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SECURITIES AND EXCHANGE COMMISSION
UNDER
THE SECURITIES ACT OF 1933
OHIO | 6022 | 34-1687530 | ||
(State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer Identification | ||
incorporation or organization) | Classification Code Number) | Number) |
P.O. Box 232
Millersburg, Ohio 44654
(330) 674-9015
91 North Clay Street
P.O. Box 232
Millersburg, Ohio 44654
(330) 674-9015
John C. Vorys, Esq. | Jeffery E. Smith, Esq. | Marty R. Lindon | ||
Vorys, Sater, Seymour and Pease LLP | Bricker & Eckler LLP | Indian Village Bancorp, Inc. | ||
52 East Gay Street | 100 South Third Street | 100 South Walnut Street | ||
Columbus, Ohio 43215 | Columbus, Ohio 43215 | Gnadenhutten, Ohio 44629 | ||
(614) 464-6400 | (614) 227-2300 | (740) 254-4313 |
Large accelerated filero | Accelerated filero | Non-accelerated filero | Smaller reporting companyþ | |||
(Do not check if a smaller reporting company) |
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Title of each class of | Amount to be | Proposed maximum | Proposed maximum | Amount of | ||||||||||||||||||
securities to be registered | registered (1) | offering price per unit | aggregate offering price (2) | registration fee | ||||||||||||||||||
Common shares, $6.25 par value | 322,462 | N/A | $ | 5,759,916 | $ | 227 | ||||||||||||||||
(1) | Based upon the maximum number of common shares that the Registrant may be required to issue in the merger transaction, calculated as the product of (a) 423,679 (the number of shares of Indian Village Bancorp, Inc. common stock estimated to be outstanding at the time the merger transaction is consummated) and (b) 0.7611 (the number of common shares of the Registrant to be exchanged for each share of Indian Village Bancorp, Inc. common stock in the merger transaction). | |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457 under the Securities Act of 1933 on the basis of the market value of the shares of Indian Village Bancorp, Inc. common stock to be cancelled in the merger transaction, computed, in accordance with Rule 457(f)(2) and (3), as (a) the product of (i) $17.97 (the book value of a share of Indian Village Bancorp, Inc. common stock as of June 30, 2008) and (ii) 423,679 (the number of shares of Indian Village Bancorp, Inc. common stock estimated to be outstanding at the time the merger transaction is consummated), less (b) $1,853,596 (the estimated amount of cash that will be paid by the Registrant to shareholders of Indian Village Bancorp, Inc. in the merger transaction). |
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CSB BANCORP, INC. | INDIAN VILLAGE BANCORP, INC. | |||
• | $4.375 in cash, and | ||
• | 0.7611 CSB common shares. |
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Sincerely, | Sincerely, | |
Eddie L. Steiner | Marty R. Lindon | |
President and Chief Executive Officer | President and Chief Executive Officer | |
CSB Bancorp, Inc. | Indian Village Bancorp, Inc. |
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100 South Walnut Street
Gnadenhutten, Ohio 44629
(740) 254-4313
To Be Held on , 2008
By Order of the Board of Directors, | ||||
Marty R. Lindon, President and | ||||
Chief Executive Officer | ||||
, 2008 | Indian Village Bancorp, Inc. |
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EX-23.1 | ||||||||
EX-23.2 | ||||||||
EX-23.3 | ||||||||
EX-99.1 |
Annex A | Agreement and Plan of Merger | |
Annex B | Dissenters’ Rights Under Subchapter D of Chapter 15 of the Pennsylvania Consolidated Statutes | |
Annex C | Opinion of Keller & Company, Inc. |
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Q. | Why am I receiving this prospectus/proxy statement? | |
A: | You are receiving this prospectus/proxy statement because CSB and Indian Village have agreed to a merger of Indian Village with and into CSB pursuant to the terms of the merger agreement attached to this prospectus/proxy statement as Annex A. The merger agreement must be adopted and approved by the shareholders of Indian Village in accordance with Section 1924 of the Pennsylvania Consolidated Statutes. | |
This prospectus/proxy statement contains important information about the merger and the special meeting of the shareholders of Indian Village, and you should read it carefully. The enclosed voting materials allow you to vote your shares of Indian Village common stock without attending the special meeting. | ||
Q. | Why are CSB and Indian Village proposing to merge? | |
A: | Indian Village believes that the merger is in the best interests of its shareholders and other constituencies because, among other reasons, the merger consideration will provide enhanced value and increased liquidity to Indian Village shareholders. Furthermore, as a result of the merger, Indian Village will become part of a larger community banking institution which will have an improved ability to compete with larger financial institutions and better serve its customers’ needs. | |
CSB believes that the merger will benefit CSB and its shareholders because the merger will enable CSB to expand its business into the markets currently served by Indian Village and strengthen the competitive position of the combined organization. Furthermore, CSB’s increased asset size after the merger will, CSB hopes, create additional economies of scale and provide additional opportunities for asset and earnings growth in an extremely competitive environment. No approval of the shareholders of CSB is required under the provisions of CSB’s Amended Articles of Incorporation or Code of Regulations or applicable law in order to consummate the merger. | ||
Q: | What will Indian Village shareholders receive in the merger? | |
A: | Under the terms of the merger agreement, the shareholders of Indian Village will be entitled to receive, for each share of Indian Village common stock (other than shares held in the Indian Village Community Bank 401(k) Plan and certain shares held in the Indian Village Community Bank Employee Stock Ownership Plan), a combination of: |
• | $4.375 in cash; and | ||
• | 0.7611 CSB common shares. |
Q: | What will Indian Village option holders receive in the merger? | |
A: | Each outstanding option granted pursuant to the Indian Village 2000 Stock-Based Incentive Plan which is not exercised in accordance with the terms of the merger agreement will be cancelled at the effective time of the merger and converted into the right to receive an amount in cash equal to the product of (1) the difference between $17.50, less the exercise price of each such option, multiplied by (2) the number of shares of Indian Village common stock subject to such option. | |
Q: | When and where will the Indian Village special meeting of shareholders take place? | |
A: | The special meeting of shareholders of Indian Village will be held at 5:00 p.m., local time, on , 2008, at the New Philadelphia branch office of Indian Village Community Bank, 635 West High Avenue, New Philadelphia, Ohio 44663. |
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Q: | What matters will be considered at the Indian Village special meeting? | |
A: | The shareholders of Indian Village will be asked to (1) vote to adopt and approve the merger agreement; (2) vote to approve the adjournment of the special meeting to solicit additional proxies if there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement; and (3) vote on any other business which properly comes before the special meeting. | |
Q: | Is my vote needed to adopt and approve the merger agreement? | |
A: | The adoption and approval of the merger agreement by the shareholders of Indian Village requires the affirmative vote of the holders of a majority of the shares of Indian Village common stock outstanding and entitled to vote at the special meeting. The special meeting may be adjourned, if necessary, to solicit additional proxies in the event there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement. The affirmative vote of the holders of a majority of the shares of Indian Village common stock represented, in person or proxy, at the special meeting is required to adjourn the special meeting. | |
Q: | How do I vote? | |
A: | If you were the record holder of shares of Indian Village common stock as of , 2008, you may vote in person by attending the special meeting or, to ensure that your shares of Indian Village common stock are represented at the special meeting, you may vote your shares by signing and returning the enclosed proxy card in the postage-paid envelope provided. | |
If you hold shares of Indian Village common stock in the name of a broker, bank or other nominee, please see the discussion below regarding shares held in “street name.” | ||
Q: | What will happen if I fail to vote or abstain from voting? | |
A: | If you fail to vote or mark“ABSTAIN”on your proxy card with respect to the proposal to adopt and approve the merger agreement, it will have the same effect as a vote“AGAINST”the proposal. | |
If you mark“ABSTAIN”on your proxy card with respect to the proposal to approve the adjournment of the Indian Village special meeting, if necessary, to solicit additional proxies, it will have the same effect as a vote“AGAINST”the proposal. The failure to vote, however, will have no effect on the proposal to approve the adjournment of the Indian Village special meeting, if necessary, to solicit additional proxies. | ||
Q: | How will my common shares be voted if I return a blank proxy card? | |
A: | If you sign, date and return your proxy card and do not indicate how you want your shares of Indian Village common stock to be voted, then your shares will be voted“FOR”the adoption and approval of the merger agreement and, if necessary,“FOR” the approval of the adjournment of the special meeting to solicit additional proxies. | |
Q: | If my shares of Indian Village common stock are held in a stock brokerage account or by a bank or other nominee (in “street name”), will my broker, bank or other nominee vote my shares for me? | |
A: | You must provide your broker, bank or nominee (the record holder of your common shares) with instructions on how to vote your shares of Indian Village common stock. Please follow the voting instructions provided by your broker, bank or nominee. | |
If you do not provide voting instructions to your broker, bank or nominee, then your shares of Indian Village common stock will not be voted by your broker, bank or nominee. |
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Q: | Can I change my vote after I have submitted my proxy? | |
A: | Yes. You may revoke your proxy at any time before a vote is taken at the special meeting by: |
• | filing a written notice of revocation with the Secretary of Indian Village, at 100 South Walnut Street, Gnadenhutten, Ohio 44629; | ||
• | executing and returning another proxy card with a later date; or | ||
• | attending the special meeting and giving notice of revocation in person. |
Attendance at the special meeting will not, by itself, revoke your proxy. | ||
If you have instructed your broker, bank or nominee to vote your shares of Indian Village common stock, you must follow directions received from your broker, bank or nominee to change your vote. | ||
Q: | If I do not favor the adoption and approval of the merger agreement, what are my rights? | |
A: | If you are an Indian Village shareholder as of the , 2008, record date and if you do not vote in favor of the adoption and approval of the merger agreement, you will have the right under Subchapter D of Chapter 15 of the Pennsylvania Consolidated Statutes to demand the fair cash value for your shares of Indian Village common stock. The right to make this demand is known as “dissenters’ rights.” For additional information regarding your dissenters’ rights, see “Dissenters’ Rights” on page of this prospectus/proxy statement and the complete text of the applicable sections of Subchapter D of Chapter 15 of the Pennsylvania Consolidated Statutes attached to this prospectus/proxy statement as Annex B. | |
Q: | When is the merger expected to be completed? | |
A: | We are working to complete the merger as quickly as we can. We expect to complete the merger on or before , 2008, assuming shareholder approval and all applicable governmental approvals have been received by that date and all other conditions precedent to the merger have been satisfied or waived. | |
Q: | Should I send in my Indian Village stock certificates now? | |
A. | No. Please do not send in your Indian Village stock certificates with your proxy card. Shortly after the merger is completed, CSB’s exchange agent, Registrar and Transfer Company, will mail to you transmittal materials that you will need to complete and return with your Indian Village stock certificates. You should not surrender your Indian Village stock certificates for exchange until you receive these transmittal materials from the exchange agent. For additional information, see “The Merger Agreement — Surrender of certificates” beginning on page of this prospectus/proxy statement. | |
Q: | What do I need to do now? | |
A: | After carefully reviewing this prospectus/proxy statement, including its annexes, please complete, sign and date the enclosed proxy card and return it in the enclosed postage-paid envelope as soon as possible. By submitting your proxy, you authorize the individuals named in the proxy to vote your shares of Indian Village common stock at the special meeting of shareholders of Indian Village in accordance with your instructions.Your vote is very important. Whether or not you plan to attend the special meeting, please submit your proxy with voting instructions to ensure that your shares of Indian Village common stock will be voted at the special meeting. |
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Q: | Who can answer my questions? | |
A: | If you have questions about the merger or desire additional copies of this prospectus/proxy statement or additional proxy cards, please contact: |
President and Chief Executive Officer
Indian Village Bancorp, Inc.
100 South Walnut Street
Gnadenhutten, Ohio 44629
(740) 254-4313
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91 North Clay Street
Millersburg, Ohio 44654
(330) 674-9015
100 South Walnut Street
Gnadenhutten, Ohio 44629
(740) 254-4313
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• | $4.375 in cash; and | ||
• | 0.7611 CSB common shares. |
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• | a proposal to adopt and approve the merger agreement; | ||
• | a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement; and | ||
• | any other business which properly comes before the special meeting or any adjournment or postponement of the special meeting. The Indian Village Board of Directors is presently unaware of any other business to be transacted at the special meeting. |
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• | benefits that certain Indian Village executive officers may receive under employment and severance agreements in connection with the merger; | ||
• | the acceleration of certain stock options held by Indian Village directors and executive officers under the Indian Village 2000 Stock-Based Incentive Plan; | ||
• | provisions in the merger agreement relating to continued indemnification of directors and officers and continued insurance for directors and officers of Indian Village for events occurring before the merger; and |
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• | the appointment of three directors of Indian Village to serve on a CSB Bank community board for a period of one year following the merger. |
• | if any of the required regulatory approvals is denied by final, nonappealable action; | ||
• | if the Indian Village shareholders do not adopt and approve the merger agreement at the Indian Village special meeting; | ||
• | if there is a material breach by the other party of any representation, warranty, covenant or agreement contained in the merger agreement that cannot be or has not been cured within 30 days of notice of the breach; or |
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• | if the merger has not been consummated by November 30, 2008, unless the failure to complete the merger by that date is due to the knowing action or inaction of the party seeking to terminate. |
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• | an increase in loan delinquencies; | ||
• | an increase in problem assets and foreclosures; | ||
• | a decrease in the demand for our products and services; and |
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• | a decrease in the value of collateral for loans, especially real estate, in turn reducing customers’ borrowing power and the value of assets associated with problem loans. |
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As of and for the | ||||||||||||||||||||||||||||
three months | ||||||||||||||||||||||||||||
As of and for the year ended December 31, | ended March 31, | |||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2007 | 2008 | ||||||||||||||||||||||
(In thousands, except per share and ratio data) | ||||||||||||||||||||||||||||
Statements of Income: | ||||||||||||||||||||||||||||
Total interest income | $ | 15,414 | $ | 15,074 | $ | 17,358 | $ | 20,045 | $ | 21,231 | $ | 5,146 | $ | 5,283 | ||||||||||||||
Total interest expense | 4,631 | 3,874 | 4,812 | 6,877 | 7,905 | 1,891 | 1,904 | |||||||||||||||||||||
Net interest income | 10,783 | 11,200 | 12,546 | 13,168 | 13,326 | 3,255 | 3,380 | |||||||||||||||||||||
Provision (credit) for loan losses | (51 | ) | 423 | 283 | 302 | 472 | 78 | 107 | ||||||||||||||||||||
Net interest income after provision (credit) for loan losses | 10,834 | 10,777 | 12,263 | 12,866 | 12,854 | 3,177 | 3,273 | |||||||||||||||||||||
Noninterest income | 2,155 | 2,680 | 2,580 | 2,592 | 3,035 | 646 | 955 | |||||||||||||||||||||
Noninterest expenses | 10,799 | 10,278 | 10,803 | 10,915 | 10,701 | 2,620 | 2,728 | |||||||||||||||||||||
Income before income taxes | 2,190 | 3,179 | 4,041 | 4,543 | 5,188 | 1,204 | 1,500 | |||||||||||||||||||||
Income tax provision | 130 | 653 | 1,168 | 1,433 | 1,674 | 389 | 498 | |||||||||||||||||||||
Net income | $ | 2,060 | $ | 2,526 | $ | 2,873 | $ | 3,110 | $ | 3,514 | $ | 815 | $ | 1,002 | ||||||||||||||
Per share of common stock: | ||||||||||||||||||||||||||||
Basic income per share | $ | 0.78 | $ | 0.96 | $ | 1.09 | $ | 1.23 | $ | 1.42 | $ | 0.33 | $ | 0.41 | ||||||||||||||
Diluted income per share | 0.78 | 0.95 | 1.09 | 1.23 | 1.42 | 0.33 | 0.41 | |||||||||||||||||||||
Dividends | 0.48 | 0.52 | 0.56 | 0.64 | 0.72 | .18 | .18 | |||||||||||||||||||||
Book value | 13.13 | 13.69 | 13.64 | 14.03 | 14.82 | 14.18 | 15.22 | |||||||||||||||||||||
Average basic common shares outstanding | 2,638,360 | 2,644,582 | 2,638,697 | 2,526,914 | 2,467,110 | 2,487,087 | 2,444,597 | |||||||||||||||||||||
Average diluted common shares outstanding | 2,641,887 | 2,650,948 | 2,642,301 | 2,532,592 | 2,467,812 | 2,487,087 | 2,444,642 |
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As of and for the | ||||||||||||||||||||||||||||
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As of and for the year ended December 31, | ended March 31, | |||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2007 | 2008 | ||||||||||||||||||||||
(In thousands, except per share and ratio data) | ||||||||||||||||||||||||||||
Period-end balances: | ||||||||||||||||||||||||||||
Loans, net | $ | 210,796 | $ | 215,510 | $ | 212,574 | $ | 229,825 | $ | 254,073 | $ | 232,922 | $ | 244,293 | ||||||||||||||
Securities | 67,773 | 76,228 | 81,220 | 70,241 | 74,526 | 69,240 | 66,387 | |||||||||||||||||||||
Total assets | 306,180 | 317,340 | 320,989 | 327,240 | 350,270 | 322,406 | 344,808 | |||||||||||||||||||||
Deposits | 248,958 | 247,951 | 255,403 | 260,178 | 259,386 | 253,531 | 247,029 | |||||||||||||||||||||
Borrowings | 21,372 | 32,062 | 29,485 | 30,521 | 53,329 | 32,013 | 58,480 | |||||||||||||||||||||
Shareholders’ equity | 34,718 | 36,208 | 35,170 | 35,070 | 36,278 | 34,915 | 37,148 | |||||||||||||||||||||
Average balances: | ||||||||||||||||||||||||||||
Loans, net | $ | 206,685 | $ | 214,330 | $ | 218,187 | $ | 222,952 | $ | 239,405 | $ | 230,801 | $ | 251,651 | ||||||||||||||
Securities | 70,027 | 73,342 | 71,866 | 74,994 | 66,966 | 69,590 | 68,898 | |||||||||||||||||||||
Total assets | 302,601 | 312,534 | 316,612 | 319,749 | 327,771 | 323,327 | 343,023 | |||||||||||||||||||||
Deposits | 236,525 | 241,674 | 249,007 | 247,543 | 253,221 | 253,398 | 251,060 | |||||||||||||||||||||
Borrowings | 30,981 | 34,540 | 30,083 | 35,824 | 37,278 | 32,868 | 53,642 | |||||||||||||||||||||
Shareholders’ equity | 34,360 | 35,332 | 36,290 | 34,766 | 35,772 | 35,269 | 37,021 | |||||||||||||||||||||
Selected ratios: | ||||||||||||||||||||||||||||
Net interest margin | 3.81 | % | 3.83 | % | 4.23 | % | 4.38 | % | 4.31 | % | 4.40 | % | 4.19 | % | ||||||||||||||
Return on average total assets | 0.68 | 0.81 | 0.91 | 0.97 | 1.07 | 1.02 | 1.17 | |||||||||||||||||||||
Return on average shareholders’ equity | 6.00 | 7.15 | 7.92 | 8.95 | 9.82 | 9.37 | 10.89 | |||||||||||||||||||||
Average shareholders’ equity as a percent of average total assets | 11.35 | 11.31 | 11.46 | 10.87 | 10.91 | 10.91 | 10.79 | |||||||||||||||||||||
Net loan charge-offs as a percent of average loans | 0.09 | 0.14 | 0.19 | 0.06 | 0.20 | 0.05 | 0.00 | |||||||||||||||||||||
Allowance for loan losses as a percent of loans at period-end | 1.15 | 1.18 | 1.14 | 1.12 | 1.01 | 1.13 | 1.09 | |||||||||||||||||||||
Shareholders’ equity as a percent of total period-end assets | 11.34 | 11.41 | 10.96 | 10.72 | 10.36 | 10.83 | 10.77 | |||||||||||||||||||||
Dividend payout ratio | 61.48 | 54.44 | 51.47 | 51.89 | 50.70 | 54.55 | 43.90 |
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As of and for the | ||||||||||||||||||||||||||||
nine months | ||||||||||||||||||||||||||||
As of and for the year ended June 30, | ended March 31, | |||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2007 | 2008 | ||||||||||||||||||||||
(In thousands, except per share and ratio data) | ||||||||||||||||||||||||||||
Statements of Income: | ||||||||||||||||||||||||||||
Total interest income | $ | 5,054 | $ | 5,100 | $ | 5,186 | $ | 5,708 | $ | 6,329 | $ | 4,845 | $ | 4,213 | ||||||||||||||
Total interest expense | 3,281 | 3,030 | 3,022 | 3,586 | 4,244 | 3,252 | 2,815 | |||||||||||||||||||||
Net interest income | 1,773 | 2,070 | 2,164 | 2,122 | 2,085 | 1,593 | 1,398 | |||||||||||||||||||||
Provision for loan losses | 305 | 133 | 120 | 271 | 698 | 396 | 320 | |||||||||||||||||||||
Net interest income after provision for loan losses | 1,468 | 1,937 | 2,044 | 1,851 | 1,387 | 1,197 | 1,078 | |||||||||||||||||||||
Noninterest income | 680 | 293 | (35 | ) | 371 | 242 | 202 | 247 | ||||||||||||||||||||
Noninterest expenses | 1,733 | 1,871 | 1,968 | 2,221 | 2,317 | 1,785 | 1,663 | |||||||||||||||||||||
Income (loss) before income taxes | 415 | 359 | 41 | 1 | (688 | ) | (386 | ) | (338 | ) | ||||||||||||||||||
Income tax provision (benefit) | 27 | 1 | 18 | (83 | ) | (311 | ) | (190 | ) | (93 | ) | |||||||||||||||||
Net income (loss) | $ | 388 | $ | 358 | $ | 23 | $ | 84 | $ | (377 | ) | $ | (196 | ) | $ | (245 | ) | |||||||||||
Per share of common stock: | ||||||||||||||||||||||||||||
Basic income (loss) per share | $ | 0.95 | $ | 0.90 | $ | 0.06 | $ | 0.20 | $ | (0.91 | ) | $ | (0.47 | ) | $ | (0.59 | ) | |||||||||||
Diluted income (loss) per share | 0.93 | 0.88 | 0.05 | 0.20 | (0.91 | ) | (0.47 | ) | (0.59 | ) | ||||||||||||||||||
Dividends | 0.29 | 0.29 | 0.31 | 0.24 | 0.04 | 0.04 | 0.00 | |||||||||||||||||||||
Book value | 23.37 | 20.32 | 20.42 | 19.14 | 18.84 | 19.74 | 19.36 | |||||||||||||||||||||
Average basic common shares outstanding | 370,628 | 398,843 | 407,258 | 412,779 | 416,087 | 415,509 | 418,585 | |||||||||||||||||||||
Average diluted common shares outstanding | 377,623 | 408,976 | 413,109 | 419,363 | 416,087 | 415,509 | 418,585 |
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As of and for the | ||||||||||||||||||||||||||||
nine months | ||||||||||||||||||||||||||||
As of and for the year ended June 30, | ended March 31, | |||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2007 | 2008 | ||||||||||||||||||||||
(In thousands, except per share and ratio data) | ||||||||||||||||||||||||||||
Period-end Balances: | ||||||||||||||||||||||||||||
Loans, net | $ | 49,674 | $ | 53,915 | $ | 64,458 | $ | 77,250 | $ | 70,812 | $ | 73,446 | $ | 63,831 | ||||||||||||||
Securities | 42,056 | 38,987 | 25,705 | 28,291 | 20,156 | 20,838 | 14,858 | |||||||||||||||||||||
Total assets | 98,427 | 99,644 | 97,358 | 113,787 | 99,712 | 103,914 | 97,121 | |||||||||||||||||||||
Deposits | 55,881 | 60,541 | 62,134 | 79,365 | 67,950 | 71,849 | 66,034 | |||||||||||||||||||||
Borrowings | 33,350 | 30,542 | 26,593 | 26,141 | 23,423 | 23,617 | 22,560 | |||||||||||||||||||||
Shareholders’ equity | 8,400 | 7,422 | 8,364 | 7,903 | 7,839 | 8,204 | 8,126 | |||||||||||||||||||||
Average balances: | ||||||||||||||||||||||||||||
Loans, net | $ | 51,480 | $ | 50,039 | $ | 58,829 | $ | 70,066 | $ | 76,249 | $ | 77,007 | $ | 68,209 | ||||||||||||||
Securities | 32,059 | 38,275 | 29,482 | 23,295 | 22,641 | 24,254 | 16,801 | |||||||||||||||||||||
Total assets | 92,931 | 98,519 | 98,581 | 103,904 | 108,590 | 110,670 | 97,051 | |||||||||||||||||||||
Deposits | 52,666 | 56,155 | 60,150 | 65,643 | 73,749 | 77,037 | 65,966 | |||||||||||||||||||||
Borrowings | 29,768 | 30,575 | 28,093 | 26,388 | 24,409 | 24,699 | 22,921 | |||||||||||||||||||||
Shareholders’ equity | 8,193 | 7,618 | 7,996 | 8,131 | 8,219 | 7,977 | 7,753 | |||||||||||||||||||||
Selected ratios: | ||||||||||||||||||||||||||||
Net interest margin | 2.11 | % | 2.40 | % | 2.47 | % | 2.30 | % | 2.11 | % | 1.98 | % | 2.07 | % | ||||||||||||||
Return on average total assets | 0.42 | 0.36 | 0.02 | 0.08 | (0.35 | ) | (0.17 | ) | (0.25 | ) | ||||||||||||||||||
Return on average shareholders’ equity | 4.59 | 4.70 | 0.29 | 1.03 | (4.60 | ) | (2.46 | ) | (3.16 | ) | ||||||||||||||||||
Average shareholders’ equity as a percent of average total assets | 9.05 | 7.73 | 8.11 | 7.82 | 7.57 | 7.21 | 7.99 | |||||||||||||||||||||
Net loan charge-offs as a percent of average loans | 1.54 | 0.33 | 0.11 | (0.01 | ) | 0.51 | 0.34 | 0.28 | ||||||||||||||||||||
Allowance for loan losses as a percent of loans at period-end | 0.54 | 0.44 | 0.45 | 0.74 | 1.23 | 0.79 | 1.36 | |||||||||||||||||||||
Shareholders’ equity as a percent of total period-end assets | 8.53 | 7.45 | 8.59 | 6.95 | 7.85 | 7.90 | 8.37 | |||||||||||||||||||||
Dividend payout ratio | 30.00 | 32.32 | 516.67 | 120.00 | N/A | N/A | N/A |
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At March 31, 2008 | ||||
(In thousands) | ||||
Total assets | $ | 441,905 | ||
Loans | 311,845 | |||
Deposits | 313,640 | |||
Borrowings | 59,083 | |||
Total shareholders’ equity | 42,806 |
For the three months | For the year | |||||||
ended March 31, 2008 | ended December 31, 2007 | |||||||
(In thousands, except | (In thousands, except | |||||||
per share data) | per share data) | |||||||
Net interest income | $ | 3,950 | $ | 15,694 | ||||
Provision for loan losses | 205 | 1,018 | ||||||
Non-interest income | 1,044 | 3,280 | ||||||
Non-interest expense | 3,400 | 13,256 | ||||||
Earnings per share | ||||||||
Basic | $ | 0.37 | $ | 1.15 | ||||
Diluted | $ | 0.37 | $ | 1.15 |
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At or for the | ||||||||
At or for the year | three months | |||||||
ended December | ended March 31, | |||||||
31, 2007 | 2008 | |||||||
CSB Bancorp, Inc. | ||||||||
Earnings per share: Basic | ||||||||
Historical | $ | 1.42 | $ | 0.41 | ||||
Pro formacombined | 1.15 | 0.37 | ||||||
Earnings per share: Diluted | ||||||||
Historical | $ | 1.42 | $ | 0.41 | ||||
Pro formacombined | 1.15 | 0.37 | ||||||
Cash dividends declared per share | ||||||||
Historical | $ | 0.72 | $ | 0.18 | ||||
Pro formacombined(1) | 0.64 | 0.16 | ||||||
Book value per share | ||||||||
Historical | $ | 14.82 | $ | 15.22 | ||||
Pro formacombined | 15.06 | 15.49 | ||||||
Indian Village Bancorp, Inc. | ||||||||
Earnings per share: Basic | ||||||||
Historical | $ | (0.96 | ) | $ | (0.08 | ) | ||
Equivalentpro formafor one share of Indian Village common stock(2) | 0.88 | 0.28 | ||||||
Earnings per share: Diluted | ||||||||
Indian Village historical | $ | (0.96 | ) | $ | (0.08 | ) | ||
Equivalentpro formafor one share of Indian Village common stock(2) | 0.88 | 0.28 | ||||||
Cash dividends declared per share | ||||||||
Indian Village historical | $ | 0.00 | $ | 0.00 | ||||
Equivalentpro formafor one share of Indian Village common stock(2) | 0.55 | 0.14 | ||||||
Book value per share | ||||||||
Historical | $ | 18.89 | $ | 19.30 | ||||
Equivalentpro formafor one share of Indian Village common stock(2) | 11.51 | 11.84 |
(1) | Pro formadividends per share represent historical dividends paid by CSB Bancorp. | |
(2) | Represents CSB’spro formaresults multiplied by the stock amount of 0.7611. |
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Comparative Market Value
Indian Village | |||||||||||||
Bancorp, Inc. | |||||||||||||
CSB | Indian Village | Equivalent | |||||||||||
Common Shares | Common Stock | Per Share Price | |||||||||||
May 13, 2008 | $ | 18.00 | $ | 12.00 | $ | 18.07 | |||||||
, 2008 | $ | ____ | $ | — | $ | ____ |
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• | a proposal to adopt and approve the merger agreement; | ||
• | a proposal to approve the adjournment of the special meeting, if necessary, to solicit additional proxies, in the event there are not sufficient votes at the time of the special meeting to adopt and approve the merger agreement; and | ||
• | any other business which properly comes before the special meeting or any adjournment or postponement of the special meeting. The Board of Directors of Indian Village is unaware of any other business to be transacted at the special meeting. |
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• | filing a written notice of revocation with the Secretary of Indian Village, at 100 South Walnut Street, Gnadenhutten, Ohio 44629; | ||
• | executing and returning another proxy card with a later date; or | ||
• | attending the special meeting and giving notice of revocation in person. |
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• | file with Indian Village,prior to the vote of shareholders on the merger at the Indian Village special meeting, a written notice of intention to demand payment of the fair value of such holder’s Indian Village common stock if the merger is effected; | ||
