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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[Fee Required]
For the Fiscal Year Ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No fee required]
For the transition period from ___________________ to ________________
Commission file number 0-17894
FIRSTFEDERAL FINANCIAL SERVICES CORP
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(Exact name of registrant as specified in its charter)
OHIO 34-1622711
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
135 EAST LIBERTY STREET, WOOSTER, OHIO 44691
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (330-264-8001)
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Securities Registered Pursuant to Section 12(b) of the Exchange Act:
None
Securities Registered Pursuant to Section 12(g) of the Exchange Act:
Title of each class: Name of each exchange on which registered:
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Common Stock, par value $1.00 per share Nasdaq National Market
6 1/2% Cumulative Convertible Preferred
Stock, Series B, without par value Nasdaq National Market
Indicate by check mark whether the Registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
l934 during the preceding l2 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant, computed by reference to the average of the bid and asked
prices of such stock on the Nasdaq Stock Market as of March 20, 1998, was
$183,633,366. (The exclusion from such amount of the market value of the shares
owned by any person shall not be deemed an admission by the registrant that such
person is an affiliate of the registrant.)
As of March 20, 1998, there were issued and outstanding 6,749,366
shares of the Registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I, II and IV of Form 10-K - Portions of the Annual Report to
Shareholders for the fiscal year ended December 31, 1997.
Part III of Form 10-K - Portions of the Proxy Statement for 1998 Annual
Meeting of Shareholders.
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Note 1: In calculating the market value of securities held by non-affiliates of
Registrant as disclosed on the cover page of this Form 10-K, Registrant has
treated as securities held by affiliates as of December 31, 1997, voting stock
owned of record by its directors and principal executive officers and
shareholders owning greater than 10% of the voting stock.
FIRSTFEDERAL FINANCIAL SERVICES CORP
1997 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I PAGE
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Item 1. Business.....................................................................................3
Item 2. Properties..................................................................................15
Item 3. Legal Proceedings...........................................................................16
Item 4. Submission of Matters to a Vote of Security Holders.........................................16
PART II
Item 5. Market For Registrant's Common Equity and Related Shareholder Matters............Ex. 13, pg. 1
Item 6. Selected Financial Data..........................................................Ex. 13, pg. 1
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations...............................................................Ex. 13, pg. 15
Item 7a. Quantitative and Qualitative Disclosures About Market Risk......................Ex. 13, pg. 20
Item 8. Financial Statements and Supplementary Data......................................Ex. 13, pg. 2
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure....................................................................17
PART III
Item 10. Directors and Executive Officers of the Registrant..........................................17
Item 11. Executive Compensation......................................................................17
Item 12. Security Ownership of Certain Beneficial Owners and Management. . . . . . . . . . . . . . ..17
Item 13. Certain Relationships and Related Transactions. . . . . . . . . . . . . . . . . . . . . . . 17
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. . . . . . . . . . . . . . .18
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PART I
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ITEM 1. BUSINESS
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ORGANIZATION
FirstFederal Financial Services Corp (the "Corporation"), an Ohio corporation,
is a bank holding company which has as its primary wholly-owned subsidiaries
Signal Bank, N.A., a national bank ("Signal Bank"), Summit Bank, N.A., a
national bank ("Summit Bank") and Mobile Consultants, Inc., a broker and
servicer of manufactured housing finance contracts ("MCi"). At December 31,
1997, the Corporation had assets of $1.5 billion, deposits of $981.7 million and
shareholders' equity of $104.7 million.
Founded in 1905 as an Ohio chartered stock building and loan association, Signal
Bank (formerly known as First Federal Savings and Loan Association of Wooster)
converted to a federally chartered mutual thrift in 1935, converted from mutual
to stock form in 1987, and converted from a savings and loan association to a
national bank in July 1997. On September 15, 1997, Signal Bank completed the
acquisition of seven branches with approximately $151 million in deposits.
Signal Bank serves north central Ohio (its "Market Area") through its home
office, 23 full service banking offices, and 3 limited service facilities.
Signal Bank offers a wide range of competitive consumer-oriented lending and
deposit products and services throughout its Market Area. Signal Bank has
achieved significant growth in recent years through the expansion of its asset
origination capabilities and by acquiring branches in its Market Area.
Summit Bank was acquired by the Corporation in July 1997. Summit Bank offers a
full complement of banking products and services to small businesses,
individuals and professionals in the Akron, Canton and Cleveland, Ohio
metropolitan areas. Summit Bank operates 2 full service banking offices.
MCi, a manufactured housing finance company which brokers manufactured home
loans to and on behalf of financial institutions, was acquired by the
Corporation in April 1996. MCi facilitates the origination of primarily
non-mortgage, consumer loan contracts through 3,500 dealers of manufactured
homes located in 42 states. MCi also services the collection and recovery of
troubled loans on behalf of the financial institutions which originate the
loans.
The Corporation has one other wholly-owned subsidiary, Summit Banc Investments
Corporation, which offers a full range of investment advisory services,
financial planning and portfolio management. Signal Bank has 8 wholly-owned
subsidiaries: Signal Mortgage Corp, a mortgage originator; Signal Finance Corp,
a multi-purpose finance company; Signal Securitization Corp, an issuer of
asset-backed securities; Alliance Corporate Resources ("ACR"), Inc., an
information technology equipment leasing and consulting company, HFS Agency,
Inc., seller of insurance and annuity products; Home Financial Services
Corporation, an investment sales and advisory company; Professional Appraisal
Services Corp, a real estate appraisal company; and Venture Mortgage Corp, a
mortgage banking joint venture. Summit Bank has one wholly-owned subsidiary,
Alpha Equipment Group, Inc., an equipment leasing company.
In February 1998, the Corporation formed Signal Capital Trust One ("Signal
Trust"), a Delaware business trust. Signal Trust was formed for the purpose of
(I) issuing and selling $50 million of its 8.67% Capital Securities, Series A
(the "Capital Securities") and common securities (the "Common Securities"), (ii)
investing the proceeds thereof in the 8.67% Junior Subordinated Deferrable
Interest Debentures, Series A, issued by the Corporation (the "FirstFederal
Debentures") and (iii) engaging in certain other limited activities. The Capital
Securities were issued and sold to investors in a private placement exempt from
the Securities Act of 1933 on February 10, 1998. The Corporation is the sole
owner of the Common Securities. Distributions on the Capital Securities are
guaranteed by the Corporation, are cumulative, began accumulating on February
13, 1998 and are payable semi-annually in arrears on February 15 and August 15
of each year, commencing August 15, 1998 at the annual rate of 8.67% of the
liquidation amount of $1,000 per security. The interest payment schedule of the
FirstFederal Debentures is identical to that of the Capital Securities, except
that so long as the Corporation is not in default
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under the indenture governing the FirstFederal Debentures, the Corporation may
defer the payment of interest on the FirstFederal Debentures at any time and
from time to time for a period not exceeding ten consecutive semi-annual periods
(an "Extension Period"). During any Extension Period, the Corporation will be
prohibited from taking certain actions, including declaring or paying any
dividends or distributions on or redeeming or purchasing any of its capital
stock.
