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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 13, 1999.
REGISTRATION NO. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
--------------------
OHIO LEGACY CORP
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
Ohio 6021 34-1903890
- ----------------------------------------- ------------------------------------- ------------------------------
(State or other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification No.)
OHIO LEGACY CORP
305 WEST LIBERTY STREET
WOOSTER, OHIO 44691
(330) 262-0437
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------
L. DWIGHT DOUCE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
OHIO LEGACY CORP
305 WEST LIBERTY STREET
WOOSTER, OHIO 44691
(330) 262-0437
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------
Copies to:
M. PATRICIA OLIVER, ESQ. JEFFREY M. WERTHAN, P.C.
SQUIRE, SANDERS & DEMPSEY L.L.P. SILVER, FREEDMAN & TAFF L.L.P.
4900 KEY TOWER, 127 PUBLIC SQUARE 1100 NEW YORK AVE., N.W., SUITE 700
CLEVELAND, OHIO 44114-1304 WASHINGTON, DC 20005-3934
(216) 479-8500 (202) 414-6100
-----------------------
Approximate date of proposed sale to public:
As soon as practicable after the effective date of this Registration Statement.
-----------------------
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. |_|
CALCULATION OF REGISTRATION FEE
============================================= ================= ==================== ======================= ==================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
CLASS OF SECURITIES TO BE REGISTERED REGISTERED SECURITY PRICE REGISTRATION FEE
- --------------------------------------------- ----------------- -------------------- ----------------------- ------------------
Common Shares, without par value............ 1,200,000 $10 $12,000,000 $3,336.00
- --------------------------------------------- ----------------- -------------------- ----------------------- ------------------
Estimated solely for the purpose of computing the amount of the registration fee
in accordance with Rule 457(c) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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[LOGO]
OHIO LEGACY CORP
900,000 TO 1,200,000 COMMON SHARES
$10 PER SHARE
We are offering for sale a minimum of 900,000 common shares and a
maximum of 1,200,000 shares at a price of $10 per share with this prospectus to
fund the start-up of a new community bank, Ohio Legacy Bank. Ohio Legacy Corp
will be the holding company and sole shareholder of the Bank. The Bank will
initially have banking centers located in Wayne and Stark County, Ohio and we
expect to open for business in the first quarter of 2000. The minimum
subscription is 500 shares or $5,000. This is our initial public offering and no
market currently exists in our shares. We have applied to have our common shares
listed on the OTC bulletin board under the symbol "OLCB".
Charles Webb & Company, a division of Keefe, Bruyette & Woods, Inc.,
has agreed to serve as our sales agent and use its best efforts to solicit
subscriptions for our shares. The offering is scheduled to end on
______________, 1999, but we may extend the offering to ___________, 2000, at
the latest. All of the money which we receive will be placed with our escrow
agent, Champaign National Bank & Trust, who will hold the money until we sell at
least 900,000 shares. If we do not succeed in selling at least 900,000 shares
before the end of the offering period, we will promptly return all funds
received to the subscribers with interest.
TERMS OF THE OFFERING
Minimum Offering Maximum Offering
---------------- ----------------
Per Share Total Per Share Total
--------- ----- --------- -----
Public offering price....................... $10.00 $9,000,000 $10.00 $12,000,000
Sales agent commissions..................... .58 525,000 .61 735,000
Offering expenses........................... .14 125,000 .10 125,000
--------- ---------- ------ -----------
Net proceeds................................ 9.28 8,350,000 9.29 11,140,000
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 7.
These securities are not deposits or accounts and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
This prospectus is dated __________ __, 1999.
CHARLES WEBB & COMPANY,
A DIVISION OF
KEEFE, BRUYETTE & WOODS, INC.
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TABLE OF CONTENTS
PAGE
----
QUESTIONS AND ANSWERS.............................................................................................1
SUMMARY...........................................................................................................3
RISK FACTORS......................................................................................................7
FORWARD-LOOKING STATEMENTS.......................................................................................14
USE OF PROCEEDS..................................................................................................15
DETERMINATION OF OFFERING PRICE..................................................................................15
PLAN OF DISTRIBUTION.............................................................................................16
DIVIDEND POLICY..................................................................................................18
CAPITALIZATION...................................................................................................19
BUSINESS.........................................................................................................20
DESCRIPTION OF PROPERTY..........................................................................................25
PLAN OF OPERATION................................................................................................25
SUPERVISION AND REGULATION.......................................................................................27
MANAGEMENT.......................................................................................................37
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS.............................................................43
PRINCIPAL SHAREHOLDERS...........................................................................................44
DESCRIPTION OF SECURITIES........................................................................................45
SALES AGENT......................................................................................................48
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES...................................................................................49
SHARES ELIGIBLE FOR FUTURE SALE..................................................................................49
LEGAL MATTERS....................................................................................................50
EXPERTS..........................................................................................................50
WHERE YOU CAN FIND MORE INFORMATION..............................................................................50
FINANCIAL STATEMENTS............................................................................................F-1
APPENDIX A - STOCK ORDER FORM...................................................................................A-1
APPENDIX B - ESCROW AGREEMENT...................................................................................B-1
Until _____________, 1999, all dealers that effect transactions in
these securities, whether or not participating in this offering, may be required
to deliver a prospectus. This is in addition to the dealer's obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
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QUESTIONS AND ANSWERS
Q. WHY IS OHIO LEGACY OFFERING THESE SECURITIES AND WHY HAS IT CHOSEN THIS
TIME FOR THE OFFERING?
A. We are offering these shares to fund the start-up of a community bank
with banking operations initially located in Wayne and Stark County,
Ohio. We believe that an opportunity exists in these markets because of
recent consolidation in the banking industry.
Q. ONCE I HAVE READ THIS PROSPECTUS AND DETERMINED THAT I WOULD LIKE TO
BUY SOME SHARES, HOW DO I SUBSCRIBE?
A. You must complete and return the Stock Order Form attached as Appendix
A to this prospectus and enclose a check or money order payable to
"Champaign National Bank & Trust, Trust No. OLCB80N01" for your entire
subscription in the enclosed reply envelope.
Q. WHEN WILL THE OFFERING EXPIRE AND HOW SOON SHOULD I SEND IN MY
SUBSCRIPTION?
A. Send in your subscription as soon as possible. This offering expires at
5:00 p.m. Eastern Time on _____________, 1999, unless we decide to
extend it to ___________, 2000. All subscriptions with payments must be
received by the expiration date of the offering.
Q. HOW MANY SHARES MAY I PURCHASE?
A. The minimum purchase is 500 shares and the maximum purchase is 50,000
shares. However, we reserve the right to reject all or any part of any
subscription.
Q. CAN I PURCHASE THROUGH AN IRA OR OTHER QUALIFIED RETIREMENT PLAN?
A. Yes. The administrator or trustee will need to fill out the appropriate
forms and return them on a timely basis.
Q. IS THIS OFFERING REGISTERED IN ALL 50 STATES?
A. No. At this time we plan to register in Ohio, Florida, Texas, New York,
Indiana, Pennsylvania, and Michigan. We may register in additional
states depending on interest in the offering. If you are not a resident
of any of these states, please call the sales agent's Stock Information
Center at (877) 298-6520 before subscribing.
Q. IF MY SUBSCRIPTION IS ACCEPTED, WHEN WILL I RECEIVE MY SHARES?
A. We will mail you stock certificates promptly after the closing of the
offering.
Q. CAN I GET MY MONEY BACK AFTER I HAVE MAILED MY SUBSCRIPTION?
A. No, unless we do not close the offering, in which case we will refund
your full subscription.
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Q. WHEN WILL I RECEIVE DIVIDENDS?
A. You will not receive any dividends in the foreseeable future. We plan
to reinvest our earnings in our business.
Q. WHO CAN I CALL IF I HAVE QUESTIONS?
A. For answers to any other questions, we encourage you to read this
prospectus. If you still have questions, please call Charles Webb &
Company's Stock Information Center at (877) 298-6520 between 8:30 a.m.
and 5:30 p.m., Monday through Friday.
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SUMMARY
This summary highlights information contained in other parts of this
prospectus. This summary is not complete and does not contain all of the
information you should consider before investing in our common shares. You
should carefully read this entire prospectus.
OHIO LEGACY CORP AND OHIO LEGACY BANK
We incorporated Ohio Legacy Corp in July of 1999 to serve as the
holding company for Ohio Legacy Bank, a new national bank. The Bank will focus
on the local community, emphasizing personal service to individuals and
businesses in the Wayne and Stark County, Ohio markets. We have filed for
regulatory approval to open the new Bank with the Office of the Comptroller of
the Currency and for deposit insurance for the Bank with the FDIC. We have also
filed for approval of the Federal Reserve Board to become a bank holding company
and acquire all of the stock of the new bank. We expect to receive all final
regulatory approvals, and to open for business in the first quarter of 2000.
OUR MARKET OPPORTUNITIES
We believe an opportunity exists as a result of the consolidation in
the banking industry. We believe this consolidation has created an attractive
market segment between the national and super-regional banks, on the one hand,
and community banks on the other hand. Larger financial institutions do not
generally provide the personalized service expected or demanded by many small to
medium-sized businesses and their principals. Members of our executive
management team have had established careers in the financial services industry
and recognize this market opportunity. We have selected Wayne and Stark County,
Ohio for our initial activities because of our management team's extensive
experience in these markets, local customer relationships, and each area's
favorable economic and demographic environment. In 1994 there were 50 de novo
community banks chartered in the United States. By 1998 this figure rose to 190
de novos. There were 289 insured commercial banks in the State of Ohio at the
end of 1990. As of December 31, 1998 there were only 220 insured commercial
banks in Ohio, which represents a decline of approximately 24%.
OUR ORGANIZERS AND MANAGEMENT TEAM
Our organizers consist of nine businessmen who reside and work in Wayne
and Stark County, Ohio. As a group, they have significant banking and business
experience and many close personal ties to our planned market area. The
organizers have already invested a total of $135,000 in Ohio Legacy. If we do
not successfully complete this offering, our organizers will lose some, if not
all of their investment.
Our executive management team includes two individuals who have
significant experience serving our target markets. L. Dwight Douce, the
President and Chief Executive Officer of Ohio Legacy has over 26 years of
banking experience, including 16 years in the Wooster market. Prior to founding
Ohio Legacy, Mr. Douce served as President-Chief Operating Officer of Signal
Bank, a
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$1.8 billion commercial bank headquartered in Wooster, which operated more than
25 branches. Steven G. Pettit, the Senior Vice President of Lending and
President of the Stark County Division, has over ten years experience with
several large regional banks and has established a positive reputation with
numerous customers in both Stark and Wayne counties. Our management team is
committed to the highest level of customer service and responsiveness and has
substantial experience in serving small and medium-sized businesses in Ohio.
OUR BANKING PHILOSOPHY
Our banking philosophy provides for two separate banking centers in
order to ensure a high degree of local autonomy in decision-making and lending
authority. We will maintain strict credit policies and procedures and will
consolidate administrative functions for our two banking centers. Our business
strategy envisions that each banking center will operate as if it were an
independent community bank providing responsive, personalized service. We will
compensate management based on the performance of their banking center as well
as our overall financial, operating and market performance. Each market area
will be represented by members of our board of directors who have demonstrated a
commitment to their local communities.
OUR ADVANTAGES
We believe that we are well positioned to capitalize on the market
opportunity created by the consolidation in the banking industry because of the
following:
- Experienced Management Team. Our executive management team has
significant banking experience which has allowed them to
develop valuable customer relationships within our target
markets.
- Local Decision Making. Our management structure is organized
to retain local decision-making authority so that our officers
will be able to provide our customers with expedited loan
decisions.
- Personalized Service. Our staff is committed to providing the
type of personalized service not generally available at larger
financial institutions.
- Competitive Technology. Our decision to have third parties
provide us with competitive technology and ongoing upgrades
will provide us with cost efficiencies. In addition, our
ability to invest in the latest technologies without having to
incur the additional financial and operational costs
associated with converting and upgrading existing systems may
provide us a technological advantage over our established
competitors.
- Customized Products and Services. Our close, personalized
service will afford us the opportunity and flexibility to
provide customized and individualized products and services to
our customers.
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OUR BUSINESS STRATEGY
We will implement our strategy by:
- targeting small and medium-sized business customers who demand
high levels of personalized attention and customer service;
- staffing banking centers with community-minded and responsive
management teams that will have significant local
decision-making authority;
- operating with two strategically located offices supported by
outsourced core processing and back room operations to
increase efficiencies;
- enhancing private banking relationships by offering a broad
spectrum of products and services; and
- providing access to our products and services via the
internet, including cash management services for our retail
and commercial customers.
TERMS OF THE OFFERING
Common shares offered.................................................. 900,000 to 1,200,000
Warrants to organizers................................................. 155,000
Common shares outstanding after the offering........................... 900,000 to 1,200,000
Common shares outstanding after the offering if all
of the warrants are exercised.......................................... 1,055,000 to 1,355,000
Price per share........................................................ $10
Use of net proceeds after the payment of sales
commissions and offering expenses...................................... $300,000 to cover start-up
expenses.
$7.05 million to $9.84 million,
depending on the size of the
offering, to provide initial
working capital for the Bank,
which will be placed in short-term
investments and available for
loans to Bank customers.
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$1.0 million retained as working
capital for Ohio Legacy.
Expiration date........................................................ ________, 1999, but may be extended an
additional 60 days to _________, 2000
at Ohio Legacy's discretion.
Purchase limitations................................................... The minimum purchase is 500 shares and
the maximum purchase is 50,000 shares.
However, we reserve the right to reject
all or any part of any subscription.
In determining which subscriptions to
accept, we may take into account any
factors we believe may be relevant,
including the order in which
subscriptions are received, a
subscriber's potential to do business
with the Bank and factors that may
cause an aggregation of ownership under
federal banking regulations.
Further information.................................................... Please call the Charles Webb & Company
Stock Information Center at (877)
298-6520.
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RISK FACTORS
Before you invest in our common shares, you should be aware that there
are various risks which we will encounter in starting and operating the new
bank, including those described below. We may face other risks as well, which we
have not anticipated. An investment in our common shares involves a significant
degree of risk and you should not invest in the offering unless you can afford
to lose some or even all of your investment. You should consider these risk
factors together with all the other information included in this prospectus
before you decide to purchase our common shares.
WE HAVE NO OPERATING HISTORY UPON WHICH TO BASE AN ESTIMATE OF OUR FUTURE
PERFORMANCE.
We have no operating history upon which to base any estimate of our
future performance. We incorporated Ohio Legacy in July, 1999 and have not yet
engaged in any banking operations. Our prospects must be evaluated in light of
the risks, expenses and difficulties frequently encountered by companies in
their early stages of development. We may not successfully address the
following:
- building our customer base;
- developing and retaining customer loyalty;
- responding to competitive developments;
- attracting, retaining and motivating qualified management and
employees;
- upgrading our technologies, products and services;
- penetrating our identified markets; and
- providing quality and personal service.
WE EXPECT LOSSES IN OUR FIRST 18 TO 24 MONTHS OF OPERATIONS.
As a result of start-up expenditures and the time it will take to
develop a deposit base and loan portfolio, we expect to operate at a loss during
our start-up period. We do not expect to be profitable for at least the first 18
to 24 months of operations. We anticipate cumulative losses during the first two
years of operations to exceed $1.2 million and could be higher. We cannot
guarantee that we will ever operate profitability. If we do not reach
profitability and recover our accumulated operating losses, you will likely
suffer a significant decline in, or total loss of, the value of your common
shares. Shareholders will not be liable for any losses, however, beyond their
investment.