• | effect no change in the beneficial ownership of the shareholder’s Indian Village common stock from the date of such written notice through the effective date of the merger; and | ||
• | refrain from voting the shareholder’s Indian Village common stock to adopt and approve the merger agreement. |
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• | the merger will provide Indian Village shareholders with immediate liquidity with respect to the portion of their shares of Indian Village exchanged for cash in the merger; | ||
• | the merger will provide Indian Village shareholders with potentially greater liquidity with respect to the portion of their shares of Indian Village to be exchanged for CSB common shares in the merger because CSB is a larger corporation and has, historically, had a more active trading market for its shares; | ||
• | the long-term interests of Indian Village and its shareholders, as well as the long-term interests of Indian Village and Indian Village Bank employees, depositors, borrowers, and the communities served by Indian Village Bank; |
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• | the questionable ability of Indian Village Bank to pay continued dividends to Indian Village in the foreseeable future in light of regulatory requirements and restrictions; the corresponding questionable ability of Indian Village to therefore pay dividends to its shareholders; and the historical dividend payments made by CSB; | ||
• | CSB and Indian Village have complementary community banking businesses so that the impact on customers and communities served would be minimized; | ||
• | the current expectation that CSB will maintain Indian Village’s existing community banking offices and that the merger may provide the opportunity for continued employment to Indian Village’s employees; | ||
• | the cost of compliance by Indian Village and Indian Village Bank with the regulatory requirements and directives of the Ohio Division of Financial Institutions, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision to which they are or may be subject; | ||
• | the fact that Indian Village shareholders will receive a significant equity ownership in the combined company; | ||
• | the structure of the merger and the terms of the merger agreement, including the fact that Indian Village shareholders who receive CSB common shares in exchange for shares of Indian Village common stock in the merger will recognize no gain or loss, other than the gain or loss to be recognized as to cash received either (a) in exchange for a portion of their shares of Indian Village common stock, or (b) in lieu of fractional CSB common shares; | ||
• | the Board’s belief that combining the two companies will create a larger and more diversified financial institution that is both better equipped to respond to economic and industry developments and better positioned to develop and build on its position in existing markets; and | ||
• | the financial analyses presented by Keller & Company to the Indian Village Board of Directors, and the opinion dated as of May 14, 2008, delivered to Indian Village by Keller & Company to the effect that, as of that date, and subject to and based on the qualifications and assumptions set forth in the opinion, the consideration to be received by the holders of shares of Indian Village common stock in the merger was fair, from a financial point of view, to such shareholders. |
• | the costs associated with the regulatory approval process, cost in connection with the calling of the special meeting of shareholders, and other merger-related costs; |
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• | the risk of a decline in the market price of CSB shares prior to and after the consummation of the merger; | ||
• | acceptance of the change by the communities served by Indian Village Bank; and | ||
• | the loss of Indian Village Bank’s independence as a separate financial institution. |
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Cardunal SB FSB, Illinois
Gilman Corp., Wisconsin
First Financial Services, Nebraska
Huron Valley State Bank, Michigan
1st Independence Financial Group, Kentucky
Community First Financial, Ohio
OC Financial, Ohio
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Price to Book | Price to Tangible | Price to | Price to | Deposit | ||||||||||||||||
Pricing Measure | Ratio | Book Ratio | Earnings | Assets | Premium | |||||||||||||||
Low Pricing Level | 89.0 | % | 89.0 | % | N/M | 10.2 | % | 3.9 | % | |||||||||||
Median Pricing Level | 106.0 | % | 106.0 | % | N/M | 8.0 | % | 1.2 | % | |||||||||||
High Pricing Level | 142.3 | % | 142.3 | % | N/M | 9.0 | % | 4.4 | % | |||||||||||
Indian Village Price @ $17.50 | 95.5 | % | 95.5 | % | N/M | 8.3 | % | 0.5 | % |
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• | evidence to the reasonable satisfaction of CSB that the Indian Village stock certificate has been lost, wrongfully taken, or destroyed; | ||
• | a bond in an amount reasonably requested by CSB or the exchange agent as indemnity against any claim that may be made against CSB and/or the exchange agent with respect to the Indian Village stock certificate; and |
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• | evidence to the reasonable satisfaction of CSB that the person was the owner of the shares of Indian Village common stock represented by the Indian Village stock certificate claimed to be lost, wrongfully taken or destroyed and that such person is the person who would be entitled to present such certificate for exchange pursuant to the merger agreement. |
• | the merger agreement must be duly adopted and approved by the requisite vote of the shareholders of Indian Village; | ||
• | we must have received all required regulatory approvals and all applicable statutory waiting periods must have expired, and no regulatory approval may contain any conditions, |
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restrictions or requirements (i) that the CSB Board of Directors reasonably determines would, either before or after the effective time of the merger, have a material adverse effect on CSB and its subsidiaries taken as a whole after giving effect to the consummation of the merger or (ii) that are not customary or usual for approvals of such type and that the CSB Board of Directors reasonably determines would be, either before or after the effective time of the merger, unduly burdensome; | |||
• | there must not be any temporary, preliminary or permanent injunction or other order, statute, rule, regulation, judgment, decree, or other legal restraint issued by or imposed by any court or any other governmental authority, prohibiting consummation of the transactions contemplated by the merger agreement; | ||
• | the registration statement filed with the Securities and Exchange Commission in connection with the issuance of the CSB common shares in the merger must be effective with no stop order or similar restraining order suspending such effectiveness initiated or threatened by the Securities and Exchange Commission; | ||
• | all permits and other authorizations under state securities laws necessary to consummate the merger and to issue the CSB common shares in the merger must be in full force and effect; and | ||
• | CSB’s legal counsel must have delivered a written opinion to the effect that, on the basis of facts, representations and assumptions set forth in such opinion, the merger will be treated for federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. |
• | the representations and warranties of CSB contained in the merger agreement must be true and correct as of the date of the merger agreement and as of the effective time of the merger (or if any representation or warranty speaks as of a specific date, as of that date), and Indian Village must have received a certificate, dated as of the effective date, signed on behalf of CSB by its chief executive officer and chief financial officer to such effect; | ||
• | CSB must have performed in all material respects all of its obligations under the merger agreement which are required to be performed at or prior to the effective time of the merger, and Indian Village must have received a certificate, dated as of the effective date, signed on behalf of CSB by its chief executive officer and chief financial officer to such effect; | ||
• | CSB must have entered into a severance payment agreement reflecting certain terms and conditions set forth in the merger agreement with each officer who is a party to an employment agreement with Indian Village and/or Indian Village Bank that, unless extended, would expire in accordance with its terms prior to the effective time of the merger; and | ||
• | there must not have occurred any event, circumstance or development that has resulted in or could reasonably be expected to result in a material adverse effect on CSB. |
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• | the representations and warranties of Indian Village contained in the merger agreement must be true and correct as of the date of the merger agreement and as of the effective time of the merger (or if any representation or warranty speaks as of a specific date, as of that date), and CSB must have received a certificate, dated as of the effective date, signed on behalf of Indian Village by its chief executive officer and chief financial officer to such effect; | ||
• | Indian Village must have performed in all material respects all of its obligations under the merger agreement which are required to be performed at or prior to the effective time of the merger, and CSB must have received a certificate, dated as of the effective date, signed on behalf of Indian Village by its chief executive officer and chief financial officer to such effect; | ||
• | CSB must have received from each holder of an outstanding option to purchase shares of Indian Village common stock an executed and legally binding agreement pursuant to which each such option is cancelled and terminated; | ||
• | Indian Village must have obtained all material third-party consents or approvals required in connection with the merger; | ||
• | Indian Village must have satisfied each of the following financial tests as of the month end immediately preceding the month in which the effective time of the merger occurs: |
o | Indian Village’s allowance for loan losses must be at least 1.25% of the amount of Indian Village’s total gross loans and at least 45% of the amount of Indian Village’s total non-performing assets; | ||
o | Indian Village’s tangible net worth, as calculated in accordance with generally accepted accounting principles and in a manner consistent with Indian Village’s financial statements, must be at least $7,600,000, excluding the effect of any action taken by Indian Village pursuant to the merger agreement. A total of up to $100,000 of fees and costs incurred or accrued by Indian Village in connection with the merger and the merger agreement, including fees payable to Indian Village’s financial advisor and attorneys, will not be taken into account in determining Indian Village’s tangible net worth; and | ||
o | the deposits (excluding any brokered deposits) of Indian Village Bank as of the month end immediately preceding the effective date of the merger must include (a) total checking, savings and money market account deposits of not less than $13,500,000 and (b) total certificates of deposit (excluding brokered certificates of deposit) of not less than $43,000,000. |
• | the holders of not more than 5% of the outstanding shares of Indian Village common stock may have perfected dissenters’ rights under Subchapter D of Chapter 15 of the Pennsylvania Consolidated Statutes in connection with the merger transaction; | ||
• | CSB must have received a statement executed on behalf of Indian Village, dated as of the effective date, certifying that the shares of Indian Village common stock do not represent United States real property interests within the meaning of Section 897 of the Internal Revenue Code and the Treasury Department regulations promulgated thereunder; |
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• | Indian Village Bank must have sold, liquidated or otherwise disposed of its entire ownership interest in Alban Title, LLC without any continuing obligations or liabilities with respect thereto; | ||
• | there must not have occurred any event, circumstance or development that has resulted in or could reasonably be expected to result in a material adverse effect on Indian Village; and | ||
• | Indian Village must have purchased the directors’ and officers’ policy in accordance with the terms and conditions set forth in the merger agreement. |
• | corporate organization, standing and authority; | ||
• | capitalization; | ||
• | subsidiaries; | ||
• | corporate power and authority to execute, deliver and perform the merger agreement; | ||
• | enforceability of the merger agreement; | ||
• | regulatory approvals; | ||
• | accuracy of financial statements and reports; | ||
• | legal proceedings and regulatory actions; | ||
• | compliance with laws; | ||
• | broker’s and finder’s fees; | ||
• | books and records; | ||
• | accuracy and completeness of representations and warranties; and | ||
• | absence of certain material adverse changes or events. |
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• | material contracts; | ||
• | employee benefit plans; | ||
• | labor matters; | ||
• | takeover laws; | ||
• | environmental matters; | ||
• | tax matters; | ||
• | risk management instruments; | ||
• | insurance; | ||
• | absence of undisclosed liabilities; | ||
• | property and title; | ||
• | loans and certain transactions; | ||
• | allowance for loan losses; | ||
• | repurchase agreements; | ||
• | deposit insurance; | ||
• | compliance with the Bank Secrecy Act, anti-money laundering laws and customer privacy laws; | ||
• | Community Reinvestment Act compliance; | ||
• | related party transactions; | ||
• | prohibited payments; and | ||
• | receipt of fairness opinion. |
• | ownership of Indian Village common shares; | ||
• | validity of the CSB common shares to be issued in the merger; and | ||
• | sufficiency of funds to pay the cash consideration in the merger. |
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• | other than pursuant to rights previously disclosed to CSB and outstanding on the date of the merger agreement, issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of Indian Village common stock or enter into any agreement with respect to the same; | ||
• | permit any additional shares of Indian Village common stock to become subject to new grants of employee or director stock options or similar stock-based employee rights; | ||
• | effect any recapitalization, reclassification, stock split, or similar change in capitalization; | ||
• | make, declare, pay or set aside for payment any dividend or distribution on any shares of its capital stock, other than dividends from wholly-owned Indian Village subsidiaries to Indian Village, or directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire any shares of its capital stock; | ||
• | enter into, modify, amend, renew or terminate any employment, consulting, severance, retention, change in control or similar agreements or arrangements with directors, officers or employees of Indian Village or any of its subsidiaries; | ||
• | hire or engage any full-time employee or consultant, other than as replacements for positions then existing; | ||
• | terminate any employee who is a party to an employment agreement with Indian Village and/or Indian Village Bank other than a “Termination for Cause” as defined in such employment agreement; | ||
• | take or fail to take any action with respect to any employee who is a party to an employment agreement with Indian Village and/or Indian Village Bank if the employee’s resignation |
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based upon such action or failure to act would constitute an “Event of Termination” under such employment agreement | |||
• | enter into, establish, adopt, amend, modify or terminate any pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, change in control, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement or similar arrangement, with respect to any director, officer or employee of Indian Village or any of its subsidiaries, except as may be required by law, to satisfy contractual obligations or as contemplated in the merger agreement; | ||
• | sell, transfer, mortgage, pledge, encumber or otherwise dispose of or discontinue any of its assets, deposits, business or properties other than in the ordinary course of business for full and fair consideration actually received; | ||
• | acquire (other than by way of foreclosure or acquisition of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith and in the ordinary and usual course of business consistent with past practice) all or any portion of the assets, business, deposits or properties of any other entity; | ||
• | amend the organizational documents of Indian Village or any of its subsidiaries; | ||
• | implement or adopt any change in its accounting principles, practices or methods other than as required by generally accepted accounting principles; | ||
• | enter into or terminate any material contract, or amend or modify any material contract in any material respect, except in the ordinary course of business consistent with past practice; | ||
• | except in the ordinary course of business consistent with past practice, settle any claim, action or proceeding, except for any claim, action or proceeding which does not involve precedent for other material claims, actions or proceedings and which involves solely money damages in an amount, individually or in the aggregate for all such settlements, that is not material to Indian Village and its subsidiaries, taken as a whole; | ||
• | knowingly take any action that would, or is reasonably likely to, prevent or impede the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code; | ||
• | knowingly take any action that is intended or is reasonably likely to result in any representations or warranties in the merger agreement being or becoming untrue in any material respect at any time at or prior to the effective time of the merger, any conditions in the merger agreement not being satisfied or a material violation of any provision of the merger agreement except, in each case, as may be required by applicable law, rule or regulation; | ||
• | except pursuant to applicable law or as required by any governmental authority, implement or adopt any material change in its interest rate and other risk management policies, procedures or practices, fail to follow its existing policies or practices with respect to managing its exposure to interest rate and other risk, fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk or fail to follow its existing policies or practices with respect to managing its fiduciary risks; |
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• | borrow or agree to borrow any funds, including but not limited to pursuant to repurchase transactions, or directly or indirectly guarantee or agree to guarantee any obligations of any other person, except in each case in the ordinary course of business and with a final maturity of less than one year; | ||
• | make or purchase any indirect or brokered loans; | ||
• | make any capital expenditure or capital additions or improvements which individually exceed $5,000 or in the aggregate exceed $25,000, except as previously disclosed to CSB; | ||
• | establish any new lending programs or make any changes in the policies of any subsidiary of Indian Village concerning which persons may approve loans; originate or renew, or issue a commitment to originate or renew, any loan in a principal amount in excess of $400,000 for FNMA loans; originate or renew, or issue a commitment to originate or renew, any commercial loans; originate or renew, or issue a commitment to originate or renew, any loan secured by 1 – 4 family real estate in an amount in excess of $250,000; or originate or renew, or issue a commitment to originate or renew, any loan secured by non-residential real estate in an amount in excess of $75,000; | ||
• | fail to prepare and file or cause to be prepared and filed in a timely manner consistent with past practice all tax returns that are required to be filed at or before the effective time of the merger, fail to pay any tax shown as due, or required to be shown as due, on any such tax return, make, change or revoke any tax election or tax accounting method, file any amended tax return, settle any tax claim or assessment, consent to the extension or waiver of any statute of limitations with respect to taxes or offer or agree to do any of the foregoing or surrender its rights to any of the foregoing or to claim any tax refund or file any amended tax return; | ||
• | open, close or relocate any offices at which business is conducted (including any ATMs), or fail to use commercially reasonable efforts to maintain and keep their respective properties and facilities in their present condition and working order, ordinary wear and tear excepted; | ||
• | increase or decrease the rate of interest paid on time deposits or certificates of deposit, except in a manner consistent with past practices in relation to rates prevailing in the relevant market; | ||
• | foreclose upon or otherwise take title to or possession or control of any real property or entity on such property without first obtaining a Phase I Environmental Site Assessment performed pursuant to ASTME 1527-05 which indicates that the property is free of hazardous material; except that no such report will be required to be obtained with respect to single family residential real property of one acre or less to be foreclosed upon unless Indian Village or any of its subsidiaries has reason to believe such real property may contain any such hazardous material; | ||
• | cause any material adverse change in the amount or general composition of deposit liabilities other than in the ordinary course of business; | ||
• | enter into any securities transaction or otherwise acquire any investment security; or | ||
• | agree or commit to do any of the foregoing. |
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• | make, declare, pay or set aside for payment any extraordinary or special dividends or distributions on any shares of it capital stock, other than dividends from any wholly-owned subsidiary to CSB; | ||
• | implement or adopt any change in its accounting principles, practices or methods, other than as may be required by generally accepted accounting principles; | ||
• | knowingly take any action that would, or is reasonably likely to, prevent or impede the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code; | ||
• | knowingly take any action that is intended or is reasonably likely to result in any representations or warranties in the merger agreement being or becoming untrue in any material respect at any time at or prior to the effective time of the merger, any conditions in the merger agreement not being satisfied or a material violation of any provision of the merger agreement except, in each case, as may be required by applicable law, rule or regulation or relating to the exercise of CSB’s rights under the voting agreements entered into by the directors of Indian Village; | ||
• | amend the organizational documents of CSB or any of its subsidiaries in a manner that would adversely affect the economic or other benefits of the merger to the holders of shares of Indian Village common stock; or | ||
• | agree or commit to do any of the foregoing. |
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• | if there is a material breach by the other party of any representation, warranty, covenant or agreement contained in the merger agreement that cannot be or has not been cured by the breaching party within 30 days of after the giving of written notice to the breaching party of such breach; | ||
• | if the merger has not been consummated by November 30, 2008, unless the failure to complete the merger by that date is due to the knowing action or inaction of the party seeking to terminate the merger agreement; | ||
• | if the approval of any governmental authority required for consummation of the merger and the other transactions contemplated by the merger agreement has been denied by final, nonappealable action of such governmental authority; or | ||
• | if the Indian Village shareholders fail to adopt and approve the merger agreement at the special meeting. |
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• | any merger or consolidation involving CSB or any subsidiary of CSB with or into an “interested shareholder” (as defined below), regardless of which person is the surviving entity; | ||
• | any sale, lease, exchange, mortgage, pledge or other disposition from CSB or any subsidiary of CSB to an interested shareholder of assets having an aggregate fair market value of 10% or more of CSB’s total stockholders’ equity; | ||
• | any sale, lease, exchange, mortgage, pledge or other disposition from an interested shareholder to CSB or any subsidiary of CSB of assets having an aggregate fair market value of 10% or more of CSB’s total stockholders’ equity; | ||
• | any issuance, sale or other transfer by CSB or any subsidiary of CSB of any securities of CSB or any subsidiary of CSB to an interested shareholder; | ||
• | the acquisition by CSB or any subsidiary of CSB of any securities of an interested shareholder; | ||
• | any reclassification or recapitalization of CSB’s securities that would have the effect of increasing the voting power of an interested shareholder; | ||
• | the adoption of any plan or proposal for the liquidation or dissolution of CSB proposed by or on behalf of an interested shareholder; and | ||
• | any agreement, contract or other arrangement providing for or resulting in any of the foregoing transactions. |
• | the social and economic effects of the transaction on CSB and its subsidiaries, employees, depositors, loan and other customers, creditors and other elements of the communities in which CSB operates; | ||
• | the business and financial conditions and earning prospects of the acquiring person or persons; and |
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• | the competence, experience and integrity of the acquiring person or persons and its or their management. |
• | one-fifth or more, but less than one-third, of the voting power; | ||
• | one-third or more, but less than a majority, of the voting power; or | ||
• | a majority or more of the voting power. |
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• | a majority of the voting power of the corporation represented in person or by proxy at the meeting; and | ||
• | a majority of the voting power at the meeting exercised by shareholders, excluding: |
o | the acquiring shareholder, | ||
o | officers of the corporation elected or appointed by the directors of the corporation, | ||
o | employees of the corporation who are also directors of the corporation, and | ||
o | persons who acquire specified amounts of shares after the first public disclosure of the proposed control share acquisition. |
• | the sale or acquisition of an interest in assets meeting thresholds specified in the statute; | ||
• | mergers and similar transactions; | ||
• | a voluntary dissolution; | ||
• | the issuance or transfer of shares or any rights to acquire shares having a fair market value at least equal to 5% of the aggregate fair market value of the corporation’s outstanding shares; | ||
• | a transaction that increases the interested shareholder’s proportionate ownership of the corporation; and | ||
• | any other benefit that is not shared proportionately by all shareholders. |
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• | the transaction is approved by the holders of shares with at least two-thirds of the voting power of the corporation in the election of directors (or a different proportion specified in the corporation’s articles of incorporation), including at least a majority of the outstanding shares after excluding shares controlled by the interested shareholder; or | ||
• | the business combination results in shareholders, other than the interested shareholder, receiving a “fair market value” for their shares determined by the method described in the statute. |
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• | any merger or consolidation of Indian Village with or into a Related Person; | ||
• | any sale, lease, exchange, transfer or other disposition of all or any substantial part of the assets of Indian Village or of a subsidiary to a Related Person; | ||
• | any merger or consolidation of a Related Person with or into Indian Village or a subsidiary; | ||
• | any sale, lease, exchange, transfer or other disposition of all or any substantial part of the assets of a Related Person to Indian Village or a subsidiary; | ||
• | the issuance of any securities of Indian Village or a subsidiary to a Related Person; | ||
• | the acquisition by Indian Village or a subsidiary of any securities of a Related Person; | ||
• | any reclassification or recapitalization involving the common stock of Indian Village; and | ||
• | any agreement, contract or other arrangement providing for any of the foregoing transactions. |
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• | the name, age, business address and residence address of the proposed nominee; | ||
• | the principal occupation or employment of the proposed nominee; | ||
• | the class and number of shares of CSB beneficially owned by the proposed nominee; | ||
• | the name and record address of the notifying shareholder; and | ||
• | the class and number of shares of CSB beneficially owned by the notifying shareholder. |
• | the name, age, business address and, if known, residence address of the proposed nominee; | ||
• | the principal occupation of the proposed nominee; | ||
• | the number of shares of Indian Village common stock beneficially owned by the proposed nominee; | ||
• | any other information relating to the proposed nominee that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended including the proposed nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director; | ||
• | the name and address of the notifying shareholder as they appear on Indian Village’s books; and | ||
• | the number of shares of Indian Village common stock beneficially owned by the shareholder. |
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Indian Village Bancorp, Inc.