When used in this form 10-K and in future filings by the Corporation with the
Securities and Exchange Commission (the "SEC"), in the Corporation's press
release or other public or shareholder communications, and in oral statements
made with the approval of an authorized executive officer, the words or phrases
"will likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "project," or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties, including, among other things, (I) the possibility that expected
cost savings from the planned acquisition of First Shenango (as described below)
cannot be fully realized or realized within the expected time frame, (ii) the
possibility that costs or difficulties related to the integration of the
businesses of the Corporation and First Shenango are greater than expected,
(iii) the possibility that revenues following the proposed acquisition of First
Shenango are lower than expected, (iv) changes in economic conditions in the
Corporation's market area, (v) changes in policies by regulatory agencies and
new legislation, (vi) fluctuations in interest rates, (vii) demand for loans in
the Corporation's market area, and (viii) competition, that could cause actual
results to differ materially from historical earnings and those presently
anticipated or projected. The Corporation wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date made. The Corporation wishes to advise readers that the factors listed
above and other factors could affect the Corporation's financial performance and
could cause the Corporation's actual results for future periods to differ
materially from any opinions or statements expressed with respect to future
periods in any current statements.
The Corporation does not undertake - and specifically declines any obligation -
to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
ACQUISITIONS
On February 9, 1998, the Corporation announced the signing of a definitive
agreement for the acquisition of First Shenango Bancorp, Inc. ("First
Shenango"). First Shenango's wholly-owned subsidiary, First Federal Savings Bank
of New Castle, is expected to become a separate operating subsidiary of the
Corporation and operate under its current name and banking charter. Under the
terms of the agreement, the Corporation will exchange 1.143 shares of its common
stock for each of the 2,069,007 outstanding shares of First Shenango stock and
109,074 outstanding options. Based on the closing price per share of the
Corporation's common stock on February 6, 1998 of $41.75, the transaction would
be valued at approximately $103.9 million, or $47.72 per share of First Shenango
stock. The merger, which will be accounted for as a pooling of interests, is
expected to be consummated in the third quarter of 1998, pending approval by
First Shenango's and the Corporation's shareholders, regulatory authorities and
other customary conditions of closing. The transaction is expected to be a
tax-fee reorganization for federal income tax purposes. First Shenango has four
banking offices in Lawrence County, Pennsylvania. At December 31, 1997, First
Shenango had total assets of $375.0 million, deposits of $275.2 million and
shareholders' equity of $47.9 million.
On September 15, 1997, Signal Bank completed the acquisition of seven branches
of KeyBank, National Association, which have approximately $151 million in
deposits and are located in the cities of Bucyrus, Crestline, Cygnet, Galion,
Tiffin, Wayne and Willard in north central and north western Ohio. The purchase
price was equal to 12.15% of average deposits measured just prior to closing
resulting in approximately $19 million in goodwill.
On July 8, 1997, the Corporation acquired Summit Bancorp, the parent company of
Summit Bank through the exchange of 2.3375 common shares of the Corporation's
common stock for each of the 234,891 shares of Summit Bancorp stock outstanding.
At the time of acquisition, Summit Bank had $89 million in assets and $73
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million in deposits and operated two offices in Summit County. The Summit
acquisition was accounted for as a pooling-of-interests.
On April 3, 1996, the Corporation acquired MCi. In the transaction, the Company
acquired $7.1 million in assets consisting primarily of advances receivable on
manufactured home loans and furniture and fixtures. The Corporation also assumed
the liabilities of MCi, which consisted mainly of accounts payable to dealers
and lines of credit. The purchase price of $10.6 million was comprised of $1
million in cash, $4 million in notes due quarterly during 1997, and 384,232
shares of the Corporation's common stock, valued at $5.6 million. The
transaction was accounted for under the purchase method of accounting and,
accordingly, the assets and liabilities of MCi were recorded at their estimated
fair value at the date of acquisition. The purchase resulted in a cost in excess
of fair value of net assets of $5.6 million, which is being amortized by the
straight-line method over a period of no longer than 10 years.
STATISTICAL INFORMATION
Pages 5 to 7 contain statistical information on the Corporation and its
subsidiaries. Information about the Corporation's business segments is
incorporated herein by reference to page 13 of Registrant's 1997 Annual Report
to Shareholders attached to this filing as Exhibit 13.
SECURITIES PORTFOLIO
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The securities portfolio as of December 31 for each of the last five years, and
the maturity distribution and weighted average yield of securities as of
December 31, 1997, are incorporated herein by reference from the securities
tables on pages 17 and 18 of the Corporation's 1997 Annual Report to
Shareholders attached to this filing as Exhibit 13.
As of December 31, 1997, the Corporation owned no securities (other than U.S.
Government and U.S. Government agencies and corporations) issued by one issuer
for which the book value exceeded ten percent of shareholders' equity.
AVERAGE BALANCE SHEETS
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The average balance sheets are incorporated herein by reference from Table 1 on
pages 15 and 16 of the Corporation's 1997 Annual Report to Shareholders attached
to this filing as Exhibit 13.
ANALYSIS OF NET INTEREST INCOME AND NET INTEREST INCOME CHANGES
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The analysis of net interest income and the analysis of net interest income
changes are incorporated herein by reference to Table 1 and Table 2 and the
related discussion on pages 15 through 17 of the Corporation's 1997 Annual
Report to Shareholders attached to this filing as Exhibit 13.
TYPES OF LOANS AND LEASES
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The loans and lease portfolio as of December 31 for each of the last five years,
and the percentage distribution by loan type, are incorporated herein by
reference from the loan and lease table on page 18 of the Corporation's 1997
Annual Report to Shareholders attached to this filing as Exhibit 13.
MATURITIES AND SENSITIVITY OF LOANS TO CHANGES IN INTEREST RATES
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The remaining maturities of the loan portfolio distributed to reflect cash flows
at December 31, 1997, based on scheduled repayments and the sensitivity of loans
to interest rate changes for loans due after one year is shown below. Commercial
loans includes commercial real estate, commercial leases and commercial finance
contracts. Consumer loans include residential mortgage loans, manufactured
housing loans and consumer loans.