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WE WILL BE COMPETING WITH MANY LARGER FINANCIAL INSTITUTIONS THAT HAVE FAR
GREATER FINANCIAL RESOURCES THAN WE HAVE, WHICH COULD PREVENT US FROM ATTRACTING
CUSTOMERS AND MAY CAUSE US TO HAVE TO PAY HIGHER INTEREST RATES TO ATTRACT AND
MAINTAIN CUSTOMERS.
We will encounter strong competition from existing banks and other
types of financial institutions operating in the Wayne and Stark County areas
and elsewhere. We will compete with other bank holding companies, state and
national commercial banks, savings and loan associations, consumer finance
companies, credit unions, securities brokerages, insurance companies, mortgage
banking companies, money market mutual funds, asset-based non-bank lenders and
other financial institutions. Some of these competitors have been in business
for a long time and have already established their customer base and name
recognition. Most are larger than we will be and have greater financial and
personnel resources than we will have. Some are large super-regional and
regional banks, like KeyBank, National City Bank and First Merit Bank. These
institutions offer services, such as extensive and established branch networks
and trust services, that we either do not expect to provide or will not provide
for some time. Due to this competition, we may have to pay higher rates of
interest to attract deposits. In addition, competitors that are not depository
institutions are generally not subject to the extensive regulations that will
apply to our bank.
OUR SUCCESS LARGELY DEPENDS UPON THE SKILL AND EXPERIENCE OF OUR SENIOR
MANAGEMENT TEAM.
The success of our business will depend upon the services of L. Dwight
Douce, our President and Chief Executive Officer, and Steven G. Pettit, Senior
Vice President of Lending and President of the Stark County Division. The loss
of either of these individuals could adversely affect our profitability, service
quality and growth. We expect to enter into one year employment agreements with
automatic one year renewals, with both of these individuals but cannot assure
their continued service. We do not have key man life insurance with respect to
any of our officers. Our future success also depends on our ability to identify,
attract and retain qualified senior officers and other employees in our
identified markets.
WE MAY NOT BE ABLE TO COMPETE WITH OUR LARGER COMPETITORS FOR LARGER CUSTOMERS
BECAUSE OUR LENDING LIMITS WILL BE LOWER THAN THEIRS.
We will be limited in the amount we can loan a single borrower by the
amount of the Bank's capital. The legal lending limit is 15% of the Bank's
capital and surplus. At a minimum, we expect that our initial lending limit will
be approximately $1.05 million immediately following the offering, but we intend
to impose an internal limit on the Bank of 50% of this amount, or approximately
$525,000. Until the Bank is profitable, our capital level will decline and
therefore so will our lending limit. Our lending limit will be significantly
less than the limit for most of our competitors and may affect our ability to
seek relationships with larger businesses in our market area. We intend to
accommodate larger loans by selling participations in those loans to other
financial institutions. We cannot guarantee, however, that we will succeed in
attracting or maintaining customers seeking larger loans or that we will be able
to engage in participation of these loans on favorable terms.
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WE WILL HAVE BROAD DISCRETION IN USING THE PROCEEDS OF THE OFFERING.
We will have broad discretion in using the net proceeds of this
offering. The timing and specific application of the net proceeds will remain in
the sole discretion of our board and management. Upon completion of the offering
and after payment of the sales agent's commissions, we intend to pay the
estimated offering expenses of $125,000 and start-up expenses of $300,000. We
expect to contribute between $7.05 million and $9.84 million of the net
proceeds, depending on the size of the offering, to the capital of Ohio Legacy
Bank to support the growth of its loan portfolio by increasing its legal lending
limit. We will retain $1 million of the net proceeds as working capital, which
will be applied in the future as needed to implement our business plan.
A DELAY IN OBTAINING REGULATORY APPROVALS WILL HAVE AN ADVERSE AFFECT ON OUR
BUSINESS.
Before we can open for business, we must obtain final approval from the
Federal Reserve Board, FDIC and OCC. We expect to obtain all regulatory
approvals by, and open for business in, the first quarter of 2000. Any delay in
commencing operations will increase pre-opening expenses and postpone
realization of potential revenue. We expect to incur approximately $125,000 in
offering expenses, and estimate that we will spend a total of $300,000 on
start-up expenses. See "Plan of Operation" beginning on page 25.
WE COULD BE ADVERSELY AFFECTED BY CHANGES IN THE LAW, ESPECIALLY CHANGES
DEREGULATING THE BANKING INDUSTRY.
We will operate in a highly regulated environment and will be subject
to supervision and regulation by several governmental regulatory agencies,
including the Federal Reserve Board, the FDIC, and the OCC. These regulations
are generally intended to provide protection for depositors and customers rather
than for the benefit of investors. We will also be subject to changes in federal
and state law, regulations, governmental policies, income tax laws and
accounting principles. Deregulation could adversely affect the banking industry
as a whole, including our operations. The effects of these changes could
adversely affect our future operations. See "Supervision and Regulation"
beginning on page 27.
INTEREST RATE VOLATILITY COULD SIGNIFICANTLY HARM OUR BUSINESS.
Our results of operations will be materially affected by the monetary
and fiscal policies of the federal government and the regulatory policies of
governmental authorities. Our profitability will be dependent to a large extent
on our net interest income, which is the difference between our income on
interest-earning assets, such as loans, and our expense on interest-bearing
liabilities, such as deposits. A change in market interest rates could adversely
affect our earnings. Consequently, we will be particularly sensitive to interest
rate fluctuations. As we plan to hold most of our commercial and consumer loans
we originate internally, we will face a greater risk of rapid changes in
interest rates than banks which sell their loans in secondary markets.
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FUTURE SALES OF OUR COMMON SHARES COULD DEPRESS THE PRICE OF OUR COMMON SHARES.
Sales of a substantial number of common shares in the public market
following this offering, or the perception that such sales could occur, could
adversely affect the market price for our common shares. After the offering, we
will have at least 900,000 common shares outstanding. In addition, we have a
stock option plan under which we have reserved options to purchase 100,000
common shares. We will also have outstanding warrants to purchase 155,000 common
shares. The shares being sold in this offering will be eligible for sale in the
open market without restriction, except for shares purchased by "affiliates" as
that term is defined in Rule 144 of the Securities Act. Our officers, directors
and some of our existing shareholders, who are expected to hold an aggregate of
156,000 common shares, have agreed not to sell any of their shares for 180 days
following the closing of the offering without the prior written consent of the
sales agent. Following the expiration of this 180 day lock-up period, these
shares will be eligible for sale in the public market subject to compliance with
volume limitations and other conditions of Rule 144. The market price of the
common shares could be materially adversely affected by the sale or availability
for sale of shares now held by our existing shareholders or of shares which may
be issued under our stock option plan or warrants.
OUR RESULTS OF OPERATIONS WILL BE SIGNIFICANTLY AFFECTED BY THE ABILITY OF OUR
BORROWERS TO REPAY THEIR LOANS.
Lending money is an essential part of the banking business. However,
borrowers do not always repay their loans. The risk of non-payment is affected
by:
- credit risks of a particular borrower;
- changes in economic and industry conditions;
- the duration of the loan; and
- in the case of a collateralized loan, uncertainties as to the
future value of the collateral.
Generally, commercial/industrial, construction and commercial real
estate loans present a greater risk of non-payment by a borrower than other
types of loans. While we do not intend to have a greater percentage of these
types of loans in our portfolio than our competitors, the youth of our portfolio
may increase our risk of non-payment. This is because most defaults occur early
in the term of a loan.
OUR FINANCIAL CONDITION WILL BE ADVERSELY AFFECTED IF OUR ALLOWANCE FOR LOAN
LOSSES IS NOT SUFFICIENT TO ABSORB ACTUAL LOSSES.
There is no precise method of predicting loan losses. We can not assure
you that our allowance for loan losses will be sufficient to absorb actual loan
losses. Excess loan losses could have a material adverse effect on our financial
condition and results of operations. We will attempt to maintain an appropriate
allowance for loan losses to provide for probable losses in our loan portfolio.
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We will periodically determine the amount of the allowance for loan losses based
upon consideration of several factors, including:
- an ongoing review of the quality, mix and size of the overall
loan portfolio;
- historical loan loss experience;
- evaluation of non-performing loans;
- assessment of economic conditions and their effects on the
existing portfolio; and
- the amount and quality of collateral, including guarantees,
securing loans.
The following factors, however, make our evaluation of our allowance
for loan losses more subjective than other banks' with an established history:
- our lack of an operating history may prevent management from
accurately predicting loan losses based on historical
experience;
- the local economy has not experienced any significant
recessionary periods over the past five (5) years; and
- because of our small business focus, the principals of the
small businesses may have many different types of loans with
the Bank and a default on one of these loans may have an
adverse effect on the other loans.
Because of these factors, we may have a higher risk that our loan
allowance will not be adequate to absorb future loan losses.
WE MAY NOT BE ABLE TO ATTRACT SUFFICIENT DEPOSITS TO FUND OUR ANTICIPATED LOAN
GROWTH.
We anticipate that we will need to attract significant levels of
deposits to fund our anticipated loan growth. Our ability to attract and
maintain such deposit levels will depend on our ability to attract new deposit
customers. To the extent that funds generated by our deposit customers are
insufficient to fund our loan growth, we may need to raise additional funds
through public or private financings. We cannot assure you that we would be able
to obtain these funds on terms that are favorable to us.
WE WILL NOT HAVE A LARGE NUMBER OF SHAREHOLDERS OR A LARGE NUMBER OF SHARES
OUTSTANDING AFTER THE OFFERING, WHICH MAY LIMIT YOUR ABILITY TO SELL OR TRADE
THE SHARES AFTER THE OFFERING.
Initially, there will be no established market for our common shares.
After the offering, we will encourage broker-dealers to buy and sell orders for
our common shares on the Over-the-Counter Bulletin Board. However, the trading
markets on the OTC Bulletin Board lack the depth, liquidity,
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and orderliness necessary to maintain a liquid market. We do not expect a liquid
market for our common shares to develop for several years, if at all. A public
market having depth and liquidity depends on having enough buyers and sellers at
any given time. Because this is a relatively small offering, we do not expect to
have enough shareholders or outstanding shares to support an active trading
market. Accordingly, investors should consider the potential illiquid and
long-term nature of an investment in our common shares.
IF A MARKET FOR OUR COMMON SHARES DOES NOT DEVELOP, YOU MAY NOT BE ABLE TO SELL
YOUR SHARES AS QUICKLY AS YOU MAY LIKE.
There is no established public market for our common shares. We cannot
guarantee:
- that any market for our common shares will develop;
- that any market for our common shares that develops will be
liquid;
- that you will be able to sell the common shares you buy in
this offering; or
- that you will be able to sell the common shares you buy in
this offering at any particular price.
Although we expect to have our common shares approved for quotation on
the OTC Bulletin Board, an active trade market may not develop or continue after
this offering.
THE OFFERING PRICE WAS DETERMINED ARBITRARILY AND MAY NOT REFLECT THE MARKET
PRICE OF OUR SHARES.
The offering price of $10 per share was arbitrarily determined by Ohio
Legacy in consultation with the sales agent. The price is not based upon
earnings or any history of operations and does not necessarily indicate the
present or anticipated value of our shares. The market price of our shares after
the offering could be lower than the offering price.
UPON EXERCISE OF THEIR WARRANTS, OUR ORGANIZERS AND DIRECTORS WILL OWN A
SIGNIFICANT NUMBER OF COMMON SHARES, WHICH WILL ALLOW THEM TO CONTROL THE
MANAGEMENT OF THE COMPANY.
Our organizers and directors have indicated that they intend to
purchase approximately 156,000 common shares, which will equal approximately
13.0% of the total number of shares, assuming the offering is fully subscribed.
If our organizers and directors exercise all of their warrants, they will, as a
group, own approximately 23% of the outstanding common shares. The ownership of
approximately 23% of our shares will likely assure control of the election of
our directors in future years. To the extent that organizers and directors vote
together, they will have the ability to exert significant influence over the
election of our board of directors, as well as our policies and business
affairs, and their interests may not be the same as yours.
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THE EXERCISE OF WARRANTS AND STOCK OPTIONS WILL CAUSE DILUTION AND MAY ADVERSELY
AFFECT THE VALUE OF OUR COMMON SHARES.
Our organizers may exercise warrants to purchase common shares, which
will result in the dilution of your proportionate interest in Ohio Legacy. Upon
completion of this offering, we will issue to the organizers warrants to
purchase one common share at $10 per share for every share they purchase in this
offering. We expect that after this offering the organizers will own 155,000
warrants. If all of these warrants were exercised, your proportionate interest
in Ohio Legacy would decrease by 11.4% per share, assuming that we sell the
maximum number of shares in this offering. See "Captialization-Impact of
Warrants and Dilution" beginning on page 19.
In addition, we have reserved 100,000 common shares for issuance under
our stock option plan. The exercise of these options at an assumed exercise
price of $10 per share will reduce your proportionate interest in Ohio Legacy by
7.7% per share. See "Capitalization-Impact of Stock Options and Dilution"
beginning on page 20.
YOU WILL NOT RECEIVE DIVIDENDS IN THE FORESEEABLE FUTURE.
We do not intend to pay dividends on our common shares for the
foreseeable future. Instead, we intend to reinvest our earnings in our business.
WE WILL BE DEPENDENT ON THE OPERATIONS OF THE BANK.
We are organized as a bank holding company and will own all of the
capital stock of the Bank. We will be substantially dependent upon dividends
from the Bank to pay our expenses, including debt repayment, and to pay cash
dividends to shareholders. The Bank is subject to regulatory limits on the
payment of dividends, which may limit our ability to receive these dividends.
Moreover, we do not anticipate receiving any cash dividends from the Bank during
our initial years of operations.
WE MAY NOT BE ABLE TO EFFECTIVELY PROVIDE, IMPLEMENT AND MARKET
TECHNOLOGY-DRIVEN PRODUCTS AND SERVICES.
The banking industry is undergoing rapid technological changes with
frequent introductions of new technology-driven products and services. In
addition to improving customer service, technology can increase efficiency and
reduce costs. Our success will depend in part on our ability to use technology
to provide products and services that will satisfy customer demands for
convenience, as well as to create operating efficiencies within the Bank. Many
of our competitors have substantially greater resources to invest in technology,
which may permit them to operate at a lower cost than us. We believe that we may
have an advantage over our competitors by being able to invest in the latest
technologies without having to incur the additional operational and financial
costs associated with converting and upgrading existing systems. We, however,
cannot assure you that we will be able to effectively implement new
technology-driven products and services or that we will be able to effectively
market these products and services to our customers.
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WE WILL BE DEPENDENT ON THIRD-PARTY PROVIDERS.
We will be dependent on third-parties to provide a number of our core
processing functions. If these third-parties that we depend on for outsourcing
our back office operations, data processing and other products and services
either increase the cost of their services or fail to maintain the operational
integrity of their networks, our business may be adversely affected.
OUR ARTICLES AND REGULATIONS CONTAIN PROVISIONS THAT COULD DETER TAKEOVER
ATTEMPTS, EVEN AT A PRICE ATTRACTIVE TO SHAREHOLDERS.
Our articles of incorporation and code of regulations, along with
Ohio and federal law may make it difficult to change or gain control of Ohio
Legacy, even at an attractive price to shareholders. As a result, shareholders
who might desire to participate in such a transaction may not have an
opportunity to do so. These provisions may reduce the market price of our
shares. Some of these provisions may also make the removal of the current board
of directors or management more difficult. These provisions include:
- restrictions on the acquisition of Ohio Legacy's equity
securities;
- the classification of the terms of the members of the board of
directors;
- shareholders meeting restrictions;
- the issuance of serial preferred shares and additional common
shares without shareholder approval; and
- supermajority provisions for the approval of specified business
combinations.