At March 31, 2008
Historical | Pro Forma | |||||||||||||||||
Historical | Indian | Adjustments | Footnote | Proforma | ||||||||||||||
CSB | Village | Debit/(Credit) | Reference | Combined | ||||||||||||||
(Unaudited) | ||||||||||||||||||
(in thousands except per share data) | ||||||||||||||||||
ASSETS: | ||||||||||||||||||
Cash and due from banks | $ | 10,486 | $ | 12,470 | $ | (2,116 | ) | (1) | $ | 20,840 | ||||||||
Fed Funds sold | 14,300 | — | 14,300 | |||||||||||||||
Securities available for sale | 63,244 | 12,886 | (175 | ) | (2) | 75,955 | ||||||||||||
Loans, gross | 246,984 | 64,713 | 148 | (3) (4) | 311,845 | |||||||||||||
Allowance for loan losses | (2,691 | ) | (882 | ) | (3,573 | ) | ||||||||||||
Premises and equipment | 7,235 | 1,712 | 8,947 | |||||||||||||||
Real estate owned | 340 | 340 | ||||||||||||||||
Federal Home Loan Bank stock | 3,143 | 1,972 | 5,115 | |||||||||||||||
Bank owned life insurance | — | 2,673 | 2,673 | |||||||||||||||
Loan servicing rights | 10 | 66 | 76 | |||||||||||||||
Core Deposit Premium | — | — | 1,350 | (5) | 1,350 | |||||||||||||
Goodwill | 255 | (6) | 255 | |||||||||||||||
Accrued interest and other assets | 2,097 | 1,171 | 514 | (7) | 3,782 | |||||||||||||
Total Assets | $ | 344,808 | $ | 97,121 | $ | (24 | ) | $ | 441,905 | |||||||||
LIABILITIES: | ||||||||||||||||||
Deposits | $ | 247,029 | $ | 66,034 | $ | (577 | ) | (8) | $ | 313,640 | ||||||||
Repurchase agreements | 22,604 | — | 22,604 | |||||||||||||||
Federal Home Loan Bank advances | 35,876 | 22,560 | (647 | ) | (9) | 59,083 | ||||||||||||
Accrued expenses and other liabilities | 2,151 | 401 | (1,220 | ) | (10) | 3,772 | ||||||||||||
Total Liabilities | 307,660 | 88,995 | (2,444 | ) | 399,099 | |||||||||||||
EQUITY: | ||||||||||||||||||
Common stock | 16,674 | 5 | (2,010 | ) | (11) | 18,689 | ||||||||||||
Additional paid-in capital | 6,456 | 4,168 | 525 | (11) | 10,099 | |||||||||||||
Retained earnings | 18,553 | 4,835 | 4,835 | (11) | 18,553 | |||||||||||||
Unearned ESOP | (168 | ) | (168 | ) | (11) | — | ||||||||||||
Treasury stock | (4,713 | ) | (687 | ) | (687 | ) | (11) | (4,713 | ) | |||||||||
Accumulated other comprehensive income (loss) | 178 | (27 | ) | (27 | ) | (11) | 178 | |||||||||||
Total Shareholders’ Equity | 37,148 | 8,126 | 2,468 | 42,806 | ||||||||||||||
Total Liabilities & Shareholders’ Equity | $ | 344,808 | $ | 97,121 | $ | 24 | $ | 441,905 | ||||||||||
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Indian Village Bancorp, Inc.
For the Three Months Ended March 31, 2008
Historical | Pro Forma | |||||||||||||||||
Historical | Indian | Adjustments | Footnote | Proforma | ||||||||||||||
CSB | Village | Debit/(Credit) | Reference | Combined | ||||||||||||||
(Unaudited) | ||||||||||||||||||
(in thousands except per share data) | ||||||||||||||||||
Interest income | $ | 5,284 | $ | 1,385 | $ | 57 | (4) | $ | 6,612 | |||||||||
Interest expense | 1,904 | 915 | (157 | ) | (8) (9) | 2,662 | ||||||||||||
Net interest income | 3,380 | 470 | (100 | ) | 3,950 | |||||||||||||
Provision for loan losses | 107 | 98 | 205 | |||||||||||||||
Net interest income after provision for loan losses | 3,273 | 372 | (100 | ) | 3,745 | |||||||||||||
Non-interest income | 955 | 89 | 1,044 | |||||||||||||||
Non-interest expense | 2,728 | 588 | 84 | (5) | 3,400 | |||||||||||||
Income (loss) before income taxes | 1,500 | (127 | ) | (16 | ) | 1,389 | ||||||||||||
Income tax provision (benefit) | 498 | (93 | ) | (38 | ) | (12) | 367 | |||||||||||
Net Income (loss) | $ | 1,002 | $ | (34 | ) | $ | (54 | ) | $ | 1,022 | ||||||||
Earnings per share | ||||||||||||||||||
Basic | $ | 0.41 | $ | (0.08 | ) | |||||||||||||
Diluted | $ | 0.41 | $ | (0.08 | ) | |||||||||||||
Proforma earnings per share | ||||||||||||||||||
Basic | (13) | $ | 0.37 | |||||||||||||||
Diluted | (13) | $ | 0.37 |
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Indian Village Bancorp, Inc.
For the Twelve Months Ended December 31, 2007
Historical | Pro Forma | |||||||||||||||||
Historical | Indian | Adjustments | Footnote | Proforma | ||||||||||||||
CSB | Village | Debit/(Credit) | Reference | Combined | ||||||||||||||
(Unaudited) | ||||||||||||||||||
(in thousands except per share data) | ||||||||||||||||||
Interest income | $ | 21,231 | $ | 5,881 | $ | 228 | (4) | $ | 26,884 | |||||||||
Interest expense | 7,905 | 3,915 | (630 | ) | (8) (9) | 11,190 | ||||||||||||
Net interest income | 13,326 | 1,966 | (402 | ) | 15,694 | |||||||||||||
Provision for loan losses | 472 | 546 | 1,018 | |||||||||||||||
Net interest income after provision for loan losses | 12,854 | 1,420 | (402 | ) | 14,676 | |||||||||||||
Non-interest income | 3,035 | 245 | 3,280 | |||||||||||||||
Non-interest expense | 10,701 | 2,217 | (338 | ) | (5) | 13,256 | ||||||||||||
Income (loss) before income taxes | 5,188 | (552 | ) | (64 | ) | 4,700 | ||||||||||||
Income tax provision (benefit) | 1,674 | (153 | ) | (28 | ) | (12) | 1,493 | |||||||||||
Net Income (loss) | $ | 3,514 | $ | (399 | ) | $ | (92 | ) | $ | 3,207 | ||||||||
Earnings per share | ||||||||||||||||||
Basic | $ | 1.42 | $ | (0.96 | ) | |||||||||||||
Diluted | $ | 1.42 | $ | (0.96 | ) | |||||||||||||
Proforma earnings per share | ||||||||||||||||||
Basic | (14) | $ | 1.15 | |||||||||||||||
Diluted | (14) | $ | 1.15 |
Notes: | ||
(1) | Represents cash consideration of $2,116 paid to Indian Village shareholders. | |
(2) | Represents an additional valuation adjustment of $175 due to extraordinary market dislocations and atypical payment structures in the private label CMO portfolio held. | |
(3) | Represents estimated fair market value adjustment of $769. | |
(4) | Represents SOP 03-3 adjustment of ($621) on impaired commercial loans. | |
(5) | Represents the establishment of the estimated core deposit intangible and deposit customer relationship of $1,350. The deposit intangible is assumed to amortize into non-interest expense over 7 years, using accelerated methods. | |
(6) | Represents the estimate of the excess of the purchase price plus direct acquisition costs over the estimated fair value of the net assets acquired. | |
(7) | Represents the tax savings of expenses recorded. | |
(8) | Represents the estimated fair market value adjustment related to deposits and is assumed to amortize into interest expense on a level yield basis over the estimated remaining maturity of the deposits. | |
(9) | Represents the estimated fair market value adjustment related to FHLB borrowings and is assumed to amortize into interest expense on a level basis over the estimated life of the borrowings. | |
(10) | Represents accruals for severance and benefits, early termination of contracts, professional fees and deconversion costs. | |
(11) | Represents the elimination of Indian Village equity on a historical basis and the issuance of an estimated 322,462 common shares of CSB based on the exchange ratio of .7611. |
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(12) | Represents the income tax effect of the estimated purchase account adjustments using an effective tax rate of 34%. | |
(13) | Basic and diluted pro forma earnings per share for the three months ended March 31, 2008 have been computed based on 2,767,059 and 2,767,104 shares, respectively. | |
(14) | Basic and diluted pro forma earnings per share for the twelve months ended December 31, 2007 have been computed based on 2,789,572 and 2,790,274 shares, respectively. |
Year First | ||||||||||||||||
Elected or | ||||||||||||||||
Appointed | ||||||||||||||||
Director or | Current | |||||||||||||||
Officer, As | Term to | |||||||||||||||
Name | Age | Principal Occupation1 | Positions Held with CSB | Applicable | Expire | |||||||||||
Robert K. Baker | 53 | Co-owner and Controller, Bakerwell, Inc. | Director | 2001 | 2011 | |||||||||||
Ronald E. Holtman | 65 | Attorney; Logee, Hostetler, Stutzman and Lehman | Director | 2001 | 2009 | |||||||||||
J. Thomas Lang | 64 | Veterinarian, Dairy Farmer, Spring Hill Farm, Inc. | Director | 1993 | 2011 | |||||||||||
Dr. Daniel J. Miller | 68 | Retired Physician; East Holmes Family Care, Inc. | Director | 1979 | 2009 | |||||||||||
Jeffery A. Robb, Sr. | 58 | President and Chairman, Robb Companies, Inc., also formerly Interim President and Chief Executive Officer of Exchange Bancshares, Inc. and The Exchange Bank (2002-2003) | Director | 2001 | 2010 | |||||||||||
Eddie L. Steiner | 52 | President and Chief Executive Officer, CSB Bancorp, Inc.; formerly Vice President, Production, Smith Dairy Products Company (1989 to 2006) | President and Chief Executive Officer, Director | 2001 | 2009 | |||||||||||
John R. Waltman | 66 | Attorney, Of Counsel; Critchfield, Critchfield & Johnston, LLC | Director | 2001 | 2010 |
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Year First | ||||||||||||||||
Elected or | ||||||||||||||||
Appointed | ||||||||||||||||
Director or | Current | |||||||||||||||
Officer, As | Term to | |||||||||||||||
Name | Age | Principal Occupation1 | Positions Held with CSB | Applicable | Expire | |||||||||||
Rick L. Ginther2 | 57 | Banker | Senior Vice President; Director, President and Chief Executive Officer of The Commercial and Savings Bank; formerly, Senior Vice President and Chief Lending Officer (2003-2006) | 2003 | N/A | |||||||||||
Paul D. Greig3 | 62 | Banker | Senior Vice President and Chief Operations/Information Officer | 2003 | N/A | |||||||||||
Paula J. Meiler4 | 53 | Banker | Senior Vice President and Chief Financial Officer | 2004 | N/A |
1 | Unless otherwise noted herein, each of the individuals listed has been engaged in the occupations and employment described above for the past five years. | |
2 | Mr. Ginther held the position of President of the Canton region of Bank One N.A. from 2002 to 2003 and various positions with Bank One Corporation (now JP Morgan Chase & Co.) or predecessor from 1973 to 2002. | |
3 | Mr. Greig retired from Bank One Corporation (now JP Morgan Chase & Co.) in 2002 from the position of National Retail Support Services Manager. During retirement from 2002 through 2003 he was a substitute teacher in two public school systems. | |
4 | Ms. Meiler held the previous positions of Chief Financial Officer and Treasurer of Consumers Bancorp Inc. from 1999 through 2004 and Comptroller of The Citizens Banking Company (aka Sky Bank) and Citizens Bancshares Inc. from 1981 to 1999. |
• | Retainer of $10,000 per year, paid quarterly | ||
• | $500 for each board or committee meeting attended |
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• | Reimbursement for customary and usual travel expenses (outside of board and committee meeting attendance). |
Fees Earned or | Stock | Stock Option | All Other | |||||||||||||||||
Name | Paid in Cash ($) | Awards ($) | Awards (#) | Compensation ($)1 | Total ($) | |||||||||||||||
Robert K. Baker | $ | 33,000 | 0 | 0 | $ | 1,909 | $ | 34,909 | ||||||||||||
Ronald E. Holtman | 23,500 | 0 | 0 | 168 | 23,668 | |||||||||||||||
J. Thomas Lang | 28,500 | 0 | 0 | 6,289 | 34,789 | |||||||||||||||
Dr. Daniel J. Miller | 30,500 | 0 | 0 | 0 | 30,500 | |||||||||||||||
Jeffery A. Robb, Sr. | 32,500 | 0 | 0 | 4,086 | 36,586 | |||||||||||||||
Samuel M. Steimel 2 | 24,500 | 0 | 0 | 10,879 | 35,379 | |||||||||||||||
John R. Waltman | 31,000 | 0 | 0 | 1,461 | 32,461 |
1 | All Other Compensation includes Mssrs. Lang, Robb and Steimel participating in a grandfathered health and dental benefits program. CSB Bank also provides a 1% reduction of the standard interest rate charged on certain consumer and primary residence mortgage loans to all directors, officers and employees during the period of service to CSB or CSB Bank. | |
2 | Mr. Steimel resigned from the Boards of Directors of CSB and CSB Bank on March 13, 2008. |
1. | In order to attract and retain highly qualified management, we strive to provide target salaries close to the mean of the market rate paid for comparable positions by similarly sized bank holding companies. |
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2. | Where practical, we establish performance-based compensation focused on individual results, team results, and contributions to CSB’s overall performance. | ||
3. | We attempt to link and align the wealth creation interests of management and shareholders by utilizing CSB stock awards or options as a component of the compensation program. |
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R. Ginther, President and CEO, The Commercial & Savings Bank | $ | 334,227 | ||
P. Greig, Senior Vice President and COO/CIO | 244,162 | |||
P. Meiler, Senior Vice President and CFO | 235,162 |
Central Federal Corporation | Fairlawn, Ohio | |
Cheviot Financial Corp. | Cheviot, Ohio | |
Commercial Bancshares, Inc. | Upper Sandusky, Ohio | |
Consumers Bancorp, Inc. | Minerva, Ohio | |
Cortland Bancorp Inc. | Cortland, Ohio | |
Croghan Bancshares Inc. | Fremont, Ohio | |
CSB Bancorp, Inc. | Millersburg, Ohio | |
First Franklin Corporation | Cincinnati, Ohio | |
Killbuck Bancshares Inc. | Killbuck, Ohio | |
Middlefield Banc Corp. | Middlefield, Ohio | |
National Bancshares Corporation | Orrville, Ohio | |
Ohio Legacy Corp | Wooster, Oho | |
Wayne Savings Bancshares, Inc. | Wooster, Ohio |
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Ronald E. Holtman
Samuel M. Steimel
Change in | ||||||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||||||
and | ||||||||||||||||||||||||||||||||||||
Nonqualified | ||||||||||||||||||||||||||||||||||||
�� | Non-equity | Deferred | ||||||||||||||||||||||||||||||||||
Name and | Stock | Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||||||||||
Principal Position | Year | Salary | Bonus | Awards | Awards1 | Compensation | Earnings | Compensation | Total | |||||||||||||||||||||||||||
Eddie L. Steiner, | 2007 | $ | 164,800 | $ | 41,000 | — | — | — | — | $ | 15,964 | $ | 221,764 | |||||||||||||||||||||||
President and CEO | ||||||||||||||||||||||||||||||||||||
Paula J. Meiler, | 2007 | 114,000 | 29,000 | — | $ | 7,500 | — | — | 22,375 | 172,875 | ||||||||||||||||||||||||||
Sr VP and CFO | ||||||||||||||||||||||||||||||||||||
Rick L. Ginther, | 2007 | 164,800 | 41,000 | — | — | — | — | 20,017 | 225,817 | |||||||||||||||||||||||||||
Sr VP; President and CEO, The Commercial & Savings Bank | ||||||||||||||||||||||||||||||||||||
Paul D. Greig, | 2007 | 120,000 | 30,000 | — | 7,500 | — | — | 7,696 | 165,196 | |||||||||||||||||||||||||||
Sr VP and COO/CIO |
1 | The option awards include amounts expensed in 2007 for stock option awards granted in 2006. For assumptions related to the valuation of the stock options, see Note 7 to CSB’s consolidated financial statements for the fiscal year ended December 31, 2007, included in this prospectus/proxy statement. |
Qualified Plan | ||||||||||||||||||||||||
Life | Disability | Matching, | Perquisites | |||||||||||||||||||||
Insurance | Insurance | Profit Sharing | and Other | |||||||||||||||||||||
Name | Year | Premiums | Premiums | Contribution | Benefits | Total | ||||||||||||||||||
Eddie L. Steiner | 2007 | $ | 480 | $ | 535 | $ | 9,301 | $ | 5,648 | $ | 15,964 | |||||||||||||
Paula J. Meiler | 2007 | 480 | 403 | 6,460 | 15,032 | 22,375 | ||||||||||||||||||
Rick L. Ginther | 2007 | 480 | 535 | 9,301 | 9,701 | 20,017 | ||||||||||||||||||
Paul D. Greig | 2007 | 480 | 423 | 6,793 | — | 7,696 |
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Health and | Loan Interest | |||||||||||||||||||||||
Dental | Country Club | Reduction of | Relocation | |||||||||||||||||||||
Name | Year | Benefits | Dues | 1% | Expenses | Total | ||||||||||||||||||
Eddie L. Steiner | 2007 | $ | 5,347 | — | $ | 301 | — | $ | 5,648 | |||||||||||||||
Paula J. Meiler | 2007 | 7,882 | — | 1,395 | $ | 5,755 | 15,032 | |||||||||||||||||
Rick L. Ginther | 2007 | 5,347 | $ | 4,354 | — | — | 9,701 | |||||||||||||||||
Paul D. Greig | 2007 | — | — | — | — | — |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||||||||||||
Equity | Incentive | |||||||||||||||||||||||||||||||||||||||
Incentive | Plan | |||||||||||||||||||||||||||||||||||||||
Plan | Awards: | |||||||||||||||||||||||||||||||||||||||
Market | Awards: | Market | ||||||||||||||||||||||||||||||||||||||
value | Number | or Payout | ||||||||||||||||||||||||||||||||||||||
Equity | Number | of | of | Value of | ||||||||||||||||||||||||||||||||||||
Incentive | of | shares | Unearned | Unearned | ||||||||||||||||||||||||||||||||||||
Plan | shares | or | Shares, | Shares, | ||||||||||||||||||||||||||||||||||||
Awards: | or units | units of | Units or | Units or | ||||||||||||||||||||||||||||||||||||
Number of | Number of | Number of | of stock | stock | Other | Other | ||||||||||||||||||||||||||||||||||
Securities | Securities | Securities | that | that | Rights | Rights | ||||||||||||||||||||||||||||||||||
Underlying | Underlying | Underlying | Option | have | have | That | That | |||||||||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Exercise | Option | not | not | Have Not | Have Not | ||||||||||||||||||||||||||||||||
Grant | Options (#) | Options (#) | Unearned | Price | Expiration | vested | vested | Vested | Vested | |||||||||||||||||||||||||||||||
Name | Date | Exercisable | Unexercisable | Options (#) | ($) | Date | (#) | ($) | (#) | ($) | ||||||||||||||||||||||||||||||
Eddie L. Steiner | ||||||||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Paula J. Meiler | ||||||||||||||||||||||||||||||||||||||||
11/29/2006 | 11,904 | 5,952 | — | $ | 18.00 | 3/31/2016 | — | — | — | — | ||||||||||||||||||||||||||||||
8/9/2004 | 1,000 | — | — | $ | 19.00 | 8/9/2009 | — | — | — | — | ||||||||||||||||||||||||||||||
Rick L. Ginther | ||||||||||||||||||||||||||||||||||||||||
7/21/2003 | 1,000 | — | — | $ | 17.50 | 7/21/2008 | — | — | — | — | ||||||||||||||||||||||||||||||
Paul D. Greig | ||||||||||||||||||||||||||||||||||||||||
11/29/2006 | 11,904 | — | — | $ | 18.00 | 3/31/2016 | — | — | — | — | ||||||||||||||||||||||||||||||
6/30/2003 | 1,000 | — | — | $ | 17.50 | 7/21/2008 | — | — | — | — |
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Change in | ||||||||
Control – | Post – | |||||||
Multiple | Termination | |||||||
Name | Base Salary | Health Care | ||||||
Rick L. Ginther | 2.0 | 1 Year | ||||||
Paula J. Meiler | 2.0 | 1 Year | ||||||
Paul D. Greig | 2.0 | 1 Year |
Termination- | Post –Termination | |||
Name | Without Cause | Health Care | ||
Rick L. Ginther | Base Salary Unpaid under agreement + 6 Months | 6 Months | ||
Paula J. Meiler | Base Salary Unpaid under agreement + 6 Months | 6 Months | ||
Paul D. Greig | Base Salary Unpaid under agreement + 6 Months | 6 Months |
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Number of shares | ||||||||||||
Number of shares of | remaining available for | |||||||||||
common stock to be issued | Weighted-average exercise | future issuance under | ||||||||||
upon exercise of | price of outstanding | equity compensation plans | ||||||||||
outstanding options, | options, warrants, and | (excluding securities | ||||||||||
warrants and rights | rights | reflected in column (a)) | ||||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by stockholders | 40,840 | 17.61 | 159,160 | |||||||||
Equity compensation plans not approved by stockholders | 10,000 | 17.75 | 0 | |||||||||
Total | 50,840 | 17.64 | 159,160 | |||||||||
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Name and Address of | Amount and Nature of | Percent of Shares | ||||||
Beneficial Owner | Beneficial Ownership | Outstanding | ||||||
Richard G. Elliott 1450 Fox Run Lane Canfield, Ohio 44406 | 125,450.000 | 1 | 5.18 | % |
1 | Mr. Elliott has sole voting power over 122,000 shares and shared voting power over 3,450 shares, as reported by an amended Schedule 13D filing with the Securities and Exchange Commission on March 21, 2007. |
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Amount and Nature of Beneficial Ownership | ||||||||||||||||||||||||
Post-Merger | ||||||||||||||||||||||||
Sole Voting or | Shared Voting | Shares | Total Shares | Percent of | Percent of | |||||||||||||||||||
Investment | or Investment | Subject to | Beneficially | Shares | Shares | |||||||||||||||||||
Name and Address1 | Power | Power | Options | Owned2 | Outstanding | Outstanding | ||||||||||||||||||
