3 45.00
Output Area:
Bank
Current Deposits
(Millions)
Deposit Mkt
Share
Deposit Mkt
Share Squared
Bank 1 250.00 50.51% 2550.76%
Bank 2 200.00 40.40% 1632.49%
Bank 3 45.00 9.09% 82.64%
Totals 495.00 100.00% 4265.89%
Bank
Current Deposits
(Millions)
Deposit Mkt
Share
Deposit Mkt
Share Squared
Bank 1 250.00 50.51% 2550.76%
Combined Bank 2 and 3 245.00 49.49% 2449.75%
Totals 495.00 100.00% 5000.51%