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($000's) Commercial Loans Real Estate Consumer
Construction Loans Loans
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Due in one year or less.................................................. $108,174 $9,181 $279,854
Due after one year through five years.................................... 76,923 ---- 315,017
Due after five years..................................................... 28,983 ---- 188,717
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TOTAL $214,080 $9,181 $783,588
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Loans due after one year:
Predetermined interest rate........................................... $95,913 ---- $432,125
Floating or adjustable interest rate.................................. $9,993 ---- $71,609
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LOANS AND LEASES AT RISK
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The table of underperforming assets and the related discussion states the amount
of non-accrual, past-due and renegotiated loans and leases on page 19 of the
Corporation's 1997 Annual Report to Shareholders attached to this filing as
Exhibit 13 is incorporated herein by reference. At December 31, 1997, loans with
a total principal balance of $7.7 million have been identified by management as
potentially nonperforming in the future, compared to $2.4 million at December
31, 1996 and $1.3 million at December 31, 1995. Increases in both years relate
primarily to commercial loans. Management works closely with these borrowers in
their efforts to resolve potential cash flow problems. Potential problem loans
are not included in nonperforming assets since the borrowers currently meet all
applicable loan agreement terms.
SUMMARY OF CREDIT LOSS EXPERIENCE
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The table below reflects net charge-offs of loans and leases for each of the
last five years.
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NET CHARGE-OFFS ($000'S) 1997 1996 1995 1994 1993
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Commercial and industrial loans..................... $220 ---- ---- ---- ----
Real estate construction loans...................... ---- ---- ---- ---- ----
Commercial real estate loans........................ 106 $309 ---- $1,110 $253
Commercial lease financing.......................... 4 ---- ---- ---- ----
Residential mortgage loans.......................... 12 20 46 56 (1)
Consumer loans...................................... 389 109 164 157 184
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TOTAL $731 $438 $210 $1,323 $436
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Net charge-offs as a percent of average
loans and leases................................. 0.09% 0.06% 0.04% 0.32% 0.13%
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The table below sets forth the allocation of the allowance for credit losses by
loan category at the dates indicated.
AT DECEMBER 31,
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1997 1996 1995 1994 1993
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% of Loans to % of Loans to % of Loans to % of Loans to % of Loans to
($000's) AMOUNT Total Loans Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans
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Type of Loan:
Commercial and
industrial loans.......... $1,216 10.0% ---- 0.7% ---- ---- ---- ---- ---- ----
Residential mortgage
loans..................... 707 55.0 $593 79.4% $616 83.0% $867 85.5% $645 83.7%
Commercial real estate....... 1,062 7.8 1,633 2.6 1,702 4.6 1,453 3.8 3,245 5.4
Consumer and other........... 2,553 27.2 690 17.3 676 12.4 884 10.7 622 10.9
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Total allowance for
credit losses............. $5,538 100% $2,916 100% $2,994 100% $3,204 100% $4,512 100%
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The analysis above is for analytical purposes. The allowance for credit losses
is general in nature and is available to absorb losses from any portion of the
loan and lease portfolio.
MATURITY DISTRIBUTION OF CERTIFICATES OF DEPOSIT AT DECEMBER 31, 1997
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The following table indicates the amount of the Corporation's certificates of
deposit by time remaining until maturity as of December 31, 1997.
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($000's) All CDS CDS over $100,000
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Due within three months................ $172,198 $70,144
Due in three to six months................. 104,299 15,002
Due in six to twelve months................ 103,103 41,783
Due after one year through five
years.................................... 184,680 37,420
Due after five years........................ 46,993 ----
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TOTAL $611,273 $164,349
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REGULATION AND SUPERVISION
GENERAL
The Corporation is a registered bank holding company, subject to broad federal
regulation and oversight by the Federal Reserve Bank (FRB). Signal Bank and
Summit Bank (the "Banks") are national banks subject to broad federal regulation
and oversight extending to all their operations by the Office of the Comptroller
of the Currency (OCC) and by the Federal Deposit Insurance Corporation (FDIC).
The Banks are also members of the Federal Home Loan Bank (FHLB) of Cincinnati.
Signal Bank is a member of the Savings Association Insurance Fund (SAIF) and
Summit Bank is a member of the Bank Insurance Fund (BIF) and the deposits of
both Banks are insured by the FDIC.
Certain of these regulatory requirements and restrictions are discussed below or
elsewhere in this document. See Note 16 of Notes To Consolidated Financial
Statements.
FEDERAL REGULATION OF NATIONAL BANKS
The OCC has extensive authority over the operations of national banks. As part
of this authority, the Banks are required to file periodic reports with the OCC
and are subject to periodic examinations by the OCC. All national banks are
subject to a semi-annual assessment, based upon the bank's total assets, to fund
the operations of the OCC.
The OCC also has extensive enforcement authority over all national banks,
including the Banks. This enforcement authority includes, among other things,
the ability to assess civil money penalties, to issue cease-and-desist or
removal orders and to initiate injunctive actions. In general, these enforcement
actions may be initiated for violations of laws and regulations and unsafe or
unsound practices. Other actions or inactions may provide the basis for
enforcement action, including misleading or untimely reports filed with the OCC.
Except under certain circumstances, public disclosure of final enforcement
actions by the OCC is required.
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The Banks' loans-to-one borrower limit is generally limited to 15% of unimpaired
capital and surplus. At December 31, 1997, the maximum amount which the Banks'
have lent to any one borrower and the borrower's related entities was
approximately $5.2 million, of which $4.3 million and $900,000 was lent by
Signal Bank and Summit Bank, respectively. The Banks' five largest lending
relationships at December 31, 1997 were performing in accordance with their
terms and totaled $22.4 million, in aggregate. The five largest lending
relationships were funded with $20.1 million and $2.3 million from Signal Bank
and Summit Bank, respectively.
The OCC, as well as the other federal banking agencies, has adopted guidelines
establishing safety and soundness standards on such matters as loan underwriting
and documentation, internal controls and audit systems, interest rate risk
exposure and compensation and other employee benefits. Any institution which
fails to comply with these standards must submit a compliance plan. Failure to
submit a plan or to comply with an approved plan will subject the institution to
further enforcement action.