Robert K. Baker | 3,438.0000 | 2,534.3561 | 0 | 5,972.3561 | * | * | ||||||||||||||||||
Ronald E. Holtman | 1,300.0000 | 0 | 0 | 1,300.0000 | * | * | ||||||||||||||||||
J. Thomas Lang | 1,295.5481 | 5,827.9781 | 0 | 7,123.5262 | * | * | ||||||||||||||||||
Dr. Daniel J. Miller | 29,639.0260 | 12,273.0000 | 0 | 41,912.0260 | 1.73 | % | 1.53 | % | ||||||||||||||||
Jeffery A. Robb, Sr. | 4,086.3448 | 0 | 0 | 4,086.3448 | * | * | ||||||||||||||||||
Eddie L. Steiner | 18,568.0000 | 1,210.2808 | 0 | 19,778.2808 | * | * | ||||||||||||||||||
John R. Waltman | 15,385.0000 | 366.2379 | 0 | 15,751.2379 | * | * | ||||||||||||||||||
Rick L. Ginther | 0 | 3,184.8937 | 1,000.0000 | 4,184.8937 | * | * | ||||||||||||||||||
Paul D. Greig | 0 | 1,500.0000 | 12,904.0000 | 14,404.0000 | * | * | ||||||||||||||||||
Paula J. Meiler | 6,137.2120 | 100.0000 | 12,904.0000 | 19,141.2120 | * | * | ||||||||||||||||||
Other Executive Officers (2 persons) | 2,491.3590 | 792.4854 | 800.0000 | 4,083.8444 | * | * | ||||||||||||||||||
All Directors and Executive Officers as a Group (12 persons) | 82,340.4899 | 27,789.2320 | 27,608.0000 | 137,737.7219 | 5.69 | % | 5.02 | % |
* | Indicates less than 1% of the total shares outstanding. | |
1 | Each of the individuals listed may be contacted at 91 North Clay Street, Millersburg, Ohio 44654. | |
2 | The amounts shown include the total number of CSB common shares beneficially owned by the individuals listed and includes CSB common shares that may be acquired upon the exercise of stock options exercisable within 60 days of June 25, 2008. |
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Banking | Other | |||||||||
Location | Center | Property | Address | Owned | Leased | |||||
Millersburg | X | 6 West Jackson Street, Millersburg, Ohio 44654 | X | |||||||
Walnut Creek | X | 4980 Old Pump Street, Walnut Creek, Ohio 44687 | X | |||||||
Winesburg | X | 2225 U.S. 62, Winesburg, Ohio 44690 | X | |||||||
Sugarcreek | X | 127 South Broadway, Sugarcreek, Ohio 44681 | X | |||||||
Charm | X | 4440 C.R.70, Charm, Ohio 44617 | X | |||||||
Clinton Commons | X | 2102 Glen Drive, Millersburg, Ohio 44654 | X | |||||||
Berlin | X | 4587 S.R.39 Suite B, Berlin, Ohio 44610 | X | |||||||
South Clay | X | 91 South Clay Street, Millersburg, Ohio 44654 | X | |||||||
Shreve | X | 333 West South Street, Shreve, Ohio 44676 | X | |||||||
Orrville | X | 461 Wadsworth Road, Orrville, Ohio 44667 | X | |||||||
Operations Center | X | 91 North Clay Street, Millersburg, Ohio 44654 | X | |||||||
Wooster Trust | X | 146 East Liberty Street, Wooster, Ohio 44691 | X |
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Per Share | ||||||||||||
Dividends | ||||||||||||
Quarter Ended | High | Low | Declared | |||||||||
2008 | ||||||||||||
March 31, 2008 | $ | 17.90 | $ | 15.75 | $ | 0.18 | ||||||
June 30, 2008 | 18.00 | 15.75 | 0.18 | |||||||||
2007 | ||||||||||||
March 31, 2007 | $ | 19.05 | $ | 17.50 | $ | 0.18 | ||||||
June 30, 2007 | 18.25 | 17.42 | 0.18 | |||||||||
September 30, 2007 | 19.00 | 15.95 | 0.18 | |||||||||
December 31, 2007 | 17.75 | 15.40 | 0.18 | |||||||||
2006 | ||||||||||||
March 31, 2006 | $ | 21.25 | $ | 20.50 | $ | 0.16 | ||||||
June 30, 2006 | 20.87 | 20.00 | 0.16 | |||||||||
September 30, 2006 | 20.40 | 18.70 | 0.16 | |||||||||
December 31, 2006 | 20.25 | 18.00 | 0.16 |
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March 31, 2008 | December 31, 2007 | March 31, 2007 | ||||||||||
Non-performing loans | 431,000 | 571,000 | 1,536,000 | |||||||||
Other real estate | — | 101,700 | 49,100 | |||||||||
Allowance for loan losses | 2,690,800 | 2,585,900 | 2,654,700 | |||||||||
Total loans | 246,983,900 | 256,659,100 | 235,576,900 | |||||||||
Allowance: loans | 1.09 | % | 1.01 | % | 1.13 | % | ||||||
Allowance: non-performing loans | 6.2 | x | 4.5 | x | 1.7 | x |
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March 31, 2008 | ||||||||||||
Changes in | ||||||||||||
Interest Rates | Net Interest | Dollar | Percentage | |||||||||
(basis points) | Income | Change | Change | |||||||||
(Dollars in Thousands) | ||||||||||||
+200 | $ | 14,667 | $ | 884 | 6.4 | % | ||||||
+100 | 14,212 | 429 | 3.1 | |||||||||
0 | 13,783 | 0 | 0.0 | |||||||||
-100 | 13,449 | (334 | ) | (2.4 | ) | |||||||
-200 | 13,027 | (756 | ) | (5.5 | ) |
December 31, 2007 | ||||||||||||
Changes in | ||||||||||||
Interest Rates | Net Interest | Dollar | Percentage | |||||||||
(basis points) | Income | Change | Change | |||||||||
(Dollars in Thousands) | ||||||||||||
+200 | $ | 14,682 | $ | 506 | 3.6 | % | ||||||
+100 | 14,457 | 281 | 2.0 | |||||||||
0 | 14,176 | 0 | 0.0 | |||||||||
-100 | 13,988 | (188 | ) | (1.3 | ) | |||||||
-200 | 13,646 | (530 | ) | (3.7 | ) |
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(Dollars in thousands)
2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||||||||||||||||
Balance1 | Interest | Rate2 | Balance1 | Interest | Rate2 | Balance1 | Interest | Rate2 | ||||||||||||||||||||||||||||||
Interest-earning assets | ||||||||||||||||||||||||||||||||||||||
Federal funds sold | $ | 458 | $ | 25 | 5.44 | % | $ | 250 | $ | 11 | 4.28 | % | $ | 3,848 | $ | 145 | 3.77 | % | ||||||||||||||||||||
Interest-earning deposits | 62 | 2 | 2.58 | 18 | 1 | 9.44 | 36 | 1 | 1.39 | |||||||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||||||||||||||||
Taxable | 61,673 | 2,928 | 4.75 | 66,951 | 3,006 | 4.49 | 57,930 | 2,243 | 3.87 | |||||||||||||||||||||||||||||
Tax exempt | 5,293 | 251 | 4.75 | 8,043 | 383 | 4.76 | 13,936 | 625 | 4.49 | |||||||||||||||||||||||||||||
Loans3 | 241,979 | 18,025 | 7.45 | 225,445 | 16,644 | 7.38 | 220,655 | 14,344 | 6.50 | |||||||||||||||||||||||||||||
Total interest-earning assets | 309,465 | 21,231 | 6.86 | % | 300,707 | 20,045 | 6.67 | % | 296,405 | 17,358 | 5.86 | % | ||||||||||||||||||||||||||
Noninterest-earning assets | ||||||||||||||||||||||||||||||||||||||
Cash and due from banks | 10,980 | 11,027 | 11,821 |
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2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||||||||||||||||
Balance1 | Interest | Rate2 | Balance1 | Interest | Rate2 | Balance1 | Interest | Rate2 | ||||||||||||||||||||||||||||||
Bank premises and equipment, net | 7,719 | 7,864 | 8,323 | |||||||||||||||||||||||||||||||||||
Other assets | 2,181 | 2,644 | 2,531 | |||||||||||||||||||||||||||||||||||
Allowance for loan losses | (2,574 | ) | (2,493 | ) | (2,468 | ) | ||||||||||||||||||||||||||||||||
Total assets | $ | 327,771 | $ | 319,749 | $ | 316,612 | ||||||||||||||||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||
Demand deposits | $ | 45,606 | 257 | 0.56 | % | $ | 46,096 | 232 | 0.50 | % | $ | 49,021 | 192 | 0.39 | % | |||||||||||||||||||||||
Savings deposits | 41,123 | 511 | 1.24 | 41,528 | 411 | 0.99 | 44,759 | 357 | 0.80 | |||||||||||||||||||||||||||||
Time deposits | 124,752 | 5,585 | 4.48 | 120,981 | 4,775 | 3.95 | 117,373 | 3,579 | 3.05 | |||||||||||||||||||||||||||||
Borrowed funds | 37,278 | 1,552 | 4.16 | 35,824 | 1,459 | 4.07 | 30,083 | 684 | 2.27 | |||||||||||||||||||||||||||||
Total interest-bearing liabilities | 248,759 | 7,905 | 3.18 | % | 244,429 | 6,877 | 2.81 | % | 241,236 | 4,812 | 1.99 | % | ||||||||||||||||||||||||||
Noninterest-bearing liabilities and shareholders’ equity | ||||||||||||||||||||||||||||||||||||||
Demand deposits | 41,740 | 38,938 | 37,855 | |||||||||||||||||||||||||||||||||||
Other liabilities | 1,500 | 1,616 | 1,231 | |||||||||||||||||||||||||||||||||||
Shareholders’ equity | 35,772 | 34,766 | 36,290 | |||||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 327,771 | $ | 319,749 | $ | 316,612 | ||||||||||||||||||||||||||||||||
Net interest income | $ | 13,326 | $ | 13,168 | $ | 12,546 | ||||||||||||||||||||||||||||||||
Net interest margin | 4.31 | % | 4.38 | % | 4.23 | % | ||||||||||||||||||||||||||||||||
Net interest spread | 3.68 | % | 3.86 | % | 3.87 | % | ||||||||||||||||||||||||||||||||
(1) | Average balances have been computed on an average daily basis. | |
(2) | Average rates have been computed based on the amortized cost of the corresponding asset or liability. | |
(3) | Average loan balances include nonaccrual loans. |
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(Dollars in thousands)
2007 v. 2006 | 2006 v. 2005 | |||||||||||||||||||||||
Change in | Change in | |||||||||||||||||||||||
Income/ | Volume | Rate | Income/ | Volume | Rate | |||||||||||||||||||
Expense | Effect | Effect | Expense | Effect | Effect | |||||||||||||||||||
Interest Income | ||||||||||||||||||||||||
Federal funds sold | $ | 14 | $ | 11 | $ | 3 | $ | (134 | ) | $ | (154 | ) | $ | 20 | ||||||||||
Interest-earning deposits | 1 | 2 | (1 | ) | 1 | (2 | ) | 3 | ||||||||||||||||
Securities: | ||||||||||||||||||||||||
Taxable | (78 | ) | (251 | ) | 173 | 763 | 405 | 358 | ||||||||||||||||
Tax exempt | (132 | ) | (131 | ) | (1 | ) | (243 | ) | (281 | ) | 38 | |||||||||||||
Loans | 1,381 | 1,231 | 150 | 2,300 | 354 | 1,946 | ||||||||||||||||||
Total interest income | 1,186 | 862 | 324 | 2,687 | 322 | 2,365 | ||||||||||||||||||
Interest Expense | ||||||||||||||||||||||||
Demand deposits | 25 | (3 | ) | 28 | 39 | (15 | ) | 54 | ||||||||||||||||
Savings deposits | 100 | (5 | ) | 105 | 54 | (32 | ) | 86 | ||||||||||||||||
Time deposits | 810 | 169 | 641 | 1,196 | 142 | 1,054 | ||||||||||||||||||
Other borrowed funds | 93 | 61 | 32 | 776 | 234 | 542 | ||||||||||||||||||
Total interest expense | 1,028 | 222 | 806 | 2,065 | 329 | 1,736 | ||||||||||||||||||
Net interest income | $ | 158 | $ | 640 | $ | (482 | ) | $ | 622 | $ | (7 | ) | $ | 629 | ||||||||||
(1) | Changes attributable to both volume and rate, which cannot be segregated, have been allocated based on the absolute value of the change due to volume and the change due to rate. |
(Dollars in thousands) | 2007 | 2006 | 2005 | |||||||||
Net interest income | $ | 13,326 | $ | 13,167 | $ | 12,546 | ||||||
Taxable equivalent adjustment (1) | 144 | 210 | 333 | |||||||||
Net interest income-fully taxable equivalent | 13,470 | 13,377 | $ | 12,879 | ||||||||
Net interest yield | 4.31 | % | 4.38 | % | 4.23 | % | ||||||
Taxable equivalent adjustment (1) | .04 | .07 | .11 | |||||||||
Net interest yield-taxable equivalent | 4.35 | % | 4.45 | % | 4.35 | % |
(1) | Taxable equivalent adjustments have been computed assuming a 34% tax rate. |
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Year Ended December 31 | ||||||||||||||||||||||||||||
(in thousands of dollars) | ||||||||||||||||||||||||||||
Change from 2006 | Change from 2005 | |||||||||||||||||||||||||||
2007 | Amount | % | 2006 | Amount | % | 2005 | ||||||||||||||||||||||
Service charges on deposit accounts | $ | 1,231 | $ | (48 | ) | (3.8 | )% | $ | 1,279 | $ | 242 | 23.3 | % | $ | 1,037 | |||||||||||||
Trust services | 731 | 191 | 35.4 | 540 | 56 | 11.6 | 484 | |||||||||||||||||||||
Debit card interchange fees | 276 | 65 | 30.8 | 211 | 50 | 31.1 | 161 | |||||||||||||||||||||
Credit card fee income | 262 | (29 | ) | (10.0 | ) | 291 | 13 | 4.7 | 278 | |||||||||||||||||||
Insurance recovery | 187 | 187 | N.M. | — | — | — | — | |||||||||||||||||||||
Securities gain (loss) | 17 | 74 | N.M. | (57 | ) | (304 | ) | N.M. | 247 | |||||||||||||||||||
Gain on sale of loans | 18 | 6 | 50.0 | 12 | (12 | ) | (50.0 | ) | 24 | |||||||||||||||||||
Gain (loss) sale of other real estate | (1 | ) | 25 | N.M. | (26 | ) | (36 | ) | N.M. | 10 | ||||||||||||||||||
Other | 314 | (28 | ) | (8.2 | ) | 342 | 2 | 0.6 | 340 | |||||||||||||||||||
Total noninterest income | $ | 3,035 | 443 | 17.1 | % | $ | 2,592 | 11 | 0.4 | % | $ | 2,581 | ||||||||||||||||
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Year Ended December 31 | ||||||||||||||||||||||||||||
(in thousands of dollars) | ||||||||||||||||||||||||||||
Change from 2006 | Change from 2005 | |||||||||||||||||||||||||||
2007 | Amount | % | 2006 | Amount | % | 2005 | ||||||||||||||||||||||
Salaries and employee benefits | $ | 5,854 | $ | (32 | ) | 0.5 | % | $ | 5,886 | $ | 215 | 3.8 | % | $ | 5,671 | |||||||||||||
Occupancy expense | 733 | 47 | 6.9 | 686 | 9 | 1.3 | 677 | |||||||||||||||||||||
Equipment expense | 504 | 6 | 1.2 | 498 | (26 | ) | (5.0 | ) | 524 | |||||||||||||||||||
Professional and directors’ fees | 580 | (79 | ) | (12.0 | ) | 659 | (18 | ) | (2.7 | ) | 677 | |||||||||||||||||
Franchise tax expense | 417 | (13 | ) | 3.0 | 430 | 2 | 0.5 | 428 | ||||||||||||||||||||
Marketing and public relations | 373 | 39 | 11.7 | 334 | 32 | 10.6 | 302 | |||||||||||||||||||||
Telecommunications | 225 | 4 | 1.8 | 221 | (54 | ) | (19.6 | ) | 275 | |||||||||||||||||||
Cash irregularity | — | (237 | ) | N.M. | 237 | 237 | N.M. | — | ||||||||||||||||||||
Other | 2,015 | 51 | 2.6 | 1,964 | (285 | ) | (12.7 | ) | 2,249 | |||||||||||||||||||
Total noninterest expenses | $ | 10,701 | $ | (214 | ) | (2.0 | )% | $ | 10,915 | $ | 112 | 1.0 | % | $ | 10,803 | |||||||||||||
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December 31, 2007 | ||||||||||||||||||||
Change in | ||||||||||||||||||||
Interest Rates | Net Interest | Dollar | Percentage | |||||||||||||||||
(basis points) | Income | Change | Change | Board policy limits | ||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
+200 | $ | 14,682 | $ | 506 | 3.6 | % | +/- 15.0 | % | ||||||||||||
+100 | 14,457 | 281 | 2.0 | +/- 10.0 | ||||||||||||||||
0 | 14,176 | — | — | |||||||||||||||||
-100 | 13,988 | (188 | ) | (1.3 | ) | +/- 10.0 | ||||||||||||||
-200 | 13,646 | (530 | ) | (3.7 | ) | +/- 15.0 |
December 31, 2006 | ||||||||||||||||||||
Change in | ||||||||||||||||||||
Interest Rates | Net Interest | Dollar | Percentage | |||||||||||||||||
(basis points) | Income | Change | Change | Board policy limits | ||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
+200 | $ | 14,165 | $ | 682 | 5.1 | % | +/- 15.0 | % | ||||||||||||
+100 | 13,767 | 284 | 2.1 | +/- 10.0 | ||||||||||||||||
0 | 13,483 | 0 | 0.0 | |||||||||||||||||
-100 | 13,290 | (193 | ) | (1.4 | ) | +/- 10.0 | ||||||||||||||
-200 | 12,937 | (546 | ) | (4.1 | ) | +/- 15.0 |
Basis point change scenario | -200 | -100 | +100 | +200 | ||||||||||||
Board policy limits | +/-20 | % | +/-15 | % | +/-15 | % | +/-20 | % | ||||||||
December 31, 2007 | +5.2 | % | +3.1 | % | -5.6 | % | -17.3 | % | ||||||||
December 31, 2006 | +7.1 | % | +3.8 | % | -5.2 | % | -11.2 | % |
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Amount of Commitment to Expire Per Period | ||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Total | Less than | 1 to 3 | 3 to 5 | Over 5 | ||||||||||||||||
Type of Commitment | Amount | 1 year | Years | Years | Years | |||||||||||||||
Commercial lines-of-credit | $ | 24,823 | $ | 24,461 | $ | 362 | ||||||||||||||
Real estate lines-of-credit | 20,147 | 1,436 | 449 | $ | 2,366 | $ | 15,896 | |||||||||||||
Consumer lines-of-credit | 1,085 | 1,085 | ||||||||||||||||||
Credit card lines-of-credit | 12,413 | 12,413 | ||||||||||||||||||
Overdraft Privilege | 5,381 | 5,381 | ||||||||||||||||||
Letters of credit | 1,310 | 1,281 | 29 | |||||||||||||||||
Total Commitments | $ | 65,159 | $ | 46,057 | $ | 840 | $ | 2,366 | $ | 15,896 | ||||||||||
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Payment Due by Period | ||||||||||||||||||||
(Dollars in Thousands) | ||||||||||||||||||||
Total | Less than | 1 to 3 | 3 to 5 | Over 5 | ||||||||||||||||
Contractual Obligations | Amount | 1 year | Years | Years | Years | |||||||||||||||
Total time deposits | $ | 123,397 | $ | 104,038 | $ | 13,100 | $ | 6,226 | $ | 33 | ||||||||||
Short-term borrowings | 27305 | 27,305 | ||||||||||||||||||
Other borrowings | 26,024 | 417 | 12,692 | 435 | 12,480 | |||||||||||||||
Capital leases | ||||||||||||||||||||
Operating leases | 403 | 112 | 201 | 90 | ||||||||||||||||
Unconditional purchase obligations Other | ||||||||||||||||||||
Total Obligations | $ | 177,129 | $ | 131,872 | $ | 25,993 | $ | 6,751 | $ | 12,513 | ||||||||||
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Per Share | ||||||||||||
Dividends | ||||||||||||
Quarter Ended | High | Low | Declared | |||||||||
2008 | ||||||||||||
March 31, 2008 | $ | 16.50 | $ | 11.05 | $ | 0.00 | ||||||
June 30, 2008 | 15.25 | 11.05 | 0.00 |
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Per Share | ||||||||||||
Dividends | ||||||||||||
Quarter Ended | High | Low | Declared | |||||||||
2007 | ||||||||||||
March 31, 2007 | $ | 20.25 | $ | 17.75 | $ | 0.00 | ||||||
June 30, 2007 | 21.25 | 18.85 | 0.00 | |||||||||
September 30, 2007 | 19.00 | 16.65 | 0.00 | |||||||||
December 31, 2007 | 17.00 | 13.75 | 0.00 | |||||||||
2006 | ||||||||||||
March 31, 2006 | $ | 19.87 | $ | 17.50 | $ | 0.04 | ||||||
June 30, 2006 | 19.00 | 16.75 | 0.04 | |||||||||
September 30, 2006 | 19.00 | 18.00 | 0.04 | |||||||||
December 31, 2006 | 19.00 | 18.00 | 0.00 |
March 31, 2008 | June 30, 2007 | June 30, 2006 | ||||||||||
Non-performing loans | 1,925,000 | 2,139,000 | 847,000 | |||||||||
Other real estate | 340,000 | 337,000 | 150,000 | |||||||||
Allowance for loan losses | 882,000 | 881,000 | 572,000 | |||||||||
Total loans | 63,831,000 | 70,812,000 | 77,250,000 | |||||||||
Allowance: loans | 1.36 | % | 1.23 | % | 0.74 | % | ||||||
Allowance: non-performing loans | 0.5 | x | 0.4 | x | 0.7 | x |
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Year ended | Year ended | |||||||||||||||||||||||
June 30, 2007 | June 30, 2006 | |||||||||||||||||||||||
Average | Interest | Average | Average | Interest | Average | |||||||||||||||||||
outstanding | earned / | yield / | outstanding | earned / | yield / | |||||||||||||||||||
(Dollars in thousands) | balance | paid | rate | balance | paid | rate | ||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans(1) | $ | 76,249 | $ | 5,159 | 6.77 | % | $ | 70,066 | $ | 4,591 | 6.55 | % | ||||||||||||
Investment securities(2) | ||||||||||||||||||||||||
Taxable | 18,064 | 990 | 5.34 | 17,474 | 911 | 5.08 | ||||||||||||||||||
Non-taxable(3) | 4,577 | 187 | 3.95 | 5,821 | 246 | 4.07 | ||||||||||||||||||
Interest-bearing deposits and federal funds sold | 1,357 | 35 | 2.58 | 1,339 | 17 | 1.27 | ||||||||||||||||||
Total interest-earning assets | 100,247 | 6,371 | 6.31 | 94,700 | 5,765 | 6.09 | ||||||||||||||||||
Noninterest-earning assets | 8,343 | 9,204 | ||||||||||||||||||||||
Total assets | $ | 108,590 | $ | 103,904 | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Demand deposits | $ | 4,513 | 49 | 1.09 | $ | 4,068 | 42 | 1.03 | ||||||||||||||||
Savings accounts | 5,290 | 26 | 0.49 | 5,659 | 29 | 0.51 | ||||||||||||||||||
Money market accounts | 6,579 | 220 | 3.34 | 6,471 | 188 | 2.91 | ||||||||||||||||||
Certificates of deposit | 57,367 | 2,637 | 4.60 | 49,445 | 1,931 | 3.91 | ||||||||||||||||||
Total deposits | 73,749 | 2,932 | 3.97 | 65,643 | 2,190 | 3.34 | ||||||||||||||||||
FHLB advances | 24,409 | 1,312 | 5.38 | 26,388 | 1,396 | 5.29 | ||||||||||||||||||
Total interest-bearing liabilities | 98,158 | 4,244 | 4.32 | 92,031 | 3,586 | 3.90 | ||||||||||||||||||
Noninterest-bearing liabilities: | 2,213 | 3,743 | ||||||||||||||||||||||
Total liabilities | 100,371 | 95,774 | ||||||||||||||||||||||
Equity | 8,219 | 8,131 | ||||||||||||||||||||||
Total liabilities and equity | $ | 108,590 | $ | 103,904 | ||||||||||||||||||||
Net interest income; interest rate spread(4) | $ | 2,127 | 1.99 | % | $ | 2,179 | 2.19 | % | ||||||||||||||||
Net interest margin(5) | 2.11 | % | 2.30 | % | ||||||||||||||||||||
Average interest-earning assets to interest-bearing liabilities | 102.13 | % | 102.90 | % | ||||||||||||||||||||
(1) | Net of deferred loan fees and costs and loans in process and includes nonperforming loans. | |
(2) | Average balance includes unrealized gains and losses. Yield is based on amortized cost. | |
(3) | Average yield for municipal securities are presented on a tax equivalent basis based on an assumed tax rate of 34%. | |
(4) | Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. | |
(5) | Net interest margin represents net interest income divided by average interest-earning assets. |
- 110 -
Table of Contents
Changes in | ||||||||||||||||
Interest Rates | Net Interest | Dollar | Percentage | |||||||||||||
(basis points) | Income | Change | Change | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