See "Description of Securities" beginning on page 45.
THE SALES AGENT MAY NOT BE ABLE TO SELL THE MINIMUM OR MAXIMUM NUMBER OF SHARES
OFFERED IN THIS OFFERING.
Charles Webb & Company has agreed to sell our shares on a best
efforts basis. We cannot assure you that Charles Webb will sell the minimum of
900,000 shares or the maximum of 1,200,000 shares. If we do not sell at least
900,000 shares before ___________, 1999 we will not close the offering. In this
case, we will return all subscription funds, with interest. See "Plan of
Distribution" beginning on page 16.
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus, including the summary,
contains "forward-looking statements" concerning Ohio Legacy Corp and Ohio
Legacy Bank and their operations, performance, financial condition and
likelihood of success.
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You can identify these statements by use of terms such as "expect,"
"believe," "goal," "plan," "intend," "estimate," "may," and "will" or similar
words. These forward-looking statements involve known and unknown risks,
uncertainties and other factors, including those described in the "Risk Factors"
section and other parts of this prospectus, that could cause our actual results
to differ materially from those anticipated in these forward-looking statements.
USE OF PROCEEDS
The following table shows our anticipated use of the proceeds of this
offering based on the sale of the minimum number and maximum number of shares.
After we pay sales commissions, the first $125,000 of the proceeds will be used
to pay offering expenses and $300,000 will be used to pay start-up expenses. We
will also contribute between $7.05 million and $9.84 million to the capital of
the Bank, depending on the size of the offering, which will be placed in
short-term investments and available for loans to Bank customers. We plan to
retain the remaining $1.0 million to use as working capital.
Minimum Offering Maximum Offering
---------------- ----------------
900,000 Shares Percent 1,200,000 Shares Percent
-------------- ------- ---------------- -------
Sales agent commissions..................... $ 525,000 5.8% $ 735,000 6.1%
Offering expenses........................... 125,000 1.4 125,000 1.0
Start-up expenses........................... 300,000 3.3 300,000 2.5
Investment in capital stock
of Bank................................... 7,050,000 78.4 9,840,000 82.0
Working capital of Ohio Legacy.............. 1,000,000 11.1 1,000,000 8.4
----------- ----- ----------- ----
Total....................................... $9,000,000 100% $12,000,000 100%
DETERMINATION OF OFFERING PRICE
The offering price was arbitrarily determined by Ohio Legacy in
consultation with the sales agent. This price is not based upon earnings or any
history of operations. In determining the offering amount, we took into account
the following factors:
- capital requirements of the OCC for the Bank;
- expenses related to the simultaneous opening of two separate
banking centers; and
- general market conditions for the sale of securities.
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PLAN OF DISTRIBUTION
GENERAL
We will offer the shares to the public for a period of sixty days
ending on _____________, 1999. We may, however, in our discretion, extend the
offering period by sixty days to _____________, 2000. We have engaged Charles
Webb & Company, a division of Keefe, Bruyette & Woods, Inc. to consult with and
advise us with respect to the offering. Webb has agreed to use its best efforts
to solicit subscriptions and purchase orders for our shares. Webb will have no
obligation to take or purchase any of our shares in the offering.
Shares will be offered primarily to persons who reside in the State of
Ohio. We also plan to register this offering in Florida, Texas, New York,
Indiana, Pennsylvania and Michigan. If you are not a resident of one of these
states, please call Webb's Stock Information Center at (877) 298-6520 before
subscribing. We will provide persons indicating an interest in acquiring our
shares with a copy of this prospectus prior to our acceptance of any
subscription funds. We will conduct our first closing only if the conditions
required to close the minimum offering have been met.
CONDITIONS OF THE OFFERING
The offering will expire at 5:00 p.m. Eastern Time on ________________,
1999 unless extended by Ohio Legacy to _______________, 2000. The offering is
expressly conditioned upon fulfillment of the following conditions within the
offering period. The offering conditions, which may not be waived, are as
follows:
- subscriptions for not less than $9,000,000 shall have been
deposited with the escrow agent; and
- Ohio Legacy shall not have canceled this offering prior to the
time funds are withdrawn from the escrow account.
ESCROW OF SUBSCRIPTION FUNDS
All accepted subscription funds and documents tendered by investors
will be placed in an escrow account with Champaign National Bank & Trust,
pursuant to the terms of the Escrow Agreement, the form of which is attached to
this prospectus as Appendix B. Upon receipt of a certification from Ohio Legacy
during the offering period that subscriptions totaling not less than $9,000,000
have been received and fully collected, the escrow agent will release to Ohio
Legacy all subscription funds, and any income received thereon.
Prior to the disposing of the escrow account, the escrow agent may
invest subscription funds in direct obligations of the United States Government,
in short-term insured certificates of deposit and/or money market management
trusts for short-term obligations of the United States Government, with
maturities not to exceed sixty days. Ohio Legacy will invest the subscription
funds in a similar
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manner after breaking escrow and prior to the time that it infuses capital into
the Bank. The escrow agent, by accepting appointment, in no way endorses the
purchase of our shares by any person.
In the event the offering conditions are not met within the offering
period or if we terminate the offering prior to withdrawing the subscription
funds, the escrow agent will promptly return to the subscribers their
subscription funds, together with their allocated share of income, if any,
earned on the investment of the escrow account. The latest date to which the
subscription funds might be held in escrow prior to their return in the event
the minimum offering is not reached or final regulatory approval to commence
operations is not granted, is _______________, 2000.
METHOD OF SUBSCRIPTION
We may cancel this offering for any reason at any time prior to the
release of subscription funds from the escrow account and we may cancel all
accepted subscriptions in the event that we elect to cancel the offering in its
entirety.
The minimum subscription is 500 shares and the maximum subscription is
50,000 shares, but we reserve the right to accept subscriptions for less or more
than these amounts.
In order to purchase shares you must:
- complete and sign the Stock Order From which is attached as
Appendix A to this prospectus;
- make full payment for your subscription in United States
currency by check or money order payable to "Champaign
National Bank & Trust, Trust No. OLCB80N01"; and
- return your Stock Order Form and full payment to Champaign
National Bank & Trust in the enclosed reply envelope before
the expiration date of the offering.
Failure to pay the full subscription price shall entitle Ohio Legacy to
disregard the subscription. No subscription agreement is binding until accepted
by Ohio Legacy, which may, in its sole discretion, refuse to accept any
subscription for shares, in whole or in part, for any reason whatsoever. In
determining which subscriptions to accept, we may take into account any factors
we believe may be relevant, including:
- the order in which subscriptions are received;
- a subscriber's potential to do business with the Bank; and
- factors that may cause an aggregation of ownership under
federal banking regulations.
No subscription will be deemed accepted until we deliver written
notification of acceptance to the subscriber. After a subscription is accepted
and proper payment received, we will not cancel such subscription, unless all
accepted subscriptions are canceled.
Once we accept a subscription, it cannot be withdrawn. Payment from any
subscriber for shares in excess of the number of shares allocated to such
subscriber, if any, will be refunded by mail, without interest, within ten days
of the date of rejection.
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Certificates representing common shares of Ohio Legacy, duly authorized
and fully paid, will be issued as soon as practicable after subscription funds
are released to Ohio Legacy from the escrow account.
DIVIDEND POLICY
We do not expect to pay any dividends in the foreseeable future. Any
profits we earn will be retained and used to finance our growth. We have no
current plans to initiate payment of cash dividends, and future dividend policy
will depend on the Bank's earnings, capital requirements, financial condition
and other factors deemed relevant by our board of directors.
Our ability to pay any cash dividends will depend primarily on the
Bank's ability to pay dividends to Ohio Legacy, which depends on the
profitability of the Bank. In order to pay dividends, the Bank must comply with
the requirements of all applicable laws and regulations. See "Supervision and
Regulation - The Bank - Dividends" on page 32 and "Supervision and Regulation -
The Bank - Capital Regulations" on page 33. In addition to the availability of
funds from the Bank, our dividend policy is subject to the discretion of our
board of directors and will depend upon a number of factors, including future
earnings, financial condition, cash needs, and general business conditions.
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CAPITALIZATION
The following table sets forth the estimated capitalization of Ohio
Legacy as of August 31, 1999, and as adjusted to give effect to the sale of the
minimum and maximum number of common shares offered with this prospectus, at an
assumed offering price of $10 per share, net of estimated offering expenses.
Actual As Adjusted
August 31, Minimum Maximum
1999 Offering Offering
---- -------- --------
Stockholders equity
Common stock - no par value, 135
shares issued and outstanding;
900,000 shares issued and outstanding
as adjusted (minimum); 1,200,000
shares issued and outstanding
(maximum) $135,000 $8,350,000 $11,140,000
Stock subscription receivable (30,000)
Deficit accumulated during the
development stage (77,854) (77,854) (77,854)
--------- ------------ ------------
Total stockholders' equity $ 27,146 $ 8,272,146 $11,062,146
========= =========== ===========
(1) Represents the sale of 900,000 shares at $10 per share less estimated
offering costs of $650,000 (minimum) and 1,200,000 shares at $10 per
share less estimated offering costs of $860,000 (maximum).
(2) Does not include potential dilution for exercise of stock options or
warrants.
As part of our initial organization and in connection with this
offering, each organizer and director will receive one warrant for each common
share they purchase. A warrant is a freely transferable certificate, which
entitles the holder to purchase a share of common stock at the price of $10 per
share. These warrants expire 10 years from the date of issuance. After this
offering, we expect that our organizers and directors will own approximately
155,000 warrants.
IMPACT OF WARRANTS AND DILUTION.
If all existing warrants were exercised, we would receive approximately
$1.5 million in new capital and would issue 155,000 shares. This would reduce
your proportionate interest in Ohio Legacy by 11.4% per share, assuming that we
sell the maximum number of shares in this offering.
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IMPACT OF STOCK OPTIONS AND DILUTION.
In October, 1999, Ohio Legacy adopted a stock option plan providing for
the grant of non-qualified stock options to directors and key employees of Ohio
Legacy and Bank. Stock options differ from warrants in several ways, which we
have listed below.
- Options are not transferable, they are exercisable only by the
employee or director originally granted the option.
- A gain is measured on the exercise date between the market
value and exercise price of the stock, which is recognized by
the individual as compensation. Additionally, Ohio Legacy
receives a tax deduction for the amount of gain recognized by
the individual. This tax savings is treated as additional
payment for the stock and is directly credited to the capital
accounts of Ohio Legacy.
- Currently, options granted have a three year vesting schedule
until they can be exercised.
If all existing dilutive options were exercised at a price of $10 per
share, we would receive a total of approximately $1,000,000 in new capital and
would issue 100,000 shares. This would reduce your proportionate interest in
Ohio Legacy by 7.7% per share.
BUSINESS
BACKGROUND
At the end of 1990 there were approximately 12,000 financial
institutions in the United States, which number declined to 8,000 by the end of
1998. This industry consolidation was due, in large part, to larger institutions
purchasing smaller institutions and then closing redundant back-office services
in the local regional communities. This consolidation continues in the financial
markets and has lead to dominance by large commercial banks. At the same time,
consolidation also provides a tremendous opportunity for local community banks
to fill a void. In 1994 there were 50 de novo community banks chartered in the
United States. By 1998 this figure rose to 190 de novos. There were 289 insured
commercial banks in the State of Ohio at the end of 1990. As of December 31,
1998 there were only 220 insured commercial banks in Ohio, which represents a
decline of approximately 24%.
We believe that industry consolidation has created significant
opportunities in the Wayne and Stark County, Ohio communities for us to satisfy
the needs of the small businesses, professionals and individuals. The idea to
charter a new bank was originally formulated by the organizers as a result of
market consolidation in the Wayne and Stark County, Ohio areas. The Bank will
provide a community based banking alternative to the large institutions for the
small businesses in the Bank service areas. The organizers and senior management
have had significant experience in the financial industry either directly or
through director experience. The experience and community connections of all ten
organizers and senior management and their knowledge of the Wayne and Stark
County, Ohio markets led them to
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identify the need for a locally chartered, owned and operated community bank
that would be service-driven and technologically advanced and capable of serving
the small businesses of Stark and Wayne County, Ohio.
The directors and management hold strong ties to both communities.
These people have a combined financial institution directorship of over thirty
years and a combined financial institution experience of over twenty-five
years. The directors are all experienced entrepreneurs and business owners who
maintain an active participation in the communities. This combination of these
individuals offers a blend of banking background and non-banking business
experience that we believe will contribute to our overall success.
BUSINESS STRATEGY
Two primary service areas will be served by Ohio Legacy Bank - Wayne
and Stark County, Ohio. These primary service areas represent the geographic
areas from which each office is expected to generate approximately 75.0 percent
of its business. Residents outside of these areas would, for the purpose of
convenience, choose branches close to where they work, live or shop.
There are no unusual customer groups in the Canton market area. The
College of Wooster is within the Wooster service area and its presence is
evident in some of the demographic characteristics; however, its overall impact
is minimal. Both markets have a diversified economic base that is not overly
dependent on any single industry.
Ohio Legacy Bank intends to operate as a full-service financial
institution with an emphasis on serving small businesses. Therefore, the Bank's
product and service line will consist of all traditional banking activities,
including the following:
- LENDING: The Bank will offer loans to individual, partnership,
and limited liability companies or other corporate borrowers
for a variety of purposes. Anticipated commercial lending will
include lines of credit, term loans, equipment loans, letters
of credit, commercial real estate, construction, and Small
Business Administration lending. Loan products will also
include consumer loans, secured and unsecured, home equity
lines of credit, home improvement loans, general lines of
credit including overdraft lines, and mortgage lending. We
anticipate that the Bank will set up the capability to sell
loans in the secondary market while maintaining servicing. The
volume of loans to be sold will be determined based on
asset/liability and capital positions.
- DEPOSIT: Deposit products will include interest-bearing and
non-interest bearing checking accounts, money market savings
accounts, certificates of deposit, regular savings accounts,
individual retirement accounts, and cash management services.
- OPERATIONS/OTHER: The Bank will offer ATM services, and will
seek to offer direct dial-up cash management services to
commercial accounts. The Bank also intends to offer internet
banking services to both retail and commercial customers.
Further, while it is our opinion
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that both markets would support trust services, the Bank will
not offer trust services initially and will consult the OCC
for guidance prior to any future decisions with respect to
fiduciary services.
Market characteristics in both Wayne and Stark suggest the ability to
generate solid deposit and loan growth both in consumer and commercial services.
Therefore, both office locations will offer the Bank's complete line of
services.
MARKETING STRATEGY
The marketing strategy for Ohio Legacy Bank involves two primary
components: capitalizing on the competitive advantages of community banking, and
utilizing technology to provide high-quality service to businesses and
residents. Several recent studies conducted by our advisor, Young & Associates,
have indicated that community banks have been growing at a faster percentage
rate than larger regional banks presumably due to strategic advantages that
include the following:
- higher level of personalized customer service;
- positive customer perception of local ownership and local
management;
- focus on small-business banking; and,
- typically lower service charges and more favorable interest
rates.
Both market areas have significant larger regional bank competition.
Therefore, the marketing focus of Ohio Legacy Bank will be to highlight the
competitive advantages of being a locally chartered and managed community bank
and to utilize the advantages discussed above to generate growth. We intend to
offer competitive rates and fees, but not to necessarily be the most attractive
in each market. The features and pricing of our products and services will be
competitive; however, we intend to compete on service rather than on rates and
fees. We believe that the likelihood of success for this strategy is enhanced by
the experience, qualifications, and community involvement of the proposed
management and directors.
