1
Consolidated Financial Highlights
- -----------------------------------------------------------------------------------------------------------------------------
DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS 1995 1994 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------------------------------------
For the year ended December 31
Per common share:
Net income $ 1.86 $ 1.68 $ 1.56 $ 1.31 $ 0.98 $ 0.55
Cash dividends 0.58 0.51 0.40 0.33 0.24 0.27
Book value 14.70 12.02 11.80 10.22 9.14 8.33
Gross operating income $ 44,548 $ 39,768 $ 39,197 $ 39,078 $ 39,264 $ 40,333
Operating expenses 37,034 32,826 32,816 33,570 35,249 38,820
--------- --------- --------- --------- --------- ---------
Income before income taxes 7,514 6,942 6,381 5,508 4,015 1,513
Federal income tax expense (credit) 1,112 1,256 1,100 1,130 761 (320)
- -----------------------------------------------------------------------------------------------------------------------------
Net income $ 6,402 $ 5,686 $ 5,281 $ 4,378 $ 3,254 $ 1,833
=============================================================================================================================
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Balance Sheet Data at December 31
Total Assets $ 529,530 $ 531,727 $ 491,801 $ 463,124 $ 408,750 $ 406,013
Total investment securities 159,415 149,807 152,934 172,767 144,360 121,035
Total loans 320,509 330,133 288,649 246,405 223,295 239,247
Total deposits 452,135 465,837 427,586 402,110 354,878 332,936
Shareholders' equity 50,672 40,982 39,733 34,162 30,407 27,575
- -----------------------------------------------------------------------------------------------------------------------------
Key Ratios
Return on average assets 1.20% 1.15% 1.10% 1.01% 0.81% 0.46%
Return on average equity 13.98% 14.28% 14.60% 13.76% 11.30% 6.67%
Total equity to assets 9.57% 7.71% 8.08% 7.38% 7.44% 6.79%
Tier 1 risk-based capital 14.87% 13.04% 13.34% 13.39% 12.78% 11.94%
Total capital (risk-based) 16.12% 14.29% 14.60% 14.65% 14.04% 13.20%
Nonperforming loans to total assets 0.18% 0.08% 0.29% 0.55% 1.19% 1.69%
Net charge-offs to total loans (0.02)% (0.06)% 0.28% 0.68% 1.36% 0.52%
Delinquencies to total loans 0.54% 0.44% 0.95% 1.85% 3.99% 6.06%
All share and per share amounts have been adjusted for a three percent stock
dividend in 1995, four-for-three stock splits in 1994 and 1993, a four percent
stock dividend in 1992 and a three percent stock dividend in 1991.
1
2
To Our Shareholders
Shareholders and Friends:
Our appreciation and gratitude are extended to Staff, Directors,
Shareholders, Customers and Friends for making 1995 another year of success and
record earnings performance. Proactive and innovative vision designed to enhance
and strengthen our Organization remained high priority and resulted in
significant strides and accomplishments.
You will note from the financial information outlined in this report that
CoBancorp Inc.'s operating and performance measurements identify continuing
positive trends and are some of the best in its class. Nineteen Hundred
Ninety-Five was our most financially successful year and will be detailed in the
accompanying review, analysis and graphs which summarize careful management of
operating fundamentals, size of our Company and shareholder return.
Our focus and commitment to strategic change over the past five years have
transformed us into a much stronger, leaner and resilient financial institution.
Cultural, operational and geographical challenges have been aggressively
addressed over the past few years resulting in a well-positioned company
possessing strong forward momentum.
Despite much accomplishment, our corporate journey is just beginning and
the framework of our next five-year plan is in place. The advances and
achievements envisioned under this initiative are designed to logically and
confidently build off the infrastructure of systems, procedures and controls
that are now in place.
Customer service and satisfaction coupled with staff professionalism,
empowerment and fulfillment will create new paradigms that will serve as the
blueprint from which we will operate to the year 2000.
The year 1995 is now a component of our 100-year history, and it is
appropriate to report that it was a year of positive significance that will
dramatically impact our future. Plans were announced to construct a new regional
headquarters and `showcase' branch in Powell, Ohio, one of the fastest growing
communities in the Columbus/Delaware MSA. Closer to home, major construction
commenced on our new administrative headquarters in the Elyria Midway Mall
complex, one of the larger shopping/service areas in northern Ohio. A number of
new locations were acquired and/or opened in the areas of Avon, Eaton Township,
Kipton, Lorain, North Olmsted, Oberlin, Sheffield Lake, South Amherst and
Wellington, making PREMIERBank & Trust the dominant financial institution in
Lorain County, controlling the largest market share.
Moving eastward, we unveiled our third Cuyahoga County Office which is
situated within the BP America Building, Public Square, in the heart of downtown
Cleveland. Our acquisitions and openings will permit the Bank to enhance its
operating efficiencies while entering into some new markets. More important,
expansion is part of a strategy of developing the Bank's presence in the
Lorain-Elyria-Columbus MSA, specifically focusing on western Cuyahoga County and
galvanizing our presence in Lorain County. Prior to some potential
reconfiguration of our branch network, PREMIERBank & Trust will operate over 40
offices in eight Ohio counties.
Looking ahead, we enter 1996 in a strong position. Loan quality remains at
a very high level supported by excellent underwriting, controls and systems. For
the second consecutive year the Bank did not experience a net loan loss, or,
stated another way, recoveries on loans previously charged off exceeded loans
charged off during the year. Our reserve for possible loan losses is sizable and
should provide an insulating effect against any unforeseen losses that might
develop in the future.
The initiatives established in 1995 addressing operating efficiency should
continue to positively impact earnings. These enhancements are logically
balanced between higher revenues and reduced operating expense. To that end, the
staffing models,
2
3
expense controls and service-charge systems, should continue to strengthen the
Bank's operating fundamentals while contributing to greater returns.
Controls and systems to strategically and carefully manage the balance
sheet to ensure safety and soundness were enhanced during the year. As reflected
in 1995, the Bank will expand its asset base in a fashion that only assures
targeted and acceptable returns on both assets and equity.
This past year produced another record year for the Trust Department, both
in assets managed and earnings. The addition of a new 401K program has enhanced
retirement plans available to industry, business and small firms. Technological
improvements and new professional staff have enabled the department to expand
benefits and personalized service to our growing client base.
As we continuously look for additional ways of providing financial services
to our customers, we recently introduced alternative investment products
provided through Compulife, Inc. and Compulife Investor Services, Inc. Under
this arrangement, conservative investment products including tax-deferred
annuities, tax-exempt investment trusts, mutual funds and discount brokerage
services are available through `One Source Financial Centers' located in
PREMIERBank & Trust's lobbies. Customers are provided a free, confidential,
no-obligation evaluation to assist them in reviewing and clarifying their
financial objectives.
We would like to pay special tribute to Mrs. J. Sue Snyder, Senior Vice
President, Human Resources Department, who recently passed away. She was a
dedicated and loyal executive whose personal contributions over the past 38
years are a critical component of the Organization's successful legacy. Her
friendship and leadership will be sorely missed, and the Bank and the community
are richer for her having lived.
In closing, we remain committed to building on traditions with
innovativeness and positive results. The ideals and spirit that have served as
the foundation of our Organization for the past century will guide us in
becoming one of the finest regional community banks in Ohio. We believe these
efforts will provide shareholder rewards that are consistent with acceptable
levels of return on investment.
John S. Kreighbaum
Chairman, President and Chief Executive Officer
Timothy W. Esson
Executive Vice President
Robert T. Bowman
Chairman Emeritus
3
4
MANAGEMENT DISCUSSION
The following discussion is presented to assist in understanding the
current financial condition and results of CoBancorp Inc. and its subsidiary,
PREMIERBank & Trust. This discussion should be read in conjunction with the
audited consolidated financial statements and related disclosures presented in
other sections of this annual report.