+200 | $ | 2,115 | $ | 109 | 5.4 | % | ||||||||||
+100 | 2,069 | 62 | 3.1 | |||||||||||||
0 | 2,006 | 0 | 0.0 | |||||||||||||
-100 | 1,929 | (77 | ) | (3.8 | ) | |||||||||||
-200 | 1,834 | (173 | ) | (8.6 | ) |
Changes in | ||||||||||||||||
Interest Rates | Net Interest | Dollar | Percentage | |||||||||||||
(basis points) | Income | Change | Change | |||||||||||||
(Dollars in Thousands) | ||||||||||||||||
+200 | $ | 2,180 | $ | (63 | ) | (2.8 | )% | |||||||||
+100 | 2,215 | (28 | ) | (1.3 | ) | |||||||||||
0 | 2,243 | 0 | 0.0 | |||||||||||||
-100 | 2,278 | 36 | 1.6 | |||||||||||||
-200 | 2,288 | 45 | 2.0 |
- 111 -
Table of Contents
Basis point change scenario | -200 | -100 | +100 | +200 | ||||||||||||
Board policy limits | +/-30 | % | +/-15 | % | +/-15 | % | +/-30 | % | ||||||||
March 31, 2008 | -24.0 | % | -8.1 | % | -3.2 | % | -12.6 | % | ||||||||
June 30, 2007 | -9.9 | % | -1.9 | % | -6.2 | % | -17.3 | % |
- 112 -
Table of Contents
100 F Street, N.E.
Room 1580
Washington, D.C. 20549
Table of Contents
Page | ||||
Financial Statements at and as of March 31, 2008 (Unaudited): | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
Financial Statements at and as of December 31, 2007 and 2006 (Audited): | ||||
F-9 | ||||
F-9 | ||||
F-10 | ||||
F-11 | ||||
F-12 | ||||
F-13 | ||||
F-15 | ||||
F-21 |
F-1
Table of Contents
March 31, | December 31, | |||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
Cash and due from bank | $ | 10,445,660 | $ | 12,111,807 | ||||
Interest-earning deposits in other banks | 40,052 | 81,555 | ||||||
Federal funds sold | 14,300,000 | — | ||||||
Total cash and cash equivalents | 24,785,712 | 12,193,362 | ||||||
Securities available-for-sale, at fair value | 63,243,672 | 71,419,830 | ||||||
Restricted stock, at cost | 3,142,900 | 3,105,900 | ||||||
Total securities | 66,386,572 | 74,525,730 | ||||||
Loans | 246,983,893 | 256,659,059 | ||||||
Less allowance for loan losses | 218,084,479 | 2,574,945 | ||||||
Less allowance for loan losses | 2,690,830 | 2,585,901 | ||||||
Net loans | 244,293,063 | 254,073,158 | ||||||
Premises and equipment, net | 7,235,361 | 7,273,238 | ||||||
Accrued interest receivable and other assets | 2,107,609 | 2,204,257 | ||||||
Total Assets | $ | 344,808,317 | $ | 350,269,745 | ||||
LIABILITIES | ||||||||
Deposits | ||||||||
Noninterest-bearing | $ | 38,665,336 | $ | 46,038,976 | ||||
Interest-bearing | 208,364,076 | 213,347,066 | ||||||
Total deposits | 247,029,412 | 259,386,042 | ||||||
Short-term borrowings | 24,604,161 | 27,305,157 | ||||||
Other borrowings | 33,875,513 | 26,023,888 | ||||||
Accrued interest payable and other liabilities | 2,151,610 | 1,276,610 | ||||||
Total liabilities | 307,660,696 | 313,991,697 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock, $6.25 par value: Authorized 9,000,000 shares; issued 2,667,786 shares | 16,673,667 | 16,673,667 | ||||||
Additional paid-in capital | 6,455,819 | 6,452,319 | ||||||
Retained earnings | 18,552,852 | 17,990,445 | ||||||
Treasury stock at cost: 226,936 shares in 2008 and 220,162 shares in 2007 | (4,712,735 | ) | (4,599,282 | ) | ||||
Accumulated other comprehensive income (loss) | 178,018 | (239,101 | ) | |||||
Total shareholders’ equity | 37,147,621 | 36,278,048 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 344,808,317 | $ | 350,269,745 | ||||
F-2
Table of Contents
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Interest income | ||||||||
Loans, including fees | $ | 4,412,704 | �� | $ | 4,314,520 | |||
Taxable securities | 804,622 | 750,057 | ||||||
Nontaxable securities | 43,878 | 68,511 | ||||||
Other | 22,207 | 13,194 | ||||||
Total interest income | 5,283,411 | 5,146,282 | ||||||
Interest expense | ||||||||
Deposits | 1,427,758 | 1,553,362 | ||||||
Short-term borrowings | 199,042 | — | ||||||
Other | 276,846 | 337,628 | ||||||
Total interest expense | 1,903,646 | 1,890,990 | ||||||
Net interest income | 3,379,765 | 3,255,292 | ||||||
Provision for loan losses | 107,032 | 78,005 | ||||||
Net interest income after provision for loan losses | 3,272,733 | 3,177,287 | ||||||
Non-interest income | ||||||||
Service charges on deposit accounts | 287,152 | 275,471 | ||||||
Trust and financial services | 188,664 | 169,638 | ||||||
Credit card fee income | 64,052 | 63,447 | ||||||
Debit card interchange | 70,821 | 53,982 | ||||||
Gain on sale of credit cards | 261,072 | — | ||||||
Other income | 83,725 | 83,563 | ||||||
Total non-interest income | 955,486 | 646,101 | ||||||
Non-interest expenses | ||||||||
Salaries and employee benefits | 1,536,903 | 1,407,180 | ||||||
Occupancy expense | 197,881 | 184,553 | ||||||
Equipment expense | 125,450 | 115,918 | ||||||
State franchise tax | 107,430 | 101,338 | ||||||
Professional and director fees | 139,556 | 141,382 | ||||||
Other expenses | 621,239 | 669,505 | ||||||
Total non-interest expenses | 2,728,459 | 2,619,876 | ||||||
Income before income taxes | 1,499,760 | 1,203,512 | ||||||
Federal income tax provision | 498,000 | 389,000 | ||||||
Net income | $ | 1,001,760 | $ | 814,512 | ||||
Basic and diluted earnings per share | $ | 0.41 | $ | 0.33 | ||||
F-3
Table of Contents
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Balance at beginning of period | $ | 36,278,048 | $ | 35,070,320 | ||||
Comprehensive income: | ||||||||
Net income | 1,001,760 | 814,512 | ||||||
Change in net unrealized gain, net of reclassification adjustments and related income tax benefit of $214,879 and $59,265, respectively | 417,119 | 115,045 | ||||||
Total comprehensive income | 1,418,879 | 929,557 | ||||||
Issuance of 40 shares from treasury | — | 641 | ||||||
Stock-based compensation expense | 3,500 | 11,250 | ||||||
Purchase of treasury shares | (113,453 | ) | (653,222 | ) | ||||
Cash dividends declared ($0.18 per share in 2008 and 2007) | (439,353 | ) | (443,320 | ) | ||||
Balance at end of period | $ | 37,147,621 | $ | 34,915,226 | ||||
F-4
Table of Contents
Three Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Net cash from operating activities | $ | 1,216,242 | $ | 896,368 | ||||
Cash flows from investing activities | ||||||||
Securities available-for-sale: | ||||||||
Proceeds from maturities, calls and repayments | 22,403,914 | 1,331,608 | ||||||
Purchases | (13,611,007 | ) | (167,061 | ) | ||||
Purchase of FHLB stock | (37,000 | ) | — | |||||
Proceeds from sale of other real estate | 105,000 | 10,000 | ||||||
Loan originations, net of repayments | 7,446,531 | (3,234,547 | ) | |||||
Proceeds from sale of credit cards | 2,513,671 | — | ||||||
Net change in loans held for sale | — | (241,000 | ) | |||||
Premises and equipment expenditures, net | (125,547 | ) | (171,964 | ) | ||||
Net cash provided by (used for) investing activities | 18,695,562 | (2,472,964 | ) | |||||
Cash flows from financing activities | ||||||||
Net change in deposits | (12,356,630 | ) | (6,646,411 | ) | ||||
Net change in short-term borrowings | (2,700,996 | ) | (3,334,306 | ) | ||||
Proceeds from other borrowings | 8,000,000 | 5,000,000 | ||||||
Repayment of other borrowings | (148,375 | ) | (174,111 | ) | ||||
Purchase of treasury shares | (113,453 | ) | (653,222 | ) | ||||
Issuance of treasury shares | — | 641 | ||||||
Cash dividends paid | — | — | ||||||
Net cash (used for) financing activities | (7,319,454 | ) | (5,807,409 | ) | ||||
Net change in cash and cash equivalents | 12,592,350 | (7,384,005 | ) | |||||
Cash and cash equivalents at beginning of period | 12,193,362 | 17,653,188 | ||||||
Cash and cash equivalents at end of period | $ | 24,785,712 | $ | 10,269,183 | ||||
Supplemental disclosures | ||||||||
Interest paid | $ | 1,918,857 | $ | 1,911,848 | ||||
Income taxes paid | — | 250,000 | ||||||
Non-cash investing activity-transfer of loans to OREO | — | 59,096 |
F-5
Table of Contents
F-6
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Gross | Gross | |||||||||||||||
Amortized | unrealized | Unrealized | Fair | |||||||||||||
Cost | gains | losses | Value | |||||||||||||
Available-for-sale: | ||||||||||||||||
U.S. Treasury security | $ | 99,953 | $ | 2,742 | $ | — | $ | 102,695 | ||||||||
Obligations of U.S. government corporations and agencies | 7,000,000 | 64,400 | — | 7,064,400 | ||||||||||||
Mortgage-backed securities | 50,862,757 | 360,711 | 88,362 | 51,135,106 | ||||||||||||
Obligations of states and political subdivisions | 4,609,484 | 90,250 | 24,992 | 4,674,742 | ||||||||||||
Total debt securities | 62,572,194 | 518,103 | 113,354 | 62,976,943 | ||||||||||||
Equity Securities | 401,752 | 779 | 135,802 | 266,729 | ||||||||||||
Total available-for-sale | 62,973,946 | 518,882 | 249,156 | 63,243,672 | ||||||||||||
Restricted stock | 3,142,900 | — | — | 3,142,900 | ||||||||||||
Total securities | $ | 66,116,846 | $ | 518,882 | $ | 249,156 | $ | 66,386,572 | ||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | gains | losses | Value | |||||||||||||
Available-for-sale: | ||||||||||||||||
U.S. Treasury security | $ | 99,944 | $ | 1,704 | $ | — | $ | 101,648 | ||||||||
Obligations of U.S. government corporations and agencies | 25,498,979 | 18,190 | 7,904 | 25,509,265 | ||||||||||||
Mortgage-backed securities | 42,682,972 | 15,639 | 333,666 | 42,364,945 | ||||||||||||
Obligations of states and political subdivisions | 3,098,457 | 60,088 | — | 3,158,545 | ||||||||||||
Total debt securities | 71,380,352 | 95,621 | 341,570 | 71,134,403 | ||||||||||||
Equity Securities | 401,752 | 665 | 116,990 | 285,427 | ||||||||||||
Total available-for-sale | 71,782,104 | 96,286 | 458,560 | 71,419,830 | ||||||||||||
Restricted stock | 3,105,900 | — | — | 3,105,900 | ||||||||||||
Total securities | $ | 74,888,004 | $ | 96,286 | $ | 458,560 | $ | 74,525,730 | ||||||||
F-7
Table of Contents
(Unaudited)
Level I: | Quoted prices are available in active markets for identical assets or liabilities as of the reported date. | |
Level II: | Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed. | |
Level III: | Assets and liabilities that have little to no pricing observability as of the reported date. These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. |
March 31, 2008 | ||||||||||||||||
Level I | Level II | Level III | Total | |||||||||||||
Assets: | ||||||||||||||||
Securities available for sale | $ | 266,729 | $ | 62,976,943 | $ | — | $ | 63,243,672 |
F-8
Table of Contents
/s/ Eddie L. Steiner | /s/ Paula J. Meiler | |||||
President and CEO | Senior Vice President and Chief Financial Officer |
March 5, 2008
except for Note 16, as to which
the date is July 15, 2008
F-9
Table of Contents
2007 | 2006 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | ||||||||
Cash and due from banks | $ | 12,111,807 | $ | 12,643,440 | ||||
Interest-earning deposits in other banks | 81,555 | 9,748 | ||||||
Federal funds sold | — | 5,000,000 | ||||||
Total cash and cash equivalents | 12,193,362 | 17,653,188 | ||||||
Securities | ||||||||
Available-for-sale, at fair value | 71,419,830 | 67,135,126 | ||||||
Restricted stock, at cost | 3,105,900 | 3,105,900 | ||||||
Total securities | 74,525,730 | 70,241,026 | ||||||
Loans | 256,659,059 | 232,431,938 | ||||||
Less allowance for loan losses | 2,585,901 | 2,607,118 | ||||||
Net loans | 254,073,158 | 229,824,820 | ||||||
Premises and equipment, net | 7,273,238 | 7,390,182 | ||||||
Accrued interest receivable and other assets | 2,204,257 | 2,130,631 | ||||||
TOTAL ASSETS | $ | 350,269,745 | $ | 327,239,847 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
LIABILITIES | ||||||||
Deposits: | ||||||||
Noninterest-bearing | $ | 46,038,976 | $ | 44,455,131 | ||||
Interest-bearing | 213,347,066 | 215,722,541 | ||||||
Total deposits | 259,386,042 | 260,177,672 | ||||||
Short-term borrowings | 27,305,157 | 28,022,077 | ||||||
Other borrowings | 26,023,888 | 2,499,399 | ||||||
Accrued interest payable and other liabilities | 1,276,610 | 1,470,379 | ||||||
Total liabilities | 313,991,697 | 292,169,527 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,667,786 shares | 16,673,667 | 16,673,667 | ||||||
Additional paid-in capital | 6,452,319 | 6,427,765 | ||||||
Retained earnings | 17,990,445 | 16,248,608 | ||||||
Treasury stock at cost – 220,162 shares in 2007 and 168,605 shares in 2006 | (4,599,282 | ) | (3,696,102 | ) | ||||
Accumulated other comprehensive loss | (239,101 | ) | (583,618 | ) | ||||
Total shareholders’ equity | 36,278,048 | 35,070,320 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 350,269,745 | $ | 327,239,847 | ||||
the accompanying summary of significant accounting policies
and notes to consolidated financial statements.
F-10
Table of Contents
2007 | 2006 | 2005 | ||||||||||
INTEREST AND DIVIDEND INCOME | ||||||||||||
Loans, including fees | $ | 18,025,190 | $ | 16,643,728 | $ | 14,343,888 | ||||||
Taxable securities | 2,927,840 | 3,006,055 | 2,243,081 | |||||||||
Nontaxable securities | 251,551 | 382,479 | 624,911 | |||||||||
Other | 26,540 | 12,490 | 145,395 | |||||||||
Total interest and dividend income | 21,231,121 | 20,044,752 | 17,357,275 | |||||||||
INTEREST EXPENSE | ||||||||||||
Deposits | 6,352,732 | 5,418,616 | 4,128,130 | |||||||||
Short-term borrowings | 1,185,377 | 1,265,850 | 331,540 | |||||||||
Other borrowings | 366,630 | 192,825 | 352,026 | |||||||||
Total interest expense | 7,904,739 | 6,877,291 | 4,811,696 | |||||||||
NET INTEREST INCOME | 13,326,382 | 13,167,461 | 12,545,579 | |||||||||
PROVISION FOR LOAN LOSSES | 472,100 | 301,667 | 282,664 | |||||||||
Net interest income, after provision for loan losses | 12,854,282 | 12,865,794 | 12,262,915 | |||||||||
NONINTEREST INCOME | ||||||||||||
Service charges on deposit accounts | 1,231,020 | 1,278,842 | 1,037,377 | |||||||||
Trust services | 730,715 | 540,299 | 484,468 | |||||||||
Debit card interchange fees | 276,467 | 210,615 | 160,509 | |||||||||
Credit card other fee income | 261,784 | 290,778 | 277,990 | |||||||||
Insurance recovery | 186,526 | — | — | |||||||||
Securities gain (loss) | 16,830 | (56,800 | ) | 247,047 | ||||||||
Gain on sale of loans, net | 18,348 | 12,078 | 23,502 | |||||||||
Gain (loss) on sale of other real estate owned, net | (994 | ) | (25,640 | ) | 10,000 | |||||||
Other | 313,929 | 341,754 | 339,596 | |||||||||
Total non-interest income | 3,034,625 | 2,591,926 | 2,580,489 | |||||||||
NONINTEREST EXPENSES | ||||||||||||
Salaries and employee benefits | 5,853,523 | 5,885,857 | 5,671,149 | |||||||||
Occupancy expense | 732,850 | 685,728 | 677,067 | |||||||||
Equipment expense | 504,356 | 498,517 | 524,112 | |||||||||
Professional and director fees | 579,923 | 658,843 | 677,252 | |||||||||
Franchise tax expense | 416,712 | 430,050 | 427,435 | |||||||||
Marketing and public relations | 372,902 | 333,753 | 302,331 | |||||||||
Cash irregularity | — | 236,547 | — | |||||||||
Telecommunications | 225,284 | 221,223 | 274,618 | |||||||||
Other expenses | 2,015,243 | 1,964,097 | 2,248,801 | |||||||||
Total non-interest expenses | 10,700,793 | 10,914,615 | 10,802,765 | |||||||||
Income before income taxes | 5,188,114 | 4,543,105 | 4,040,639 | |||||||||
FEDERAL INCOME TAX PROVISION | 1,674,200 | 1,433,000 | 1,168,000 | |||||||||
NET INCOME | $ | 3,513,914 | $ | 3,110,105 | $ | 2,872,639 | ||||||
NET INCOME PER SHARE | ||||||||||||
Basic | $ | 1.42 | $ | 1.23 | $ | 1.09 | ||||||
Diluted | $ | 1.42 | $ | 1.23 | $ | 1.09 | ||||||
the accompanying summary of significant accounting policies
and notes to consolidated financial statements.
F-11
Table of Contents
Accumulated | ||||||||||||||||||||||||
Additional | other | |||||||||||||||||||||||
Common | paid-in | Retained | Treasury | comprehensive | ||||||||||||||||||||
stock | capital | earnings | stock | income (loss) | Total | |||||||||||||||||||
BALANCE AT DECEMBER 31, 2004 | $ | 16,673,667 | $ | 6,413,915 | $ | 13,358,321 | $ | (627,119 | ) | $ | 388,723 | $ | 36,207,507 | |||||||||||
Comprehensive income: | ||||||||||||||||||||||||
Net income | — | — | 2,872,639 | — | — | 2,872,639 | ||||||||||||||||||
Change in net unrealized loss, net of reclassification adjustments and related income tax benefit | — | — | — | — | (971,610 | ) | (971,610 | ) | ||||||||||||||||
Total comprehensive income | 1,901,029 | |||||||||||||||||||||||
Issuance of 6 shares from treasury | — | — | (64 | ) | 185 | — | 121 | |||||||||||||||||
Purchase of 66,469 treasury shares | — | — | — | (1,459,752 | ) | — | (1,459,752 | ) | ||||||||||||||||
Cash dividends declared, $.56 per share | — | — | (1,478,646 | ) | — | — | (1,478,646 | ) | ||||||||||||||||
BALANCE AT DECEMBER 31, 2005 | 16,673,667 | 6,413,915 | 14,752,250 | (2,086,686 | ) | (582,887 | ) | 35,170,259 | ||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||
Net income | — | — | 3,110,105 | — | — | 3,110,105 | ||||||||||||||||||
Change in net unrealized loss, net of reclassification adjustments and related income tax benefit | — | — | — | — | (731 | ) | (731 | ) | ||||||||||||||||
Total comprehensive income | 3,109,374 | |||||||||||||||||||||||
Stock-based compensation expense | — | 13,850 | — | — | — | 13,850 | ||||||||||||||||||
Purchase of 79,318 treasury shares | — | — | — | (1,609,416 | ) | — | (1,609,416 | ) | ||||||||||||||||
Cash dividends declared, $.64 per share | — | — | (1,613,747 | ) | — | — | (1,613,747 | ) | ||||||||||||||||
BALANCE AT DECEMBER 31, 2006 | 16,673,667 | 6,427,765 | 16,248,608 | (3,696,102 | ) | (583,618 | ) | 35,070,320 | ||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||
Net income | — | — | 3,513,914 | — | — | 3,513,914 | ||||||||||||||||||
Change in net unrealized gain, net of reclassification adjustments and related income tax provision | — | — | — | — | 344,517 | 344,517 | ||||||||||||||||||
Total comprehensive income | 38,928,751 | |||||||||||||||||||||||
Stock-based compensation expense | — | 24,554 | — | — | — | 24,554 | ||||||||||||||||||
Issuance of 40 shares from treasury | — | — | (586 | ) | 1,230 | — | 644 | |||||||||||||||||
Purchase of 51,597 treasury shares | — | — | — | (904,410 | ) | — | (904,410 | ) | ||||||||||||||||
Cash dividends declared, $.72 per share | — | — | (1,771,491 | ) | — | — | (1,771,491 | ) | ||||||||||||||||
BALANCE AT DECEMBER 31, 2007 | $ | 16,673,667 | $ | 6,452,319 | $ | 17,990,445 | $ | (4,599,282 | ) | $ | (239,101 | ) | $ | 36,278,048 | ||||||||||
the accompanying summary of significant accounting policies
and notes to consolidated financial statements.
F-12
Table of Contents
Years Ended December 31, 2007, 2006 and 2005
2007 | 2006 | 2005 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net income | $ | 3,513,914 | $ | 3,110,105 | $ | 2,872,639 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization of premises, equipment and software | 685,832 | 692,461 | 758,310 | |||||||||
Deferred income taxes | (131,300 | ) | 198,675 | 408,837 | ||||||||
Provision for loan losses | 472,100 | 301,667 | 282,664 | |||||||||
Gain on sale of loans,net | (18,348 | ) | (12,078 | ) | (23,502 | ) | ||||||
Securities (gain) loss | (16,830 | ) | 56,800 | (247,047 | ) | |||||||
(Gain) loss on sale of other real estate owned,net | 994 | 25,640 | (10,000 | ) | ||||||||
Security amortization, net of accretion | 26,141 | 47,328 | 83,699 | |||||||||
Federal Home Loan Bank stock dividends | — | (158,900 | ) | (156,600 | ) | |||||||
Secondary market loan sale proceeds | 1,474,148 | 1,231,578 | 2,868,967 | |||||||||
Originations of secondary market loans held-for-sale | (1,455,800 | ) | (1,219,500 | ) | (2,845,465 | ) | ||||||
Stock compensation expense | 24,554 | 13,850 | — | |||||||||
Effects of changes in operating assets and liabilities: | ||||||||||||
Net deferred loan (fees) costs | 7,495 | 21,130 | (39,536 | ) | ||||||||
Accrued interest receivable | 4,717 | (82,270 | ) | (201,106 | ) | |||||||
Accrued interest payable | 24,910 | 106,691 | 41,649 | |||||||||
Other assets and liabilities | (317,533 | ) | 485,802 | 125,107 | ||||||||
Net cash provided by operating activities | $ | 4,294,994 | $ | 4,818,979 | $ | 3,918,616 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Securities available-for-sale: | ||||||||||||
Proceeds from maturities and repayments | $ | 15,634,028 | $ | 12,867,830 | $ | 15,056,944 | ||||||
Proceeds from sale | — | 3,943,200 | 5,094,640 | |||||||||
Purchases | (19,406,047 | ) | (5,778,145 | ) | (26,295,553 | ) | ||||||
Loan originations, net of repayments | (25,027,508 | ) | (17,606,716 | ) | (2,067,227 | ) | ||||||
Proceeds from sale of other real estate | 196,881 | 454,000 | 195,000 | |||||||||
Property, equipment and software acquisitions | (492,856 | ) | (283,749 | ) | (624,692 | ) | ||||||
Net cash used in investing activities | $ | (29,095,502 | ) | $ | (6,403,580 | ) | $ | (4,506,434 | ) | |||
F-13
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2007, 2006 and 2005
2007 | 2006 | 2005 | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Net change in deposits | $ | (791,630 | ) | $ | 4,774,955 | $ | 7,451,998 | |||||
Net change in short-term borrowings | (300,000 | ) | — | 5,000,000 | ||||||||
Net change in securities sold under repurchase agreements | (416,920 | ) | 6,604,461 | 3,101,143 | ||||||||
Federal Home Loan Bank borrowings: | ||||||||||||
Proceeds | 24,000,000 | — | — | |||||||||
Repayments | (475,511 | ) | (5,568,441 | ) | (10,667,396 | ) | ||||||
Purchase of treasury shares | (904,410 | ) | (1,609,416 | ) | (1,459,752 | ) | ||||||
Issuance of treasury shares | 644 | — | — | |||||||||
Cash dividends paid | (1,771,491 | ) | (1,613,747 | ) | (1,822,491 | ) | ||||||
Net cash provided by financing activities | $ | 19,340,682 | $ | 2,587,812 | $ | 1,593,502 | ||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (5,459,826 | ) | 1,003,212 | 1,005,684 | ||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 17,653,188 | 16,649,976 | 15,644,292 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF YEAR | $ | 12,193,362 | $ | 17,653,188 | $ | 16,649,976 | ||||||
SUPPLEMENTAL DISCLOSURES | ||||||||||||
Cash paid during the year for: | ||||||||||||
Interest | $ | 7,879,829 | $ | 6,770,600 | $ | 4,770,048 | ||||||
Income taxes | 2,065,000 | 965,000 | 665,000 | |||||||||
Noncash investing activities: | ||||||||||||
Transfer of loans to other real estate owned | $ | 299,575 | $ | 39,640 | $ | 625,000 | ||||||
the accompanying summary of significant accounting policies
and notes to consolidated financial statements.