The second component of our marketing strategy will be to utilize
technology where appropriate to provide convenience and service to businesses
and customers. We believe that we may have an advantage over our competitors by
being able to invest in the latest technologies without having to incur the
additional financial and operational costs associated with converting and
upgrading existing systems. We intend to provide products and services via the
internet, including cash management services to our retail and commercial
customers.
We believe that by using a combination of the competitive advantages of
community banking and the convenience of technology, Ohio Legacy Bank will be
able to meet the needs of businesses and residents in Wayne and Stark County,
Ohio.
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COMPETITION
WAYNE COUNTY AND WOOSTER. According to published data, as of June 30,
1998, the primary service area of Wayne County was served by 19 financial
institution offices, 17 of which were bank or savings and loan offices. Total
deposits in Wooster increased by 17.2 percent or $124.5 million, between June
30, 1996 and June 30, 1998. Deposits from June 1997 to June 1998 increased by
nearly 15.0 percent or $110.0 million.
It is important to note some of the competitive changes that have
occurred in Wooster since June 1998. The most significant change was the
acquisition of Signal Bank by FirstMerit, which affected nearly $417.0 million
in deposits in Wooster. Since the time of the acquisition, FirstMerit has closed
three of the branch offices and consolidated the accounts with the remaining
offices. In addition, First National Bank, Orrville Savings Bank and Trust Co.,
United National Bank and Wayne Savings & Loan have either recently opened or are
scheduled to open in 1999 new banking offices in Wooster. Therefore, despite the
branch closings from the Signal-FirstMerit merger, the net number of branches
serving Wooster will have remained the same at the end of 1999.
Total deposits in Wayne County grew by more than 13.0 percent between
1996 and 1998, reaching $1.4 billion in June 1998. It is important to note that
Wooster represents more than 60.0 percent of total deposits in the county.
STARK COUNTY AND CANTON. Deposits in Canton decreased by 6.9 percent,
or $110.2 million since 1996, resulting in total deposits of nearly $1.5 billion
in June 1998. It is important to note that the majority of the deposit loss was
the result of branch closings in 1998 by Bank One, which totaled nearly $114.3
million. In addition to Bank One, deposit losses occurred at Charter One,
FirstMerit, and KeyBank; while National City Bank, The Citizens Banking Company,
and United National realized solid increases in deposits. Further, while overall
deposits in Canton decreased, North Canton realized a solid increase in
deposits. Total deposits in North Canton increased from $399.2 million in June
1996 to $420.9 million in June 1998, for growth of 5.4 percent. Bank One and
FirstMerit both realized deposit decreases of $846,000 and $3.7 million,
respectively, while KeyBank, National City Bank, Star Bank, and United National
all realized deposit gains since 1996.
Similar to Wooster and its relationship to Wayne County, the
Canton/North Canton market area represents a significant percentage of
county-wide deposits, with nearly 49.0 percent of total Stark County deposits.
SUMMARY. In reviewing the competitive nature of both markets there are
two positive characteristics that suggest the potential for success of the Bank.
First, both markets have significant deposit bases, which have provided growth
for the majority of financial institutions serving the areas. Wooster has a
deposit base approaching $850.0 million and has realized solid growth since
1996. Canton has a deposit base of approximately $1.9 billion, and while total
deposits have decreased, we believe that this is due largely to the branch
divestitures by Bank One rather than a decrease in the overall deposit base. The
overall size of the deposit base in both markets suggests the opportunity for
the new bank to generate deposit growth. Second, the presence of locally-owned
and managed
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community banks in both markets is limited. Larger regional banks hold nearly
58.0 percent of market share in Wooster, nearly 60.0 percent of market share in
Canton, and nearly 67.0 percent of market share in North Canton. While the
larger regional banks in the markets are strong, several studies recently
conducted by Young & Associates have indicated that smaller community banks have
been growing at a faster rate than larger regional banks presumably by offering
a higher level of customer service and by benefiting from positive customer
perception of local ownership, local management, and community involvement.
Though no assurances can be given, we believe that the large deposit market
shares held by the larger regional banks provide Ohio Legacy Bank with the
opportunity to effectively position itself as a stable and attractive community
banking alternative.
COMMUNITY INVOLVEMENT
We realize that our success will be dependent on the success of the
local communities of Wayne and Stark County, Ohio. We plan to attract and
maintain support in each community through the following three methods:
- Public offering - This public offering of our shares will give
residents in the community an opportunity to have an ownership
interest in Ohio Legacy from its inception and be part of its
future success.
- Community participation - Our directors and officers are
currently and will continue to be members of civic, social and
religious organizations, through which we will maintain
regular contact with various leaders throughout the community.
This type of association will provide a forum for exchange of
thoughts and ideas regarding a variety of subjects, including
identification of community needs and ways in which we can
assist.
- Community communication - We plan to maintain consistent,
ongoing communication with Wayne and Stark County, Ohio
residents. We will use advertising and public relations tools
to consistently inform the communities with respect to our
products, services and involvement in local activities and
community development.
EMPLOYEES
We anticipate that when the Bank opens for business, it will employ
approximately fifteen full-time employees and five part-time employees.
Initially, the executive officers of the Bank will consist of two persons, the
Chief Executive Officer and President and the Senior Vice-President of Lending
and President of the Stark County Division. The remaining employees will provide
personal banking services to customers and staff support in the areas of
accounting, lending and operations. Other non-banking services such as data
processing, compliance and internal audit will be outsourced to companies
specializing in these areas.
We expect that total compensation for the Bank's employees for the
first year of operations will be approximately $853,000. There are no
significant increases in compensation planned for the second and third years
unless significant increases in deposits and loans occur that would require
additional
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staff. We also intend to provide employees with benefit programs, including
medical insurance, paid vacation time and sick leave, and employee stock
options.
LITIGATION
We are not a party to any pending legal proceedings.
DESCRIPTION OF PROPERTY
Our headquarters and the Wayne County banking center will be located at
305 West Liberty St., Wooster, Ohio 44691. We have entered into a fifteen-year
lease agreement for the property, with two five-year renewal options. The
one-story brick and frame structure will be built with approximately four
thousand square feet. The anticipated completion date is July 2000. The annual
base rent is approximately $50,000 plus an amount equal to the yearly
amortization of the construction costs, which are estimated to be $550,000 over
180 months, with interest charged at the prime rate plus 1/2%. The facility will
include a vault, safe deposit boxes, personal banker stations, an automated
teller machine, a night depository drop and drive-up teller stations.
We have also entered into a lease for temporary facilities four blocks
from the permanent site at 132 E. Liberty St., Wooster, Ohio. The temporary site
will be used for administrative purposes during the organization of the Bank and
then as a branch office once we receive our charter, until the permanent site is
completed.
Our Stark County banking center will be located at 3900 Dressler Road
in Canton, Ohio. We are currently negotiating a ten year lease agreement for
the property with two five year renewal options. Annual rent payments will be
approximately $45,000 for the first five years of the lease, with 15% increases
for each renewal term. This facility will be approximately 3,000 square feet and
will include a vault, safe deposit boxes, personal banking stations, an ATM, a
night depository drop and drive-up teller stations.
PLAN OF OPERATION
We formed Ohio Legacy Corp to own and hold all of the common stock of
Ohio Legacy Bank. In July and August of 1999, our organizers filed applications
with the OCC and with the FDIC to receive a national bank charter and federal
deposit insurance. Whether the OCC and FDIC grant us a charter and deposit
insurance will depend upon, among other things, our compliance with legal
requirements imposed by the OCC and the FDIC, including capitalization of the
Bank with at least a specified minimum amount of capital which we believe will
be $7.05 million. Upon receipt of these regulatory approvals from the OCC and
the FDIC, we will file an application with the Federal Reserve to become a bank
holding company, which must be approved before we can acquire the capital stock
of the Bank. We expect to receive all regulatory approvals by the first quarter
of 2000.
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Our profitability will be dependent upon the successful operations of
the Bank. New banks are typically not profitable in the first year of operation
and sometimes do not become profitable for several years, if at all. At August
31, 1999, our accumulated deficit was $78,000. We will continue to incur
pre-opening expenses until the Bank commences operations. We expect to incur
total pre-opening expenses of approximately $300,000. Based upon industry
standards, management's experience and current market demand, we believe that
the Bank will begin to be profitable in the third quarter of the second year of
operations. We cannot assure you, however, that the Bank will be profitable, or
if profitable, that its earnings will equal those of similar banking
institutions.
We face stiff competition in making loans and attracting deposits in
our service area. In order to overcome this competitive environment, we plan to
become the premier community based financial institution in our service areas by
providing personalized bank products and traditional bank services to
individuals, small businesses, professionals and other local organizations. We
intend to employ professional and consumer friendly individuals who can think
outside of the box. While the Bank will provide personal computer banking and
telephone banking for customers who want this convenience, customers will still
be able to talk with employees and have their transactions handled by employees
who have the authority and knowledge to take care of them. We plan to open the
Bank with approximately fifteen full-time employees and five part-time employees
and expect that this number of employees will be sufficient for our first two
years of operations.
Our operating principle focuses on superior customer service through
knowledgeable employees and efficient operating systems and technology.
Customers will each have one employee assigned to them to serve all of their
needs, while at the same time having access to any senior manager when
necessary. Policies and procedures will be tailored to the local markets rather
than larger regional or state areas.
Our directors and management plan to focus on the small businesses
within the areas, residential real estate mortgages and a growing consumer
market. They will rely on themselves, shareholders, management and employees for
business development.
Over the next twelve to twenty-four months, we plan to continue to
offer competitive products in our markets and should have no trouble satisfying
our cash requirements for funding loans. We do not plan to pay the highest rates
on deposits, but feel we can compete with exceptional customer service. At the
same time we do not expect to charge the lowest rates and fees on our loans. We
will work with customers to design products and systems that will meet their
individual needs, without just being another low cost provider.
Assuming this offering is fully subscribed, we do not anticipate any
need to raise additional capital for the next three to five years.
We anticipate that expenditures for furniture, fixtures, and equipment
will be approximately $500,000 in the first year of operation. Our largest
expenditure items will be for bank equipment
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such as vaults, safe deposit boxes, ATMs, personal comuters, teller equipment
and leasehold improvements. These expenditures are expected to meet our needs
for the next few years.
SUPERVISION AND REGULATION
Both Ohio Legacy and the Bank are or will soon be subject to extensive
state and federal banking laws and regulations which impose specific
requirements or restrictions on and provide for general regulatory oversight of
virtually all aspects of operations. These laws and regulations are generally
intended to protect depositors, not shareholders. The following summary is
qualified by reference to the statutory and regulatory provisions discussed.
Changes in applicable laws or regulations may have a material effect on our
business and prospects. Beginning with the enactment of the Financial
Institution Report Recovery and Enforcement Act in 1989 and following with the
FDIC Improvement Act in 1991, numerous additional changes have been proposed.
Our operations may be affected by legislative changes and the policies of
various regulatory authorities. We cannot predict the effect that fiscal or
monetary policies, economic control, or new federal or state legislation may
have in the future on our business and earnings.
OHIO LEGACY CORP
Because we will own the outstanding capital stock of Bank, we will be
deemed a bank holding company under the federal Bank Holding Company Act of
1956. Our activities will also be governed by the Glass-Steagall Act of 1933.
THE BANK HOLDING COMPANY ACT. Under the Bank Holding Company Act, Ohio
Legacy will be subject to periodic examination by the Federal Reserve and
required to file periodic reports of its operations and any additional
information that the Federal Reserve may require. Our activities at the bank
holding company level will be limited to:
- banking, managing or controlling banks;
- furnishing services to or performing services for its
subsidiaries; and
- engaging in other activities that the Federal Reserve
determines to be so closely related to banking, managing, or
controlling banks as to be a proper incident thereto.
INVESTMENTS, CONTROL, AND ACTIVITIES. With some limited exceptions, the
Bank Holding Company Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before:
- acquiring substantially all the assets of any bank;
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- acquiring direct or indirect ownership or control of any
voting shares of any bank if after such acquisition it would
own or control more than 5% of the voting shares of such bank
(unless it already owns or controls the majority of such
shares); or
- merging or consolidating with another bank holding company.
In addition, and subject to some exceptions, the Bank Holding Company
Act and the Change in Bank Control Act, together with regulations thereunder,
require Federal Reserve approval prior to any person or company acquiring
"control" of a bank holding company. Control is conclusively presumed to exist
if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is rebuttably presumed to exist
if a person acquires 10% or more, but less than 25%, of any class of voting
securities and either Ohio Legacy has registered securities under Section 12 of
the Securities Exchange Act of 1934 or no other person owns a greater percentage
of that class of voting securities immediately after the transaction. We will
register our common stock under the Securities Exchange Act of 1934. The
regulations provide a procedure for challenge of the rebuttable control
presumption.
Under the Bank Holding Company Act, a bank holding company is generally
prohibited from engaging in, or acquiring direct or indirect control of more
than 5% of the voting shares of any company engaged in nonbanking activities
unless the Federal Reserve Board, by order or regulation, has found those
activities to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto. Some of the activities that the Federal
Reserve Board has determined by regulation to be proper incidents to the
business of a bank holding company include:
- making or servicing loans and certain types of leases;
- engaging in certain insurance and discount brokerage
activities;
- performing certain data processing services;
- acting in certain circumstances as a fiduciary or investment
or financial adviser;
- owning savings associates; and
- making investment in certain corporations or projects designed
primarily to promote community welfare.
The Federal Reserve Board imposes capital requirements on Ohio Legacy
under the Bank Holding Company Act, including a minimum leverage ratio and a
minimum ratio of "qualifying" capital to risk-weighted assets. These
requirements are described below under "Capital Regulations." Subject to its
capital requirements and certain other restrictions, Ohio Legacy is able to
borrow money to make a capital contribution to Bank, and these loans may be
repaid from dividends paid from Bank to Ohio Legacy. Our ability to pay
dividends will be subject to regulatory restrictions as described below in "The
Bank - Dividends." Ohio Legacy is also able to raise capital for contribution
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to Bank by issuing securities without having to receive regulatory approval,
subject to compliance with federal and state securities laws.
SOURCE OF STRENGTH; CROSS-GUARANTEE. In accordance with Federal Reserve
Board policy, Ohio Legacy will be expected to act as a source of financial
strength to Bank and to commit resources to support Bank in circumstances in
which Ohio Legacy might not otherwise do so. Under the Bank Holding Company Act,
the Federal Reserve Board may require a bank holding company to terminate any
activity or relinquish control of a nonbank subsidiary, other than a nonbank
subsidiary of a bank, upon the Federal Reserve Board's determination that such
activity or control constitutes a serious risk to the financial soundness or
stability of any subsidiary depository institution of the bank holding company.
Further, federal bank regulatory authorities have additional discretion to
require a bank holding company to divest itself of any bank or nonbank
subsidiary if the agency determines that divestiture may aid the depository
institution's financial condition.
GLASS-STEAGALL ACT. We will also be restricted by the provisions of the
Glass-Steagall Act, which prohibits Ohio Legacy from owning subsidiaries that
are engaged principally in the issue, flotation, underwriting, public sale, or
distribution of securities. The interpretation, scope, and application of the
provisions of the Glass-Steagall Act currently are being considered and reviewed
by regulators and legislators, and the interpretation and application of those
provisions have been challenged in the federal courts.
OHIO LAW. Ohio's Merger Moratorium Act, enacted in 1990, prohibits
certain Ohio corporations from engaging in specified types of transactions with
an "interested shareholder" for a period of three years after the shareholder
becomes an "interested shareholder" unless the shareholder receives the approval
of the corporation's board of directors prior to the acquisition of shares or
the consummation of the specified type of transaction. The anticipated effect of
the Merger Moratorium Act is to encourage a potential acquiror to negotiate with
a target corporation's board of directors prior to obtaining a 10 percent or
greater block of shares in the corporation.