INSURANCE OF ACCOUNTS AND REGULATION BY THE FDIC
Signal Bank is a member of the SAIF and Summit Bank is a member of the BIF, both
of which are administered by the FDIC. Deposits are insured up to applicable
limits by the FDIC and such insurance is backed by the full faith and credit of
the United States Government. As insurer, the FDIC imposes deposit insurance
premiums and is authorized to conduct examinations of and to require reporting
by FDIC-insured institutions. It also may prohibit any FDIC-insured institution
from engaging in any activity the FDIC determines by regulation or order to pose
a serious risk to the FDIC. The FDIC also has the authority to initiate
enforcement actions against banks after giving the OCC an opportunity to take
such action, and may terminate the deposit insurance if it determines that the
institution has engaged in unsafe or unsound practices or is in an unsafe or
unsound condition.
The FDIC's deposit insurance premiums are assessed through a risk-based system
under which all insured depository institutions are placed into one of nine
categories and assessed insurance premiums based upon their level of capital and
supervisory evaluation. Under the system, institutions classified as well
capitalized (i.e., a core capital ratio of at least 5%, a ratio of Tier 1 or
core capital to risk-weighted assets ("Tier 1 risk-based capital") of at least
6% and a risk-based capital ratio of at least 10%) and considered healthy pay
the lowest premium while institutions that are less than adequately capitalized
(i.e., core or Tier 1 risk-based capital ratios of less than 4% or a risk-based
capital ratio of less than 8%) and considered of substantial supervisory concern
pay the highest premium. Risk classification of all insured institutions will be
made by the FDIC for each semi-annual assessment period.
In order to equalize the deposit insurance premium schedules for BIF and SAIF
insured institutions, the FDIC imposed a one-time special assessment on all
SAIF-assessable deposits pursuant to federal legislation passed on September 30,
1996. Signal Bank's special assessment, which was $3.3 million, was paid in
November 1996. Effective January 1, 1997, the premium schedule for BIF and SAIF
insured institutions ranged from 0 to 27 basis points. However, SAIF-insured
institutions are required to pay a Financing Corporation (FICO) assessment, in
order to fund the interest on bonds issued to resolve thrift failures in the
1980s. In 1997, for SAIF-insured institutions, the assessment was equal to about
6.50 basis points for each $100 in domestic deposits, while BIF-insured
institutions paid an assessment equal to about 1.30 basis points for each $100
in domestic deposits. The assessment is expected to be reduced to about 2 basis
points no later than January 1, 2000, when BIF insured institutions fully
participate in the assessment. These assessments, which may be revised based
upon the level of BIF and SAIF deposits will continue until the bonds mature in
the year 2017.
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NATIONAL BANKS
The Banks are subject to the capital regulations of the OCC. The OCC's
regulations establish two capital standards for national banks: a leverage
requirement and a risk-based capital requirement. In addition, the OCC may, on a
case-by-case basis, establish individual minimum capital requirements for a
national bank that vary from the requirements which would otherwise apply under
OCC regulations. A national bank that fails to satisfy the capital requirements
established under the OCC's regulations will be subject to such administrative
action or sanctions as the OCC deems appropriate.
The leverage ratio adopted by the OCC requires a minimum ratio of "Tier 1
capital" to adjusted total assets of 3% for national banks rated composite 1
under the CAMEL rating system for banks. National banks not rated composite 1
under the CAMEL rating system for banks are required to maintain a minimum ratio
of Tier 1 capital to adjusted total assets of 4% to 5%, depending upon the level
and nature of risks of their operations. For purposes of the OCC's leverage
requirement, Tier 1 capital generally consists of common shareholders' equity
and retained income and certain non-cumulative perpetual preferred stock and
related income, except that no intangibles and certain purchased mortgage
servicing rights and purchased credit card relationships may be included in
capital.
The risk-based capital requirements established by the OCC's regulations require
national banks to maintain "total capital" equal to at least 8% of total
risk-weighted assets. For purposes of the risk-based capital requirement, "total
capital" means Tier 1 capital (as described above) plus "Tier 2 capital,"
provided that the amount of Tier 2 capital may not exceed the amount of Tier 1
capital, less certain assets. The components of Tier 2 capital include certain
permanent and maturing capital instruments that do not qualify as core capital
and general valuation loan and lease loss allowances up to a maximum of 1.25% of
risk-weighted assets. The OCC has revised its risk-based capital requirements to
permit the OCC to require higher levels of capital for an institution in light
of its interest rate risk.
PROMPT CORRECTIVE ACTION
The OCC is authorized and, under certain circumstances required, to take certain
actions against national banks that fail to meet their capital requirements. The
OCC is generally required to take action to restrict the activities of an
"undercapitalized institution" (generally defined to be one with less than
either a 4% core capital ratio, a 4% Tier 1 risked-based capital ratio or an 8%
risk-based capital ratio). Any such institution must submit a capital
restoration plan and until such plan is approved by the OCC may not increase its
assets, acquire another institution, establish a branch or engage in any new
activities, and generally may not make capital distributions. The OCC is
authorized to impose the additional restrictions that are applicable to
significantly undercapitalized banks.
Any national banking association that fails to comply with its capital plan or
is "significantly undercapitalized" (i.e., Tier 1 risk-based or core capital
ratios of less than 3% or a risk-based capital ratio of less than 6%) must be
made subject to one or more of additional specified actions and operating
restrictions which may cover all aspects of its operations and include a forced
merger or acquisition of the institution. A national bank that becomes
"critically undercapitalized" (i.e., a tangible capital ratio of 2% or less) is
subject to further mandatory restrictions on its activities in addition to those
applicable to significantly undercapitalized banks. In addition, the OCC must
appoint a receiver (or conservator with the concurrence of the FDIC) for a
national bank, with certain limited exceptions, within 90 days after it becomes
critically undercapitalized. Any undercapitalized bank is also subject to the
general enforcement authority of the OCC, including the appointment of a
conservator or a receiver.
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The OCC is also generally authorized to reclassify a bank into a lower capital
category and impose the restrictions applicable to such category if the
institution is engaged in unsafe or unsound practices or is in an unsafe or
unsound condition.
LIMITATIONS ON DIVIDENDS AND OTHER CAPITAL DISTRIBUTIONS
The Banks' ability to pay dividends is governed by the National Bank Act and OCC
regulations. Under such statute and regulations, all dividends by a national
bank must be paid out of current or retained net profits, after deducting
reserves for losses and bad debts. The National Bank Act further restricts the
payment of dividends out of net profits by prohibiting a national bank from
declaring a cash dividend on its shares of common stock until the surplus fund
equals the amount of capital stock or, if the surplus fund does not equal the
amount of capital stock, until one-tenth of the Banks' net profits for the
preceding half year in the case of quarterly or semi-annual dividends, or the
preceding two half-year periods in the case of annual dividends, are transferred
to the surplus fund. In addition, the prior approval of the OCC is required for
the payment of a dividend if the total of all dividends declared by a national
bank in any calendar year would exceed the total of its net profits for the year
combined with its net profits for the two preceding years, less any required
transfers to surplus or a fund for the retirement of any preferred stock.