RESULTS OF OPERATIONS
OVERVIEW
CoBancorp Inc.'s net income increased 12.60% in 1995 when compared to 1994,
and 7.67% in 1994 when compared to 1993. The following table summarizes certain
key performance measures:
1995 1994 1993
- ------------------------------------------------------------
Net income ($000) $ 6,402 $ 5,686 $ 5,281
Net income/share ($) 1.86 1.68 1.56
Return on average assets
(ROA) (%) 1.20 1.15 1.10
Return on average equity
(ROE) (%) 13.98 14.28 14.60
- ------------------------------------------------------------
NET INTEREST INCOME
The Corporation's primary source of earnings is net interest income, which
is the difference between revenue generated from earning assets such as loans
and investment securities, and the interest cost of liabilities which fund those
assets, such as interest-bearing deposits and short-term funds. For purposes of
this discussion, net interest income is adjusted to a taxable equivalent basis
to compare the yields on certain tax-exempt investments and loans with other
sources of interest income. On a fully taxable equivalent basis, net interest
income was $26,199,000 in 1995, compared to $25,756,000 in 1994 and $23,713,000
in 1993. The increase in net interest income in 1995 was attributable mainly to
an increase in average earning assets and, to a lesser extent, an increase in
the rate earned on those assets. These increases were partially offset by an
increase in the rate paid on interest-bearing liabilities and an increase in the
volume of those liabilities. Net interest margin, which is net interest income
on a fully taxable equivalent basis divided by average earning assets, was 5.31%
in 1995, 5.70% in 1994 and 5.39% in 1993. Net interest margin is affected by
changes in both the level of interest rates and changes in the amounts and mix
of interest-earning assets and interest-bearing liabilities. Average earning
assets grew $41,361,000, or 9.15%, to $493,373,000 in 1995, compared to
$452,012,000 in 1994 and $439,961,000 in 1993. Expressed as a percentage of
total average assets, earning assets were 92.7%, 91.4% and 91.7% in 1995, 1994
and 1993, respectively. The following table shows changes in interest income and
expense due to variances in rates and volume:
1995 VS. 1994
DUE TO CHANGE IN
- -------------------------------------------------------------
($000) VOLUME RATE NET
- -------------------------------------------------------------
Increase (decrease) in tax-
equivalent interest income:
Loans $ 1,492 $ 1,116 $ 2,608
Securities 1,740 298 2,038
Other 17 47 64
- -------------------------------------------------------------
Total 3,249 1,461 4,710
(Increase) decrease in
interest expense:
NOW 56 4 60
Savings & IMMA 470 45 515
Time (2,207) (2,440) (4,647)
Short-term funds (43) (152) (195)
- -------------------------------------------------------------
Total (1,724) (2,543) (4,267)
- -------------------------------------------------------------
Increase (decrease) in tax-
equivalent net interest
income $ 1,525 $(1,082) $ 443
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4
5
1994 VS. 1993
DUE TO CHANGE IN
- --------------------------------------------------------------
($000) VOLUME RATE NET
- --------------------------------------------------------------
Increase (decrease) in tax-
equivalent interest income:
Loans $ 4,652 $ (946) $ 3,706
Securities (2,171) (517) (2,688)
Other (84) 30 (54)
- --------------------------------------------------------------
Total 2,397 (1,433) 964
(Increase) decrease in
interest expense:
NOW 47 186 233
Savings & IMMA (281) 807 526
Time 121 200 321
Short-term funds 64 (63) 1
Total (49) 1,130 1,081
Increase (decrease) in
tax-equivalent net
interest income $ 2,348 $ (303) $ 2,045
- --------------------------------------------------------------
Changes in interest income and interest expense not arising solely from
rate or volume variances are included in rate variances.
PROVISION FOR LOAN LOSSES
The provision for loan losses is an operating expense recorded to maintain
the related allowance for loan losses balance sheet account, and is provided to
cover losses that may be incurred in the normal course of lending. Actual losses
on loans are charged against the allowance for loan losses, and the related loan
is removed from the loan asset account on the balance sheet. The total provision
for loan and real estate losses was $180,000 in 1995, $208,000 in 1994 and
$920,000 in 1993. Further information is contained in the section of this
discussion entitled "Credit Quality and Experience".
NONINTEREST INCOME
The following table presents components of other operating income for the
past three years:
($000) 1995 1994 1993
- ------------------------------------------------------
Service charges on deposits $1,995 $1,821 $1,586
Trust fees 1,360 1,234 1,149
Other service charges
and fees 1,081 902 1,067
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Subtotal 4,436 3,957 3,802
Securities gains 284 454 665
Total $4,720 $4,411 $4,467
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Total noninterest income, exclusive of securities gains, increased
$478,000, or 12.1% in 1995 when compared to 1994. 1994 represented an increase
of $155,000, or 4.1%. In early 1995, the Corporation completed a comprehensive
internal and competitive review of service charges. As a result, service charges
on deposit accounts increased $174,000 in 1995. The increase of $234,000 in 1994
was due primarily to growth in transaction and savings account deposits, coupled
with pricing adjustments. Income from trust activities has increased each year.
Total assets managed by the Trust Department aggregated $204,000,000,
$181,300,000 and $220,000,000 at December 31, 1995, 1994 and 1993, respectively.
Gains and losses on the sale of investment securities also impact comparisons.
Security transactions resulted in gains of $284,000, $454,000 and $665,000 in
1995, 1994 and 1993, respectively.
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6
NONINTEREST EXPENSES
The following table shows significant components of noninterest expenses
during the past three years:
($000) 1995 1994 1993
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Salaries, wages and benefits $ 9,541 $ 9,301 $ 8,410
Occupancy-net 1,501 1,407 1,196
Furniture and equipment 764 615 546
Taxes, other than income
and payroll 600 584 542
FDIC insurance 560 966 924
Data processing 1,521 1,523 1,239
Office supplies, printing
and postage 1,177 1,106 1,280
Other 5,395 5,588 5,150
Total $21,059 $21,090 $19,287
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The Corporation and the Bank have focused efforts on cost efficiency during
the last three years. In early 1995, a comprehensive program was begun to review
and challenge staffing levels in the organization, with the objective of
ensuring optimal levels of customer service by staffing based on customers'
banking patterns. Full-time equivalent staff was 313 at December 31, 1995,
compared to 328 and 319 at the same dates in 1994 and 1993. Total salaries and
wages were level in 1995 compared with 1994. However, the cost of employee
benefits increased $229,000 in 1995, due primarily to pension and Employee Stock
Ownership Plan costs. The increase in salaries, wages and benefits in 1994 when
compared to 1993, was due primarily to wage and benefit cost increases and
increases in the number of employees due to branch acquisitions. FDIC insurance
expense decreased significantly in 1995, to $560,000 from $966,000 in 1994. In
September 1995, the Federal Deposit Insurance Corporation (FDIC) reduced the
annual premium from $0.23 per $100 of insured deposits to approximately $0.04
per $100 deposits insured in the Bank Insurance Fund (BIF). In December 1995,
the FDIC lowered the rate for BIF insured deposits to zero. The Bank also has
approximately $37 million of deposits acquired from Savings and Loan
institutions which are insured by the FDIC in the Savings Association Insurance
Fund (SAIF). These deposits continue to be assessed at $0.23 per $100 per year.
Additionally, Congress is considering a special one-time assessment on SAIF
deposits.
INCOME TAXES
The Corporation employs various strategies in investments and loans to
maximize after-tax profits. This ongoing process considers the levels of
tax-exempt securities and loans, investment securities gains or losses and
allowable loan loss deductions. The Corporation's effective income tax rate
(income tax expense divided by income before income taxes) was 14.8% in 1995,
compared to 18.1% in 1994 and 17.2% in 1993. The effective tax rate is lower
than the statutory rate primarily due to the effect of income on tax-exempt
securities and loans. The income tax provision was $1,112,000 in 1995, compared
with $1,256,000 in 1994 and $1,100,000 in 1993. For the year ended December 31,
1995, no valuation allowance is required on any of the deferred tax assets
recorded due primarily to the earnings history of the Corporation and the
significant amount of federal income taxes paid in prior years.
CREDIT QUALITY AND EXPERIENCE
NONPERFORMING LOANS
Inherent in the business of providing financial services is the risk
involved in extending credit. Management believes the objective of a sound
credit policy is to extend quality loans to customers while reducing risk
affecting shareholders' and depositors' investments. Risk reduction is achieved
through diversity of the loan portfolio as to type, borrower and industry
concentrations, as well as sound credit policy guidelines and procedures.
Nonperforming loans include loans accounted for on a nonaccrual basis as well as
accruing loans that are contractually past due 90 days or more as to principal
or interest. The following table presents information about nonperforming
assets:
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7
($000) 1995 1994 1993
- ----------------------------------------------------
Nonaccrual loans $859 $358 $1,315
Other real estate owned 49 640
Loans past due 90 days or
more and still accruing 106 51 135
Total nonperforming assets $965 $458 $2,090
Nonperforming assets as a
percentage of total loans 0.30% 0.14% 0.72%
Asset quality remains a major focus of the organization, and nonperforming
loans are substantially lower than the industry average.
ALLOWANCE FOR LOAN LOSSES AND
LOAN CHARGE-OFFS AND RECOVERIES
The allowance for loan losses is the reserve maintained to cover possible
losses that may be incurred in the normal course of lending. The allowance for
loan losses is increased by the provision for loan losses which is charged
against income and by recoveries of loans previously charged off. The allowance
is decreased by the charge off of loans that are determined by management to be
uncollectible. In determining the adequacy of the allowance for loan losses,
management on a regular basis evaluates and gives consideration to a variety of
factors. These include estimated future losses on significant loans including
identified problem credits, historical loss experience based on volume and types
of loans, trends in portfolio volume, maturity and composition. Also,
off-balance sheet credit risk (i.e. unadvanced lines of credit), volume and
trends in delinquencies and nonaccruing loans, economic conditions in the Bank's
market areas, and any other relevant factors are evaluated. Potential problem
loans are those loans which are on the Bank's "watch list." These loans exhibit
characteristics which could cause the loan to become nonperforming or require
restructuring in the future. Periodically, and at a minimum monthly, this watch
list is reviewed and adjusted for changing conditions.
As discussed in Note D, the Corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 114 and 118 effective January 1, 1995. As of
December 31, 1995, there were no loans outstanding which met the Standards'
definition of an impaired loan.
7
FINANCIAL CONDITION
The following discussion addresses key elements of financial condition
including earning assets, sources of funds supporting those assets, capital
adequacy and asset and liability management.