OHIO LEGACY BANK
The Bank will operate as a national banking association incorporated
under the laws of the United States and subject to examination by the Office of
the Comptroller of the Currency. Deposits in the Bank will be insured by the
FDIC up to a maximum amount, which is generally $100,000 per depositor subject
to aggregation rules.
The Office of the Comptroller of the Currency and the FDIC will
regulate or monitor virtually all areas of the Bank's operations, including:
- security devices and procedures;
- adequacy of capitalization and loss reserves;
- loans;
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- investments;
- borrowings;
- deposits;
- mergers;
- issuances of securities;
- payment of dividends;
- interest rates payable on deposits;
- interest rates or fees chargeable on loans;
- establishment of branches;
- corporate reorganizations;
- maintenance of books and records; and
- adequacy of staff training to carry on safe lending and deposit
gathering practices.
The OCC requires the Bank to maintain specified capital ratios and
imposes limitations on the Bank's aggregate investment in real estate, bank
premises, and furniture and fixtures. The OCC will also require the Bank to
prepare quarterly reports on the Bank's financial condition and to conduct an
annual audit of its financial affairs in compliance with its minimum standards
and procedures.
Under the FDIC Improvement Act, all insured institutions must undergo
regular on site examinations by their appropriate banking agency. The cost of
examinations of insured depository institutions and any affiliates may be
assessed by the appropriate agency against each institution or affiliate, as it
deems necessary or appropriate. Insured institutions are required to submit
annual reports to the FDIC, their federal regulatory agency, and state
supervisor when applicable. The FDIC Improvement Act directs the FDIC to develop
a method for insured depository institutions to provide supplemental disclosure
of the estimated fair market value of assets and liabilities, to the extent
feasible and practicable, in any balance sheet, financial statement, report of
condition or any other report of any insured depository institution. The FDIC
Improvement Act also requires the federal banking regulatory agencies to
prescribe, by regulation, standards for all insured depository institutions and
depository institution holding companies relating, among other things, to the
following:
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- internal controls;
- information systems and audit systems;
- loan documentation;
- credit underwriting;
- interest rate risk exposure; and
- asset quality.
National banks and their holding companies which have been chartered or
registered or have undergone a change in control within the past two years or
which have been deemed by the OCC or the Federal Reserve Board to be troubled
institutions must give the OCC or the Federal Reserve Board thirty days prior
notice of the appointment of any senior executive officer or director. Within
the thirty day period, the OCC or the Federal Reserve Board, as the case may be,
may approve or disapprove any such appointment.
DEPOSIT INSURANCE. The FDIC establishes rates for the payment of
premiums by federally insured banks and thrifts for deposit insurance. A
separate Bank Insurance Fund and Savings Association Insurance Fund are
maintained for commercial banks and savings associations with insurance premiums
from the industry used to offset losses from insurance payouts when banks and
thrifts fail. In 1993, the FDIC adopted a rule, which establishes a risk-based
deposit insurance premium system for all insured depository institutions. Under
this system, until mid-1995 depository institutions paid to Bank Insurance Fund
or Savings Association Insurance Fund from $0.23 to $0.31 per $100 of insured
deposits depending on its capital levels and risk profile, as determined by its
primary federal regulator on a semiannual basis. Once Bank Insurance Fund
reached its legally mandated reserve ratio in mid-1995, the FDIC lowered
premiums for well-capitalized banks, eventually eliminating premiums for
well-capitalized banks, with a minimum semiannual assessment of $1,000. However,
in 1996 Congress enacted the Deposit Insurance Funds Act of 1996, which
eliminated even this minimum assessment. It also separated the Financial
Corporation (FICO) assessment to service the interest on its bond obligations.
The amount assessed on individual institutions, including the Bank, by FICO is
in addition to the amount paid for deposit insurance according to the
risk-related assessment rate schedule. Increases in deposit insurance premiums
or changes in risk classification will increase the Bank's cost of funds, and we
may not be able to pass these costs on to our customers.
TRANSACTIONS WITH AFFILIATES AND INSIDERS. The Bank will be subject to
the provisions of Section 23A of the Federal Reserve Act, which places limits on
the amount of loans or extensions of credit to, or investments in, or certain
other transactions with, affiliates and on the amount of advances to third
parties collateralized by the securities or obligations of affiliates. The
aggregate of all covered transactions is limited in amount, as to any one
affiliate, to 10% of the Bank's capital and surplus and, as to all affiliates
combined, to 20% of the Bank's capital and surplus. Furthermore,
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within the foregoing limitations as to amount, each covered transaction must
meet specified collateral requirements. Compliance is also required with certain
provisions designed to avoid the taking of low quality assets.
The Bank will also be subject to the provisions of Section 23B of
Federal Reserve Act which among other things, prohibits an institution from
engaging in certain transactions with certain affiliates unless the transactions
are on terms substantially the same, or at least as favorable to such
institution or its subsidiaries, as those prevailing at the time for comparable
transactions with nonaffiliated companies. The Bank will be subject to certain
restrictions on extensions of credit to executive officers, directors, certain
principal shareholders, and their related interests. Such extensions of credit:
- must be made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time
for comparable transactions with third parties; and
- must not involve more than the normal risk of repayment or
present other unfavorable features.
DIVIDENDS. A national bank may not pay dividends from its capital. All
dividends must be paid out of undivided profits then on hand, after deducting
expenses, including reserves for losses and bad debts. In addition, a national
bank is prohibited from declaring a dividend on its shares of common stock until
its surplus equals its stated capital, unless there has been transferred to
surplus no less than one-tenth of the bank's net profits of the preceding two
consecutive half-year periods, in the case of an annual dividend. The approval
of the OCC is required if the total of all dividends declared by a national bank
in any calendar year exceeds the total of its net profits for that year combined
with its retained net profits for the preceding two years, less any required
transfers to surplus.
BRANCHING. National banks are required by the National Bank Act to
adhere to branch office banking laws applicable to state banks in the states in
which they are located. Under current Ohio law, the Bank may establish banking
offices in Ohio with the prior approval of the superintendent of financial
institutions. In addition, with prior regulatory approval, the Bank will be able
to acquire existing banking operations in Ohio. Furthermore, federal legislation
allows interstate branching. The law permits out-of-state acquisitions by bank
holding companies, interstate branching by banks if allowed by state law, and
interstate merging by banks.
COMMUNITY REINVESTMENT ACT. The Community Reinvestment Act requires
that, in connection with examinations of financial institutions within their
respective jurisdictions, the Federal Reserve, the FDIC, or the OCC, shall
evaluate the record of each financial institution in meeting the credit needs of
its local community, including low and moderate income neighborhoods. These
factors are also considered in evaluating mergers, acquisitions, and
applications to open a branch or facility. Failure to adequately meet these
criteria could impose additional requirements and limitations on the Bank.
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OTHER REGULATIONS. Interest and other charges collected or contracted
for by the Bank are subject to state usury laws and federal laws concerning
interest rates. The Bank's loan operations are also subject to federal laws
applicable to credit transactions, such as the:
- Truth-In-Lending Act, governing disclosures of credit terms to
consumer borrowers;
- Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and
public officials to determine whether a financial institution
is fulfilling its obligation to help meet the housing needs of
the community it serves;
- Equal Credit Opportunity Act, prohibiting discrimination on
the basis of race, creed or other prohibited factors in
extending credit;
- Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies;
- Fair Debt Collection Act, governing the manner in which
consumer debts may be collected by collection agencies; and
- rules and regulations of the various federal agencies charged
with the responsibility of implementing such federal laws.
The deposit operations of the Bank also are subject to the:
- Right to Financial Privacy Act, which imposes a duty to
maintain confidentiality of consumer financial records and
prescribes procedures for complying with administrative
subpoenas of financial records; and
- Electronic Funds Transfer Act and Regulation E issued by the
Federal Reserve Board to implement that act, which governs
automatic deposits to and withdrawals from deposit accounts
and customers' rights and liabilities arising from the use of
automated teller machines and other electronic banking
service.
CAPITAL REGULATIONS. The federal bank regulatory authorities have
adopted risk-based capital guidelines for banks and bank holding companies that
are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among banks and bank holding companies and account
for off-balance sheet items. The guidelines are minimums, and the federal
regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their
capital ratios and should maintain ratios in excess of the minimums. We have not
received any notice indicating that either Ohio Legacy or the Bank is subject to
higher capital requirements. The current guidelines require all bank holding
companies and federally-regulated banks to maintain a minimum risk-based total
capital ratio equal to 8%, of which at least 4% must be Tier 1 capital, Tier 1
capital includes common shareholders' equity, qualifying perpetual preferred
stock, and minority interests in equity accounts of consolidated subsidiaries,
but
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excludes goodwill and most other intangibles and excludes the allowance for loan
and lease losses. Tier 2 capital includes the excess of any preferred stock not
included in Tier 1 capital, mandatory convertible securities, hybrid capital
instruments, subordinated debt and intermediate term-preferred stock, and
general reserves for loan and lease losses up to 1% of risk-weighted assets.
Under these guidelines, banks' and bank holding companies' assets are
given risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance
sheet items are given credit conversion factors to convert them to asset
equivalent amounts to which an appropriate risk-weight applies. These
computations result in the total risk-weighted assets. Most loans are assigned
to the 100% risk category, except for first mortgage loans fully secured by
residential property and, under certain circumstances, residential construction
loans, both of which carry a 50% rating. Most investment securities are assigned
to the 20% category, except for municipal or state revenue bonds, which have a
50% rating, and direct obligations of or obligations guaranteed by the United
States Treasury or United States Government agencies, which have a 0% rating.
The federal bank regulatory authorities have also implemented a
leverage ratio, which is equal to Tier 1 capital as a percentage of average
total assets less intangibles, to be used as a supplement to the risk-based
guidelines. The principal objective of the leverage ratio is to place a
constraint on the maximum degree to which a bank holding company may leverage
its equity capital base. The minimum required leverage ratio for top-rated
institutions is 3%, but most institutions are required to maintain an additional
cushion of at least 100 to 200 basis points.
The FDIC Improvement Act established a new capital-based regulatory
scheme designed to promote early intervention for troubled banks which requires
the FDIC to choose the least expensive resolution of bank failures. The new
capital-based regulatory framework contains five categories of compliance with
regulatory capital requirements, including "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." To qualify as a "well capitalized" institution, a
bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of
no less than 6%, and a total risk-based capital ratio of no less than 10%, and
Bank must not be under any order or directive from the appropriate regulatory
agency to meet and maintain a specific capital level. Initially, we will qualify
as "well capitalized."
Under the FDIC Improvement Act regulations, the applicable agency can
treat an institution as if it were in the next lower category if the agency
determines, after notice and an opportunity for hearing, that the institution is
in an unsafe or unsound condition or is engaging in an unsafe or unsound
practice. The degree of regulatory scrutiny of a financial institution
increases, and the permissible activities of the institution decreases, as it
moves downward through the capital categories. Institutions that fall into one
of the three undercapitalized categories may be required to do some or all of
the following:
- submit a capital restoration plan;
- raise additional capital;
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- restrict their growth, deposit interest rates, and other
activities;
- improve their management;
- eliminate management fees; or
- divest themselves of all or a part of their operations.
Bank holding companies controlling financial institutions can be called upon to
boost the institutions' capital and to partially guarantee the institutions'
performance under their capital restoration plans.
These capital guidelines can affect us in several ways. If we grow at a
rapid pace, a premature "squeeze" on capital could occur making a capital
infusion necessary. The requirements could impact our ability to pay dividends.
Our capital levels will initially be more than adequate; however, rapid growth,
poor loan portfolio performance, poor earnings performance, or a combination of
these factors could change our capital position in a relatively short period of
time.
The FDIC Improvement Act requires the federal banking regulators to
revise the risk-based capital standards to provide for explicit consideration of
interest-rate risk, concentration of credit risk, and the risks of untraditional
activities. We are uncertain what effect these regulations would have.
Failure to meet these capital requirements would mean that a bank would
be required to develop and file a plan with its primary federal banking
regulator describing the means and a schedule for achieving the minimum capital
requirements. In addition, such a bank would generally not receive regulatory
approval of any application that requires the consideration of capital adequacy,
such as a branch or merger application, unless the bank could demonstrate a
reasonable plan to meet the capital requirement within a reasonable period of
time.
ENFORCEMENT POWERS. The Financial Institution Reform Recovery and
Enforcement Act expanded and increased civil and criminal penalties available
for use by the federal regulatory agencies against depository institutions and
certain "institution-affiliated parties." Institution-affiliated parties
primarily include management, employees, and agents of a financial institution,
as well as independent contractors and consultants such as attorneys and
accountants and others who participate in the conduct of the financial
institution's affairs. These practices can include the failure of an institution
to timely file required reports or the filing of false or misleading information
or the submission of inaccurate reports. Civil penalties may be as high as
$1,000,000 a day for such violations. Criminal penalties for some financial
institution crimes have been increased to twenty years. In addition, regulators
are provided with greater flexibility to commence enforcement actions against
institutions and institution-affiliated parties. Possible enforcement actions
include the termination of deposit insurance. Furthermore, banking agencies'
power to issue cease-and-desist orders were expanded. Such orders may, among
other things, require affirmative action to correct any harm resulting from a
violation or practice, including restitution, reimbursement, indemnifications or
guarantees against loss. A financial institution may also be ordered to restrict
its
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growth, dispose of certain assets, rescind agreements or contracts, or take
other actions as determined by the ordering agency to be appropriate.
RECENT LEGISLATIVE DEVELOPMENTS. From time to time, various bills are
introduced in the United States Congress with respect to the regulation of
financial institutions. Some of these proposals, if adopted, could significantly
change the regulation of banks and the financial services industry. We cannot
predict whether any of these proposals will be adopted or, if adopted, what
effect these would have.
EFFECT OF GOVERNMENTAL MONETARY POLICIES. Our earnings are affected by
domestic economic conditions and the monetary and fiscal policies of the United
States government and its agencies. The Federal Reserve Bank's monetary policies
have had, and are likely to continue to have, an important impact on the
operating results of commercial banks through its power to implement national
monetary policy in order, among other things, to curb inflation or combat a
recession. The monetary policies of the Federal Reserve Board have major effects
upon the levels of bank loans, investments and deposits through its open market
operations in United States government securities and through its regulation of
the discount rate on borrowings of member banks and the reserve requirements
against member bank deposits. It is not possible to predict the nature or impact
of future changes in monetary and fiscal policies.
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MANAGEMENT
DIRECTORS AND OFFICERS
The following table sets forth the names, ages, classes and positions
of Ohio Legacy's and the Bank's executive officers and directors. Our articles
of incorporation provide for a classified board of directors, so that, as nearly
as possible, one-third of the directors are elected each year to serve three
year terms. The terms of office of the classes of directors expire as follows:
Class I at the 2003 annual meeting of shareholders, Class II at the 2002 annual
meeting of shareholders and Class III at the 2001 annual meeting of
shareholders. Executive officers serve at the discretion of the board of
directors, a summary of the background and experience of each of these
individuals is set forth after the table.
