Exhibit A: Case Studies 1 & 2

By James R. Miller

Case Study 1: Monarch Bancorp

Monarch Bancorp retained the services of Spectrum Securities in March of 1994 to raise $3 - $8 million on a "best efforts" basis. Additionally, Mr. James Avery was contracted as a consultant on the project. The purpose of the offering was to comply with a regulatory order to boost capital ratios.

I performed two appraisals of Monarch Bancorp, one in conjunction with the purchase of shares by the company KSOP Plan and the other for the purposes of the proposed offering. I concluded that a fair evaluation of the Bancorp at that time in relation to a public offering was 80% of stated book value. The fund raising effort turned out to be a total and dismal failure. The Bancorp expended more than $300,000 (requiring immediate write off to capital by the regulators) and now face the real possibility of having to find a "white knight or knights" to make a capital infusion. This new investor group will undoubtedly come in at a price that is a severe discount to tangible book value. Additionally, the future of present management is most assuredly in doubt.

The problems in this case are: 1) The deal was priced wrong. 2) The wrong people were chosen to execute the plan. 3) The basic chemistry of a broker-dealer "best efforts" offering and a community bank's shares sale to the public is not a good mix.

A Fair Market Valuation is designed to establish a price at which knowledgeable investors may establish a transaction. The underwriters of the Monarch offering used that valuation as a starting point for the sale of securities. The fatal problem created by that move was that after offering potentially $2 million shares at a discount to book value, the "at rest" position of investors was a poor value. For instance, investors are paying 80% of current book value for their shares but after dilution of the offering to the moving book value is calculated, those same investors may have an "at rest" holding at 100% of book or greater. Given today's market environment, those levels present an overvalued situation. Simply stated, the offering was overpriced by the underwriters and knowledgeable investors were rightfully not moved to invest as the risk/reward balance was not favorable.

Spectrum Securities represented to Monarch Management that it would sell stock through its own efforts and those of syndicate partners. This simply did not prove to be the case. Spectrum's individual efforts were woefully short of results. Additionally, virtually no syndicate was effectively formed. These specific failings lead into the next area of failing, which is more generic in nature.

Case Study 2: Marine National Bank

Marine National Bank engaged Bankmark to assist them in their capital formation plan, which called for raising $2 - $3 million in new capital. The Bank had lost over $1 million in fiscal 1993 but was under no regular orders to meet any ratio levels. The new capital was to be used to enable the Bank to take advantage of growth opportunities that were present in their market area. In particular, three banks had failed in their backyard during the most recent six months: Pioneer Bank, Commerce Bank, and Bank of Newport. Management felt, and rightfully so, the Bank must boost capital to finance deposit growth and meet incoming loan demand.

Coincidentally, Marine, as well as Monarch, contracted with me to do a Fairness Opinion Valuation as part of the preparation for a public offering. My conclusion in the case of Marine was that a valuation of 75% of given book value was a price at which knowledgeable investors may opt to establish a transaction. Marine chose to use that value as an offering price of the common shares but as a value kicker to investors, establishing a unit offering consisting of one common share at $5.40 per share with a two year warrant to purchase an additional share at $5.40. The inclusion of the warrant made the deal attractive to the investment community. Without the warrant, the deal would have suffered from the same weakness the Monarch structure encountered - an "at rest" holding value to book that provided the investor with a poor value. However if not handled properly in the market place, the warrant may be problematic in the future. A strong market-maker structure must be consistently applied to avoid a down draft in share price at the maturation of the warrants.

Unlike Monarch, Marine chose to engage Bankmark to facilitate and manage their capital acquisition program. I was on hand to observe the Bankmark Program and to compare it to others with which I am familiar. Simply stated, the Bankmark approach organizes, guides, and manages the Bank's Officers, Board, and employees in the capital raising process. It is a structured program that must be adhered to precisely to be successful. In Marine's case, the investment opportunity meetings managed by Bankmark were well organized, well run, and well attended.

The problem that manifested during the process was the lack of timely follow-up on the part of Bank staff to those attending the meetings. As in the case with the cultural dilemma of broker-dealers raising capital for community banks, there is a similar situation with bank personnel and the fund-raising process. Bank employees by nature are not sales oriented. From a simple distaste for selling to outright cold fear of the phone, the process slows due to the front-line troops. Helping bank personnel to become more comfortable in this situation is a part of the Bankmark Program. However, the client must be willing to take direction and accept responsibility for the outcome. Bankmark recognized that the Bank's staff were not following up the attendees in a timely manner. Knowing this is critical to the success of the campaign, Bankmark insisted that steps be taken to correct this deficiency.

Finally, in an effort to assist Marine National Bank, I was asked to step in and make follow-up calls on their behalf. I made over 400 calls during a three-day period. Unfortunately, the results were not what we hoped for. I believe this was due to two basic reasons: 1) The time between the date the prospect attended the meeting and the date of the follow-up call (in some cases over 90 days) was far too long and in effect became a cold trail and: 2) Many of those who did receive a timely call were interested but needed more direct attention before they would commit to a purchase. However, as the offering period was about to expire, there wasn't enough time remaining to make the second or third contact necessary for the close. All during the engagement, Bankmark warned that if timely follow-up did not occur, opportunities would be lost. Bankmark estimates, and the Bank staff agrees, that perhaps as much as $1 million was left on the table due to the lack of timely follow up.

Marine National Bank did raise approximately $1.5 million in their effort. While this was short of expectations, I believe the reasons for the shortfall can be identified as client deviation from the basic Bankmark Plan. I further believe that if followed to the letter, the Bankmark Program works effectively for community banks.

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