The OCC has the authority to prohibit the payment of dividends by a national
bank when it determines such payment to be an unsafe and unsound banking
practice. In addition, the Banks would be prohibited by federal statute and the
OCC's prompt corrective action regulations from making any capital distribution
if, after giving effect to the distribution, the Banks would be classified as
"undercapitalized" under the OCC's regulations. See "Prompt Corrective Action."
ACCOUNTING
The OCC requires that investment activities of a national bank be in compliance
with approved and documented investment policies and strategies, and must be
accounted for in accordance with generally accepted accounting principles
("GAAP"). Accordingly, management must support its classification of and
accounting for loans and securities (i.e., whether held for investment, sale or
trading) with appropriate documentation. The Banks are in compliance with these
requirements.
COMMUNITY REINVESTMENT ACT
Under the Community Reinvestment Act ("CRA"), every FDIC insured institution has
a continuing and affirmative obligation consistent with safe and sound banking
practices to help meet the credit needs of its entire community, including low
and moderate income neighborhoods. The CRA does not establish specific lending
requirements or programs for financial institutions nor does it limit an
institution's discretion to develop the types of products and services that it
believes are best suited to its particular community, consistent with the CRA.
The CRA requires the OCC, in connection with the examination of the Banks, to
assess the institutions' records of meeting the credit needs of its communities
and to take such record into account in its evaluation of certain applications,
such as a merger or the establishment of a branch, by the Banks. An
unsatisfactory rating may be used as the basis for the denial of an application
by the OCC.
The federal banking agencies, including the OCC, have recently revised the CRA
regulations and the methodology for determining an institution's compliance with
the CRA. Due to the heightened attention being given to the CRA in the past few
years, the Banks may be required to devote additional funds for
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investment and lending in its local community. The last CRA compliance exams
ranked Signal Bank as outstanding and Summit Bank as satisfactory.
TRANSACTIONS WITH AFFILIATES
Generally, transactions between a national bank or its subsidiaries and its
affiliates are required to be on terms as favorable to the institution as
transactions with non-affiliates. In addition, certain of these transactions,
such as loans to an affiliate, are restricted to a percentage of capital of the
Banks. Affiliates of the Banks include any Corporation which is under common
control with the Banks. Subsidiaries of the Banks are not deemed affiliates.
However, the FRB has the discretion to treat subsidiaries of national banks as
affiliates on a case by case basis.
Certain transactions with directors, officers or controlling persons
("Insiders") are also subject to conflict of interest rules enforced by the OCC.
These conflict of interest regulations and other statutes also impose
restrictions on loans to such persons and their related interests. Among other
things, as a general matter, loans to Insiders must be made on terms
substantially the same as for loans to unaffiliated individuals.
FEDERAL RESERVE SYSTEM
The FRB requires all depository institutions to maintain non-interest bearing
reserves at specified levels against their transaction accounts (primarily
checking, NOW and Super NOW checking accounts). National banks are authorized to
borrow from the Federal Reserve Bank "discount window," but FRB regulations
require companies to exhaust other reasonable alternative sources of funds,
including FHLB borrowings, before borrowing from the Federal Reserve Bank. The
Banks are also members of the Federal Reserve System.
HOLDING COMPANY REGULATION
GENERAL
The Corporation is a bank holding company, registered with the FRB. Bank holding
companies are subject to comprehensive regulation by the FRB under the BHCA, and
the regulations of the FRB. As a bank holding company, the Corporation is
required to file reports with the FRB and such additional information as the FRB
may require, and will be subject to regular examinations by the FRB. The FRB
also has extensive enforcement authority over bank holding companies, including,
among other things, the ability to assess civil money penalties, to issue cease
and desist or removal orders and to require that a holding company divest
subsidiaries (including its bank subsidiaries). In general, enforcement actions
may be initiated for violations of law and regulations and unsafe or unsound
practices.
Under FRB policy, a bank holding company must serve as a source of strength for
its subsidiary banks. Under this policy the FRB may require, and has required in
the past, a holding company to contribute additional capital to an
undercapitalized subsidiary bank.
Under the BHCA, a bank holding company must obtain FRB approval before: (I)
acquiring, directly or indirectly, ownership or control of any voting shares of
another bank or bank holding company if, after such acquisition, it would own or
control more than 5% of such shares (unless it already owns or
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controls the majority of such shares); (ii) acquiring all or substantially all
of the assets of another bank or bank holding company; or (iii) merging or
consolidating with another bank holding company.
The BHCA also prohibits a bank holding company, with certain exceptions, from
acquiring direct or indirect ownership or control of more than 5% of the voting
shares of any corporation which is not a bank or bank holding company, or from
engaging directly or indirectly in activities other than those of banking,
managing or controlling banks, or providing services for its subsidiaries. The
principal exceptions to these prohibitions involve certain non-bank activities
which, by statute or by FRB regulation or order, have been identified as
activities closely related to the business of banking or managing or controlling
banks. The list of activities permitted by the FRB includes, among other things,
operating a savings institution, mortgage company, finance company, credit card
company or factoring company; performing certain data processing operations;
providing certain investment and financial advice; underwriting and acting as an
insurance agent for certain types of credit-related insurance; leasing property
on a full-payout, non-operating basis; selling money orders, travelers' checks
and United States Savings Bonds; real estate and personal property appraising;
providing tax planning and preparation services; and, subject to certain
limitations, providing securities brokerage services for customers.
INTERSTATE BANKING AND BRANCHING
On September 29, 1994, the Riegle-Neal Interstate Banking and Branching Act of
1994 (the "Act") was enacted to ease restrictions on interstate banking.
Effective September 29, 1995, the Act allows the FRB to approve an application
of an adequately capitalized and adequately managed bank holding company to
acquire control of, or acquire all or substantially all of the assets of, a bank
located in a state other than such holding company's home state, without regard
to whether the transaction is prohibited by the laws of any state. The FRB may
not approve the acquisition of the bank that has not been in existence for the
minimum time period (not exceeding five years) specified by the statutory law of
the host state. The Act also prohibits the FRB from approving an application if
the applicant (and its depository institution affiliates) controls or would
control more than 10% of the insured deposits in the United States or 30% or
more of the deposits in the target bank's home state or in any state in which
the target bank maintains a branch. The Act does not affect the authority of
states to limit the percentage of total insured deposits in the state which may
be held or controlled by a bank or bank holding company to the extent such
limitation does not discriminate against out-of-state banks or bank holding
companies. Individual states may also waive the 30% state-wide concentration
limit contained in the Act.