EARNING ASSETS
LOANS
Loans comprise the majority of the Corporation's earning assets,
representing 66.5% of average earning assets in 1995 and 69.2% in 1994. At
year-end 1995, total loans were $320,509,000, which was a decrease of
$9,624,000, or 2.9%, from $330,133,000 at year-end 1994. The following table
illustrates the mix within the loan portfolio:
1995 1994 1993
- --------------------------------------------------------
Real estate mortgages 43.3% 46.2% 45.9%
Commercial and collateral 43.0% 41.3% 42.5%
Installment 12.8% 11.6% 10.6%
Credit card and other 0.9% 0.9% 1.0%
Total 100.0% 100.0% 100.0%
- --------------------------------------------------------
The largest category in the loan portfolio is residential real estate
mortgage loans, which were 43.3% of total loans at December 31, 1995, compared
to 46.2% of total loans at the same date in 1994. These loans are primarily
residential first mortgages which can qualify for sale in the secondary market.
At December 31, 1995 and 1994, there were approximately $17,942,000 and
$17,633,000, respectively, in home equity loans. During 1995, approximately
$14,000,000 of residential real estate mortgage loans were sold in the secondary
market. These sales provided a source of fee income and additional funds for new
lending.
The mix within the commercial loan portfolio is diverse and represents
loans to a broad range of businesses located primarily within the Bank's defined
market areas. There are no significant industry concentrations.
The installment loan portfolio is made up primarily of loans to individuals
for the purchase of vehicles and other consumer assets, as well as other
personal purposes.
Fixed rate loans maturing within one year and loans with adjustable rates
that reprice annual or more frequently (exclusive of scheduled repayments),
totaled $129,418,000, or 40.4% of the loan portfolio, at December 31, 1995. This
compares with $121,742,000, or 36.9%, at December 31, 1994.
8
8
INVESTMENT SECURITIES
The investment portfolio represented 32.9% of average earning assets during
1995, compared to 30.3% in 1994 and 39.7% in 1993. These investments provide a
stable yet diversified income stream and serve a useful role in liquidity and
interest-rate sensitivity management. In addition, they serve as a source of
collateral for low-cost funding. Management bases its decisions on purchases of
investment securities based upon an assessment of current economic and financial
trends. The tax-equivalent yield on the investment portfolio was 7.32% in 1995,
7.18% in 1994 and 7.17% in 1993.
The investment portfolio is comprised of U.S. Treasury and other U.S.
Government agency-backed securities, collateralized mortgage-backed securities,
tax-exempt obligations of states and political subdivisions and certain other
investments. The quality rating of obligations of states and political
subdivisions will be A, AA, or AAA, with the majority rated AA or AAA by a
nationally recognized service. As a matter of policy, in support of our service
areas, we may purchase certain unrated bank-qualified bonds of local schools,
townships and municipalities, provided they are a sound credit risk.
As discussed in Note C, in accordance with the Financial Accounting
Standards Board's (FASB) special report, the Corporation reclassified
$48,706,000 of securities from the held-to-maturity to the available-for-sale
category. This reclassification will permit added flexibility in the management
of interest rate sensitivity, investment returns, asset allocation and
liquidity. Securities which are in the held-to-maturity category are purchased
with the intent and ability to hold them to maturity and are carried at
amortized cost.
FEDERAL FUNDS SOLD
Short-term federal funds sold are used to manage interest rate sensitivity
and to meet liquidity needs. During 1995, 1994 and 1993, these funds represented
approximately 0.4%, 0.5% and 1.2%, respectively, of average earning assets.
SOURCES OF FUNDS
DEPOSITS
The Corporation's major source of funds is core deposits of retail and
business customers. Core deposits include non-interest and interest-bearing
demand deposits, savings and other time deposits, exclusive of Certificates of
Deposit over $100,000. The following table illustrates the distribution of
average deposits for the past three years:
1995 1994 1993
- --------------------------------------------------------
Noninterest demand 13.8% 14.0% 12.5%
Interest demand (NOW) 11.0% 12.6% 13.4%
Savings and insured money
market accounts 33.3% 40.7% 39.8%
Other time deposits and
certificates of deposit
under $100,000 29.7% 28.2% 30.2%
- --------------------------------------------------------
Total core deposits 87.8% 95.5% 95.9%
Certificates of deposit
over $100,000 12.2% 4.5% 4.1%
Total 100.0% 100.0% 100.0%
- --------------------------------------------------------
At year-end 1995, certificates of deposit over $100,000 represented 9.5% of
total deposits.
SHORT-TERM FUNDS
Other interest-bearing liabilities include securities sold under agreements
to repurchase, sweep accounts, federal funds purchased and notes payable
treasury tax and loan. During 1995, these funds represented 4.7% of average
earning assets, compared to 4.5% in 1994 and 5.0% in 1993. The following table
contains information on these funds:
($000) 1995 1994 1993
- ----------------------------------------------------------
Balance at December 31 $22,454 $21,357 $20,245
Maximum outstanding
at any month-end 30,013 33,049 32,322
Average amount outstanding 23,144 22,350 24,721
Weighted average
interest rate 3.59% 2.85% 2.58%
- ----------------------------------------------------------
9
9
SHAREHOLDERS' EQUITY AND CAPITAL ADEQUACY
Shareholders' equity is a stable, noninterest-bearing source of funds and
provides stability and support for asset growth.
Cash dividends are evaluated by management on an ongoing basis. During the
past five years, the dividend payout ratio has ranged from 25.4% in 1991 to
31.3% in 1995. Dividends per share were $0.577 per share in 1995, $0.512 in 1994
and $0.399 in 1993.
Capital adequacy refers to the level of capital required to sustain growth
over time to absorb unanticipated losses. The following table contains
additional information related to capital:
($000) 1995 1994 1993
- --------------------------------------------------------------
Total equity $ 50,672 $ 40,982 $ 39,733
Book value per share $ 14.70 $ 12.02 $ 11.80
Tier 1 capital 47,740 41,581 38,746
Total risk-based capital 51,777 45,588 42,396
Risk-adjusted assets 321,121 318,982 290,405
Tier 1 capital ratio 14.87% 13.04% 13.34%
Total capital ratio 16.12% 14.29% 14.60%
Tier 1 leverage ratio 9.05% 8.09% 7.90%
- --------------------------------------------------------------
Total equity is computed in accordance with generally accepted accounting
principles and, as such, includes the net adjustment for unrealized gains or
losses on securities available-for-sale. This adjustment was $1,315,000 in 1995,
$(2,913,000) in 1994 and $982,000 in 1993. Regulatory capital and risk-adjusted
assets are computed according to federal reserve board guidelines, and exclude
the market value adjustment related to available-for-sale investment securities.
The Corporation's and the Bank's capital ratios substantially exceed the
Federal Reserve Board's capital guidelines for a well-capitalized institution,
which are Tier 1 capital ratio of at least 6.00%, 10.00% for total capital and
5.00% for the leverage ratio.
It is management's intent to maintain a level of capitalization that allows
the flexibility to take advantage of opportunities that may arise in the future.
INTEREST RATE SENSITIVITY AND LIQUIDITY MANAGEMENT
The Bank's Asset/Liability Committee manages the overall rate sensitivity
and mix of balance sheet assets to anticipate and minimize negative effects due
to interest rate fluctuations, to maintain a consistent net interest margin and
to maintain consistent growth in net interest income. Interest rate risk is
monitored through gap analysis to properly position the Corporation in various
interest rate scenarios.
Liquidity management ensures that funds are available to meet the cash flow
needs of borrowers, depositors and the Corporation. Funds for short-term
liquidity are provided through maturing securities, the Bank's extensive core
deposit base, repayments received on loans and the acquisition of new deposits.
The Bank also has access to short-term borrowings, if needed, through
arrangements with several of its correspondent banks. Additionally, long-term
funding needs can be met, if required, through the issuance of common stock. The
Corporation's liquidity is considered by management to be adequate to meet
current and projected levels of need.