F-14
Table of Contents
F-15
Table of Contents
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
F-16
Table of Contents
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
F-17
Table of Contents
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2005 | ||||
Net income as reported | $ | 2,872,639 | ||
Pro forma net income | 2,867,223 | |||
Basic earnings per share as reported | 1.09 | |||
Pro forma basic earnings per share | 1.09 | |||
Diluted earnings per share as reported | 1.09 | |||
Pro forma diluted earnings per share | 1.09 |
F-18
Table of Contents
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2007 | 2006 | 2005 | ||||||||||
Risk-free interest rate | n/a | 4.57 | % | n/a | ||||||||
Dividend yield | 3.56 | % | ||||||||||
Volatility | 9 | % | ||||||||||
Expected option life | 3.0 | yrs. |
F-19
Table of Contents
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2007 | 2006 | 2005 | ||||||||||
Weighted average common shares outstanding | 2,667,786 | 2,667,786 | 2,667,786 | |||||||||
Average treasury shares | (200,676 | ) | (140,872 | ) | (29,089 | ) | ||||||
Total weighted average common shares outstanding (basic) | 2,467,110 | 2,526,914 | 2,638,697 | |||||||||
Dilutive effect of assumed exercise of stock options | 702 | 5,678 | 3,604 | |||||||||
Weighted average common shares outstanding (diluted) | 2,467,812 | 2,532,592 | 2,642,301 | |||||||||
F-20
Table of Contents
Gross | Gross | |||||||||||||||
Amortized | unrealized | unrealized | Fair | |||||||||||||
cost | gains | losses | value | |||||||||||||
December 31, 2007 | ||||||||||||||||
Available-for-sale: | ||||||||||||||||
U.S. Treasury security | $ | 99,944 | $ | 1,704 | $ | — | $ | 101,648 | ||||||||
Obligations of U.S. Government corporations and agencies | 25,498,979 | 18,190 | 7,904 | 25,509,265 | ||||||||||||
Mortgage-backed securities | 42,682,972 | 15,639 | 333,666 | 42,364,945 | ||||||||||||
Obligations of states and political subdivisions | 3,098,457 | 60,088 | — | 3,158,545 | ||||||||||||
Total debt securities | 71,380,352 | 95,621 | 341,570 | 71,134,403 | ||||||||||||
Equity securities | 401,752 | 665 | 116,990 | 285,427 | ||||||||||||
Total available for-sale | 71,782,104 | 96,286 | 458,560 | 71,419,830 | ||||||||||||
Restricted stock | 3,105,900 | — | — | 3,105,900 | ||||||||||||
Total securities | $ | 74,888,004 | $ | 96,286 | $ | 458,560 | $ | 74,525,730 | ||||||||
December 31, 2006 | ||||||||||||||||
Available-for-sale: | ||||||||||||||||
U.S. Treasury security | $ | 99,992 | $ | — | $ | 172 | $ | 99,820 | ||||||||
Obligations of U.S. Government corporations and agencies | 33,493,189 | — | 576,494 | 32,916,695 | ||||||||||||
Mortgage-backed securities | 28,453,336 | 591 | 405,963 | 28,047,964 | ||||||||||||
Obligations of states and political subdivisions | 5,666,915 | 103,482 | 1,103 | 5,769,294 | ||||||||||||
Total debt securities | 67,713,432 | 104,073 | 983,732 | 66,833,773 | ||||||||||||
Equity securities | 305,965 | 8,194 | 12,806 | 301,353 | ||||||||||||
Total available for-sale | 68,019,397 | 112,267 | 996,538 | 67,135,126 | ||||||||||||
Restricted stock | 3,105,900 | — | — | 3,105,900 | ||||||||||||
Total securities | $ | 71,125,297 | $ | 112,267 | $ | 996,538 | $ | 70,241,026 | ||||||||
F-21
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Amortized | Fair | |||||||
cost | value | |||||||
Available-for-sale: | ||||||||
Due in one year or less | $ | 3,579,935 | $ | 3,604,660 | ||||
Due after one through five years | 25,739,772 | 25,775,551 | ||||||
Due after five years through ten years | 3,131,836 | 3,091,771 | ||||||
Due after ten years | 38,928,809 | 38,662,421 | ||||||
Total available-for-sale | $ | 71,380,352 | $ | 71,134,403 | ||||
F-22
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Securities in a Continuous Unrealized Loss Position | ||||||||||||||||||||||||
Less Than | 12 Months | |||||||||||||||||||||||
12 Months | or More | Total | ||||||||||||||||||||||
Gross | Gross | Gross | ||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||
Losses | Value | Losses | Value | Losses | Value | |||||||||||||||||||
2007 | ||||||||||||||||||||||||
Obligations of U.S. Government corporations and agencies | $ | — | $ | — | $ | 7,904 | $ | 14,491,455 | $ | 7,904 | $ | 14,491,455 | ||||||||||||
Mortgage-backed securities | 112,399 | 21,664,006 | 221,267 | 15,868,261 | 333,666 | 37,532,267 | ||||||||||||||||||
Total debt securities | 112,399 | 21,664,006 | 229,171 | 30,359,716 | 341,570 | 52,023,722 | ||||||||||||||||||
Equity securities | 54,790 | 171,875 | 62,200 | 109,183 | 116,990 | 281,058 | ||||||||||||||||||
Total temporarily impaired securities | $ | 167,189 | $ | 21,835,881 | $ | 291,371 | $ | 30,468,899 | $ | 458,560 | $ | 52,304,780 | ||||||||||||
2006 | �� | |||||||||||||||||||||||
Obligations of U.S. Government corporations and agencies | $ | 5,620 | $ | 1,994,380 | $ | 570,874 | $ | 30,922,315 | $ | 576,494 | $ | 32,916,695 | ||||||||||||
Mortgage-backed securities | 34,629 | 7,768,042 | 371,334 | 15,384,068 | 405,963 | 23,152,110 | ||||||||||||||||||
Obligations of states and political subdivisions | — | — | 1,103 | 250,313 | 1,103 | 250,313 | ||||||||||||||||||
U.S. Treasury Security | — | — | 172 | 99,820 | 172 | 99,820 | ||||||||||||||||||
Total debt securities | 40,249 | 9,762,422 | 943,483 | 46,656,516 | 983,732 | 56,418,938 | ||||||||||||||||||
Equity securities | 145 | 1,445 | 12,661 | 128,500 | 12,806 | 129,945 | ||||||||||||||||||
Total temporarily impaired securities | $ | 40,394 | $ | 9,763,867 | $ | 956,144 | $ | 46,785,016 | $ | 996,538 | $ | 56,548,883 | ||||||||||||
F-23
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | 2006 | |||||||
Commercial | $ | 46,000,089 | $ | 55,512,802 | ||||
Commercial real estate | 97,984,830 | 72,706,863 | ||||||
Residential real estate | 92,084,807 | 85,933,260 | ||||||
Installment and credit card | 8,862,456 | 10,509,913 | ||||||
Construction | 11,700,889 | 7,735,618 | ||||||
Deferred loan costs (fees), net | 25,988 | 33,482 | ||||||
Total Loans | $ | 256,659,059 | $ | 232,431,938 | ||||
2007 | 2006 | 2005 | ||||||||||
Beginning balance | $ | 2,607,118 | $ | 2,445,494 | $ | 2,574,945 | ||||||
Provision for loan losses | 472,100 | 301,667 | 282,664 | |||||||||
Loans charged-off | (612,723 | ) | (309,644 | ) | (575,556 | ) | ||||||
Recoveries | 119,406 | 169,601 | 163,441 | |||||||||
Ending balance | $ | 2,585,901 | $ | 2,607,118 | $ | 2,445,494 | ||||||
2007 | 2006 | |||||||
Year-end loans with no allowance for loan losses allocated | $ | — | $ | — | ||||
Year-end loans with allowance for loan losses allocated | 198,286 | 987,897 | ||||||
Amount of the allowance allocated | 42,773 | 326,705 |
2007 | 2006 | 2005 | ||||||||||
Average of impaired loans during the year | $ | 729,699 | $ | 700,202 | $ | 576,907 | ||||||
Interest income recognized during impairment | 25,876 | 25,717 | 2,764 | |||||||||
Cash-basis interest income recognized | 25,674 | 24,762 | 472 | |||||||||
Accrued interest not recognized | 35,166 | 33,188 | 36,404 |
2007 | 2006 | |||||||
Loans past due over 90 days still accruing interest | $ | 144,339 | $ | — | ||||
Nonaccrual loans | 426,706 | 1,508,577 |
F-24
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | 2006 | |||||||
Land and improvements | $ | 1,007,927 | $ | 1,007,927 | ||||
Buildings and improvements | 8,499,044 | 8,616,211 | ||||||
Furniture and equipment | 4,753,393 | 5,453,248 | �� | |||||
Leasehold improvements | 172,483 | 79,979 | ||||||
14,432,847 | 15,157,365 | |||||||
Accumulated depreciation | 7,159,609 | 7,767,183 | ||||||
Premises and equipment, net | $ | 7,273,238 | $ | 7,390,182 | ||||
2007 | 2006 | |||||||
Demand | $ | 48,922,949 | $ | 50,602,872 | ||||
Savings | 41,027,057 | 39,370,654 | ||||||
Time deposits: | ||||||||
In excess of $100,000 | 34,282,194 | 32,304,548 | ||||||
Other | 89,114,866 | 93,444,467 | ||||||
Total interest-bearing deposits | $ | 213,347,066 | $ | 215,722,541 | ||||
2008 | $ | 104,037,947 | ||
2009 | 5,368,426 | |||
2010 | 7,731,092 | |||
2011 | 1,816,232 | |||
2012 | 4,410,151 | |||
2013 and beyond | 33,212 | |||
Total | $ | 123,397,060 | ||
F-25
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | 2006 | |||||||
Balance at year-end | $ | 27,305,157 | $ | 28,022,077 | ||||
Average balance outstanding | 29,950,025 | 32,974,064 | ||||||
Maximum month-end balance | 34,371,093 | 41,468,292 | ||||||
Weighted-average rate at year-end | 3.49 | % | 3.71 | % | ||||
Weighted-average rate during the year | 3.96 | 3.84 |
Weighted- | ||||||||||||||||||||||||||||
average | Stated interest rate | |||||||||||||||||||||||||||
Maturity range | interest | range | At December 31, | |||||||||||||||||||||||||
Description | from | To | rate | from | to | 2007 | 2006 | |||||||||||||||||||||
Fixed rate | 11/23/09 | 12/21/17 | 3.97 | % | 3.48 | % | 4.60 | % | $ | 24,000,000 | $ | — | ||||||||||||||||
Fixed rate amortizing | 1/01/08 | 3/01/17 | 6.45 | % | 5.60 | % | 7.15 | % | 2,023,888 | 2,499,399 | ||||||||||||||||||
$ | 26,023,888 | $ | 2,499,399 | |||||||||||||||||||||||||
Year Ending | Weighted- | |||||||
December 31, | Amount | Average Rate | ||||||
2008 | $ | 417,127 | 6.42 | % | ||||
2009 | 6,369,517 | 4.20 | ||||||
2010 | 6,322,234 | 4.65 | ||||||
2011 | 247,456 | 6.47 | ||||||
2012 | 187,551 | 6.47 | ||||||
2013 and beyond | 12,480,003 | 3.73 | ||||||
$ | 26,023,888 | 4.06 | % | |||||
F-26
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | 2006 | 2005 | ||||||||||
Current | $ | 1787,250 | $ | 1,234,325 | $ | 759,163 | ||||||
Deferred | (113,050 | ) | 198,675 | 408,837 | ||||||||
Total income tax provision | $ | 1,674,200 | $ | 1,433,000 | $ | 1,168,000 | ||||||
2007 | 2006 | 2005 | ||||||||||
Expected provision using statutory federal income tax rate | $ | 1,763,900 | $ | 1,544,700 | $ | 1,373,800 | ||||||
Tax-exempt income on state and municipal securities and political subdivision loans | (94,760 | ) | (138,600 | ) | (218,400 | ) | ||||||
Interest expense associated with carrying certain state and municipal securities and political subdivision loans | 9,400 | 11,800 | 14,300 | |||||||||
Other | (4,340 | ) | 15,100 | (1,700 | ) | |||||||
Total income tax provision | $ | 1,674,200 | $ | 1,433,000 | $ | 1,168,000 | ||||||
2007 | 2006 | |||||||
Allowance for loan losses | $ | 722,900 | $ | 626,600 | ||||
Unrealized loss on securities available-for-sale | 123,200 | 300,650 | ||||||
Other | 15,900 | 26,950 | ||||||
Deferred tax assets | 862,000 | 954,200 | ||||||
Depreciation of premises and equipment | (309,300 | ) | (334,200 | ) | ||||
Federal Home Loan Bank stock dividends | (459,600 | ) | (459,600 | ) | ||||
Deferred loan fees | (80,500 | ) | (81,700 | ) | ||||
Other | (66,500 | ) | (68,200 | ) | ||||
Deferred tax liabilities | (915,900 | ) | (943,700 | ) | ||||
Net deferred tax (liability) asset | $ | (53,900 | ) | $ | 10,500 | |||
F-27
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-28
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | 2006 | 2005 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
Outstanding at beginning of year | 51,245 | $ | 17.63 | 21,970 | $ | 17.09 | 42,820 | $ | 16.09 | |||||||||||||||
Granted | 29,760 | 18.00 | — | — | ||||||||||||||||||||
Exercised | (40 | ) | (16.05 | ) | — | — | — | — | ||||||||||||||||
Forfeited | (365 | ) | (16.05 | ) | (485 | ) | (16.05 | ) | (20,850 | ) | (15.04 | ) | ||||||||||||
Outstanding at end of year | 50,840 | $ | 17.64 | 51,245 | $ | 17.63 | 21,970 | $ | 17.09 | |||||||||||||||
Options exercisable at year-end | 32,984 | $ | 17.45 | 19,788 | $ | 17.20 | 18,361 | $ | 17.29 | |||||||||||||||
Weighted-average fair value of options granted during year | N/A | $ | 1.26 | N/A | ||||||||||||||||||||
Outstanding | ||||||||||||||||
Weighted | Exercisable | |||||||||||||||
Average | Weighted | |||||||||||||||
Range of | Remaining | Average | ||||||||||||||
Exercisable | Contractual Life | Exercise | ||||||||||||||
Prices | Number | (Years) | Number | Price | ||||||||||||
$16.05 | 8,080 | 4.93 | 8,080 | $ | 16.05 | |||||||||||
17.50 | 2,000 | .58 | 2,000 | 17.50 | ||||||||||||
17.75 | 10,000 | .38 | 10,000 | 17.75 | ||||||||||||
18.00 | 29,760 | 8.14 | 11,904 | 18.00 | ||||||||||||
19.00 | 1,000 | 1.59 | 1,000 | 19.00 | ||||||||||||
Outstanding at year-end | 50,840 | 5.68 | 32,984 | $ | 17.45 | |||||||||||
F-29
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Contract amount | ||||||||
2007 | 2006 | |||||||
Commitments to extend credit | $ | 63,849,000 | $ | 69,989,000 | ||||
Letters of credit | $ | 1,310,000 | $ | 882,000 | ||||
F-30
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | ||||
Balance at beginning of year | $ | 5,147,458 | ||
New loans and advances | 1,631,913 | |||
Repayments, including loans sold | (824,480 | ) | ||
Balance at end of year | $ | 5,954,891 | ||
F-31
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Minimum | Minimum required | |||||||||||||||||||||||
required | to be well | |||||||||||||||||||||||
for capital | capitalized under | |||||||||||||||||||||||
adequacy | prompt corrective | |||||||||||||||||||||||
Actual | purposes | action regulations | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
As of December 31, 2007 | ||||||||||||||||||||||||
Total capital (to risk- weighted assets) | ||||||||||||||||||||||||
Consolidated | $ | 39,101 | 16.4 | % | $ | 19,069 | 8.0 | % | $ | 23,836 | 10.0 | % | ||||||||||||
Bank | 36,736 | 15.4 | 19,041 | 8.0 | 23,801 | 10.0 | ||||||||||||||||||
Tier I capital (to risk- weighted assets) | ||||||||||||||||||||||||
Consolidated | 36,515 | 15.3 | 9,534 | 4.0 | 14,301 | 6.0 | ||||||||||||||||||
Bank | 34,150 | 14.4 | 9,520 | 4.0 | 14,280 | 6.0 | ||||||||||||||||||
Tier I capital (to average assets) | ||||||||||||||||||||||||
Consolidated | 36,515 | 11.0 | 13,290 | 4.0 | 16,612 | 5.0 | ||||||||||||||||||
Bank | 34,150 | 10.3 | 13,271 | 4.0 | 16,589 | 5.0 | ||||||||||||||||||
As of December 31, 2006 | ||||||||||||||||||||||||
Total capital (to risk- weighted assets) | ||||||||||||||||||||||||
Consolidated | $ | 38,259 | 17.7 | % | $ | 17,337 | 8.0 | % | $ | 21,671 | 10.0 | % | ||||||||||||
Bank | 35,460 | 16.4 | 17,298 | 8.0 | 21,623 | 10.0 | ||||||||||||||||||
Tier I capital (to risk- weighted assets) | ||||||||||||||||||||||||
Consolidated | 35,652 | 16.5 | 8,668 | 4.0 | 13,002 | 6.0 | ||||||||||||||||||
Bank | 32,853 | 15.2 | 8,649 | 4.0 | 12,974 | 6.0 | ||||||||||||||||||
Tier I capital (to average assets) | ||||||||||||||||||||||||
Consolidated | 35,652 | 11.1 | 12,816 | 4.0 | 16,020 | 5.0 | ||||||||||||||||||
Bank | 32,853 | 10.3 | 12,781 | 4.0 | 15,976 | 5.0 |
F-32
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS | 2007 | 2006 | ||||||
ASSETS | ||||||||
Cash deposited with subsidiary bank | $ | 1,748,248 | $ | 1,793,833 | ||||
Investment in subsidiary bank | 33,990,029 | 32,271,581 | ||||||
Securities available-for-sale | 285,427 | 805,281 | ||||||
Other assets | 261,769 | 199,625 | ||||||
Total assets | $ | 36,285,473 | $ | 35,070,320 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Other liabilities | $ | 7,425 | $ | — | ||||
Total shareholders’ equity | 36,278,048 | 35,070,320 | ||||||
Total liabilities and shareholders’ equity | $ | 36,285,473 | $ | 35,070,320 | ||||
CONDENSED STATEMENTS | ||||||||||||
OF INCOME | 2007 | 2006 | 2005 | |||||||||
Interest on securities | $ | 16,672 | $ | 27,230 | $ | 25,273 | ||||||
Dividends from subsidiary | 2,500,000 | 3,600,000 | 3,910,886 | |||||||||
Total income | 2,516,672 | 3,627,230 | 3,936,159 | |||||||||
Operating expenses | 450,030 | 377,769 | 377,211 | |||||||||
Income before taxes and undistributed equity income of subsidiary | 2,066,642 | 3,249,461 | 3,558,948 | |||||||||
Income tax benefit | (150,000 | ) | (125,000 | ) | (128,000 | ) | ||||||
Equity earnings in subsidiary, net of dividends | 1,297,272 | (264,356 | ) | (814,309 | ) | |||||||
Net income | $ | 3,513,914 | $ | 3,110,105 | $ | 2,872,639 | ||||||
F-33
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED STATEMENTS OF CASH FLOWS | 2007 | 2006 | 2005 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 3,513,914 | $ | 3,110,105 | $ | 2,872,639 | ||||||
Adjustments to reconcile net income to cash provided by operations: | ||||||||||||
Security accretion | (508 | ) | (187 | ) | (187 | ) | ||||||
Securities gain | (5,430 | ) | — | — | ||||||||
Software amortization | 6,667 | 6,667 | 5,000 | |||||||||
Equity earnings in subsidiary, net of dividends | (1,297,272 | ) | 264,356 | 814,309 | ||||||||
Stock compensation expense | 24,554 | 13,850 | — | |||||||||
Change in other assets, liabilities | (21,451 | ) | 3,000 | (73,879 | ) | |||||||
Net cash provided by operating activities | 2,220,474 | 3,397,791 | 3,617,882 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchase of investment securities | (95,787 | ) | (1,590 | ) | (304,376 | ) | ||||||
Maturities, calls of investment securities | 504,985 | — | — | |||||||||
Purchase of software | — | — | (20,000 | ) | ||||||||
Net cash provided by (used in) investing activities | 409,198 | (1,590 | ) | (324,376 | ) | |||||||
Cash flows from financing activities: | ||||||||||||
Purchase of treasury shares | (904,410 | ) | (1,609,416 | ) | (1,459,752 | ) | ||||||
Issuance of treasury shares | 644 | — | — | |||||||||
Cash dividends paid | (1,771,491 | ) | (1,613,747 | ) | (1,822,491 | ) | ||||||
Net cash used in financing activities | (2,675,257 | ) | (3,223,163 | ) | (3,282,243 | ) | ||||||
Net change in cash | (45,585 | ) | 173,038 | 11,263 | ||||||||
Cash at beginning of year | 1,793,833 | 1,620,795 | 1,609,532 | |||||||||
Cash at end of year | $ | 1,748,248 | $ | 1,793,833 | $ | 1,620,795 | ||||||
2007 | 2006 | 2005 | ||||||||||
Unrealized holding (losses) gain on available-for-sale securities | $ | 538,825 | $ | (57,908 | ) | $ | (1,225,090 | ) | ||||
Less reclassification adjustment for securities Losses (gains) recognized in income | (16,830 | ) | 56,800 | (247,047 | ) | |||||||
Net unrealized holding gains (losses) | 521,995 | (1,108 | ) | (1,472,137 | ) | |||||||
Federal income tax provision (benefit) | 177,478 | (377 | ) | (500,527 | ) | |||||||
Other comprehensive income (loss) | $ | 344,517 | $ | (731 | ) | $ | (971,610 | ) | ||||
F-34
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | 2006 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
amounts | value | amounts | value | |||||||||||||
Financial assets: | ||||||||||||||||
Cash and cash equivalents | $ | 12,193 | $ | 12,193 | $ | 17,653 | $ | 17,653 | ||||||||
Securities | 74,526 | 74,526 | 70,241 | 70,241 | ||||||||||||
Loans, net | 254,073 | 254,623 | 229,825 | 226,830 | ||||||||||||
Accrued Interest Receivable | 1,409 | 1,409 | 1,414 | 1,414 | ||||||||||||
Financial liabilities: | ||||||||||||||||
Deposits | $ | 259,386 | $ | 259,612 | $ | 260,178 | $ | 259,403 | ||||||||
Short-term borrowings | 27,305 | 27,305 | 28,022 | 28,022 | ||||||||||||
Other borrowings | 26,024 | 25,915 | 2,499 | 2,515 | ||||||||||||
Accrued Interest Payable | 375 | 375 | 350 | 350 |
F-35
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basic | Diluted | |||||||||||||||||||
Net | earnings | earnings | ||||||||||||||||||
Interest | interest | Net | per | per | ||||||||||||||||
income | income | income | share | share | ||||||||||||||||
2007 | ||||||||||||||||||||
First quarter | $ | 5,146,282 | $ | 3,255,292 | $ | 814,512 | $ | .33 | $ | .33 | ||||||||||
Second quarter | 5,288,509 | 3,275,353 | 956,467 | .39 | .39 | |||||||||||||||
Third quarter | 5,418,095 | 3,389,682 | 863,090 | .35 | .35 | |||||||||||||||
Fourth quarter | 5,378,235 | 3,406,055 | 879,845 | .35 | .35 | |||||||||||||||
2006 | ||||||||||||||||||||
First quarter | $ | 4,708,719 | $ | 3,294,273 | $ | 773,906 | $ | .30 | $ | .30 | ||||||||||
Second quarter | 5,006,077 | 3,272,933 | 676,653 | .27 | .27 | |||||||||||||||
Third quarter | 5,156,066 | 3,294,090 | 813,564 | .32 | .32 | |||||||||||||||
Fourth quarter | 5,173,890 | 3,306,165 | 845,982 | .34 | .34 |
F-36
Table of Contents
F-37
Table of Contents
Page | ||||
Financial Statements at and as of March 31, 2008 (Unaudited): | ||||
F-39 | ||||
F-40 | ||||
F-41 | ||||
F-42 | ||||
F-43 | ||||
Financial Statements at and as of June 30, 2007 and 2006 (Audited): | ||||
F-46 | ||||
F-47 | ||||
F-48 | ||||
F-50 | ||||
F-51 | ||||
F-52 |
F-38
Table of Contents
March 31, | June 30, | |||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 12,470 | $ | 2,256 | ||||
Federal funds sold | — | — | ||||||
Total cash and cash equivalents | 12,470 | 2,256 | ||||||
Securities available-for-sale, at fair value | 12,886 | 18,223 | ||||||
Restricted stock, at cost | 1,972 | 1,933 | ||||||
Total securities | 14,858 | 20,156 | ||||||
Loans | 64,713 | 72,033 | ||||||
Less allowance for loan losses | 882 | 881 | ||||||
Net loans | 63,831 | 71,152 | ||||||
Bank owned life insurance | 2,673 | 2,595 | ||||||
Premises and equipment, net | 1,712 | 1,761 | ||||||
Accrued interest receivable and other assets | 1,577 | 1,792 | ||||||
Total Assets | $ | 97,121 | $ | 99,712 | ||||
LIABILITIES | ||||||||
Deposits | ||||||||
Noninterest-bearing | $ | 1,606 | $ | 1,609 | ||||
Interest-bearing | 64,428 | 66,341 | ||||||
Total deposits | 66,034 | 67,950 | ||||||
Other borrowings | 22,560 | 23,423 | ||||||
Accrued interest payable and other liabilities | 401 | 500 | ||||||
Total liabilities | 88,995 | 91,873 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock, $0.01 par value; 5,000,000 authorized shares; issued 485,237 shares | 5 | 5 | ||||||
Additional paid-in capital | 4,168 | 4,151 | ||||||
Retained earnings | 4,835 | 5,080 | ||||||
Unearned ESOP | (168 | ) | (189 | ) | ||||