Name Age Class Position with Ohio Legacy Position with Bank
- ---- --- ----- ------------------------- ------------------
D. William Allen 48 III Director Director
Robert Belden 52 II Director Director
J. Edward Diamond 61 I Director Director
L. Dwight Douce 51 I President, Chief Executive President, Chief Executive
Officer and Director Officer and Director
Scott Fitzpatrick 47 III Director Director
Gregory Long II Director Director
Michael Meenan 45 III Director Director
Steven G. Pettit 40 Vice President Senior Vice President of Lending,
President of Stark
County Division
Daniel Plumly 46 I Director and Secretary Director
Thomas Schervish 59 II Director Director
D. William Allen (Director). Since 1997, Mr. Allen has been involved in
commercial real estate sales and management for George N. Swallow, Inc. Prior to
1997, Mr. Allen served as the President, Chief Operating Officer and owner of
Service Packaging Corporation. Mr. Allen currently serves as the President of
Meals on Wheels of Stark and Wayne Counties and as Secretary of the Board of
Governors of Mercy Medical Hospital. Mr. Allen is also involved with the Pro
Football Hall of Fame Festival, where his involvement spans 25 years, and served
as its General Chairman in 1993. Mr. Allen's activities also include Congress
Lake Club Board of Directors, Greater Canton Chamber of Commerce Vice Chairman
of the Board of Directors, Chairman of the Norma Tschantz and Walter C. Deuble
Caddy Scholarship Fund, Clubs for Kids Board of Directors, Buckeye Council of
the Boy Scouts of America, United Way and Walsh University.
Robert Belden (Director). Mr. Belden is President of the Belden Brick
Company, a Canton based company since 1885. Mr. Belden served as a director of
both Signal Corporation and Signal Bank from 1988 to 1999. He graduated from the
University of Notre Dame in 1969 with a BS degree in Mathematics and then
graduated from the University of Michigan Graduate School of Business in 1971.
Mr. Belden has been very active in community affairs including the American Red
Cross, Canton
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Regional Chamber of Commerce, Junior Achievement of Stark County, Stark County
Foundation and others.
J. Edward Diamond (Director). Mr. Diamond, currently a private investor
in the Canton area, is the retired Chairman of Glendale Oxygen Company, a Canton
based supplier of cryogenic gases and welding supplies. He has served on the
boards of Arrowhead Country Club, The Canton Club, The Canton Ballet and The
Canton Symphony Orchestra Association. He is a graduate of the University of
Virginia and has been a resident of Canton his entire life.
L. Dwight Douce (President/Chief Executive Officer and Director). Mr.
Douce has more than 26 years of financial institution experience in a diverse
number of positions, with 16 years experience in the Wooster area. Most
recently, Mr. Douce was President-Chief Operating Officer of Signal Bank, a $1.8
billion commercial bank headquartered in Wooster, which operated more than 25
branches. Prior to that, Mr. Douce served as Senior Vice President and Chief
Financial Officer of Signal Bank. During Mr. Douce's tenure, Signal Bank grew
from a $200 million to a $1.8 billion financial services institution. Mr. Douce
graduated from Capital University with a B.S. in business administration. He has
been a resident of the Wooster area for the last sixteen years and has been very
active in civic and social activities including the Wayne Development Council,
American Heart Association, Kiwanis, United Way and other activities.
Scott Fitzpatrick (Director). Mr. Fitzpatrick is a partner in
Fitzpatrick Enterprises in Canton, Ohio. The partnership is primarily involved
in the development of sale of real estate and management of properties.
Gregory Long (Director). Mr. Long is a licensed CPA with over 27 years
experience in the business and is currently President of Long & Wilson, Inc.
CPA's of Wooster, Ohio. Mr. Long is actively involved as a board member of the
Wayne County Historical Society and is President of Buckeye Council, Inc., Boy
Scouts of America. He is also a member of Rotary Club and a coach in Wooster
Youth Baseball, and is retired from the Army Reserve as a Lt. Col. and is
Scoutmaster of Boy Scout Troop 61 of Wooster.
Michael Meenan (Director). Mr. Meenan is the President and owner of
Riverview Industrial Wood Products, Inc. based in Wooster. Mr. Meenan is
involved in the local rotary organization as well as other non-profit
organizations in the Wooster area.
Steven G. Pettit (Senior Vice President of Lending, President of Stark
County Division). Mr. Pettit has 15 years of commercial banking experience in a
diverse number of lending positions in both Stark and Wayne Counties. Most
recently, Mr. Pettit held the position of Senior Vice President, Senior Loan
Officer for two regions of FirstMerit Bank, N.A. Prior to this assignment, Mr.
Pettit held the same position at Signal Bank, N.A., a $1.8 billion financial
institution. Mr. Pettit graduated from the University of Tennessee with a B.S.
degree in Business Administration and from Ashland University with an MBA in
Executive Management. Mr. Pettit has been a resident of the Canton Area his
entire life and has been active in various social and civic activities,
including Meals on Wheels of Stark and Wayne Counties and the United Way.
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Daniel Plumly (Director and Secretary). Mr. Plumly is an attorney with
Critchfield, Critchfield & Johnston, the largest law firm in Wooster. Mr. Plumly
served on the board of directors of Signal Corporation and Signal Bank from 1986
to 1999. Mr. Plumly is the Vice President of Meals on Wheels of Stark and Wayne
Counties and is involved in coaching youth football, basketball and lacrosse. He
also serves as Chairman of the Board of Governors of Wooster Country Club, as a
trustee of the Wooster Boosters Club and as a member of the Board of Trustees of
the United Methodist Church.
Thomas Schervish (Director). Mr. Schervish is the owner and president
of Stark Management Company, which owns and operates a number of restaurant
franchises in the Stark County area. The company also provides management and
consulting services to other local businesses. He graduated from the University
of Detroit with a B.S. in marketing. Mr. Schervish is very active in community
affairs including the Pro Football Hall of Fame, Stark Development Board,
Rotary, Walsh University Board of Trustees, Junior Achievement and others.
GENERAL
Initially, our board will consist of nine directors. The directors will
be divided into three classes, designated Class I, Class II and Class III. Each
class will consist, as nearly as possible, of one third of the total number of
directors constituting the entire board of directors. In accordance with our
code of regulations, the initial term of office of directors of Class I will
expire at the annual meeting of the shareholders to be held in 2003 and when
their respective successors are duly elected and qualified; the initial term of
the office of Director of Class II will expire at the annual meeting of
shareholders to be held in 2002 and when their respective successors are duly
elected and qualified; and the initial term of the office of Director of Class
III will expire at the annual meeting of shareholders to be held in 2001 and
when their respective successors are duly elected and qualified. At each annual
meeting of shareholders, successors to the directors whose term expires at the
annual meeting will be elected for three-year terms. If the number of directors
is changed, an increase or decrease will be apportioned among the classes so as
to maintain the number of directors to fill a vacancy resulting from an increase
in such class will hold office for a term that will coincide with the remaining
term of that class, but in no event will a decrease in the number of directors
shorten the term of any incumbent director. Any director elected to fill a
vacancy not resulting in an increase in the number of directors will have the
same remaining term as that of his predecessor. Except in the case of removal
from office, any vacancy on the board of directors will be filled by a majority
vote of the remaining directors then in office. The executive officers of Ohio
Legacy and the Bank are elected annually by the board of directors following the
annual meeting of shareholders and serve at the pleasure of the board.
COMMITTEES OF THE BOARD OF DIRECTORS.
The Bank's board of directors has established four committees. These
committees meet with management on a regularly scheduled basis to review the
Bank's policies, procedures and operating performance on particular functional
areas. The activities of all committees are reviewed by the board of directors.
These committees are established in accordance with the bylaws of the Bank,
which may be changed from time to time by a majority vote of the Bank.
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The Loan Committee is comprised of five directors, one of whom is an
officer of the Bank. The primary responsibilities of the Loan Committee are to
review and approve loans over particular limits and review and approve changes
to the Bank's lending policies and procedures.
The Executive Committee is comprised of three directors. The directors
currently serving on this Committee include Messrs. Douce, Schervish and Belden.
The Executive Committee meets as needed, and its primary responsibilities
include exercising the authority of the board of directors in between board
meetings, to the extent permitted by law.
The Compensation Committee is comprised of three directors, with its
primary responsibility being the review of personnel policies and practices and
evaluation of senior management. The directors currently serving on the
Compensation Committee include Messrs. Plumly, Diamond and Belden.
The Audit/Compliance Committee is comprised of three directors, none of
whom are officers of the Bank. The Audit/Compliance Committee's primary
responsibilities are the review of internal and external auditors' reports, the
review of internal loan review reports, evaluation of the internal auditor and
external audit firm, and the review of regulatory examination results. The
directors currently serving on this Audit/Compliance Committee include Messrs.
Long, Allen and Fitzpatrick.
COMPENSATION OF DIRECTORS.
Employee directors will receive no compensation for their services as
directors. Non-employee directors will receive reimbursement of reasonable
expenses incurred in serving as a director. In addition, each non-employee
director of Ohio Legacy will receive:
- a grant of 2,500 non-qualified options to purchase shares of
Ohio Legacy on the date that person first becomes a director,
which will vest annually in equal amounts over three years and
have an exercise price equal to the fair market value on the
date of grant.
- an annual grant of 1,000 non-qualified options at each annual
meeting of shareholders under the Omnibus Stock Option, Stock
Ownership and Long Term Incentive Plan, which will vest
immediately and have an exercise price equal to the fair
market value on the date of grant.
EXECUTIVE COMPENSATION
The Bank expects to enter into one-year employment agreements with Mr.
Douce, as its Chief Executive Officer and President, and Mr. Pettit, as its
Senior Vice President of Lending and President of the Stark County Division.
Each employment agreement will renew automatically for an additional year unless
either party furnishes at least sixty days notice to the other of its intent to
terminate the agreement. Mr. Douce's employment agreement commences on the date
that the Bank begins operations. Mr. Pettit's employment agreement commences on
the date of its execution. If we do not open the Bank, we must continue paying
Mr. Pettit under his employment agreement for a period of one year from the
commencement date of his agreement.
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Each of Mr. Douce and Mr. Pettit will receive an annual base salary of
$100,000 and will be eligible for bonuses at the board of directors discretion.
Each will also be eligible to participate in all employee benefit plans, stock
option plans, health insurance and other fringe benefits commensurate with their
positions.
Upon a change in control of Ohio Legacy, each of Mr. Douce and Mr.
Pettit will have the right to terminate his employment and receive a severance
payment equal to 2.99 times his current annual compensation. In addition, all
previously granted stock options will vest in the event of a termination of
employment upon a change in control.
OMNIBUS STOCK OPTION, STOCK OWNERSHIP AND LONG TERM INCENTIVE PLAN
We have adopted an Omnibus Stock Option, Stock Ownership and Long Term
Incentive Plan, which is designed to attract qualified individuals to serve as
directors and employees and to motivate them to contribute to our success and
the growth of our common stock. The plan will provide selected directors and
employees with equity ownership opportunities and potentially tax-advantageous
future compensation. The following is a summary of the principal provisions of
the plan.
ADMINISTRATION. A compensation committee appointed by our board of
directors will interpret and administer the plan, and prescribe, amend and
rescind rules relating to the plan, under the supervision and, in most matters,
with the approval of the board.
SHARES AVAILABLE UNDER THE PLAN. A total of 100,000 common shares are
available for grants under the plan. This amount may be adjusted by the board in
cases of any increase or decrease in the number of outstanding common shares
from dividend payment, stock split, recapitalization, merger, share exchange
acquisition, combination or reclassification.
TYPES OF AWARDS UNDER THE PLAN. We may grant the following types of
awards under the plan to eligible persons:
- non-qualified stock options;
- incentive stock options;
- restricted stock;
- stock appreciation rights; and
- performance units.
STOCK OPTIONS TO EMPLOYEES AND DIRECTORS. Under the plan, we will
automatically grant 2,500 non-qualified options to each non-employee director at
the time that person first becomes a director.
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In addition, each non-employee director will receive an annual grant of 1,000
non-qualified options during his tenure on the board.
We may grant incentive stock options, as defined in Section 422 of the
Internal Revenue Code, and/or non-qualified stock options to our employees,
including employees who also serve as directors. We may, however, only grant
non-qualified stock options to non-employee directors and consultants.
Each option granted under the plan will be evidenced by an option
agreement or, in the case of an automatic grant to a non-employee director, a
director option agreement.
The exercise price of an option shall not be less than the fair market
value of the underlying common stock on the date of the grant. For a recipient
of stock options that already owns more than 10% of the combined voting power of
Ohio Legacy at the time of the grant, however, the exercise price shall not be
less than 110% of such fair market value.
In the event of a change in control of Ohio Legacy, outstanding options
may become immediately exercisable in full at the discretion of the compensation
committee. Otherwise, all outstanding options will terminate unless the
successor corporation agrees to assume or replace such options with an
equivalent entitlement.
STOCK APPRECIATION RIGHTS. The plan allows us to grant stock
appreciation rights to employees or directors, with a base value equal to the
fair market value of the stock at the time of grant.
RESTRICTED STOCK. We may also grant restricted stock awards under the
plan to our directors and employees. Each grant of restricted stock will be
evidenced by a restricted stock grant agreement.
PERFORMANCE UNITS. We may award our directors and employees performance
units that give them the right to receive a combination of cash and common
stock. The percentage of the units awarded that will become distributable to the
recipients will depend on Ohio Legacy's performance in achieving financial or
other performance objectives during the relevant time period.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We expect to have banking and other transactions in the ordinary course
of business with the organizers, directors, and officers and their affiliates,
including members of their families or corporation, partnerships, or other
organizations in which such organizers, officers, or directors have a
controlling interest, on substantially the same terms, including price, or
interest rates and collateral, as those prevailing at the time for comparable
transactions with unrelated parties. These transactions are also restricted by
our regulatory agencies, including the Federal Reserve Board. For a discussion
of the Federal Reserve Board regulations, please see "Transactions with
Affiliates and Insiders" on page 31. These transactions are not expected to
involve more than the normal risk of collectibility nor present other
unfavorable features.
Loans to individual directors and officers must also comply with the
Bank's lending policies, regulatory restrictions, and statutory lending limits,
and directors with a personal interest in any loan application will be excluded
from the consideration of such loan application. We intend for all of our
transactions with organizers or other affiliates to be on terms no less
favorable than could be obtained from an unaffiliated third party and to be
approved by a majority of our disinterested directors.
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PRINCIPAL SHAREHOLDERS
The following table gives information about the anticipated beneficial
ownership of Ohio Legacy capital stock after the offering by:
- each person expected to own more than 5% of Ohio Legacy's common
shares;
- each of Ohio Legacy's executive officers and directors; and
- all of Ohio Legacy's executive officers and directors as a group.
Name Amount and Nature of Percent of Class Percent of Class
- ---- -------------------- ---------------- ----------------
Beneficial Ownership(1) (Minimum)(2) (Maximum)(2)
----------------------- ------------ ------------
Directors and executive
officers:
L. Dwight Douce............... 50,000 4.74 3.69
Gregory Long.................. 30,000 2.84 2.21
Michael Meenan................ 20,000 1.90 1.48
Daniel Plumly................. 30,000 2.84 2.21
D. William Allen.............. 20,000 1.90 1.48
Robert Belden................. 20,000 1.90 1.48
J. Edward Diamond............. 50,000 4.74 3.69
Thomas Schervish.............. 60,000 5.69 4.43
Scott Fitzpatrick............. 30,000 2.84 2.21
Steven G. Pettit.............. 1,000 .09 .07
------- ----- -----
Directors and executive 311,000 29.48% 22.95%
officers as a group (10):.....
(1) Reflects all common shares, including warrants received in connection
with Ohio Legacy's initial capitalization and this offering, which we
anticipate will be "beneficially owned" by each named individual and
group at the closing of this offering. Each of the directors will
receive one warrant for each common share purchased. We have calculated
these numbers in accordance with the definition of "beneficial
ownership" set forth by the SEC under Section 13(d) of the Securities
Act of 1934. For a description of the distribution and terms of the
warrants please see "Capitalization - Impact of Warrants and Dilution."