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10
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------------------------
DECEMBER 31
1995 1994
- -------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 26,611,296 $ 29,271,444
Investment securities available-for-sale 129,466,384 71,604,165
Investment securities held-to-maturity 29,948,383 78,202,883
Federal funds sold 2,900,000 2,500,000
Loans 320,508,725 330,132,961
Less allowance for loan losses 5,849,689 5,616,859
Net loans 314,659,036 324,516,102
Bank premises and equipment, net 11,640,337 10,585,653
Accrued income and prepaid expenses 4,228,757 3,980,626
Other assets 10,076,157 11,066,084
Total Assets $ 529,530,350 $ 531,726,957
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits
Demand-noninterest bearing $ 70,008,577 $ 69,649,373
Demand-interest bearing 53,962,361 55,965,771
Savings and other time 328,163,756 340,221,731
Total deposits 452,134,694 465,836,875
Short-term funds 22,453,980 21,357,228
Other liabilities 3,839,195 2,770,882
Employee stock ownership plan obligation 430,260 780,260
Total liabilities 478,858,129 490,745,245
Shareholders' equity
Capital stock, no par value, 5,000,000 shares authorized
3,447,160 shares issued and outstanding (3,409,311 in 1994) 5,896,098 5,182,737
Capital surplus 18,553,553 16,623,320
Retained earnings 25,337,492 22,868,953
Unrealized gain (loss) on available-for-sale investment
securities (net of income tax) 1,315,338 (2,913,038)
Employee stock ownership plan obligation (430,260) (780,260)
TOTAL SHAREHOLDERS' EQUITY 50,672,221 40,981,712
Total Liabilities and Shareholders' Equity $ 529,530,350 $ 531,726,957
See accompanying notes to consolidated financial statements
11
11
CONSOLIDATED INCOME STATEMENTS
- ------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------
Interest Income
Loans (including fees)
Taxable $ 29,669,860 $ 27,108,064 $23,382,522
Tax-exempt 190,612 160,825 175,218
Investment securities
Taxable 5,789,178 4,405,702 8,099,418
Tax-exempt 4,012,945 3,580,522 2,916,890
Federal funds sold and other short-term funds 166,290 101,532 155,215
Total interest income 39,828,885 35,356,645 34,729,263
Interest Expense
Deposits 14,963,571 10,891,503 11,970,871
Short-term funds 831,670 636,854 638,295
Total interest expense 15,795,241 11,528,357 12,609,166
Net interest income 24,033,644 23,828,288 22,120,097
Provision for Loan and Real Estate Losses 180,000 208,333 920,000
Net interest income after provision for
loan and real estate losses 23,853,644 23,619,955 21,200,097
Other Income
Service charges on deposit accounts 1,994,693 1,820,807 1,586,405
Trust fees 1,360,000 1,234,037 1,149,262
Other 1,080,559 902,351 1,066,717
Security gains 284,274 454,219 665,373
Total other income 4,719,526 4,411,414 4,467,757
Other Expenses
Salaries, wages and benefits 9,541,034 9,301,485 8,410,219
Occupancy-net 1,501,004 1,406,883 1,196,260
Furniture and equipment 764,318 615,305 546,415
Taxes, other than income and payroll 599,523 584,121 541,965
FDIC insurance 559,675 965,612 924,145
Other 8,093,662 8,216,267 7,668,251
TOTAL OTHER EXPENSES 21,059,216 21,089,673 19,287,255
Income before income taxes 7,513,954 6,941,696 6,380,599
Income Tax Expense (Benefit)
Current 1,298,000 1,511,000 1,080,000
Deferred (186,000) (255,000) 20,000
Total income tax expense 1,112,000 1,256,000 1,100,000
Net Income $ 6,401,954 $ 5,685,696 $ 5,280,599
Net Income Per Share (amounts reflect a three percent
stock dividend in 1995 and four-for-three stock
splits in 1994 and 1993) $ 1.86 $ 1.68 $ 1.56
See accompanying notes to consolidated financial statements.
12
12
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31
1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
Operating Activities
Net income $ 6,401,954 $ 5,685,696 $ 5,280,599
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan and real estate losses 180,000 208,333 920,000
Provision for depreciation and amortization 1,433,910 1,211,917 1,026,158
Accretion of discounts on purchased loans (103,702) (491,577)
Amortization of premiums, less accretion of discounts on
investment securities (347,707) (12,508) 332,613
(Increase) decrease in refundable taxes (212,340) 243,723 (243,723)
Realized securities gains on available-for-sale securities (284,274) (454,219) (665,373)
(Credit) provision for deferred income taxes (186,000) (255,000) 20,000
(Increase) decrease in interest receivable (340,943) (560,812) 437,562
Increase (decrease) in interest payable 95,686 210,877 (114,462)
(Increase) in other assets (212,947) (347,184) (567,817)
Increase (decrease) in other Liabilities 290,567 50,087 (2,123)
Net Cash Provided By Operating Activities 6,714,204 5,489,333 6,423,434
Investing and Lending Activities
Proceeds from sales of available-for-sale investment securities 32,727,163 38,295,166 54,757,889
Maturities of available-for-sale investment securities 8,481,652 17,255,095 56,155,855
Maturities of held-to-maturity investment securities 7,387,123 3,725,331
Purchases of available-for-sale investment securities (40,793,428) (42,374,244) (89,259,979)
Purchases of held-to-maturity investment securities (10,371,621) (19,209,616)
Net (increase) decrease in credit card receivables (101,434) 45,390 397,988
Net decrease (increase) in longer-term loans 9,882,205 (40,855,489) (44,250,140)
Purchases of premises and equipment, net of retirements (2,217,265) (1,031,599) (3,167,403)
Net Cash Provided (Used) By Investing Activities 4,994,395 (44,149,966) (25,365,790)
Deposit and Financing Activities
Net (Decrease) Increase in Demand Deposits and Savings Accounts (35,513,764) 7,587,826 39,008,588
Net increase (decrease) in certificates of deposit 21,811,582 30,663,432 (13,532,659)
Net increase (decrease) in short-term funds 1,096,752 1,112,200 (2,459,637)
Cash dividends (2,003,182) (1,745,427) (1,347,730)
Dividend reinvestment plan 380,423 446,715 288,757
Long-term incentive plan 259,442 315,843 67,683
Net Cash (Used) Provided By Financing Activities (13,968,747) 38,380,589 22,025,002
(Decrease) Increase In Cash and Cash Equivalents (2,260,148) (280,044) 3,082,646
Cash and Cash Equivalents at Beginning of Year 31,771,444 32,051,488 28,968,842
Cash and Cash Equivalents at End of Year $ 29,511,296 $ 31,771,444 $ 32,051,488
See accompanying notes to consolidated financial statements.
13
13
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- ----------------------------------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31, 1995, UNREALIZED
1994 AND 1993 GAINS (LOSSES) EMPLOYEE
ON AVAILABLE- STOCK OWNER-
CAPITAL CAPITAL RETAINED FOR-SALE SHIP PLAN
STOCK SURPLUS EARNINGS SECURITIES OBLIGATION TOTAL
- ----------------------------------------------------------------------------------------------------------------------------
Balance at January 1, 1993 $ 3,947,905 $16,623,320 $14,995,815 $(1,405,260) $ 34,161,780
Net income 5,280,599 5,280,599
Cash dividends-$0.399* per share (1,347,730) (1,347,730)
Reduction in employee stock
ownership plan obligation 300,000 300,000
Shares issued (18,841*) under
dividend reinvestment plan 288,757 288,757
Shares issued (5,713*) under
long-term incentive plan 67,683 67,683
Adjustment to unrealized gains
on available-for-sale securities,
net of tax $ 982,078 982,078
- ----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 4,304,345 16,623,320 18,928,684 982,078 (1,105,260) 39,733,167
Net income 5,685,696 5,685,696
Cash Dividends-$0.512* Per Share (1,745,427) (1,745,427)
Reduction in employee stock
ownership plan obligation 325,000 325,000
Shares issued (17,400*) under
dividend reinvestment plan 446,715 446,715
Shares issued (25,945*) under
long-term incentive plan 431,677 431,677
Adjustment to unrealized gains
(losses) on available-for-sale
securities, net of tax (3,895,116) (3,895,116)
- ----------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 5,182,737 16,623,320 22,868,953 (2,913,038) (780,260) 40,981,712
Net income 6,401,954 6,401,954
Cash dividends - $0.577 per share (2,003,182) (2,003,182)
Reduction in employee stock
ownership plan obligation 350,000 350,000
Shares issued (17,278) under
dividend reinvestment plan 380,423 380,423
Shares issued (21,184) under
long-term incentive plan 332,938 332,938
Three percent stock dividend 1,930,233 (1,930,233)
Adjustment to unrealized gains
(losses) on available-for-sale
securities, net of tax 4,228,376 4,228,376
- ----------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1995 $ 5,896,098 $18,553,553 $25,337,492 $ 1,315,338 $ (430,260) $ 50,672,221
<FN>
*Restated for a three percent stock dividend in 1995 and four-for-three stock
splits in 1994 and 1993.
See accompanying notes to consolidated financial statements.
14
14
NOTES TO FINANCIAL STATEMENTS
NOTE A -- ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of CoBancorp Inc. (the Corporation) and its wholly-owned subsidiary,
PREMIERBank & Trust (the Bank). All material intercompany accounts and
transactions have been eliminated.
SECURITIES HELD-TO-MATURITY AND AVAILABLE-FOR-SALE: Management determines the
appropriate classification of debt securities at the time of purchase. Debt
securities are classified as held-to-maturity when the Corporation has the
positive intent and ability to hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost.
Debt securities not classified as held-to-maturity are classified as
available-for-sale. Available-for-sale securities are stated at fair value with
the unrealized gains and losses, net of tax, reported as a separate component of
shareholders' equity. There are no securities classified as trading.
The amortized cost of debt securities classified as held-to-maturity or
available-for-sale is adjusted for amortization of premiums and accretion of
discounts to maturity or, in the case of mortgage-backed securities, over the
estimated life of the security. Such amortization is included in interest income
from investments. Interest and dividends are included in interest income from
investments. Realized gains and losses are included in net securities gains
(losses). The cost of securities sold is based on the specific identification
method.
FINANCIAL INSTRUMENTS: The Bank invests in on-balance sheet financial
instruments as part of the overall asset and liability management process. The
Bank does not buy and sell financial instruments for the purpose of earning a
profit due to changes in the market price of the instruments. No off-balance
sheet financial instruments, other than those disclosed in Note M, have been
used by the Bank.
LOANS: Interest on loans is credited to earnings based upon
the principal amount outstanding. Interest on nonaccrual loans is recognized on
a cash basis.
DEPRECIATION AND AMORTIZATION: Bank premises and equipment are stated at cost
less accumulated depreciation. Depreciation is computed on straight-line and
declining-balance methods, based on the following ranges of lives:
YEARS
- ------------------------------------------------------
Buildings 10-40
Equipment and leasehold improvements 3-20
Intangible assets are amortized using the straight-line method over the
assets' estimated life, generally ten years.
The asset account is relieved of the cost of the item and the allowance for
depreciation is relieved of accumulated depreciation when property is retired or
otherwise disposed. Any resulting gain or loss is reflected in operations
concurrently. Costs of major additions and improvements are capitalized.