Treasury stock at cost: 46,361 shares in 2008 and 47,805 shares in 2007 | (687 | ) | (701 | ) | ||||
Accumulated other comprehensive loss | (27 | ) | (507 | ) | ||||
Total shareholders’ equity | 8,126 | 7,839 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 97,121 | $ | 99,712 | ||||
F-39
Table of Contents
Three Months Ended | Nine Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Interest income | ||||||||||||||||
Loans, including fees | $ | 1,116 | $ | 1,295 | $ | 3,459 | $ | 3,928 | ||||||||
Securities | 208 | 271 | 665 | 901 | ||||||||||||
Other | 61 | 6 | 89 | 16 | ||||||||||||
Total interest income | 1,385 | 1,572 | 4,213 | 4,845 | ||||||||||||
Interest expense | ||||||||||||||||
Deposits | 606 | 702 | 1,872 | 2,257 | ||||||||||||
Short-term borrowings | 309 | 321 | 943 | 995 | ||||||||||||
Total interest expense | 915 | 1,023 | 2,815 | 3,252 | ||||||||||||
Net interest income | 470 | 549 | 1,398 | 1,593 | ||||||||||||
Provision for loan losses | 98 | 22 | 320 | 396 | ||||||||||||
Net interest income after provision for loan losses | 372 | 527 | 1,078 | 1,197 | ||||||||||||
Non-interest income | ||||||||||||||||
Service charges on deposit accounts | 51 | 40 | 170 | 142 | ||||||||||||
Gain or loss on securities | (9 | ) | (10 | ) | (55 | ) | (41 | ) | ||||||||
Gain on sale of loans | 9 | — | 36 | 20 | ||||||||||||
Other income | 38 | 14 | 96 | 81 | ||||||||||||
Total non-interest income | 89 | 44 | 247 | 202 | ||||||||||||
Non-interest expenses | ||||||||||||||||
Salaries and employee benefits | 235 | 276 | 696 | 806 | ||||||||||||
Occupancy and equipment expense | 60 | 91 | 188 | 229 | ||||||||||||
State franchise tax | 23 | 23 | 71 | 84 | ||||||||||||
Professional and director fees | 69 | 38 | 199 | 196 | ||||||||||||
Other expenses | 201 | 182 | 509 | 470 | ||||||||||||
Total non-interest expenses | 588 | 610 | 1,663 | 1,785 | ||||||||||||
Income before income taxes | (127 | ) | (39 | ) | (338 | ) | (386 | ) | ||||||||
Federal income tax provision (benefit) | (93 | ) | (32 | ) | (93 | ) | (190 | ) | ||||||||
Net income (loss) | $ | (34 | ) | $ | (7 | ) | $ | (245 | ) | $ | (196 | ) | ||||
Basic and diluted earnings per share | $ | (0.08 | ) | $ | (0.02 | ) | $ | (0.59 | ) | $ | (0.47 | ) | ||||
F-40
Table of Contents
Three Months Ended | Nine Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Balance at beginning of period | $ | 7,921 | $ | 8,147 | $ | 7,839 | $ | 7,903 | ||||||||
Comprehensive income: | ||||||||||||||||
Net income (loss) | (34 | ) | (7 | ) | (245 | ) | (196 | ) | ||||||||
Change in net unrealized gain, net of reclassification adjustments and related income tax provision | 218 | 37 | 480 | 472 | ||||||||||||
Total comprehensive income | 184 | 30 | 235 | 276 | ||||||||||||
Cash dividends paid | — | — | — | (17 | ) | |||||||||||
Stock options exercised | 11 | — | 18 | — | ||||||||||||
Release of Esop shares | 10 | 27 | 34 | 42 | ||||||||||||
Balance at end of period | $ | 8,126 | $ | 8,204 | $ | 8,126 | $ | 8,204 | ||||||||
F-41
Table of Contents
Nine Months Ended | ||||||||
March 31, | ||||||||
2008 | 2007 | |||||||
Net cash from operating activities | $ | 233 | $ | (269 | ) | |||
Cash flows from investing activities | ||||||||
Securities available-for-sale: | ||||||||
Proceeds from maturities, calls and repayments | 2,479 | 1,709 | ||||||
Sales | 4,690 | 6,483 | ||||||
Purchases | (1,070 | ) | — | |||||
Proceeds from sale of other real estate | 94 | 30 | ||||||
Loan originations, net of repayments | 6,561 | 3,074 | ||||||
Premises and equipment expenditures, net | (12 | ) | (14 | ) | ||||
Net cash provided by investing activities | 12,742 | 11,282 | ||||||
Cash flows from financing activities | ||||||||
Net change in deposits | (1,916 | ) | (7,516 | ) | ||||
Net change in short-term borrowings | — | (1,550 | ) | |||||
Repayment of borrowings | (863 | ) | (974 | ) | ||||
Cash dividends paid | — | (17 | ) | |||||
Issuance of treasury shares | 18 | — | ||||||
Net cash provided (used for) financing activities | (2,761 | ) | (10,057 | ) | ||||
Net change in cash and cash equivalents | 10,214 | 956 | ||||||
Cash and cash equivalents at beginning of period | 2,256 | 2,427 | ||||||
Cash and cash equivalents at end of period | $ | 12,470 | $ | 3,383 | ||||
Supplemental disclosures | ||||||||
Interest paid | $ | 2,939 | $ | 3,198 | ||||
Income taxes paid | — | — | ||||||
Non-cash investing activity-transfer of loans to OREO | 100 | 334 |
F-42
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
F-43
Table of Contents
F-44
Table of Contents
F-45
Table of Contents
Indian Village Bancorp, Inc.
Gnadenhutten, Ohio
/s/ Crowe Chizek and Company LLC | ||||
Crowe Chizek and Company LLC | ||||
F-46
Table of Contents
2007 | 2006 | |||||||
ASSETS | ||||||||
Cash and due from banks | $ | 1,057 | $ | 1,711 | ||||
Interest-bearing and overnight deposits in other banks | 1,199 | 716 | ||||||
Cash and cash equivalents | 2,256 | 2,427 | ||||||
Securities available for sale, at fair value | 18,223 | 26,414 | ||||||
Loans held for sale | 340 | — | ||||||
Loans, net of allowance for loan losses | 70,812 | 77,250 | ||||||
Federal Home Loan Bank stock | 1,933 | 1,877 | ||||||
Loan servicing rights | 66 | 64 | ||||||
Real estate owned | 337 | 150 | ||||||
Premises and equipment, net | 1,761 | 1,839 | ||||||
Bank-owned life insurance | 2,595 | 2,498 | ||||||
Accrued interest receivable | 489 | 540 | ||||||
Other assets | 900 | 728 | ||||||
$ | 99,712 | $ | 113,787 | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Deposits | ||||||||
Non-interest bearing | $ | 1,609 | $ | 1,828 | ||||
Interest bearing | 66,341 | 77,537 | ||||||
Total deposits | 67,950 | 79,365 | ||||||
Federal Home Loan Bank advances | 23,423 | 26,141 | ||||||
Accrued interest payable | 362 | 288 | ||||||
Other liabilities | 138 | 90 | ||||||
Total liabilities | 91,873 | 105,884 | ||||||
Shareholders’ equity | ||||||||
Common stock, $.01 par value; 5,000,000 shares authorized; 485,237 shares issued | 5 | 5 | ||||||
Additional paid-in capital | 4,151 | 4,126 | ||||||
Retained earnings | 5,080 | 5,474 | ||||||
Accumulated other comprehensive income (loss) | (507 | ) | (781 | ) | ||||
Unearned employee stock ownership plan shares | (189 | ) | (220 | ) | ||||
Treasury stock, at cost 47,805 and 47,800 shares at June 30, 2007 and 2006 | (701 | ) | (701 | ) | ||||
Total shareholders’ equity | 7,839 | 7,903 | ||||||
$ | 99,712 | $ | 113,787 | |||||
F-47
Table of Contents
2007 | 2006 | |||||||
Interest and dividend income | ||||||||
Loans, including fees | ||||||||
Taxable | $ | 5,142 | $ | 4,567 | ||||
Tax-exempt | 13 | 19 | ||||||
Securities | ||||||||
Taxable | 990 | 911 | ||||||
Tax-exempt | 149 | 194 | ||||||
Interest-bearing deposits and Federal funds sold | 35 | 17 | ||||||
6,329 | 5,708 | |||||||
Interest expense | ||||||||
Deposits | 2,932 | 2,190 | ||||||
Federal Home Loan Bank advances | 1,312 | 1,396 | ||||||
4,244 | 3,586 | |||||||
Net interest income | 2,085 | 2,122 | ||||||
Provision for loan losses | 698 | 271 | ||||||
Net interest income after provision for loan losses | 1,387 | 1,851 | ||||||
Noninterest income | ||||||||
Service charges and other fees | 202 | 179 | ||||||
Net gains on sales of loans | 26 | 59 | ||||||
Loan servicing fees | 24 | 34 | ||||||
Net gains (losses) on sales of securities | (40 | ) | (3 | ) | ||||
Net gains (losses) on sales / write-downs of real estate owned | (77 | ) | (7 | ) | ||||
Increase in cash surrender value of life insurance | 97 | 85 | ||||||
Other income | 10 | 24 | ||||||
242 | 371 | |||||||
Noninterest expense | ||||||||
Salaries and employee benefits | 1,038 | 1,029 | ||||||
Occupancy and equipment | 306 | 317 | ||||||
Professional and consulting fees | 171 | 110 | ||||||
Franchise taxes | 105 | 82 | ||||||
Data processing | 193 | 184 | ||||||
Directors and committee fees | 71 | 82 | ||||||
Other expense | 433 | 417 | ||||||
2,317 | 2,221 | |||||||
Income (loss) before income taxes | (688 | ) | 1 | |||||
Income tax expense (benefit) | (311 | ) | (83 | ) | ||||
Net income (loss) | $ | (377 | ) | $ | 84 | |||
Basic earnings (loss) per common share | $ | (0.91 | ) | $ | 0.20 | |||
Diluted earnings (loss) per common share | $ | (0.91 | ) | $ | 0.20 | |||
F-48
Table of Contents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
2007 | 2006 | |||||||
Net income (loss) | $ | (377 | ) | $ | 84 | |||
Other comprehensive income: | ||||||||
Unrealized gains and (losses) on securities available for sale arising during the period, net of tax of $(127) and $269 | 248 | (524 | ) | |||||
Reclassification adjustment for (gains) and losses included in net income, net of tax benefit of $14 and $1 | 26 | 2 | ||||||
274 | (522 | ) | ||||||
Comprehensive income (loss) | $ | (103 | ) | $ | (438 | ) | ||
F-49
Table of Contents
Accumulated | ||||||||||||||||||||||||||||
Additional | Other | Unearned | Total | |||||||||||||||||||||||||
Common | Paid-In | Retained | Comprehensive | ESOP | Treasury | Shareholders’ | ||||||||||||||||||||||
Stock | Capital | Earnings | Income (Loss) | Shares | Stock | Equity | ||||||||||||||||||||||
Balance at July 1, 2005 | $ | 5 | $ | 4,093 | $ | 5,502 | $ | (259 | ) | $ | (251 | ) | $ | (726 | ) | $ | 8,364 | |||||||||||
Net income | — | — | 84 | — | — | — | 84 | |||||||||||||||||||||
Change in net unrealized gain (loss) on securities available for sale, net | — | — | — | (522 | ) | — | — | (522 | ) | |||||||||||||||||||
Purchase of treasury stock, 50 shares | — | — | — | — | — | (1 | ) | (1 | ) | |||||||||||||||||||
Stock options exercised, 940 shares | — | — | (13 | ) | — | — | 26 | 13 | ||||||||||||||||||||
Stock options expense | — | 9 | — | — | — | — | 9 | |||||||||||||||||||||
Cash dividends — $0.24 per share | — | — | (99 | ) | — | — | — | (99 | ) | |||||||||||||||||||
Release of 3,201 ESOP shares | — | 24 | — | — | 31 | — | 55 | |||||||||||||||||||||
Balance at June 30, 2006 | 5 | 4,126 | 5,474 | (781 | ) | (220 | ) | (701 | ) | 7,903 | ||||||||||||||||||
Net loss | — | — | (377 | ) | — | — | — | (377 | ) | |||||||||||||||||||
Change in net unrealized gain (loss) on securities available for sale, net | — | — | — | 274 | — | — | 274 | |||||||||||||||||||||
Cash dividends — $0.04 per share | — | — | (17 | ) | — | — | — | (17 | ) | |||||||||||||||||||
Release of 3,101 ESOP shares | — | 25 | — | — | 31 | — | 56 | |||||||||||||||||||||
Balance at June 30, 2007 | $ | 5 | $ | 4,151 | $ | 5,080 | $ | (507 | ) | $ | (189 | ) | $ | (701 | ) | $ | 7,839 | |||||||||||
F-50
Table of Contents
2007 | 2006 | |||||||
Cash flows from operating activities | ||||||||
Net income (loss) | $ | (377 | ) | $ | 84 | |||
Adjustments to reconcile net income to net cash from operating activities | ||||||||
Provision for loan losses | 698 | 271 | ||||||
Depreciation | 92 | 85 | ||||||
Net amortization of securities | (12 | ) | (30 | ) | ||||
Federal Home Loan Bank stock dividends | (56 | ) | (100 | ) | ||||
Increase in cash surrender value of life insurance | (97 | ) | (85 | ) | ||||
Net realized (gain) loss on sales of securities | 40 | 3 | ||||||
Loss on sales / write-downs of real estate owned | 77 | — | ||||||
Loss on sale of fixed assets | — | 6 | ||||||
Stock options expense | — | 9 | ||||||
Compensation expense on ESOP shares | 56 | 55 | ||||||
Net change in: | ||||||||
Loans held for sale | (340 | ) | 212 | |||||
Accrued interest receivable and other assets | (265 | ) | (264 | ) | ||||
Accrued expenses and other liabilities | 122 | 206 | ||||||
Net cash from operating activities | (62 | ) | 452 | |||||
Cash flows from investing activities | ||||||||
Available-for-sale securities: | ||||||||
Sales | 6,483 | 2,217 | ||||||
Calls and paydowns | 2,096 | 4,352 | ||||||
Purchases | — | (9,818 | ) | |||||
Loan originations and payments, net | 5,406 | (13,213 | ) | |||||
Proceeds from sales of real estate owned | 70 | — | ||||||
Proceeds from disposal of premises and equipment | — | 60 | ||||||
Premises and equipment expenditures | (14 | ) | (650 | ) | ||||
Net cash from investing activities | 14,041 | (17,052 | ) | |||||
Cash flows from financing activities | ||||||||
Net change in deposits | (11,415 | ) | 17,231 | |||||
Net change in short-term FHLB advances | (1,550 | ) | 1,550 | |||||
Principal payments on long-term FHLB advances | (1,168 | ) | (2,002 | ) | ||||
Cash dividends paid | (17 | ) | (99 | ) | ||||
Tax benefit from stock options exercised | — | 2 | ||||||
Proceeds from exercise of stock options | — | 11 | ||||||
Net cash from financing activities | (14,150 | ) | 16,693 | |||||
Net change in cash and cash equivalents | (171 | ) | 93 | |||||
Beginning cash and cash equivalents | 2,427 | 2,334 | ||||||
Ending cash and cash equivalents | $ | 2,256 | $ | 2,427 | ||||
Supplemental cash flow information: | ||||||||
Interest paid | $ | 4,170 | $ | 3,431 | ||||
Income taxes paid | — | — | ||||||
Noncash transaction: | ||||||||
Transfers from loans to real estate owned | $ | 334 | $ | 150 |
F-51
Table of Contents
F-52
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
F-53
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
F-54
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
F-55
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
F-56
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
Gross | Gross | |||||||||||
Fair | Unrealized | Unrealized | ||||||||||
Value | Gains | Losses | ||||||||||
2007 | ||||||||||||
U.S. Government and federal agency | $ | 4,219 | $ | — | $ | (165 | ) | |||||
State and municipal | 4,032 | — | (202 | ) | ||||||||
Mortgage-backed | 9,972 | 4 | (406 | ) | ||||||||
Total | $ | 18,223 | $ | 4 | $ | (773 | ) | |||||
2006 | ||||||||||||
U.S. Government and federal agency | $ | 5,806 | $ | 4 | $ | (259 | ) | |||||
State and municipal | 5,557 | — | (315 | ) | ||||||||
Mortgage-backed | 15,051 | 7 | (620 | ) | ||||||||
Total | $ | 26,414 | $ | 11 | $ | (1,194 | ) | |||||
2007 | 2006 | |||||||
Sales of available for sale securities were as follows: | ||||||||
Proceeds | $ | 6,483 | $ | 2,217 | ||||
Gross gains | 15 | 7 | ||||||
Gross losses | (55 | ) | (10 | ) |
F-57
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
Fair | ||||
Value | ||||
Due in one year or less | $ | — | ||
Due from one to five years | 3,008 | |||
Due from five to ten years | 3,651 | |||
Due after ten years | 1,592 | |||
Mortgage-backed | 9,972 | |||
Total | $ | 18,223 | ||
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
2007 | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||
Description of Securities | Value | Loss | Value | Loss | Value | Loss | ||||||||||||||||||
U.S. Government and federal agency | $ | — | $ | — | $ | 4,219 | $ | (165 | ) | $ | 4,219 | $ | (165 | ) | ||||||||||
State and municipal | — | — | 4,032 | (202 | ) | 4,032 | (202 | ) | ||||||||||||||||
Mortgage-backed | 343 | (2 | ) | 9,091 | (404 | ) | 9,434 | (406 | ) | |||||||||||||||
Total temporarily impaired | $ | 343 | $ | (2 | ) | $ | 17,342 | $ | (771 | ) | $ | 17,685 | $ | (773 | ) | |||||||||
F-58
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||
2006 | Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | ||||||||||||||||||
Description of Securities | Value | Loss | Value | Loss | Value | Loss | ||||||||||||||||||
U.S. Government and federal agency | $ | 1,286 | $ | (19 | ) | $ | 4,135 | $ | (240 | ) | $ | 5,421 | $ | (259 | ) | |||||||||
State and municipal | — | — | 5,557 | (315 | ) | 5,557 | (315 | ) | ||||||||||||||||
Mortgage-backed | 7,627 | (167 | ) | 6,332 | (453 | ) | 13,959 | (620 | ) | |||||||||||||||
Total temporarily impaired | $ | 8,913 | $ | (186 | ) | $ | 16,024 | $ | (1,008 | ) | $ | 24,937 | $ | (1,194 | ) | |||||||||
F-59
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
2007 | 2006 | |||||||
Real estate loans | ||||||||
One- to four-family residential | $ | 37,979 | $ | 39,429 | ||||
Multi-family residential | 2,904 | 3,004 | ||||||
Nonresidential | 10,417 | 11,603 | ||||||
Construction and land | 3,305 | 4,594 | ||||||
54,605 | 58,630 | |||||||
Consumer loans | ||||||||
Home equity loans and lines of credit | 7,437 | 8,105 | ||||||
Home improvement | 3,447 | 3,786 | ||||||
Automobile | 1,422 | 2,096 | ||||||
Loans on deposit accounts | 521 | 621 | ||||||
Unsecured | 339 | 542 | ||||||
Other | 2,575 | 2,707 | ||||||
15,741 | 17,857 | |||||||
Municipal loans | 219 | 197 | ||||||
Commercial business loans | 791 | 747 | ||||||
1,010 | 944 | |||||||
71,356 | 77,431 | |||||||
Less: | ||||||||
Net deferred loan fees and costs | 337 | 391 | ||||||
Allowance for loan losses | (881 | ) | (572 | ) | ||||
Loans, net | $ | 70,812 | $ | 77,250 | ||||
F-60
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
2007 | 2006 | |||||||
Beginning balance | $ | 572 | $ | 294 | ||||
Provision for loan losses | 698 | 271 | ||||||
Loans charged-off | (394 | ) | (33 | ) | ||||
Recoveries | 5 | 40 | ||||||
Ending balance | $ | 881 | $ | 572 | ||||
2007 | 2006 | |||||||
Year-end loans with no allocated allowance for loan losses | $ | 676 | $ | — | ||||
Year-end loans with allocated allowance for loan losses | 1,129 | 761 | ||||||
Total | $ | 1,805 | $ | 761 | ||||
Amount of the allowance for loan losses allocated | $ | 300 | $ | 114 |
2007 | 2006 | |||||||
Average of impaired loans during the year | $ | 1,161 | $ | 379 | ||||
Interest income recognized during impairment | 19 | 60 | ||||||
Cash-basis interest income recognized | 14 | 53 |
2007 | 2006 | |||||||
Loans past due over 90 days still on accrual | $ | — | $ | — | ||||
Other real estate owned | 337 | 150 | ||||||
Nonaccrual loans | 2,139 | 847 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
2007 | 2006 | |||||||
Land | $ | 260 | $ | 260 | ||||
Buildings and improvements | 1,212 | 1,212 | ||||||
Leasehold improvements | 509 | 509 | ||||||
Furniture, fixtures and equipment | 865 | 851 | ||||||
2,846 | 2,832 | |||||||
Less: Accumulated depreciation | (1,085 | ) | (993 | ) | ||||
$ | 1,761 | $ | 1,839 | |||||
June 30, 2008 | $ | 35 | ||
2009 | 37 | |||
2010 | 41 | |||
2011 | 43 | |||
2012 | 47 | |||
Thereafter | 75 | |||
$ | 278 | |||
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Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
2007 | 2006 | |||||||
Non-interest bearing demand deposit accounts | $ | 1,609 | $ | 1,828 | ||||
NOW accounts | 4,441 | 4,626 | ||||||
Money market accounts | 4,843 | 7,064 | ||||||
Savings accounts | 5,241 | 5,458 | ||||||
Certificates of deposit | 51,816 | 60,389 | ||||||
$ | 67,950 | $ | 79,365 | |||||
June 30, 2008 | $ | 38,514 | ||
2009 | 8,857 | |||
2010 | 1,917 | |||
2011 | 1,126 | |||
2012 | 422 | |||
Thereafter | 980 | |||
$ | 51,816 | |||
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Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
2007 | 2006 | |||||||
Short-term cash management advances, variable rate of 5.43% at June 30, 2006 | $ | — | $ | 1,550 | ||||
Convertible advances, rates ranging from 5.44% to 6.23%, maturities from April 2008 to December 2010 | 19,500 | 19,500 | ||||||
Fixed-rate advance, rate of 2.50%, amortizing advance with maturity of March 2009 | 350 | 550 | ||||||
Mortgage-matched advances, rates ranging from 3.40% to 4.80%, amortizing advances with maturities from November 2011 to November 2016 | 3,573 | 4,541 | ||||||
Total | $ | 23,423 | $ | 26,141 | ||||
June 30, 2008 | $ | 3,095 | ||
2009 | 1,891 | |||
2010 | 9,648 | |||
2011 | 8,066 | |||
2012 | 442 | |||
Thereafter | 281 | |||
$ | 23,423 | |||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
F-65
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
2007 | 2006 | |||||||
Allocated to participants | 24,958 | 21,857 | ||||||
Unearned | 19,832 | 22,933 | ||||||
Total ESOP shares | 44,790 | 44,790 | ||||||
Fair value of unearned shares | $ | 374 | $ | 436 | ||||
Fair value of allocated shares subject to repurchase obligation | $ | 470 | $ | 415 | ||||
2007 | 2006 | |||||||
Current tax expense | $ | (11 | ) | $ | 14 | |||
Deferred tax expense (benefit) | (300 | ) | (95 | ) | ||||
Change in deferred tax valuation allowance | — | (2 | ) | |||||
Total | $ | (311 | ) | $ | (83 | ) | ||
2007 | 2006 | |||||||
Income taxes computed at the statutory tax rate on pretax income | $ | (234 | ) | $ | — | |||
Tax effect of: | ||||||||
Tax-exempt income | (42 | ) | (57 | ) | ||||
Bank-owned life insurance income | (33 | ) | (29 | ) | ||||
Deferred tax valuation allowance | — | (2 | ) | |||||
Nondeductible expenses and other | (2 | ) | 5 | |||||
Total | $ | (311 | ) | $ | (83 | ) | ||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
2007 | 2006 | |||||||
Deferred tax assets: | ||||||||
Allowance for loan losses | $ | 299 | $ | 192 | ||||
Unrealized loss on securities available for sale | 261 | 402 | ||||||
Net loan fees | 18 | 19 | ||||||
Non-accrual loan interest income | 38 | 20 | ||||||
ESOP loan payments | 29 | 27 | ||||||
Net operating loss carryforward | 351 | 171 | ||||||
Capital loss carryforward | 93 | 93 | ||||||
Other | 31 | 7 | ||||||
Total deferred tax assets | 1,120 | 931 | ||||||
Valuation allowance | (93 | ) | (93 | ) | ||||
1,027 | 838 | |||||||
Deferred tax liabilities: | ||||||||
Depreciation | (52 | ) | (43 | ) | ||||
FHLB stock dividends | (211 | ) | (191 | ) | ||||
Other | (1 | ) | — | |||||
Total deferred tax liabilities | (264 | ) | (234 | ) | ||||
Net deferred tax asset | $ | 763 | $ | 604 | ||||
F-67
Table of Contents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
Beginning balance | $ | 540 | ||
New loans | — | |||
Repayments | (120 | ) | ||
Ending balance | $ | 420 | ||
2007 | 2006 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Average | Average | |||||||||||||||
Exercise | Exercise | |||||||||||||||