(2) We calculated the minimum and maximum percentages based on the exercise
of 155,000 warrants, which would increase the total number of
outstanding shares by 155,000.
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DESCRIPTION OF SECURITIES
GENERAL
We are authorized to issue up to 2,500,000 common shares, without par
value and 500,000 preferred shares, also without par value. We have no preferred
shares outstanding as of the date of this offering. Upon completion of this
offering, we will have up to 1,200,000 common shares outstanding.
Common shareholders are entitled to one vote per share on all matters
submitted to a vote of shareholders, and do not have the right to vote
cumulatively in the election of directors.
Our board of directors has full discretion to determine the payment of
dividends on common shares. Common shareholders will have equal rights to
receive dividends ratably, as and when declared by the board of directors out of
funds legally available, subject to the dividend rights of serial preferred
shares that may be issued in the future. In the event of any liquidation,
dissolution or winding-up of Ohio Legacy, common shareholders will receive the
assets of Ohio Legacy available for distribution.
Ohio Legacy common shareholders do not have preemptive or preferential
rights to purchase or subscribe to any shares or other securities of Ohio
Legacy.
All of the common shares issued pursuant to this offering will be
validly issued, fully paid and nonassessable. Ohio Legacy acts as its own
transfer agent and registrar.
SPECIAL VOTE FOR CONTROL SHARE ACQUISITIONS
Under Ohio law, unless a corporation's articles of incorporation or
regulations provide otherwise, any "control share acquisition" of an "issuing
public corporation" can be made only with the prior authorization of the
corporation's shareholders in accordance with the Ohio control share acquisition
statute (the "statute"). As an alternative, an Ohio corporation may include in
its articles of incorporation or regulations restrictions on transfer of its
shares in connection with a "control share acquisition," including procedures
for obtaining the consent of shareholders and for the screening by directors of
proposals for such acquisitions. Our articles provide the statute does not apply
to us. Specifically, Article Eighth sets forth a procedure for obtaining
shareholder consent that is consistent with the statute, subject to the right of
directors to screen out proposals that do not meet the standards set forth in
Article Eighth. The right of the board to screen control share acquisitions is
the principal difference between Article Eighth and the requirements of Ohio law
which would otherwise be applicable to Ohio Legacy.
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A "control share acquisition" is defined in Article Eighth as any
acquisition, directly or indirectly, of Ohio Legacy common shares which, when
added to all other Ohio Legacy common shares owned or controlled by the
acquiror, would entitle the acquiror to exercise or direct the exercise of
voting power in the election of directors within any of the following ranges of
voting power:
- one-fifth or more but less than one-third;
- one-third or more but less than a majority; and
- a majority or more.
Article Eighth requires that a person proposing to make a control share
acquisition deliver a written notice to Ohio Legacy describing, among other
things, the terms of the proposed acquisition and giving reasonable evidence
that the proposed control share acquisition would not be contrary to law and
that the person who gave the notice has the financial capacity to make such an
acquisition. Ohio Legacy is required to call and hold, within fifty (50) days
after receipt of the notice, a special meeting of shareholders to vote on the
proposed control share acquisition. However, the board of directors has no
obligation to call this meeting if it determines that:
- the notice was not given in good faith;
- the proposed control share acquisition would not be in the best
interests of Ohio Legacy and its shareholders; or
- the proposed control share acquisition could not be completed
for financial or legal reasons.
In addition, the board of directors may adjourn the special
shareholders meeting if prior to the meeting Ohio Legacy has received notice of
another proposed control share acquisition, merger, consolidation or sale of
assets of the corporation and decided that such proposal should be presented to
shareholders instead either at the adjourned meeting or a special meeting to be
held at a later date.
Article Eighth provides that a determination by the board not to call
the special shareholders meeting will not be deemed void or voidable with
respect to Ohio Legacy merely because one or more directors who participate in
making the determination might be deemed to be other than "disinterested
directors," if in any such case the material facts of the relationship giving
rise to a basis for self-interest are known to the directors participating in
the determination, and these directors, in good faith reasonably justified by
the facts, make this determination by a majority of the "disinterested
directors," even though such "disinterested directors" constitute less than a
quorum. For these purposes, a "disinterested director" means a director whose
material contacts with Ohio Legacy are limited principally to activities as a
director, a shareholder, a customer or a depositor of Ohio Legacy or any of its
subsidiaries or affiliates. However, a director would not be deemed to be
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other than a "disinterested director" merely because he would no longer be a
director if the proposed control share acquisition were approved and
consummated.
The notice to shareholders of the special meeting must include or be
accompanied by both the acquiring person's notice and a statement by the Ohio
Legacy board of directors of its position or recommendation with respect to the
proposed acquisition or a statement that no position is being taken or
recommendation being made.
Approval of a control share acquisition requires the affirmative vote
of both:
- a majority of the voting power represented at the meeting, and
- a majority of that portion of such voting power excluding any
"interested shares" -- that is, those shares held by the acquiring
person and Ohio Legacy officers and directors.
As drafted, Article Eighth also provides that proxies, which are
otherwise irrevocable if coupled with an interest, given in connection with a
control share acquisition are revocable at any time prior to obtaining the
requisite shareholder vote.
Any amendment, modification or repeal of Article Eighth requires
approval of at least eighty percent of Ohio Legacy's outstanding voting stock.
Each Ohio Legacy stock certificate will have a legend stating that such
shares are subject to the provisions of Article Eighth. The issuance or transfer
of shares in violation of Article Eighth will be null and void. In the event
Ohio Legacy is not permitted to treat an issuance or transfer of shares in
violation of Article Eighth as null and void, Article Eighth provides that such
shares will be treated as treasury shares, not entitling the holder to exercise
shareholder rights or receive dividends.
SERIAL PREFERRED SHARES
Article Fourth of our articles authorizes 500,000 preferred shares,
with no par value, which may be issued in one or more series by the board of
directors. The board may establish, among other things, the number of shares in
each series, dividend rates, cumulative rights, redemption rights or prices,
sinking fund provisions, and conversion rights of the serial preferred shares.
The serial preferred shareholders are entitled to be paid dividends when and as
declared in preference to the common shareholders. In liquidation or
dissolution, the serial preferred shareholders are entitled to be paid for their
shares, plus the amount of any dividends in arrears, before any amounts are paid
to the common shareholders. The serial preferred shareholders are entitled to
one vote per share on all matters presented to the shareholders. Except as
indicated below, the serial preferred shareholders vote with the common
shareholders on matters presented to the shareholders. All serial preferred
shares shall be of equal rank unless otherwise determined by the board of
directors.
In the event of a control share acquisition of Ohio Legacy that the
board of directors does not approve, it would be possible for the board to
authorize the issuance of a series of serial preferred
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shares with rights and preferences that could impede the completion of such a
transaction. The flexibility of the board to take such action will be increased
by virtue of the denial of preemptive rights. However, we do not currently have
any plans, arrangements, commitments or understandings to issue any serial
preferred shares. Any serial preferred shares issued in the future will be on
terms, which the board of directors deems to be in the best interests of Ohio
Legacy and its shareholders.
OTHER PROVISIONS
Some other provisions of our articles and regulations may also tend to
discourage attempts to acquire control of Ohio Legacy. These include:
- advance notice requirements for director nominations and
shareholder proposals;
- provisions which permit a special meeting to be called by
shareholders only with the approval of the holders of 50% or more
of the outstanding voting shares;
- provisions which provide for a staggered board of directors
divided into three classes as nearly equal in number as possible.
SALES AGENT
We have engaged Charles Webb & Company, a division of Keefe, Bruyette &
Woods, Inc. to serve as our sales agent in connection with this offering,
pursuant to a Sales Agency Agreement dated ____________, 1999. Webb was chosen
because of its general experience in the financial services industry and because
of its experience in transactions involving community offerings.
Webb has provided advice to us regarding the structure of the offering
and the marketing of our shares. Webb will use its best efforts to solicit
subscriptions and purchase orders for our shares.
Webb has not prepared any report or opinion constituting a
recommendation or advice to us, nor has it prepared an opinion as to the
fairness of the offering price or the terms of the offering. Webb expresses no
opinion as to the prices at which shares to be distributed in connection with
the offering may trade if and when they are issued at any future time.
As compensation for their services, we have agreed to pay Webb as
follows:
- an initial advisory fee of $10,000;
- a sales commission equal to 4.0% of the aggregate sales price of
the shares sold to investors who are included on the lists
provided to Webb by our directors; and
- a sales commission equal to 7.0% of the aggregate sales price of
the shares sold to investors who are not included on the lists
provided to Webb by our directors.
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Webb will pass on to mutually selected broker-dealers who participate
in the offering an amount of stock sold at a comparable price per share in a
similar market environment. Fees with respect to purchases made with the
assistance of broker-dealers other than Webb will be transmitted by Webb to such
broker-dealers.
We have agreed to indemnify Webb against certain liability arising out
of its engagement or, in the event indemnification is unavailable, to contribute
payments that Webb may be required to make in respect thereof.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 1701.13 of the Ohio Revised Code provides for the
indemnification of officers and directors against liability and expenses that
may be incurred by them in the event of an action against them as a result of
their service for or on behalf of Ohio Legacy. Our regulations contain specific
provisions with regard to indemnification of our directors and officers, in
compliance with the general provisions of Section 1701.13. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
SHARES ELIGIBLE FOR FUTURE SALE
As of August 31, 1999, Ohio Legacy had 135 common shares outstanding
held by a group of nine organizers. Upon completion of this offering, we will
have a minimum of 900,000 and a maximum of 1,200,000 common shares outstanding.
All of these shares will be freely transferable without restriction of future
registration, except for the approximately 155,000 common shares purchased by
Ohio Legacy directors, executive officers and affiliates, as defined in Rule
144 of the Securities Act.
In general, under Rule 144, an affiliate may sell shares within any
three month period in an amount limited to the greater of 1% of the outstanding
shares or the average weekly trading volume of the shares over the four week
period immediately preceding the sale. Rule 144 sales are also subject to the
holding periods, notice requirements, manner of sale restrictions and
information requirements.
In addition to any other restrictions, Ohio Legacy officers and
directors have agreed with the sales agent not to sell their shares for 180
days after the closing of the offering.
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LEGAL MATTERS
The validity of the common shares offered with this prospectus has been
passed upon for Ohio Legacy by the law firm Squire, Sanders & Dempsey L.L.P.
Certain legal matters relating to this offering will be passed upon for the
sales agent by Silver, Freedman & Taff, L.L.P., 1100 New York Avenue, N.W.,
Washington, DC 20005.
EXPERTS
The financial statements of Ohio Legacy Corp as of August 31, 1999 and
for the period from July 1, 1999, the date of inception, to August 31,1999,
included in this prospectus and in the Registration Statement have been audited
by Crowe, Chizek and Company LLP, independent public accountants, as set forth
in their report dated September 28, 1999, which appears elsewhere herein and in
the Registration Statement. All such financial statements have been included
herein in reliance upon such reports given upon the authority of such firm as
experts in auditing and accounting.
WHERE YOU CAN FIND
MORE INFORMATION
Upon the completion of this offering, Ohio Legacy will be required to
file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy the registration statement and
any other documents filed by Ohio Legacy at the SEC's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. Information regarding the
operation of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. Our filings are also available to the public at the SEC's
internet site located at http://www.sec.gov.
This prospectus is part of the registration statement and does not
contain all of the information included in the registration statement. Whenever
a reference is made in this prospectus to any contract or other document of Ohio
Legacy, the reference may not be complete and you should refer to the exhibits
that are a part of the registration statement for a copy of the contract or
document.
After the offering, we expect to provide annual reports to our
shareholders that include financial information examined and reported on by our
independent public accountants.
Requests for these documents should be directed to L. Dwight Douce at
(330) 262-0437.
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OHIO LEGACY CORP
(A Development Stage Company)
Wooster, Ohio
FINANCIAL STATEMENTS
August 31, 1999
55
OHIO LEGACY CORP
(A Development Stage Company)
Wooster, Ohio
FINANCIAL STATEMENTS
August 31, 1999
CONTENTS
REPORT OF INDEPENDENT AUDITORS............................................................................ F-1
FINANCIAL STATEMENTS
BALANCE SHEET AS OF AUGUST 31, 1999................................................................. F-2
STATEMENT OF OPERATIONS FOR THE PERIOD FROM JULY 1, 1999 TO
AUGUST 31, 1999................................................................................... F-3
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE
PERIOD FROM JULY 1, 1999 TO AUGUST 31, 1999....................................................... F-4
STATEMENT OF CASH FLOWS FOR THE PERIOD FROM JULY 1, 1999 TO
AUGUST 31, 1999................................................................................... F-5
NOTES TO FINANCIAL STATEMENTS....................................................................... F-6
56
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Ohio Legacy Corp
Wooster, Ohio
We have audited the accompanying balance sheet of Ohio Legacy Corp as of August
31, 1999, and the related statements of operations, changes in stockholders'
equity and cash flows for the period from July 1, 1999 (date of inception) to
August 31, 1999. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ohio Legacy Corp as of August
31, 1999, and the results of its operations and its cash flows for the period
from July 1, 1999 (date of inception) to August 31, 1999, in conformity with
generally accepted accounting principles.
Crowe, Chizek and Company LLP
Columbus, Ohio
September 28, 1999
F-1
57
OHIO LEGACY CORP
(A Development Stage Company)
BALANCE SHEET
August 31, 1999
- --------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 90,000
Deferred offering costs 32,500
------------
Total assets $ 122,500
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable $ 94,096
Accounts payable to shareholder 1,258
------------
Total liabilities 95,354
Stockholders' equity
Common stock - no par value, 875 shares authorized;
135 shares issued and outstanding 135,000
Stock subscription receivable (30,000)
Deficit accumulated during the development stage (77,854)
------------
Total stockholders' equity 27,146
------------
Total liabilities and stockholders' equity $ 122,500
============
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
F-2
58
OHIO LEGACY CORP
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Period from July 1, 1999 (Date of Inception) to August 31, 1999
- --------------------------------------------------------------------------------
EXPENSES
Professional fees $ 56,725
OCC application fee 15,000
Occupancy expense 5,000
Telephone, supplies and other 1,129
-----------
Net loss $ 77,854
===========
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
F-3
59
OHIO LEGACY CORP
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from July 1, 1999 (Date of Inception) to August 31, 1999
- --------------------------------------------------------------------------------
Stock Total
Common Subscription Accumulated Stockholders'
Stock Receivable Deficit Equity
----- ---------- ------- ------
Issuance of common stock $ 135,000 $ 135,000
Stock subscription receivable
from issuance of common stock $ (30,000) (30,000)
Net loss $ (77,854) (77,854)
-------------- ------------- ------------- --------------
Balance August 31, 1999 $ 135,000 $ (30,000) $ (77,854) $ 27,146
============== ============= ============= ==============
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
F-4
60
OHIO LEGACY CORP
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Period from July 1, 1999 (Date of Inception) to August 31, 1999
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (77,854)
Adjustments to reconcile net loss to net cash from operating activities
Increase in deferred offering costs (32,500)
Increase in accounts payable 95,354
------------
Net cash from operating activities (15,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock, net of stock
subscription receivable 105,000
------------
Net cash from financing activities 105,000
------------
Net change in cash and cash equivalents 90,000
Cash and cash equivalents at beginning of period --
------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 90,000
============
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
F-5
61
OHIO LEGACY CORP
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION: Ohio Legacy Corp (the Corporation) was incorporated July 1, 1999,
and was a development stage company as of August 31, 1999. The Corporation will
be devoting its efforts to the offering of its common shares to the general
public and to obtaining regulatory approvals, recruiting personnel and financial
planning related to the organization of Ohio Legacy Bank (the Bank). The
Corporation is expected, upon completion of a public stock offering, to purchase
100% of the common stock of the Bank, a national-chartered bank. The Corporation
will file an application to become a bank holding company with the Board of
Governors of the Federal Reserve System pursuant to the Bank Holding Company Act
of 1956, as amended.