Expenditures for maintenance and repairs are charged to operations as incurred.
ALLOWANCE FOR LOAN LOSSES: The provision for loan losses charged to operating
expense and the adequacy of the allowance for loan losses is based upon a
continuing evaluation of the loan portfolio, prior years' loss experience,
current economic conditions and other pertinent factors.
INCOME TAXES: Certain items of income and expense are recognized in taxable
years other than those in which such amounts are recognized in the financial
statements. Provisions are made in the financial statements for any
deferred taxes that arise in recognition of these temporary differences in
accordance with FASB Statement No. 109, "Accounting for Income Taxes." The
cumulative effect of adoption of FASB Statement No. 109 was not material to the
Corporation's results of operations for the year ended December 31, 1993.
CASH EQUIVALENTS: Cash equivalents include amounts due from banks and federal
funds sold. Generally, federal funds are purchased and sold for periods less
than thirty days.
FAIR VALUES OF FINANCIAL INSTRUMENTS: FASB Statement No. 107, "Disclosures
about Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate that value. In cases
where quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those techniques
are significantly affected by the assumptions used, including the discount rate
and estimates of future cash flows. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets and, in
many cases, could not be realized in immediate settlement of the instrument.
FASB Statement No. 107 excludes certain financial instruments and all
nonfinancial instruments from its disclosure requirement. Accordingly, the
aggregate fair value amounts presented do not represent the underlying value of
the Corporation.
15
15
The following methods and assumptions were used by the Corporation in
estimating its fair value disclosures for financial instruments:
CASH AND CASH EQUIVALENTS: The carrying amounts reported in the balance
sheet for cash and short-term instruments approximate those assets' fair
values.
INVESTMENT SECURITIES (INCLUDING MORTGAGE-BACKED SECURITIES): Fair values
for investment securities are based on quoted market prices, where
available. If quoted market prices are not available, fair values are based
on quoted market prices of comparable instruments.
LOANS RECEIVABLE: For variable-rate loans that reprice frequently and with
no significant change in credit risk, fair values are based on carrying
values. The fair values for certain mortgage loans (e.g., one-to-four
family residential), credit card loans, and other consumer loans are based
on quoted market prices of similar loans sold in conjunction with
securitization transactions, adjusted for differences in loan
characteristics. The fair values for other loans (e.g., commercial real
estate and rental property mortgage loans, commercial and industrial loans,
financial institution loans, and agricultural loans) are estimated using
discounted cash flow analyses, using interest rates currently being offered
for loans with similar terms to borrowers of similar credit quality. The
carrying amount of accrued interest approximates its fair value.
DEPOSIT LIABILITIES: The fair values disclosed for demand deposits (e.g.,
interest and noninterest checking, passbook savings, and certain types of
money market accounts) are, by definition, equal to the amount payable on
demand at the reporting date (i.e., their carrying amounts). The carrying
amounts for variable-rate, fixed-term money market accounts and
certificates of deposit approximate their fair values at the reporting
date. Fair values for fixed-rate certificates of deposit are estimated
using a discounted cash flow calculation that applies interest rates
currently being offered on certificates to a schedule of aggregated
expected monthly maturities on time deposits.
SHORT-TERM FUNDS: The carrying amounts of the funds under repurchase
agreements and other short-term funds approximate their fair values.
LONG-TERM BORROWINGS: The carrying amounts of the Corporation's long-term
borrowings (other than deposits) approximate their fair values.
POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS: The Corporation does not
provide postretirement or postemployment benefits except as provided by the
defined benefit plan discussed in Note J.
SEGMENT OF BUSINESS: The Corporation operates in the single industry of
banking. While the Corporation offers a wide range of services, they are
all deemed to be a part of commercial banking. PREMIERBank & Trust operates
38 branch offices in 8 counties in Northeast and North Central Ohio, as
well as a loan origination office in Worthington, Ohio.
PER SHARE AMOUNTS: Earnings per share computations are based on the average
number of shares of capital stock outstanding during the year. All per
share amounts have been adjusted to reflect a three percent stock dividend
in 1995, four-for-three stock splits in 1994 and 1993, and a four percent
stock dividend in 1992.
USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
RECLASSIFICATIONS: Certain amounts in the 1994 and 1993 financial
statements have been reclassified to conform to the 1995 presentation.
NOTE B -- RESTRICTIONS ON CASH AND DUE FROM BANKS
PREMIERBank & Trust is required to maintain reserve balances with the
Federal Reserve Bank. The average amount of those reserve balances for the year
ended December 31, 1995, was $2,247,000.
16
16
NOTE C -- INVESTMENT SECURITIES
The following is a summary of available-for-sale and held-to-maturity
securities:
DECEMBER 31, 1995 AVAILABLE-FOR-SALE SECURITIES
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
- ----------------------------------------------------------------------------------------------------------
U.S. Treasury and other U.S. Government agencies $ 31,365,822 $ 316,722 $ 31,636 $ 31,650,908
Collateralized mortgage-backed securities 45,563,545 488,410 476,290 45,575,665
States of the U.S. and political subdivisions 48,230,831 1,815,854 120,124 49,926,561
Other 2,313,250 2,313,250
$127,473,448 $2,620,986 $ 628,050 $129,466,384
HELD-TO-MATURITY SECURITIES
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
- ----------------------------------------------------------------------------------------------------------
States of the U.S. and political subdivisions $ 29,948,383 $ 874,470 $ 86,004 $ 30,736,849
DECEMBER 31, 1994 AVAILABLE-FOR-SALE SECURITIES
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
- ----------------------------------------------------------------------------------------------------------
U.S. Treasury and other U.S. Government agencies $ 28,505,524 $ 781 $ 1,264,863 $ 27,241,442
Collateralized mortgage-backed securities 45,252,684 21,399 3,254,648 42,019,435
States of the U.S. and political subdivisions 1,000,000 83,638 1,083,638
Other 1,259,650 1,259,650
$ 76,017,858 $ 105,818 $ 4,519,511 $ 71,604,165
HELD-TO-MATURITY SECURITIES
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
- ----------------------------------------------------------------------------------------------------------
U.S. Treasury and other U.S. Government agencies $ 5,490,570 $ 177,320 $ 5,313,250
States of the U.S. and political subdivisions 72,712,313 $ 416,336 2,917,857 70,210,792
$ 78,202,883 $ 416,336 $ 3,095,177 $ 75,524,042
Gross proceeds from sales of investment securities during 1995, 1994 and
1993 were $32,727,163, $38,295,166 and $54,757,889, respectively. For the same
periods, gross gains of $345,715, $615,066 and $768,985 and gross losses of
$61,441, $160,847 and $103,612 were realized, respectively. The net adjustment
to unrealized gains (losses) on available-for-sale securities, net of tax,
included as a separate component of shareholders' equity totaled $4,228,376, in
1995, ($3,895,116) in 1994 and $982,078 in 1993.
The amortized cost and estimated fair value of debt and marketable equity
securities at December 31, 1995, by contractual maturity, are shown below.
Mortgage-backed securities that may have prepayment provisions are assigned to a
maturity category based on estimated average life. Expected maturities will
differ from contractual maturities because the issuers of securities may have
the right to prepay obligations without prepayment penalties.
AVAILABLE-FOR-SALE SECURITIES
Estimated
Cost Fair Value
- ----------------------------------------------------------------
Due in 1 year or less $ 4,425,241 $ 4,483,667
Due in 1 to 5 years 36,027,547 36,401,406
Due in 5 to 10 years 61,735,714 62,741,565
DUE AFTER 10 YEARS 25,284,946 25,839,746
$127,473,448 $129,466,384
17
HELD-TO-MATURITY SECURITIES
Estimated
Cost Fair Value
- ----------------------------------------------------------------
Due in 1 year or less $ 2,082,890 $ 2,115,734
Due in 1 to 5 years 13,262,493 13,656,779
Due in 5 to 10 years 10,484,463 10,734,503
Due after 10 years 4,118,537 4,229,833
$ 29,948,383 $ 30,736,849
At December 31, 1995 and 1994, investment securities with a carrying value
of approximately $100,685,315 and $80,721,505, respectively, were pledged as
collateral to secure public deposits and for other purposes.
On November 15, 1995, the FASB staff issued a special report, "A Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities." In accordance with provisions in that special report,
management chose to reclassify certain securities classified as held-to-maturity
to available-for-sale in a single transaction in December 1995. The amortized
cost of those securities was $48,705,886 and the net unrealized gain on those
securities was $1,757,891.
18
17
NOTE D -- LOANS
The composition of the loan portfolio at December 31 was:
1995
Estimated
Carrying Amount Fair Value
- -------------------------------------------------------
REAL ESTATE $138,664,113 $140,325,240
Installment 41,154,570 39,947,967
Commercial and collateral 137,701,651 133,664,400
All other 2,988,391 2,988,391
$320,508,725 $316,925,998
1994
Estimated
Carrying Amount Fair Value
- -------------------------------------------------------
Real estate $152,695,507 $147,153,620
Installment 38,363,874 37,311,565
Commercial and collateral 136,186,623 140,746,508
All other 2,886,957 2,886,957
$330,132,961 $328,098,650
Included in commercial and collateral loans for 1995 and 1994 are
$2,588,807 and $2,946,474, respectively, of tax-exempt industrial revenue
development bonds.
