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  1. EB Financial Group, Inc.’s Acquisition and Re-capitalization of Mike Flynn April 22, 2010

  2. Background • 16 years in banking two different stints • 5 years as a small business owner • Gained invaluable experience working with banks as a customer • Had to raise and repay $15 million in bank debt • Sold the business for a nice profit in 2002 • Went back into banking 2003 as an equity partner • Built a large client base, 2003 – 2009 very profitable • Had no control over decisions or strategy • Shared a disproportionate piece of the profits with the house • Watched others amass significant wealth starting their own bank

  3. Price to Tangible Book Value 156% - 20 Year Average Source: SNL Financial www.snl.com

  4. Price to Earnings Multiple 14.9X – 20 Year Average Source: SNL Financial www.snl.com

  5. Chicagoland Community Bank M&A FBOP Corporation acquires United Financial Holdings, Inc. in Lisle. United Financial Holdings, Inc. was organized in 2000 and headquartered in Lisle. At the time of acquisition, the bank had 4 offices, $253.0 million in assets, $200.5 million in deposits and $23.7 million in shareholders equity. ROAA .69 & ROAE 7.63 at 6/30/06 Deal Announcement Date (Five Years) 9/20/2006 Announced Deal Value ($M) 46.4 Deal Value/Book Value (%) 240.8 Deal Value/Earnings (x) 51.4 Price/Deposits (%) 23.11 Price/Assets (%) 18.33 Source – SNL Financial

  6. Chicagoland Community Bank M&A Midwest Banc Holdings, Inc. acquires Northwest Suburban Bancorp, Inc. Northwest Suburban Bancorp, Inc. was organized in 1997 and headquartered in Mount Prospect. At the time of acquisition, the bank had five offices, $531.4 million in assets, $448.8 million in deposits and $51.8 million in shareholders equity. ROAA .94 ROAE 10.00 at 3/31/07 Deal Announcement Date (Ten Years) 3/22/2007 Announced Deal Value ($M) 140.6 Deal Value/Book Value (%) 284.2 Deal Value/Earnings (x) 26.4 Price/Deposits (%) 31.11 Price/Assets (%) 26.27 Source – SNL Financial

  7. Chicagoland Community Bank M&A Midwest Banc Holdings, Inc. acquires Royal American Corporation Royal American Corporation was organized in 1991 and headquartered in Inverness. At the time of acquisition, the bank had 6 offices, $530.3 million in assets, $463.9 million in deposits and $45.2 million in shareholders equity. ROAA 1.09 ROAE 12.09 at 12/31/05 Deal Announcement Date (Fifteen Years) 2/8/2006 Announced Deal Value ($M) 133.4 Deal Value/Book Value (%) 295.1 Deal Value/Earnings (x) 26.0 Price/Deposits (%) 28.76 Price/Assets (%) 25.16 Source – SNL Financial

  8. EB Financial Group, Inc. • Company formed in 2008 to start a commercial bank • EB = Entrepreneurs Bank • Entrepreneurs and small business owners value the benefits of a community bank • No small business bank in the marketplace • Big attraction to start a bank with Founders • Wealth creation of banks to its founders can be extraordinary • Advantages of leveraging a bank’s balance sheet

  9. Start vs. Acquire prior 2009 Start • Capital required: $20 million • Cost: $5 million • Breakeven point: 3 years • Approval process: 18 months • Clean portfolio Acquire • Capital: $50 million • Cost: $1 million • Breakeven: 12 to 18 months • Search and due diligence: 12 months

  10. Start vs. Acquire in 2009 Start • No charters granted anywhere in the country • 140 banks failed and seized by the FDIC all over the country • All start up groups abandoned efforts in pursuit of acquisitions Acquire • Bank failures make open bid acquisitions unattractive to existing banks • 140 failed banks sold to banks with existing charters through assisted transactions • Groups must have a bank charter to bid on a failed bank

  11. Why acquire a bank? • Market valuations are at all time low point • No new charters are being issued • Competition is bogged down • Businesses are changing banks in droves • With a bank charter FDIC assisted acquisitions become attainable to enhance growth potential

  12. Early stage • Initially raised $2.0 million to fund pre-opening operating expenses • Left my former bank • Carefully selected and recruited organizer group to manage business strategy and drive business to the bank • Organizers have businesses complementary to commercial banking, i.e., Medical accounts receivable management, merchant processing, payroll, insurance, title services, mortgage banking, insurance, etc.

  13. Target Bank • Under cease & desist order April 2009 • Replace CEO • Make radical improvements in operations • Raise capital • Interim CEO was close personal friend • Not compensated to make sale • Highly respected by regulators • Made significant improvements quickly • $15 million in mark to market adjustments • Sold off non-core businesses

  14. The Opportunity • Acquire a National Bank Charter • Platform for long-term growth and future opportunities • $200 million in assets for $1,000,000 (BV was $3.0 million) • Cost basis $0 (Push down accounting wiped out BV) • Compelling demographics in two of Chicagoland’s wealthiest communities • Portfolio marked to market • Opening day balance sheet had approximately $30 million of cash, $10 mil unencumbered bank premises and no debt

  15. Baytree National Bank & Trust Co. • Opened in October of 2000 • Headquartered in Lake Forest (wealthiest community in Illinois > 20k residents) • Two branches - Lake Forest and Lake Bluff Lake ForestLake Bluff

  16. Market Opportunity In thousands • Combined totals for both Lake Forest and Lake Bluff • Source – FDIC • Total Deposits include brokered and/or wholesale deposits

  17. Challenges • Negotiate with Stakeholders • Correspondent bank owed $9.0 million • Subordinated note holders owed $4.5 million • Negotiate with Regulators • OCC issued consent order • FDIC ready to shut down • Time and rapidly eroding capital base • Large write offs and operating losses • Complete due diligence • Raise capital • $13 million in less than 30 days

  18. Success • Correspondent bank agreed to take a $8.0 million plus loss • Converted subordinated debt holders to equity creating Tier 1 capital and an additional layer of reserves • Wiped out the existing shareholders • Transferred troubled assets off bank’s balance sheet • Acquired 100% of the stock of the bank • Raised $15.5 million • High praise from regulators • Saved taxpayers $30 to 60 million

  19. Path Forward • Breakeven within 12 months • Cut waste • Convert non-core assets to cash • Deploy idle cash • Finish $20 million capital raise • Make strategic investments • Grow organically • 20% per year • Recruit top talent in the market • Consider FDIC-assisted acquisitions • Window to close mid 2011

  20. Industry • 200 plus banks will fail in 2010 • Inability to raise capital • Lack of government support • Push troubled assets through the system • Interest rates will begin to rise • Private equity and hedge funds will remain closed out • Thousands of community bank customers disenfranchised

  21. Industry “Last year, 140 banks failed in the U.S. That was the highest annual number since 1992 during the peak of the savings and loan crisis. The failures last year cost the FDIC's insurance fund more than $30 billion. Twenty-five banks failed in 2008 and three in 2007 FDIC Chairman Sheila Bair has predicted that the number of bank failures will peak this year and be slightly more than in 2009” USA Today 4/16/10

  22. Industry • Fewer community banks will be left to serve market creating tremendous growth opportunities • FDIC-assisted transactions will become plentiful due to lack of bidders

  23. The Economic Case If the earnings are achieved over the next five years and the price to book returns to the 20 year average historic average of 156% then…

  24. The Economic Case The resulting returns may be 268.92% * Note: This presentation contains forward looking statements within the meaning of the federal securities laws

  25. Lake Forest

  26. Lake Bluff