Additionally, on June 1, 1997, the federal banking agencies were authorized to
approve interstate merger transactions without regard to whether such
transaction is prohibited by the law of any state, unless the home state of one
of the banks opted out of the Act by adopting a law after the date of enactment
of the Act and prior to June 1, 1997 which applies equally to all out-of-state
banks and expressly prohibits merger transactions involving out-of-state banks.
Interstate acquisitions of branches will be permitted only if the law of the
state in which the branch is located permits such acquisitions. Interstate
mergers and branch acquisitions will also be subject to the nationwide and
statewide insured deposit concentration amounts described above. The State of
Ohio has authorized interstate merger transactions.
The Act authorizes the OCC and FDIC to approve interstate branching de novo by
national and state banks, respectively, only in states which specifically allow
for such branching. The Act also requires the appropriate federal banking
agencies to prescribe regulations which prohibit any out-of-state bank from
using the interstate branching authority primarily for the purpose of deposit
production. These
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regulations include guidelines to ensure that interstate branches operated by an
out-of-state bank in a host state are reasonably helping to meet the credit
needs of the communities which they serve.
DIVIDENDS
The FRB has issued a policy statement on the payment of cash dividends by bank
holding companies, which expresses the FRB's view that a bank holding company
should pay cash dividends only to the extent that the holding company's net
income for the past year is sufficient to cover both the cash dividends and a
rate of earning retention that is consistent with the holding company's capital
needs, asset quality and overall financial condition. The FRB also indicated
that it would be inappropriate for a corporation experiencing serious financial
problems to borrow funds to pay dividends. Furthermore, under the prompt
corrective action regulations adopted by the FRB, the FRB may prohibit a bank
holding company from paying any dividends if the holding company's bank
subsidiary is classified as "undercapitalized". See "Capital Requirements --
Prompt Corrective Action."
Bank holding companies are required to give the FRB prior written notice of any
purchase or redemption of its outstanding equity securities if the gross
consideration for the purchase or redemption, when combined with the net
consideration paid for all such purchases or redemptions during the preceding 12
months, is equal to 10% or more of their consolidated net worth. The FRB may
disapprove such a purchase or redemption if it determines that the proposal
would constitute an unsafe or unsound practice or would violate any law,
regulation, FRB order, or any condition imposed by, or written agreement with,
the FRB. This notification requirement does not apply to any corporation that
meets the well-capitalized standard for commercial banks, has a safety and
soundness examination rating of at least a "2" and is not subject to any
unresolved supervisory issues.
CAPITAL REQUIREMENTS. The FRB has established capital requirements for bank
holding companies that generally parallel the capital requirements for national
banks. See "Regulatory Capital Requirements - National Banks." The Corporation's
capital exceeds such requirements.
FEDERAL HOME LOAN BANK SYSTEM
The Banks are members of the FHLB of Cincinnati, one of twelve regional FHLBs
that administer the home financing credit function of member institutions. Each
FHLB serves as a reserve or central bank for its members within its assigned
region. It is funded primarily from proceeds derived from the sale of
consolidated obligations of the FHLB System. It makes loans to members (i.e.,
advances) in accordance with policies and procedures, established by the board
of directors of the FHLB which are subject to the oversight of the Federal
Housing Finance Board. All advances from the FHLB are required to be fully
secured by sufficient collateral as determined by the FHLB. In addition, all
long-term advances are required to provide funds for residential home financing.
As members, the Banks are required to purchase and maintain stock in the FHLB of
Cincinnati. At December 31, 1997, the Banks had $19.9 million in FHLB stock,
which was in compliance with this requirement. In the past fiscal year, FHLB
stock paid dividends to both Banks.
Under federal law the FHLBs are required to provide funds for the resolution of
troubled savings institutions and to contribute to low- and moderately priced
housing programs through direct loans or interest subsidies on advances targeted
for community investment and low- and moderate-income housing projects. These
contributions have affected adversely the level of FHLB dividends paid and could
continue to do so in the future. These contributions could also have an adverse
effect on the value
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of FHLB stock in the future. A reduction in value of the Banks' FHLB stock may
result in a corresponding reduction in the Banks' capital.
For the year ended December 31, 1997, dividends paid by the FHLB of Cincinnati
to the Banks totaled $1.3 million, which constitutes a $269,000 increase over
the amount of dividends received in calendar year 1996.
FEDERAL AND STATE TAXATION
FEDERAL TAXATION
In addition to the regular income tax, corporations, including the Banks,
generally are subject to a minimum tax. An alternative minimum tax is imposed at
a minimum tax rate of 20% on alternative minimum taxable income, which is the
sum of a corporation's regular taxable income (with certain adjustments) and tax
preference items, less any available exemption. The alternative minimum tax is
imposed to the extent it exceeds the corporation's regular income tax and net
operating losses can offset no more than 90% of alternative minimum taxable
income. For taxable years beginning after 1986 and before 1996, entities, such
as the Banks, are also subject to an environmental tax equal to 0.12% of the
excess of alternative minimum taxable income for the taxable year (determined
without regard to net operating losses and the deduction for the environmental
tax) over $2 million.
The Corporation files consolidated federal income tax returns on a fiscal year
basis using the accrual method of accounting.
Signal Bank and its consolidated subsidiaries have been audited by the IRS with
respect to consolidated federal income tax returns through December 31, 1992.
Summit Bancorp and its consolidated subsidiary have been audited by the IRS with
respect to consolidated federal income tax returns through December 31, 1993.
With respect to years examined by the IRS, either all deficiencies have been
satisfied or sufficient reserves have been established to satisfy asserted
deficiencies. In the opinion of management, any examination of still open
returns (including returns of subsidiaries and predecessors of, or entities
merged into, the Banks) would not result in a deficiency which could have a
material adverse effect on the financial condition of the Corporation, the Banks
or their consolidated subsidiaries.
OHIO TAXATION
As national banks, the Banks are subject to an Ohio franchise tax based on its
net worth plus certain reserve amounts. Total net worth for this purpose is
reduced by certain exempted assets. The resultant net worth is taxed at a rate
of 1.5% for 1997.