Transactions in the allowance for loan losses were:
1995 1994 1993
- ---------------------------------------------------------------------
Balance at January 1 $ 5,616,859 $ 5,226,401 $ 5,214,700
Provision for loan losses 180,000 208,333 820,000
Recoveries on loans
charged off 680,655 614,195 1,337,624
6,477,514 6,048,929 7,372,324
Loans charged off (627,825) (432,070) (2,145,923)
Balance at December 31 $ 5,849,689 $ 5,616,859 $ 5,226,401
At December 31, 1995, nonperforming loans were $964,986, and other real
estate was $0. At December 31, 1994, the corresponding amounts were $408,735 and
$49,570, respectively.
Effective January 1, 1995, the Corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of
a Loan" as amended by SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan--Income Recognition and Disclosures." These standards address the
accounting for certain loans when it is probable that all amounts due, pursuant
to the contractual terms of the loan, will not be collected. Impairment is
measured based on either the present value of expected future cash flows using
the initial effective interest rate on the loan, the observable market price of
the loan, or the fair value of the collateral if the loan is collateral
dependent. If the recorded investment in the loan exceeds the measure of fair
value, a valuation allowance is established as a component of the allowance for
loan losses. The adoption of these accounting standards did not have a material
impact on the overall allowance for loan losses and did not affect CoBancorp's
charge-off or income recognition policies. At December 31, 1995, CoBancorp did
not have any impaired loans outstanding.
NOTE E -- BANK PREMISES AND EQUIPMENT
Bank premises and equipment at December 31 were:
1995 1994
- ------------------------------------------------------------
Land and improvements $ 2,214,358 $ 2,218,060
Buildings 9,492,718 9,528,425
Equipment and leasehold
improvements 12,484,913 11,214,728
Construction in progress 717,423
24,909,412 22,961,213
Less accumulated depreciation
and amortization (13,269,075) (12,375,560)
$ 11,640,337 $ 10,585,653
19
NOTE F -- DEPOSITS
Time certificates of deposit with balances of $100,000 or more, principally
public and corporate funds, were $42,842,392 and $36,896,549 at December 31,
1995 and 1994, respectively. Interest expense on these deposits amounted to
$3,402,732, $810,522 and $602,849 for 1995, 1994 and 1993, respectively.
20
18
Total interest paid on deposits in 1995, 1994 and 1993 was $14,877,688,
$10,678,550 and $12,083,166, respectively.
The carrying amounts and fair values of deposits consisted of the following
at December 31. For deposits with no defined maturities, FASB Statement No. 107
defines fair value as the amount payable on demand.
1995
Estimated
Carrying Amount Fair Value
- ----------------------------------------------------------
Demand - noninterest bearing $ 70,008,577 $ 70,008,577
Demand - interest bearing 53,962,361 53,962,361
Savings 143,601,686 143,601,686
Certificates of deposit 153,625,646 148,810,981
IRAs 30,936,424 29,043,383
$452,134,694 $445,426,988
1994
Estimated
Carrying Amount Fair Value
- ----------------------------------------------------------
Demand - noninterest bearing $ 69,649,373 $ 69,649,373
Demand - interest bearing 55,965,771 55,965,771
Savings 177,471,243 177,471,243
Certificates of deposit 131,629,889 125,017,271
IRAs 31,120,599 29,231,997
$465,836,875 $457,335,655
NOTE G -- CAPITAL STOCK
On July 17, 1995, the Corporation declared a three percent stock dividend,
payable on September 1, 1995, to shareholders of record August 22, 1995. The
increase in the number of shares outstanding as a result of the stock dividend
was 99,431. The dividend was recorded at fair market value. Cash was paid for
any resulting fractional shares. On January 18, 1994, the Corporation declared a
four-for-three stock split, payable on February 22, 1994, to shareholders of
record February 1, 1994. The increase in the number of shares outstanding as a
result of the stock split was 841,773. Cash was paid for any resulting
fractional shares. On June 21, 1993, the Corporation declared a four-for-three
stock split, payable on July 23, 1993, to shareholders of record July 15, 1993.
The increase in the number of shares outstanding as a result of the stock split
was 627,908. Cash was paid for any resulting fractional shares.
The Corporation adopted a dividend reinvestment plan in 1987. The plan
allowed shareholders to elect to use their dividends to purchase shares of
capital stock at ninety-five percent of the fair market value of such stock as
determined on the dividend declaration date. During 1993, 18,841 shares were
issued under the plan. In April of 1994, the Corporation terminated the 1987
dividend reinvestment plan and replaced it with a new plan, which allows
shareholders to elect to use all or part of their dividends to purchase shares
of capital stock at the fair market value of such stock as determined on the
dividend declaration date. Additionally, cash can be contributed directly to the
plan for the purchase of shares of capital stock with an annual limit of
$25,000. During 1995 and 1994, a total of 17,278 and 17,400 shares,
respectively, were issued under the plans. Beginning in November 1995, shares
for the dividend reinvestment plan are acquired in the market, rather than
issued from the Corporation's authorized but unissued shares.
NOTE H -- DIVIDEND RESTRICTION
The payment of dividends by member banks of the Federal Reserve System,
without prior Federal regulatory approval, is limited to the current year's net
profits as defined and the retained net profits for the two preceding years. At
December 31, 1995, approximately $14,055,000 was available to the subsidiary
bank for the payment of dividends without prior regulatory approval.
21
19
NOTE I -- INCOME TAXES
Significant components of the Corporation's deferred tax assets and
liabilities as of December 31, are as follows:
1995 1994
- -----------------------------------------------------------
Deferred Tax Assets:
Unrealized gain (loss) on
available-for-sale securities,
net of tax $1,500,655
Provision for Loan Losses $1,310,134 1,155,554
Deferred Compensation 576,383 563,453
Nonaccrual Loan Interest 8,954 248,387
Other 213,123 80,216
2,108,594 3,548,265
Deferred Tax Liabilities:
Tax over Book Depreciation 348,560 591,279
Unrealized gain (loss) on
available-for-sale securities,
net of tax 677,598
Pension Costs 203,690 191,014
Insurance Costs 65,562
Other 206,322 113,672
1,436,170 961,527
NET DEFERRED TAX ASSET $ 672,424 $2,586,738
The reasons for the difference between tax expense based on the statutory
rate of 34 percent in 1995, 1994 and 1993 and the effective tax rates were:
1995 1994 1993
- ------------------------------------------------------------------------------
Tax expense at
statutory rates $ 2,555,000 $ 2,360,000 $ 2,169,000
Reduction in taxes resulting from:
Tax-exempt interest (1,274,000) (1,272,000) (1,051,000)
Other (169,000) 168,000 (18,000)
$ 1,112,000 $ 1,256,000 $ 1,100,000
The Corporation made income tax payments of approximately $1,525,000,
$975,000 and $1,634,000 during 1995, 1994 and 1993, respectively.
NOTE J -- PENSION PLAN
The Corporation has a trusteed, noncontributory retirement plan covering
eligible employees. Pension benefits are based on employees' career average
compensation. The Bank's funding policy is to contribute sufficient amounts to
meet minimum funding requirements set forth by required laws plus such
additional amounts as the Bank may determine appropriate. During 1995, the
Corporation's pension contribution was $217,282. There was no pension
contribution in 1994.
A summary of the components of pension expense is as follows:
1995 1994 1993
- ------------------------------------------------------------------
Service cost benefits earned
during the period $ 219,506 $ 229,680 $ 184,495
Interest cost on projected
benefit obligation 185,495 192,763 174,274
RETURN ON PLAN ASSETS (200,715) (226,203) (227,774)
Net amortization
and deferral (24,286) (43,104) (50,756)
Net pension expense $ 180,000 $ 153,136 $ 80,239
22
The funded status of the plan at December 31, 1995 and 1994, was as
follows:
1995 1994
- -------------------------------------------------------------
Actuarial present value of
accumulated benefit obligation
Vested $ 2,237,967 $ 2,283,084
Nonvested 176,328 151,003
$ 2,414,295 $ 2,434,087
Actuarial present value of
projected benefit obligation $(3,027,399) $(3,151,832)
22
Plan assets at fair value 3,046,861 3,433,306
Plan assets in excess of
projected benefit obligation 19,462 281,474
Unrecognized transition asset,
net of amortization (651,235) (744,269)
UNRECOGNIZED NET LOSS 1,230,860 1,024,600
Net pension asset included in
other assets $ 599,087 $ 561,805
23
20
The long-term rate of return used to determine the expected return on plan
assets included in net pension expense is 7 percent. The projected benefit
obligation was determined using an assumed discount rate of 7 percent, and an
annual compensation increase of 5 percent. At December 31, 1995 and 1994, plan
assets consisted primarily of money market, equity and fixed income funds.
NOTE K -- EMPLOYEE STOCK OWNERSHIP PLAN
The Corporation has a noncontributory employee stock ownership plan (ESOP)
that covers substantially all employees. In 1986, the ESOP borrowed $2,680,260.
The balance outstanding at December 31, 1995, of $430,260 is due in November
1996 under a loan agreement with an unaffiliated bank to finance a purchase of
shares of the Corporation's capital stock for the ESOP. The loan agreement
provides for the payment of interest at a fluctuating rate. The rate of interest
on the loan at December 31, 1995, was 7.785 percent. Interest incurred on this
loan obligation was $54,926, $61,104 and $70,094 in 1995, 1994 and 1993,
respectively. At December 31, 1995, 33,640 shares of the Corporation's common
stock owned by the ESOP were pledged as security for the payment of principal
and interest as provided in the loan agreement.