Shares | Price | Shares | Price | |||||||||||||
Outstanding at beginning of year | 30,414 | $ | 13.11 | 31,354 | $ | 13.08 | ||||||||||
Granted | — | — | — | — | ||||||||||||
Exercised | — | — | (940 | ) | 12.10 | |||||||||||
Forfeited or expired | (2,200 | ) | 19.05 | — | — | |||||||||||
Outstanding at end of year | 28,214 | $ | 12.64 | 30,414 | $ | 13.11 | ||||||||||
Options exercisable at year end | 27,334 | 19,919 | ||||||||||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
June 30, | June 30, | |||||||
2007 | 2006 | |||||||
Proceeds of options exercised | — | 11 | ||||||
Related tax benefit recognized | — | 2 | ||||||
Intrinsic value of options exercised | — | 6 |
Outstanding | Exercisable | |||||||||||||||||||
Weighted | ||||||||||||||||||||
Average | Weighted | Weighted | ||||||||||||||||||
Range of | Remaining | Average | Average | |||||||||||||||||
Exercise | Contractual | Exercise | Exercise | |||||||||||||||||
Prices | Number | Life | Price | Number | Price | |||||||||||||||
$ 12.10 | 26,014 | 4.25 | $ | 12.10 | 26,014 | $ | 12.10 | |||||||||||||
19.05 | 2,200 | 6.64 | 19.05 | 1,320 | 19.05 | |||||||||||||||
Outstanding at year end | 28,214 | 27,334 | ||||||||||||||||||
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
To Be Well | ||||||||||||||||||||||||
Capitalized Under | ||||||||||||||||||||||||
For Capital | Prompt Corrective | |||||||||||||||||||||||
Actual | Adequacy Purposes | Action Provisions | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
2007 | ||||||||||||||||||||||||
Total Capital to risk weighted assets | $ | 8,900 | 14.3 | % | $ | 4,995 | 8.0 | % | $ | 6,244 | 10.0 | % | ||||||||||||
Tier 1 (Core) Capital to risk weighted assets | 8,118 | 13.0 | 2,498 | 4.0 | 3,747 | 6.0 | ||||||||||||||||||
Tier 1 (Core) Capital to adjusted total assets | 8,118 | 7.9 | 4,089 | 4.0 | 5,111 | 5.0 | ||||||||||||||||||
Tangible Capital to adjusted total assets | 8,118 | 7.9 | 1,533 | 1.5 | N/A | |||||||||||||||||||
To Be Well | ||||||||||||||||||||||||
Capitalized Under | ||||||||||||||||||||||||
For Capital | Prompt Corrective | |||||||||||||||||||||||
Actual | Adequacy Purposes | Action Provisions | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
2006 | ||||||||||||||||||||||||
Total Capital to risk weighted assets | $ | 8,983 | 12.9 | % | $ | 5,554 | 8.0 | % | $ | 6,492 | 10.0 | % | ||||||||||||
Tier 1 (Core) Capital to risk weighted assets | 8,411 | 12.1 | 2,777 | 4.0 | 4,165 | 6.0 | ||||||||||||||||||
Tier 1 (Core) Capital to adjusted total assets | 8,411 | 7.5 | 4,492 | 4.0 | 5,615 | 5.0 | ||||||||||||||||||
Tangible Capital to adjusted total assets | 8,411 | 7.5 | 1,685 | 1.5 | N/A |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
F-72
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
2007 | 2006 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Financial assets | ||||||||||||||||
Cash and cash equivalents | 2,256 | 2,256 | $ | 2,427 | $ | 2,427 | ||||||||||
Securities available for sale | 18,223 | 18,223 | 26,414 | 26,414 | ||||||||||||
Loans held for sale | 340 | 340 | — | — | ||||||||||||
Loans, net | 70,812 | 68,807 | 77,250 | 74,703 | ||||||||||||
Federal Home Loan Bank stock | 1,933 | 1,933 | 1,877 | 1,877 | ||||||||||||
Accrued interest receivable | 489 | 489 | 540 | 540 | ||||||||||||
Financial liabilities | ||||||||||||||||
Demand and savings deposits | (16,134 | ) | (16,134 | ) | $ | (18,976 | ) | (18,976 | ) | |||||||
Certificates of deposit | (51,816 | ) | (52,136 | ) | (60,389 | ) | (60,679 | ) | ||||||||
Federal Home Loan Bank advances | (23,423 | ) | (22,800 | ) | (26,141 | ) | (25,035 | ) | ||||||||
Accrued interest payable | (362 | ) | (362 | ) | (288 | ) | (288 | ) |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Years ended June 30, 2007 and 2006
(Dollar amounts in thousands except per share data)
2007 | 2006 | |||||||
Basic | ||||||||
Net income (loss) | $ | (377 | ) | $ | 84 | |||
Weighted average common shares outstanding | 437,433 | 437,289 | ||||||
Less: Average unallocated ESOP shares | (21,346 | ) | (24,510 | ) | ||||
Average shares | 416,087 | 412,779 | ||||||
Basic earnings (loss) per common share | $ | (0.91 | ) | $ | 0.20 | |||
Diluted | ||||||||
Net income (loss) | $ | (377 | ) | $ | 84 | |||
Weighted average common shares outstanding for basic earnings per common share | 416,087 | 412,779 | ||||||
Add: Dilutive effects of assumed exercises of stock options | — | 6,584 | ||||||
Average shares and dilutive potential common shares | 416,087 | 419,363 | ||||||
Diluted earnings (loss) per common share | $ | (0.91 | ) | $ | 0.20 | |||
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Table of Contents
Page | ||||
RECITALS | A-1 | |||
ARTICLE I – CERTAIN DEFINITIONS | A-1 | |||
1.01 Certain Definitions | A-1 | |||
ARTICLE II – THE MERGER | A-7 | |||
2.01 The Parent Merger | A-7 | |||
2.02 The Subsidiary Merger | A-8 | |||
2.03 Effectiveness of Parent Merger | A-8 | |||
2.04 Effective Date and Effective Time | A-8 | |||
ARTICLE III – MERGER CONSIDERATION; SURRENDER OF CERTIFICATES | A-9 | |||
3.01 Merger Consideration | A-9 | |||
3.02 Rights as Shareholders; Share Transfers | A-9 | |||
3.03 Exchange Procedures | A-10 | |||
3.04 Conversion of Indian Village Stock Options | A-11 | |||
3.05 Anti-Dilution Provisions and Other Adjustments | A-12 | |||
3.06 Dissenting Shares | A-12 | |||
3.07 Tax Consequences | A-13 | |||
ARTICLE IV – ACTIONS PENDING CONSUMMATION OF MERGER | A-13 | |||
4.01 Forbearances of Indian Village | A-13 | |||
4.02 Forbearances of CSB | A-16 | |||
ARTICLE V – REPRESENTATIONS AND WARRANTIES | A-17 | |||
5.01 Disclosure Schedules | A-17 | |||
5.02 Standard | A-17 | |||
5.03 Representations and Warranties of Indian Village | A-17 | |||
5.04 Representations and Warranties of CSB | A-33 | |||
ARTICLE VI – COVENANTS | A-38 | |||
6.01 Reasonable Best Efforts | A-38 | |||
6.02 Shareholder Approval | A-38 | |||
6.03 Registration Statement | A-39 | |||
6.04 Press Releases | A-40 | |||
6.05 Access; Information | A-40 | |||
6.06 Acquisition Proposals; Break Up Fee | A-41 | |||
6.07 Takeover Laws | A-41 | |||
6.08 Certain Policies | A-41 | |||
6.09 Regulatory Applications | A-42 | |||
6.10 Employment Matters; Employee Benefits | A-42 | |||
6.11 Notification of Certain Matters | A-44 |
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Page | ||||
6.12 Accounting and Tax Treatment | A-44 | |||
6.13 No Breaches of Representations and Warranties | A-44 | |||
6.14 Consents | A-44 | |||
6.15 Insurance Coverage | A-44 | |||
6.16 Correction of Information | A-44 | |||
6.17 Confidentiality | A-45 | |||
6.18 Supplemental Assurances | A-45 | |||
6.19 Regulatory Matters | A-45 | |||
6.20 Establishment of Bank Community Board | A-45 | |||
6.21 Indemnification; Directors’ and Officers’ Liability Insurance | A-46 | |||
6.22 Non-Solicitation | A-46 | |||
ARTICLE VII – CONDITIONS TO CONSUMMATION OF THE MERGER | A-46 | |||
7.01 Conditions to Each Party’s Obligation to Effect the Merger | A-46 | |||
7.02 Conditions to Obligation of Indian Village | A-47 | |||
7.03 Conditions to Obligation of CSB | A-48 | |||
ARTICLE VIII – TERMINATION | A-49 | |||
8.01 Termination | A-49 | |||
8.02 Effect of Termination and Abandonment, Enforcement of Agreement | A-50 | |||
ARTICLE IX – MISCELLANEOUS | A-50 | |||
9.01 Survival | A-50 | |||
9.02 Waiver; Amendment | A-50 | |||
9.03 Counterparts | A-51 | |||
9.04 Governing Law | A-51 | |||
9.05 Expenses | A-51 | |||
9.06 Notices | A-51 | |||
9.07 Entire Understanding; No Third Party Beneficiaries | A-52 | |||
9.08 Interpretation; Effect | A-52 | |||
9.09 Waiver of Jury Trial | A-52 | |||
EXHIBIT A Form of Voting Agreement |
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Certain Definitions
A-1
Table of Contents
A-2
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A-3
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A-4
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A-5
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A-6
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The Merger
A-7
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A-8
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Merger Consideration; Surrender of Certificates
A-9
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A-10
Table of Contents
A-11
Table of Contents
A-12
Table of Contents
Actions Pending Consummation of Merger
A-13
Table of Contents
A-14
Table of Contents
A-15
Table of Contents
A-16
Table of Contents
Representations and Warranties
A-17
Table of Contents
A-18
Table of Contents
A-19
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A-20
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A-21
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A-22
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A-23
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A-24
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A-25
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A-26
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A-27
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A-28
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A-29
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A-30
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A-31
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A-32
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A-33
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A-34
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A-35
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A-36
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A-37
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Covenants
A-38
Table of Contents
A-39
Table of Contents
A-40
Table of Contents
A-41
Table of Contents
A-42
Table of Contents
A-43
Table of Contents
A-44
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A-45
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Conditions to Consummation of the Merger
A-46
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A-47
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A-48
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Termination
A-49
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Miscellaneous
A-50
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100 South Walnut Street
Gnadenhutten, Ohio 44629
Attention: Marty R. Lindon, President and CEO
Bricker & Eckler LLP
100 South Third Street
Columbus, Ohio 43215
91 North Clay Street
P.O. Box 232
Millersburg, Ohio 44654
Attention: Eddie Steiner, President and CEO
A-51
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Vorys, Sater, Seymour and Pease LLP
52 East Gay Street, P.O. Box 1008
Columbus, Ohio 43216-1008
A-52
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INDIAN VILLAGE BANCORP, INC. | ||||
By | /s/ Marty R. Lindon | |||
Name: | Marty R. Lindon | |||
Title: | President and CEO | |||
CSB BANCORP, INC. | ||||
By | /s/ Eddie L. Steiner | |||
Name: | Eddie L. Steiner | |||
Title: | President and CEO | |||
A-53
Table of Contents
Voting of Shares
A-54
Table of Contents
Representations and Warranties
Additional Covenants
A-55
Table of Contents
Miscellaneous
A-56
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SHAREHOLDERS | CSB BANCORP, INC. | |||||
By: | ||||||
[Name] | Name: | |||||
Title: | ||||||
[Name] | ||||||
[Name] |
A-57
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Name | Common Shares | |
Total |
A-58
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B-1
Table of Contents
B-2
Table of Contents
B-3
Table of Contents
B-4
Table of Contents
B-5
Table of Contents
B-6
Table of Contents
B-7
Table of Contents
SUITE 524
DUBLIN, OHIO 43017
Indian Village Bancorp, Inc.
100 S. Walnut St.
Gnadenhutten, OH 44629
C-1
Table of Contents
Indian Village Bancorp, Inc.
May 14, 2008
Page 2
C-2
Table of Contents
Indian Village Bancorp, Inc.
May 14, 2008
Page 3
C-3
Table of Contents
Information Not Required In Prospectus
II-1
Table of Contents
II-2
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II-3
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II-4
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Exhibit No. | Description of Exhibit | |||
2.1 | Agreement and Plan of Merger, dated as of May 14, 2008, by and between CSB Bancorp, Inc. (“CSB”) and Indian Village Bancorp, Inc. (the “Merger Agreement”) (included in Part I as Annex A to the Prospectus/Proxy Statement included in this Registration Statement) | |||
3.1 | (a) | Amended Articles of Incorporation of CSB (incorporated herein by reference to Exhibit 3.1 to CSB’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994 (File No. 0-21714)) | ||
3.1 | (b) | Amended Article Fourth of Amended Articles of Incorporation of CSB, effective as of April 9, 1998 (incorporated herein by reference to Exhibit 3.1.1 to CSB’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 0-21714)) | ||
3.2 | Code of Regulations of CSB (incorporated herein by reference to Exhibit 3.2 to CSB’s Form 10-SB, filed on April 29, 1993 (File No. 0-21714)) | |||
4.1 | Form of Certificate for Common Shares of CSB (incorporated herein by reference to Exhibit 4 to CSB’s Form 10-SB, filed on April 29, 1993 (File No. 0-21714)) | |||
5 | Opinion of Vorys, Sater, Seymour and Pease LLP as to the legality of the securities being registered (filed herewith) | |||
8 | Opinion of Vorys, Sater, Seymour and Pease LLP as to tax matters (filed herewith) | |||
10.1 | Severance Payment Agreement, dated as of May 14, 2008, by and among Marty R. Lindon, CSB Bancorp, Inc., Indian Village Bancorp, Inc. and Indian Village Community Bank (incorporated herein by reference to Exhibit 10.1 to CSB’s Current Report on Form 8-K filed on May 16, 2008 (File No. 0-21714)) | |||
10.2 | Severance Payment Agreement, dated as of May 14, 2008, by and among Andrea R. Miley, CSB Bancorp, Inc., Indian Village Bancorp, Inc. and Indian Village Community Bank (incorporated herein by reference to Exhibit 10.2 to CSB’s Current Report on Form 8-K filed on May 16, 2008 (File No. 0-21714)) | |||
10.3 | Severance Payment Agreement, dated as of May 14, 2008, by and among Lori S. Frantz, CSB Bancorp, Inc., Indian Village Bancorp, Inc. and Indian Village Community Bank (incorporated herein by reference to Exhibit 10.3 to CSB’s Current Report on Form 8-K filed on May 16, 2008 (File No. 0-21714)) | |||
10.4 | Severance Payment Agreement, dated as of May 14, 2008, by and among Elaine A. Tedrow, CSB Bancorp, Inc., Indian Village Bancorp, Inc. and Indian Village Community Bank (incorporated herein by reference to Exhibit 10.4 to CSB’s Current Report on Form 8-K filed on May 16, 2008 (File No. 0-21714)) |
II-5
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Exhibit No. | Description of Exhibit | |||
21 | Subsidiaries of CSB (incorporated herein by reference to Exhibit 21 to CSB’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 (File No. 0-21714)) | |||
23.1 | Consent of S.R. Snodgrass A.C. – CSB (filed herewith) | |||
23.2 | Consent of Crowe Chizek and Company LLC – Indian Village Bancorp, Inc. (filed herewith) | |||
23.3 | Consent of Keller & Company, Inc. (filed herewith) | |||
23.4 | Consent of Vorys, Sater, Seymour and Pease LLP relating to opinion as to the legality of the securities being registered (included in Exhibit 5) | |||
23.5 | Consent of Vorys, Sater, Seymour and Pease LLP relating to opinion as to tax matters (included in Exhibit 8) | |||
24 | Power of Attorney (included on signature page) | |||
99.1 | Form of Revocable Proxy for special meeting of shareholders of Indian Village Bancorp, Inc. (filed herewith) |
(b) | Financial Statement Schedules | ||
Not applicable. | |||
(c) | Report, Opinion or Appraisal | ||
The opinion of Keller & Company, Inc. is included as Annex C to the prospectus/proxy statement. |
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(a) | The undersigned Registrant hereby undertakes: |
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; |
(i) | To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; | ||
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and | ||
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
(2) | That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof. | ||
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(b) | The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(c) (1) | The undersigned Registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
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(2) | The undersigned Registrant undertakes that every prospectus (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment will be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time will be deemed to be the initial bona fide offering thereof. |
(d) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. | |
(e) | The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus/proxy statement which forms a part of the registration statement pursuant to Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. | |
(f) | The undersigned Registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
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CSB BANCORP, INC. | ||||
By: | /s/ Paula J. Meiler | |||
Paula J. Meiler | ||||
Senior Vice President and Chief Financial Officer | ||||
Name | Date | Capacity | ||
/s/ Eddie L. Steiner | July 17, 2008 | President, Chief Executive Officer and Director | ||
/s/ Paula J. Meiler | July 17, 2008 | Senior Vice President and Chief Financial Officer | ||
/s/ Robert K. Baker | July 17, 2008 | Director | ||
/s/ Ronald E. Holtman | July 17, 2008 | Director | ||
/s/ J. Thomas Lang | July 17, 2008 | Director |
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Name | Date | Capacity | ||
/s/ Dr. Daniel J. Miller | July 17, 2008 | Director | ||
/s/ Jeffery A. Robb, Sr. | July 17, 2008 | Director | ||
/s/ John R. Waltman | July 17, 2008 | Director |
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Exhibit No. | Description of Exhibit | |||
2.1 | Agreement and Plan of Merger, dated as of May 14, 2008, by and between CSB Bancorp, Inc. (“CSB”) and Indian Village Bancorp, Inc. (the “Merger Agreement”) (included in Part I as Annex A to the Prospectus/Proxy Statement included in this Registration Statement) | |||
3.1 | (a) | Amended Articles of Incorporation of CSB (incorporated herein by reference to Exhibit 3.1 to CSB’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994 (File No. 0-21714)) | ||
3.1 | (b) | Amended Article Fourth of Amended Articles of Incorporation of CSB, effective as of April 9, 1998 (incorporated herein by reference to Exhibit 3.1.1 to CSB’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (File No. 0-21714)) | ||
3.2 | Code of Regulations of CSB (incorporated herein by reference to Exhibit 3.2 to CSB’s Form 10-SB, filed on April 29, 1993 (File No. 0-21714)) | |||
4.1 | Form of Certificate for Common Shares of CSB (incorporated herein by reference to Exhibit 4 to CSB’s Form 10-SB, filed on April 29, 1993 (File No. 0-21714)) | |||
5 | Opinion of Vorys, Sater, Seymour and Pease LLP as to the legality of the securities being registered (filed herewith) | |||
8 | Opinion of Vorys, Sater, Seymour and Pease LLP as to tax matters (filed herewith) | |||
10.1 | Severance Payment Agreement, dated as of May 14, 2008, by and among Marty R. Lindon, CSB Bancorp, Inc., Indian Village Bancorp, Inc. and Indian Village Community Bank (incorporated herein by reference to Exhibit 10.1 to CSB’s Current Report on Form 8-K filed on May 16, 2008 (File No. 0-21714)) | |||
10.2 | Severance Payment Agreement, dated as of May 14, 2008, by and among Andrea R. Miley, CSB Bancorp, Inc., Indian Village Bancorp, Inc. and Indian Village Community Bank (incorporated herein by reference to Exhibit 10.2 to CSB’s Current Report on Form 8-K filed on May 16, 2008 (File No. 0-21714)) | |||
10.3 | Severance Payment Agreement, dated as of May 14, 2008, by and among Lori S. Frantz, CSB Bancorp, Inc., Indian Village Bancorp, Inc. and Indian Village Community Bank (incorporated herein by reference to Exhibit 10.3 to CSB’s Current Report on Form 8-K filed on May 16, 2008 (File No. 0-21714)) | |||
10.4 | Severance Payment Agreement, dated as of May 14, 2008, by and among Elaine A. Tedrow, CSB Bancorp, Inc., Indian Village Bancorp, Inc. and Indian Village Community Bank (incorporated herein by reference to Exhibit 10.4 to CSB’s Current Report on Form 8-K filed on May 16, 2008 (File No. 0-21714)) |
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Exhibit No. | Description of Exhibit | |||
21 | Subsidiaries of CSB (incorporated herein by reference to Exhibit 21 to CSB’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 (File No. 0-21714)) | |||
23.1 | Consent of S.R. Snodgrass A.C. – CSB (filed herewith) | |||
23.2 | Consent of Crowe Chizek and Company LLC – Indian Village Bancorp, Inc. (filed herewith) | |||
23.3 | Consent of Keller & Company, Inc. (filed herewith) | |||
23.4 | Consent of Vorys, Sater, Seymour and Pease LLP relating to opinion as to the legality of the securities being registered (included in Exhibit 5) | |||
23.5 | Consent of Vorys, Sater, Seymour and Pease LLP relating to opinion as to tax matters (included in Exhibit 8) | |||
24 | Power of Attorney (included on signature page) | |||
99.1 | Form of Revocable Proxy for special meeting of shareholders of Indian Village Bancorp, Inc. (filed herewith) |
(b) | Financial Statement Schedules | ||
Not applicable. | |||
(c) | Report, Opinion or Appraisal | ||
The opinion of Keller & Company, Inc. is included as Annex C to the prospectus/proxy statement. |
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