Certain subsidiaries in the consolidated group will be subject to Ohio franchise
tax based on the greater of the tax on net worth or the tax on net income,
subject to various adjustments and varying rates. In addition, the subsidiaries
will be subject to state taxes in other states in which they do business. Local
taxes on property and income will also be imposed in certain jurisdictions.
For additional information regarding taxation, see Note 8 of the Notes to the
Consolidated Financial Statements in the Annual Report.
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EMPLOYEES
At December 31, 1997, the Corporation had a total of 635 full-time equivalent
(FTE) employees including 191 part-time employees. None of the Corporation's
employees are represented by a collective bargaining group. Management considers
its employee relations to be excellent.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
- ----------------------------------------
The following information as to the business experience during the last five
years is supplied with respect to executive officers who do not serve on the
Corporation's Board of Directors.
JAMES J. LITTLE. In January 1998, age 35, Mr. Little became President and Chief
Operating Officer of the Corporation. Mr. Little served as Executive Vice
President and Chief Financial Officer of the Corporation from June 1996 until
his appointment as President and Chief Operating Officer and as Executive Vice
President from July 1995 to June 1996. Prior to joining the Corporation in July
1995, Mr. Little served as President and Chief Executive Officer of Falls
Financial, Inc. from 1993 to 1995 and as Executive Vice President and Chief
Financial Officer of Falls Financial, Inc. from 1989 to 1993.
JON W. PARK. Mr. Park, age 36, is Chief Financial Officer of the Corporation.
Mr. Park has served as Senior Vice President and Chief Financial Officer of
Signal Bank, N.A. since September 1997 and as Vice President and Chief Financial
Officer of Summit Bank since December 1995. Mr. Park previously worked for Ernst
& Young LLP from 1984 through November 1995. Mr. Park is a certified public
accountant.
COMPETITION
The Banks face strong competition, both in originating real estate, commercial
and consumer loans and in attracting deposits. Competition in originating loans
comes primarily from commercial banks, credit unions and savings institutions
located in the Banks' market area. Commercial banks, credit unions and savings
institutions provide vigorous competition in consumer lending. The Bank competes
for real estate and other loans principally on the basis of the quality of
services it provides to borrowers, the interest rates and loan processing fees
it charges, and the types of loans it originates. See "-Lending Activities."
The Banks attract deposits through retail banking offices. Therefore,
competition for those deposits is principally from retail brokerage offices,
commercial banks, credit unions and savings institutions located in the
communities in the Banks' Market Areas. The Banks compete for these deposits by
offering a variety of account alternatives at competitive rates and by providing
convenient business hours.
ITEM 2. PROPERTIES
- -------------------
The Corporation's executive offices and the main office of Signal Bank are
located in downtown Wooster, Ohio in a 4-story office building owned by Signal
Bank.
At December 31, 1997, the Corporation, through Signal Bank and Summit Bank,
operated 28 banking centers in Ohio, of which 20 were owned and 8 were leased.
The Specialty Finance Group of the Corporation operated 6 facilities (4 in Ohio,
1 in Indiana and 1 in Virginia) at December 31, 1997, of
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which 1 was owned and 5 were leased. The properties owned are generally free
from mortgages and encumbrances.
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
In the ordinary course of their respective businesses, the Corporation and its
subsidiaries are parties to various legal proceedings. In the opinion of
management of the Corporation, after consideration of advice from outside
litigation counsel, the ultimate resolution of any legal proceedings outstanding
as of December 31, 1997 will not have a material adverse effect on the
Corporation's consolidated financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
No matter was submitted to a vote of security holders through the solicitation
of proxies or otherwise, during the three months ended December 31, 1997.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
- ------------------------------------------------------------------------------
The information under the caption "Market Information" in the portions of the
Corporation's Annual Report to Shareholders for the year ended December 31,
1997, included as Exhibit 13 to this Report, is herein incorporated by
reference.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
The information required by this item is incorporated by reference from page 1
of the Corporation's 1997 Annual Report to Shareholders attached to this filing
as Exhibit 13.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
The information under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the portions of the
Corporation's Annual Report to Shareholders for the year ended December 31,
1997, included as Exhibit 13 to this Report, is herein incorporated by
reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------
The information required by this item is incorporated herein by reference from
page 20 of the Corporation's 1997 Annual Report to Shareholders attached to this
filing as Exhibit 13.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
The consolidated financial statements and notes thereto contained in the
portions of the Corporation's Annual Report to Shareholders for the year ended
December 31, 1997, included as Exhibit 13 to this Report, are herein
incorporated by reference.
The independent auditor's report of Deloitte & Touche LLP dated January 26, 1996
is included as Exhibit 99 to this Report and is herein incorporated by
reference.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- ------------------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
The information required by Item 304 of Regulation S-K was previously filed as
part of the Corporation's Current Report on Form 8-K reporting the event of
August 20, 1996 filed on August 27, 1996, as amended on Form 8-K/A filed on
September 9, 1996.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
Information concerning Executive Officers of the Corporation is contained under
the heading "Executive Officers Who Are Not Directors" on page 15 herein.
Information concerning Directors of the Registrant and compliance with the
reporting requirements of Section 16(a) of the Securities and Exchange Act of
1934, as amended, is incorporated herein by reference from the definitive Proxy
Statement for the Annual meeting of Shareholders to be held in 1998, a copy of
which will be filed with the SEC in April 1998. Information contained under the
headings "Compensation Committee Report on Executive Compensation" and
"Performance Graph" included in the Proxy Statement pursuant to Items 402(k) and
402(l) of Regulation S-K are specifically not incorporated by reference herein.
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
Information concerning executive compensation is incorporated herein by
reference from the definitive Proxy Statement for the Annual Meeting of
Shareholders to be held in 1998, a copy of which will be filed with the SEC in
April 1998. Information contained under the headings "Compensation Committee
Report on Executive Compensation" and "Performance Graph" included in the Proxy
Statement pursuant to Items 402(k) and 402(l) of Regulation S-K are specifically
not incorporated by reference herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
Information concerning security ownership of certain beneficial owners and
management is incorporated herein by reference from the definitive Proxy
Statement for the Annual Meeting of Shareholders to be held in 1998, a copy of
which will be filed with the SEC in April 1998. Information contained under the
headings "Compensation Committee Report on Executive Compensation" and
"Performance Graph" included in the Proxy Statement pursuant to Items 402(k) and
402(l) of Regulation S-K are specifically not incorporated by reference herein.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Information concerning certain relationships and related transactions is
incorporated herein by reference from the definitive Proxy Statement for the
Annual Meeting of Shareholders to be held in 1998, a copy of which will be filed
with the SEC in April 1998. Information contained under the headings
"Compensation Committee Report on Executive Compensation" and "Performance
Graph" included in the Proxy Statement pursuant to Items 402(k) and 402(l) of
Regulation S-K are specifically not incorporated by reference herein.