It is anticipated that funds for servicing the loan agreement will be
provided essentially from contributions paid by the Corporation or its
subsidiary to the ESOP, from earnings attributable to such contributions and
from cash dividends paid to the ESOP on shares of the Corporation's capital
stock which it owns. Neither the Corporation, nor its subsidiary, has guaranteed
the payments required by the loan agreement, nor made any commitment to make
contributions to the ESOP for this purpose. However, as required by generally
accepted accounting principles, the ESOP's obligation has been recorded on the
Corporation's consolidated balance sheet with an offsetting reduction of
shareholders' equity.
Contributions by the Corporation and its subsidiary to the ESOP are
expensed in the year the contribution is approved. These contributions were
$291,350, $165,375 and $267,600 in 1995, 1994 and 1993, respectively.
Dividends received for shares owned by the ESOP amounted to $149,613,
$146,453 and $121,770 in 1995, 1994 and 1993, respectively, and were used to
service the loan obligation.
NOTE L -- RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Bank makes loans and enters into
other transactions with its directors, officers and entities having a specified
relationship to such directors and officers. Transactions entered into between
the Bank and such related parties have been and are in the ordinary course of
business made on substantially the same terms and conditions as transactions
with other parties. As of December 31, 1995 and 1994, the Bank had loans
outstanding to related parties of approximately $6,320,616 and $7,538,657,
respectively.
NOTE M -- FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
Loan commitments are made to accommodate the financial needs of the Bank's
customers. Standby letters of credit commit the Bank to make payments on behalf
of customers when certain specified future events occur. Both arrangements have
credit risk essentially the same as that involved in extending loans to
customers and are subject to the Bank's normal credit policies. Collateral
(e.g., securities, receivables, inventory or equipment) is obtained based on
management's credit assessment of the customer.
The Bank's maximum potential obligation to extend credit for loan
commitments (unfunded loans and unused lines of credit) and standby letters of
credit at December 31, 1995 and 1994, was:
1995 1994
- -------------------------------------------------------
Real estate $17,195,000 $21,385,000
Commercial and collateral 33,538,000 36,853,000
All other 15,651,000 18,070,000
$66,384,000 $76,308,000
Most of the Bank's business activity is with customers located within the
Bank's defined market area. As of December 31, 1995, the Bank had no significant
concentrations of credit risk in its loan portfolio. The Bank also has no
exposure to highly leveraged transactions and no foreign credits in its loan
portfolio.
NOTE N -- SERVICE AGREEMENT
In 1995, the Corporation renegotiated its agreement to purchase information
technology services from a data processing company. This agreement has a term of
seven years and may be renewed for successive terms of seven years each. The
agreement provides for payment of a monthly charge based on the number of
application and transaction accounts maintained. These payments are partially
offset by amounts received by the Corporation for the use of certain facilities
by the processor. The amount included in
24
21
"other expenses" in connection with the service agreement was $1,261,213
for 1995, $1,276,647 for 1994 and $859,884 for 1993. The minimum annual base
charge in connection with this agreement is $486,000 annually.
Additionally, the Corporation entered into an agreement to lease certain
data processing equipment from a different company. The agreement has a term of
seven years. The annual lease fee in connection with this agreement is
approximately $252,000.
NOTE O -- LONG-TERM INCENTIVE PLAN
On January 21, 1992, the Board of Directors of the Corporation adopted a
Long-Term Incentive Plan ("Plan") for officers and key employees of the
Corporation. Under the terms of the Plan, eligible employees may be granted
stock options, restricted stock or long-term performance awards based on certain
conditions. There were 190,435 shares of stock reserved and available for
distribution under the Plan. Stock options are exercisable at the fair market
value of the stock at the time of the grant. On January 21, 1992, options which
cover 126,164 shares of stock were granted by the Board of Directors at a fair
market value of $11.85 per share. During 1995, 19,042 options were exercised at
$11.85 and 2,142 were exercised at $15.80. In 1994, 20,946 options were
exercised at $11.85 and 4,999 were exercised at $15.80. Finally, in 1993, 5,713
shares were exercised at $15.80. No options were granted in 1995 or 1993. On
November 15, 1994, options which cover 47,397 shares of stock were granted by
the Board of Directors at a fair market of $22.09 per share. All shares and per
share amounts have been restated for a three percent stock dividend in 1995, a
four percent stock dividend in 1992 and four-for-three stock splits in 1994 and
1993.
The Corporation accounts for the plan under the provisions of Accounting
Principles Board (APB) Opinion No. 25, "Accounting For Stock Issued To
Employees."
In 1995, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 123, "Accounting Disclosure of Stock-Based Compensation." The
statement is effective for fiscal years beginning after December 15, 1995. The
adoption of FASB 123 is not expected to have a material effect on the
Corporation's financial statements.
NOTE P -- COBANCORP INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
BALANCE SHEETS (Parent Company Only)
DECEMBER 31
1995 1994
- ----------------------------------------------------------------
Assets
Cash $ 288 $ 223,351
Investment in bank subsidiary 50,886,687 41,412,688
Other assets 215,505 125,933
Total Assets $51,102,480 $41,761,972
Liabilities and Shareholders' Equity
Liabilities
Employee stock ownership
plan obligation $ 430,260 $ 780,260
Total Liabilities 430,260 780,260
Shareholders' Equity 50,672,220 40,981,712
Total Liabilities and
Shareholders' Equity $51,102,480 $41,761,972
STATEMENTS OF INCOME (Parent Company Only)
YEARS ENDED DECEMBER 31
1995 1994 1993
- -----------------------------------------------------------------
Income
Dividends from
bank subsidiary $1,340,089 $1,366,365 $1,250,749
Other income 75,885 1,000
Total income 1,415,974 1,367,365 1,250,749
Expenses 259,644 288,960 171,793
Income Before Equity in
Undistributed Net Income
of Bank Subsidiary 1,156,330 1,078,405 1,078,956
Equity in Undistributed
Net Income of Bank
Subsidiary 5,245,624 4,607,291 4,201,643
Net Income $6,401,954 $5,685,696 $5,280,599
25
22
STATEMENTS OF CASH FLOWS (Parent Company Only)
YEARS ENDED DECEMBER 31
1995 1994 1993
- --------------------------------------------------------------------------
Operating Activities
Net Income $ 1,156,330 $ 1,078,405 $ 1,078,956
(Increase) in Other Assets (16,075) (9,999) (100)
Net Cash Provided by
Operating Activities 1,140,255 1,068,406 1,078,856
Financing Activities
Cash Dividends (2,003,182) (1,347,730)
Dividend
Investment Plan 380,423 446,715 288,757
Long-Term
Incentive Plan 259,441 315,843 67,683
Net Cash Used by
Financing Activities (1,363,318) (982,869) (991,290)
(Decrease) Increase
in Cash and Cash
Equivalents (233,063) 85,537 87,566
Cash and Cash Equivalents
at Beginning of Year 223,351 137,814 50,248
Cash and Cash
Equivalents at End
of Year $ 288 $ 223,351 $ 137,814
NOTE Q -- QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Quarterly financial information is contained on page 22.
NOTE R -- ACQUISITIONS
On November 10, 1995, the Bank entered into an agreement to acquire certain
assets and assume certain liabilities representing eleven (11) Lorain County
branch offices of Bank One, Cleveland, N.A. The transaction closed on February
16, 1996.
26
23
Report Of Ernst & Young LLP, Independent Auditors
The Shareholders
CoBancorp Inc.
We have audited the accompanying consolidated balance sheets of CoBancorp
Inc. and subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of CoBancorp Inc.
and subsidiary at December 31, 1995 and 1994, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
Cleveland, Ohio
January 19, 1996
27
24
MARKET AND DIVIDEND INFORMATION
All common shares of CoBancorp Inc. are voting shares and are traded on the
NASDAQ National Market System. There are currently 3,447,160 shares outstanding,
held among approximately 1,719 shareholders of record as of December 31, 1995.
Prices are the high and low closing prices as reported by NASDAQ. All per-share
amounts have been adjusted for a three percent stock dividend in September 1995
and a four-for-three stock split in February 1994.