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PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------------------------------------------------------------------------
(a)(1) Consolidated Financial Statements:
----------------------------------
The following information appears in the portions of the Corporation's Annual
Report to Shareholders for the year ended December 31, 1997, included as Exhibit
13 to this Report:
PAGES IN
EXHIBIT 13
-----------
Independent Auditors' Report............................................................................................14
Consolidated Statements of Financial Condition
December 31, 1997 and 1996..........................................................................................2
Consolidated Statements of Operations
Years Ended December 31, 1997, 1996 and 1995........................................................................3
Consolidated Statements of Shareholders' Equity
Years Ended December 31, 1997, 1996 and 1995........................................................................4
Consolidated Statements of Cash Flows
Years Ended December 31, 1997, 1996 and 1995........................................................................5
Notes to Consolidated Financial Statements............................................................................6-14
(a)(2) Financial Statement Schedules:
------------------------------
Financial statement schedules have been omitted because the required information
is contained in the consolidated financial statements and notes thereto, or
because such schedules are not required or applicable.
18
19
(a)(3) Exhibits
--------
REFERENCE TO
REGULATION PRIOR FILING OR
S-K EXHIBIT EXHIBIT NUMBER
NUMBER DOCUMENT ATTACHED HERETO
- -------------------------------------------------------------------------------------------------------------------
2 Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession *
3(i) Articles of Incorporation **
3(ii) By-Laws ***
4 Instruments defining the rights of security holders, See also Exhibit 3
including debentures ****
9 Voting Trust Agreement None
10 Material contracts
1987 Stock Option and Incentive Plan *****
Non-Employee Director Stock Option Plan *****
Management Incentive Compensation Plan ******
1997 Omnibus Incentive Plan ******
Summit Bancorp 1989 Stock Incentive Plan ******
1997 FirstFederal Employee Discount Stock Purchase Plan ******
Branch acquisition agreement with KeyBank, N.A.
dated as of May 16, 1997 *******
Employment agreement of G. Clark **
Employment agreement of L.D. Douce **
Employment agreement of J. Little **
Employment agreement of R. James **
Employment agreement of J. Park 10a
Employment agreement of D. Vernon 10b
11 Statement regarding computation of per share earnings None
12 Statement regarding computation of ratios Not required
13 Annual Report to Security Holders 13
16 Letter regarding change in certifying accountants Not required
18 Letter regarding change in accounting principles None
21 Subsidiaries of the registrant 21
22 Published report regarding matters submitted to vote of
security holders None
23 Consents of Experts and Counsel 23.1 and 23.2
25 Power of Attorney Not required
27 Financial Data Schedule 27
99 Additional Exhibits -- report of predecessor independent accountants 99
19
20
*Filed as an exhibit to First Shenango Bancorp's Current Report on
Form 8-K filed with the Securities and Exchange Commission on February 23, 1998.
**Filed as exhibits to the Corporation's Annual report on Form
10-K for the fiscal year ended December 31, 1996, filed with the Securities and
Exchange Commission on March 25, 1997 (File No. 0-17594). Such previously filed
document is hereby incorporated herein by reference in accordance with Item 601
of Regulation S-K.
***Filed as exhibits to the Corporation's Registration Statement on
Form S-2 under the Securities Act of 1933, filed with the Securities and
Exchange Commission on September 28, 1992 (Registration No. 33- 50664). All of
such previously filed document is hereby incorporated herein by reference in
accordance with Item 601 of Regulation S-K.
****The Corporation agrees to file with the Securities and Exchange
Commission, if requested, a copy of the indenture relating to the Corporation's
$40,500,000 of 9.125% Subordinated Notes due March 15, 2004.
*****Filed as Exhibit 4 to the Corporation's Registration Statement
on Form S-8 under the Securities Act of 1933, filed with the Securities and
Exchange Commission on May 29, 1992 (Registration No. 33-48246). All of such
previously filed document is hereby incorporated herein by reference in
accordance with Item 601 of Regulation S-K.
******Filed on Form S-8 with the Securities and Exchange Commission
on October 6, 1997 (File No. 0-17894). All of such previously filed document is
hereby incorporated herein by reference in accordance with Item 601 of
Regulation S-K.
*******Filed as Exhibit 10 to the Corporation's quarterly report on
Form 10-Q for the nine-month period ended September 30, 1997 filed with the
Securities and Exchange Commission (File No. 0-17894). All of such previously
filed document is hereby incorporated herein by reference in accordance with
Item 601 of Regulation S-K.
EXHIBITS ARE AVAILABLE BY WRITTEN REQUEST TO:
FIRSTFEDERAL FINANCIAL SERVICES CORP
CONNIE S. STROCK
VICE PRESIDENT
P.O. BOX 385
WOOSTER, OH 44691
(b) Reports on Form 8-K:
--------------------
None
20
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SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FIRSTFEDERAL FINANCIAL SERVICES CORP
Date: March 26, 1998 By: /s/ Jon W. Park
- ------------------------------------------------------------------------------------------------------------------
Jon W. Park
Chief Financial Officer
(Duly Authorized Representative and Principal
Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
By: /s/ Gary G. Clark By: /s/ Joseph P. Ciolek
------------------------------------- -------------------------------------
GARY G. CLARK, Chairman of the Board, JOSEPH P. CIOLEK, Director
Principal Executive Officer and
Chief Executive Officer Date: March 26, 1998
--------------
Date: March 26, 1998
--------------
By: /s/ L. Dwight Douce
-------------------------------------
By: /s/ Steven N. Stein L. DWIGHT DOUCE, Executive Vice
------------------------------------- President, Secretary and Director
STEVEN N. STEIN, Director
Date: March 26, 1998
Date: March 26, 1998 --------------
--------------
By: /s/ Gust B. Geralis
By: /s/ R. Victor Dix -------------------------------------
------------------------------------- GUST B. GERALIS, Director
R. VICTOR DIX, Director
Date: March 26, 1998
Date: March 26, 1998 --------------
--------------
By: /s/ Richard E. Herald
By: /s/ David C. Vernon -------------------------------------
------------------------------------- RICHARD E. HERALD, Director
DAVID C. VERNON, Director
Date: March 26, 1998
Date: March 26, 1998 --------------
--------------
By: /s/ Daniel H. Plumly
-------------------------------------
DANIEL H. PLUMLY, Director
Date: March 26, 1998
--------------
21