TRADING RANGES OF COMMON STOCK
BID PRICES DIVIDEND PER SHARE
1995 1994 1995 1994
- --------------------------------------------------------------------------------------------------------------------
First Quarter $20.87 $24.27 $14.48 $15.19 $0.1359 $0.1238
Second Quarter 18.45 23.54 15.19 15.75 0.1456 0.1262
Third Quarter 18.45 22.00 15.82 18.56 0.1456 0.1262
Fourth Quarter 17.75 22.00 19.13 25.50 0.1500 0.1359
$0.5771 $0.5121
28
25
The following is a summary of unaudited quarterly results of operations for the
years 1995, 1994 and 1993:
FIRST SECOND THIRD FOURTH FULL YEAR
- -----------------------------------------------------------------------------------------------------
1995
Interest income $ 9,760,554 $10,098,322 $10,043,559 $9,926,450 $39,828,885
Interest expense 3,598,738 4,101,478 4,175,916 3,919,109 15,795,241
Net interest income 6,161,816 5,996,844 5,867,643 6,007,341 24,033,644
Provision for loan losses 60,000 60,000 60,000 0 180,000
Security gains (4,118) 7,623 240,607 40,162 284,274
Net overhead 4,327,341 4,235,406 4,026,569 4,034,648 16,623,964
Income before income taxes 1,770,357 1,709,061 2,021,681 2,012,855 7,513,954
Net income 1,460,357 1,421,061 1,661,681 1,858,855 6,401,954
Net income per common share 0.43 0.41 0.48 0.54 1.86
Dividends paid per common share 0.1359 0.1456 0.1456 0.1500 0.5771
- -----------------------------------------------------------------------------------------------------
1994
Interest income $ 8,394,404 $ 8,620,442 $ 8,805,930 $9,535,869 $35,356,645
Interest expense 2,742,931 2,784,411 2,869,878 3,131,137 11,528,357
Net interest income 5,651,473 5,836,031 5,936,052 6,404,732 23,828,288
Provision for loan losses 125,000 83,333 0 0 208,333
Security gains 291,131 117,394 44,969 725 454,219
Net overhead 4,350,613 4,350,743 4,116,790 4,314,332 17,132,478
Income before income taxes 1,466,991 1,519,349 1,864,231 2,091,125 6,941,696
Net income 1,216,991 1,277,349 1,542,231 1,649,125 5,685,696
Net income per common share 0.36 0.38 0.45 0.49 1.68
Dividends paid per common share 0.1238 0.1262 0.1262 0.1359 0.5121
- -----------------------------------------------------------------------------------------------------
1993
Interest income $ 8,614,197 $ 8,706,940 $ 8,759,519 $8,648,607 $34,729,263
Interest expense 3,185,375 3,193,055 3,300,071 2,930,665 12,609,166
Net interest income 5,428,822 5,513,885 5,459,448 5,717,942 22,120,097
Provision for loan losses 600,000 250,000 50,000 20,000 920,000
Security gains 140,716 340,756 100,673 83,228 665,373
Net overhead 3,752,133 3,788,369 3,962,098 3,982,271 15,484,871
Income before income taxes 1,217,405 1,816,272 1,548,023 1,798,899 6,380,599
Net income 1,006,405 1,433,272 1,306,023 1,534,899 5,280,599
Net income per common share 0.30 0.43 0.39 0.44 1.56
Dividends paid per common share 0.0874 0.0928 0.1019 0.1165 0.3986
All share and per-share amounts have been adjusted for a three percent stock
dividend in 1995 and four-for-three stock splits in 1994 and 1993.
29
26
COBANCORP INC.
BOARD OF DIRECTORS
JOHN S. KREIGHBAUM
Chairman, President and Chief Executive Officer
CoBancorp Inc., Elyria, Ohio
Chairman and Chief Executive Officer
PREMIERBank & Trust, Elyria, Ohio
TIMOTHY W. ESSON
Executive Vice President and Treasurer
CoBancorp Inc., Elyria, Ohio
President
PREMIERBank & Trust, Elyria, Ohio
THEODORE S. ALTFELD
Vice President
EBM Group Corp., Elyria, Ohio
ROBERT T. BOWMAN
Chairman Emeritus
CoBancorp Inc. and PREMIERBank & Trust, Elyria, Ohio
ROBERT S. COOK
Executive Vice President
R. W. Beckett Corporation, North Ridgeville, Ohio
MAUREEN M. CROMLING
President and Chief Executive Officer
Ross Environmental Services, Inc., Grafton, Ohio
GARIS F. DISTELHORST
President
NACSCORP, Inc., Oberlin, Ohio
MICHAEL B. DUFFIN
President
Duffin Manufacturing Company, Elyria, Ohio
THOMAS E. HAYWOOD
President and Chief Executive Officer
Brandau Jewelers, Inc., Elyria, Ohio
LARRY D. JONES
President and Chief Executive Officer
Erie Shores Computer, Inc., Elyria, Ohio
THOMAS R. MIKLICH
Chief Financial Officer
Invacare Corporation, Elyria, Ohio
RICHARD J. STEWART
Chairman
Stewart Appliances, Inc., Elyria, Ohio
A. E. SZAMBECKI
President and Chief Executive Officer
Hallrich, Inc., Stow, Ohio
RICHARD A. VAN AUKEN
President and Chief Executive Officer
Jennings and Churella Construction Company,
Wellington, Ohio
30A
27
PREMIERBANK & TRUST
BOARD OF DIRECTORS
JOHN S. KREIGHBAUM
Chairman and Chief Executive Officer
PREMIERBank & Trust, Elyria, Ohio
Chairman, President and Chief Executive Officer
CoBancorp Inc., Elyria, Ohio
TIMOTHY W. ESSON
President
PREMIERBank & Trust, Elyria, Ohio
Executive Vice President and Treasurer
CoBancorp Inc., Elyria, Ohio
THEODORE S. ALTFELD
Vice President
EBM Group Corp., Elyria, Ohio
ROBERT T. BOWMAN
Chairman Emeritus
CoBancorp Inc. and PREMIERBank & Trust, Elyria, Ohio
ROBERT S. COOK
Executive Vice President
R. W. Beckett Corporation, North Ridgeville, Ohio
MAUREEN M. CROMLING
President and Chief Executive Officer
Ross Environmental Services, Inc., Grafton, Ohio
GARIS F. DISTELHORST
President
NACSCORP, Inc., Oberlin, Ohio
MICHAEL B. DUFFIN
President
Duffin Manufacturing Company, Elyria, Ohio
THOMAS E. HAYWOOD
President and Chief Executive Officer
Brandau Jewelers, Inc., Elyria, Ohio
SHARON L. HERZER
Firm Administrator and Chief Executive Officer
Wickens, Herzer & Panza, Lorain, Ohio
LARRY D. JONES
President and Chief Executive Officer
Erie Shores Computer, Inc., Elyria, Ohio
THOMAS R. MIKLICH
Chief Financial Officer
Invacare Corporation, Elyria, Ohio
RICHARD J. STEWART
Chairman
Stewart Appliances, Inc., Elyria, Ohio
A. E. SZAMBECKI
President and Chief Executive Officer
Hallrich, Inc., Stow, Ohio
RICHARD A. VAN AUKEN
President and Chief Executive Officer
Jennings and Churella Construction Company,
Wellington, Ohio
JERRY M. WOLF
President and Chief Executive Officer
Midwest Acoust-A-Fiber, Inc., Delaware, Ohio
30B
28
COBANCORP INC.
EXECUTIVE OFFICERS
JOHN S. KREIGHBAUM
Chairman, President and Chief Executive Officer
TIMOTHY W. ESSON
Executive Vice President and Treasurer
PREMIERBANK & TRUST
EXECUTIVE OFFICERS
JOHN S. KREIGHBAUM
Chairman and Chief Executive Officer
TIMOTHY W. ESSON
President
JAMES R. BRYDEN
Regional President/North Central District
LOIS E. GUNNING
Corporate Secretary
MARY A. BARNES
Senior Vice President/Branch Administration
DENNIS K. MILLER
Senior Vice President/Operations Manager
ROBERT J. SCOTT
Senior Vice President/Director of Investment Management and Trust Services
BRUCE E. STEVENS
Senior Vice President/Director of Lending
NORTH CENTRAL DISTRICT
ADVISORY COUNCIL
JOHN S. KREIGHBAUM
Chairman, President and Chief Executive Officer
CoBancorp Inc., Elyria, Ohio
Chairman and Chief Executive Officer
PREMIERBank & Trust, Elyria, Ohio
TIMOTHY W. ESSON
Executive Vice President and Treasurer
CoBancorp Inc., Elyria, Ohio
President
PREMIERBank & Trust, Elyria, Ohio
JAMES R. BRYDEN
Regional President/North Central District
PREMIERBank & Trust, Worthington, Ohio
STEVEN W. WILSON
Owner
S. W. Wilson Personal Clothier, Delaware, Ohio
JERRY M. WOLF
President and Chief Executive Officer
Midwest Acoust-A-Fiber, Inc., Delaware, Ohio
REGULATORY AND S.E.C. COUNSEL
Grady & Associates, Cleveland, Ohio
30C
29
SHAREHOLDERS' INFORMATION
SHAREHOLDERS' ANNUAL MEETING
The Annual Meeting of the Shareholders of CoBancorp Inc. will be held at 11:00
a.m., Wednesday, May 8, 1996, at Lorain County Community College, Classroom
Conferencing Center, 1005 North Abbe Road, Elyria, Ohio 44035.
COMMON STOCK INFORMATION
CoBancorp Inc. common stock is traded on the NASDAQ National Market System under
the symbol COBI. CoBancorp Inc.'s CUSIP is 190750 10 9.
REGISTRAR AND TRANSFER AGENT
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
10-K REPORT
A copy of the Corporation's 1995 Annual Report filed with the Securities and
Exchange Commission on Form 10-K without exhibits is available to shareholders
without charge. To obtain a copy, direct your request to the Office of the
Controller, CoBancorp Inc., P. O. Box 4001, Elyria, Ohio 44036-2001. Exhibits
will be furnished to shareholders upon request after the Corporation receives
payment to cover its costs of furnishing the exhibits.
DIVIDEND REINVESTMENT AND
STOCK PURCHASE PLAN
A Dividend Reinvestment and Stock Purchase Plan is available to shareholders of
CoBancorp Inc. The Plan provides an opportunity to invest cash dividends and
optional cash payments in CoBancorp Inc. stock. For details, contact CoBancorp
Inc., P. O. Box 4001, Elyria, Ohio 44036-2001, or telephone (216) 329-8000 or
(800) 522-3034.
31