The Corporation intends to sell between 900,000 and 1,200,000 shares of its
common stock at $10.00 per share. The offering is expected to raise between
$8,350,000 and $11,140,000, net of estimated underwriting commissions and
offering expenses. The Board of Directors and Executive Officers of the
Corporation intend to purchase approximately 155,000 shares of common stock at
$10.00 per share for a total of approximately $1,550,000. Upon the purchase of
these shares, the Corporation will issue one warrant for each share of common
stock purchased by the Board of Directors and Executive Officers.
NATURE OF BUSINESS: The Corporation, through its subsidiary Bank, intends to
open banking centers in Wooster and Canton, Ohio, and offer a full range of
consumer and commercial banking services to individuals and businesses in the
Wayne and Stark County, Ohio, markets.
USE OF ESTIMATES: To prepare financial statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions based
on available information. These estimates and assumptions affect the amounts
reported in the financial statements and the disclosures provided, and future
results could differ. Areas involving the use of management's estimates and
assumptions include the realization of deferred tax assets.
CASH FLOWS: Cash and cash equivalents includes cash and deposits with a
financial institution with original maturities under ninety days.
STOCK SUBSCRIPTION RECEIVABLE: Each of the organizers of the Corporation
contributed $15,000 to purchase 15 shares of common stock of the Corporation.
Two organizers paid for their shares subsequent to August 31, 1999.
As a result, this amount is shown as a reduction of equity at August 31, 1999.
- --------------------------------------------------------------------------------
Continued
F-6
62
OHIO LEGACY CORP
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 1 - ORGANIZATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (Continued)
ORGANIZATION AND STOCK OFFERING COSTS: Costs directly associated with the
organization of the Corporation and the Bank have been expensed as incurred.
Costs directly associated with preparing the stock offering have been deferred
and will be deducted from the proceeds received in the offering. If the stock
offering is not completed, any deferred costs will be charged to operations.
INCOME TAXES: Income tax expense is the total of the current year income tax due
or refundable and the change in deferred tax assets and liabilities. Deferred
tax assets and liabilities are the expected future tax amounts for the temporary
differences between the carrying amounts and tax bases of assets and
liabilities, computed using enacted tax rates. A valuation allowance reduces
deferred tax assets to the amount expected to be realized.
COMPREHENSIVE INCOME: Comprehensive income consists of net income (loss) and
other comprehensive income. Other comprehensive income includes items such as
unrealized gains and losses on securities available for sale and changes in
minimum pension liability, which are also recognized as separate components of
equity. The Corporation had no other comprehensive income items for the period
presented. As a result, comprehensive income consists only of net loss for the
period presented.
NOTE 2 - STOCK OPTIONS
The Corporation's Board of Directors has adopted an Omnibus Stock Option, Stock
Ownership and Long-Term Incentive Plan. A total of 100,000 common shares are
available for grants under the plan. The number of shares may be adjusted by the
Board in the event of an increase or decrease in the number of common shares
outstanding resulting from dividend payments, stock splits, recapitalization,
merger, share exchange acquisition, combination or reclassification.
The following types of awards may be granted under the plan to eligible persons:
nonqualified stock options, incentive stock options, restricted stock, stock
appreciation rights and performance units. Under the plan, each nonemployee
Director will be granted 2,500 nonqualified options at the time that person
first becomes a Director. The initial option grant will vest annually in equal
amounts over a three-year term. In addition, each nonemployee Director will
receive an annual grant of 1,000 nonqualified options during his tenure on the
Board, which will vest immediately. The exercise price of an option shall not be
less than the fair market value of the underlying common stock on the date of
the grant.
- --------------------------------------------------------------------------------
Continued
F-7
63
OHIO LEGACY CORP
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 2 - STOCK OPTIONS (Continued)
In the event of a change in control of the Corporation, outstanding options may
become immediately exercisable in full at the discretion of the compensation
committee. Otherwise, all outstanding options will terminate unless the
successor corporation agrees to assume or replace such options with an
equivalent entitlement.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
The Bank expects to enter into one-year employment agreements with its Chief
Executive Officer and President, and its Senior Loan Officer and President of
the Stark County Division. Each employment agreement will renew automatically
for an additional year unless either party furnishes at least sixty days notice
to the other of its intent to terminate the agreement. Both parties will receive
an annual base salary of $100,000 and will be eligible for bonuses at the
Board's discretion. The agreements also entitle the employees to participate in
any formally established stock option, health insurance and other fringe benefit
plans for which management personnel are eligible. In the event of a change in
control, both parties would receive 2.99 times their annual compensation.
The employment agreement with the Chief Executive Officer and President begins
and becomes valid when the Bank begins operations. The employment agreement with
the Senior Loan Officer and President of the Stark County Division begins and
becomes valid at the date the agreement is signed. Should the Bank not open, the
contract will pay the Senior Loan Officer and President of the Stark County
Division until he finds other employment and will make up for any short fall in
salary below $100,000 during the contract term.
The Corporation's headquarters and the Wayne County banking center will be
located at 305 West Liberty Street, Wooster, Ohio 44691. The Corporation has
entered into a fifteen-year lease agreement for the property, with two five-year
renewal options, with its owner. The Corporation is required to pay the lessor
$5,000 upon execution of the lease, which is nonrefundable and will not apply
against any rent payments, as consideration for the lessors not seeking to
enforce the provisions of the lease until October 31, 1999 (grace period). The
Corporation can extend the grace period until June 15, 2000 by delivering
written notice and making nonrefundable payments totaling $100,000 on or before
each extension deadline. The extension payments shall be credited
dollar-for-dollar against monthly rent installments. The initial rent during the
construction period shall be the prime rate plus 1/2% times the construction
financing amount. Following the initial rent, monthly rent for the first five
years will be base rent of $4,200 plus an amount equal to the monthly payment to
amortize the construction costs, which are estimated to be $550,000 over 180
months, with an interest rate of prime plus 1/2%. The base rent increases every
five years by the increase in the Consumer Price Index. The lease is expected to
be accounted for as a capital lease.
- --------------------------------------------------------------------------------
Continued
F-8
64
OHIO LEGACY CORP
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 3 - COMMITMENTS AND CONTINGENCIES (Continued)
The Stark County banking center will be located at 3900 Dressler Road in Canton,
Ohio. The Corporation is in the process of negotiating a ten-year lease
agreement for the property with two five-year renewal options. Annual rent
payments will be approximately $45,000 for the first five years of the lease,
with the lease increasing 15% for each renewal term. The lease is expected to be
accounted for as an operating lease.
The Corporation also entered into a one-year lease beginning January 1, 2000 for
temporary facilities four blocks from the permanent site at 132 East Liberty
Street, Wooster, Ohio. The temporary site will be used for administrative
purposes during the organization of the Bank. Once the Bank receives its
charter, it will also be used as a branch office until the permanent site is
completed. Monthly rent will be $1,895.
Estimated rental commitments under these leases for the next five years assuming
the payments begin on January 1, 2000 are as follows:
Year ending December 31,
2000 $ 184,104
2001 161,364
2002 161,364
2003 161,364
2004 161,364
NOTE 4 - INCOME TAXES
The tax benefit of $26,470 associated with the net operating loss carryforward
of $77,854 has been offset with a valuation allowance as of August 31, 1999
since the Corporation is in the development stage and has no history of
generating taxable income.
- --------------------------------------------------------------------------------
F-9
65
Appendix A
STOCK ORDER FORM & OHIO LEGACY CORP
CERTIFICATION FORM (ON THE REVERSE SIDE) (Ohio Legacy Bank)
Stock Information Center (877) 298-6520
================================================================================
DEADLINE: The Subscription Offering ends at 5:00 P.M. EASTERN TIME, __, 1999.
Your Stock Order Form and Certification Form, properly executed and with the
correct payment, must be received at the address on the bottom of this form by
this deadline, or it will be considered void.
- --------------------------------------------------------------------------------
NUMBER OF SHARES
(1) Number of Shares Price Per Share (2) Total Amount Due
- ------------------------ --------------------
x $10.00 = $
- ------------------------ --------------------
The minimum number of shares that may be subscribed for is 500. The maximum
amount any person may purchase is 50,000 shares. Ohio Legacy Corp. has reserved
the right to reject all or any part of any subscription.
- ------------------------------------------------------------------------------------------------------------------------------------
(3) METHOD OF PAYMENT PURCHASER INFORMATION
- ------------------------------------------------------------------------------------------------------------------------------------
(4) |_|Check here if you are a DIRECTOR, OFFICER or EMPLOYEE of
|_| Enclosed is a check, bank draft or money order payable to Ohio Legacy Bank or a member of such person's immediate
"CHAMPAIGN NATIONAL BANK & TRUST, TRUST NO. OLCB80N01" family.
in the amount of $_____.
(5) If purchasing through a broker/dealer, please list the
name, address and phone number below:
- ------------------------------------------------------------------- ----------------------------------------------------------
(6) STOCK REGISTRATION - FORM OF STOCK OWNERSHIP Name:
- ------------------------------------------------------------------- ----------------------------------------------------------
[ ] Individual [ ] Uniform Gift to Minors Street Address:
----------------------------------------------------------
[ ] Joint Tenants [ ] Uniform Transfer to Minors City:
----------------------------------------------------------
[ ] Tenants in Common [ ] Corporation State:
----------------------------------------------------------
[ ] Partnership [ ] Individual Retirement Account Zip Code:
----------------------------------------------------------
[ ] Fiduciary/Trust (under Agreement Dated _________) Phone Number:
----------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Name Social Security or Tax I.D.
- ------------------------------------------------------------------------------------------------------------------------------------
Name Daytime Telephone
- ------------------------------------------------------------------------------------------------------------------------------------
Street Address Evening Telephone
- ------------------------------------------------------------------------------------------------------------------------------------
City State Zip Code County of Residence
- ------------------------------------------------------------------------------------------------------------------------------------
NASD AFFILIATION (This section only applies to those individuals who meet the
delineated criteria)
|_| Check here if you are a member of the National Association of Securities
Dealers, Inc. ("NASD"), a person associated with an NASD member, a member of the
immediate family of any such person to whose support such person contributes,
directly or indirectly, or the holder of an account in which an NASD member or
person associated with an NASD member has a beneficial interest. To comply with
conditions under which an exemption from the NASD's Interpretation With Respect
to Free-Riding and Withholding is available, you agree, if you have checked the
NASD affiliation box: (1) not to sell, transfer or hypothecate the shares
subscribed for herein for a period of three months following the issuance and
(2) to report this subscription in writing to the applicable NASD member within
one day of the payment therefor.
- --------------------------------------------------------------------------------
ACKNOWLEDGMENT By signing below, I acknowledge receipt of the Prospectus dated
__, 1999 and that I have reviewed all provisions therein. I understand that I
may not change or revoke my order once it is received by the Escrow Agent. Under
penalties of perjury, I further certify that: (1) the social security number or
taxpayer identification number given above is correct; and (2) I am not subject
to backup withholding. You must cross out this item, (2) above, if you have been
notified by the Internal Revenue Service that you are subject to backup
withholding because of under- reporting interest or dividends on your tax
return. By signing below, I also acknowledge that I have not waived any rights
under the Securities Act of 1933 and the Securities Exchange Act of 1934.
- --------------------------------------------------------------------------------
SIGNATURE THIS ORDER FORM TOGETHER WITH THE CERTIFICATION ---------------------------------------------------------------
FORM MUST BE SIGNED AND DATED. THIS ORDER IS NOT VALID IF THE Signature Title (if applicable) Date
STOCK ORDER FORM AND CERTIFICATION FORM ARE NOT BOTH
SIGNED. YOUR ORDER WILL BE FILLED IN ACCORDANCE WITH THE ---------------------------------------------------------------
PROVISIONS OF THE PROSPECTUS. When purchasing as a custodian, Signature Title (if applicable) Date
corporate officer, etc., include your full title. If you need
help completing this Form, you may call (877) 298-6520. ---------------------------------------------------------------
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE SAVINGS
ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
- --------------------------------------------------------------------------------
Date Rec'd ___/__/___ Order # _________________ Batch # ____ Champaign National Bank & Trust
P.O. Box 48
OFFICE USE Check # __________ Category ________________ Urbana, Ohio 43078
Amount $ __________ Initials ________________
66
CERTIFICATION FORM
(THIS FORM MUST ACCOMPANY A SIGNED STOCK ORDER FORM)
I ACKNOWLEDGE THAT THE COMMON STOCK WITHOUT PAR VALUE ("COMMON STOCK"), OF
OHIO LEGACY CORP (`THE COMPANY") IS NOT A DEPOSIT OR ACCOUNT AND IS NOT
FEDERALLY INSURED, AND IS NOT GUARANTEED BY OHIO LEGACY BANK OR BY THE FEDERAL
GOVERNMENT.
I further certify that, before purchasing the Common Stock of the Company, I
received a copy of the PROSPECTUS DATED, _________________ __, 1999 which
discloses the nature of the Common Stock being offered thereby and describes the
following risks involved in an investment in the Common Stock under the heading
"Risk Factors" beginning on page 6 of the Prospectus:
1. We have no operating history upon which to base an estimate of our
future performance.
2. We expect losses in our first 18 to 24 months of operations.
3. We will be competing with many larger financial institutions that have
far greater financial resources than we have, which could prevent us
from attracting customers and may cause us to have to pay higher
interest rates to attract and maintain customers.
4. Our success largely depends upon the skill and experience of our senior
management team.
5. We may not be able to compete with our larger competitors for larger
customers because our lending limits are lower than theirs.
6. We will have broad discretion in using the proceeds of the offering.
7. A delay in obtaining regulatory approvals will have an adverse affect on
our business.
8. We could be adversely affected by changes in the law, especially changes
deregulating the banking industry.
9. Interest rate volatility could significantly harm our business.
10. Future sales of our common shares could depress the price of our common
shares.
11. Our results of operations will be significantly affected by the ability
of our borrowers to repay their loans.
12. Our financial condition will be adversely affected if our allowance for
loan losses is not sufficient to absorb actual losses.
13. No assurance of ability to raise additional capital.
14. We may not be able to attract sufficient deposits to fund our
anticipated loan growth.
15. We will not have a large number of shareholders or a large number of
shares outstanding after the offering, which may limit your ability to
sell or trade the shares after the offering.
16. If a market for our common shares does not develop, you may not be able
to sell you shares as quickly as you may like.
17. The offering price was determined arbitrarily and may not reflect the
market price of our shares.
18. Upon exercise of their warrants, our organizers and directors will own a
significant number of common shares, which will allow them to control
the management of the company.
19. The exercise of warrants and stock options will cause dilution and may
adversely affect the value of our common shares.
20. You will not receive dividends in the foreseeable future.
21. We are dependent on the operations of the Bank.
22. We may not be able to effectively provide, implement and market
technology-driven products and services.
23. We will be dependent on third-party providers.
24. Our Articles and Regulations contain provisions that could deter
takeover attempts, even at a price attractive to shareholders.
25. The sales agent may not be able to sell the minimum or maximum number of
shares offered in this offering.
- ---------------------------------- ----------------------------------
Signature Signature
- ---------------------------------- ----------------------------------
(NOTE: IF SHARES ARE TO BE HELD JOINTLY, BOTH PARTIES MUST SIGN)
Date: _____________________
67
OHIO LEGACY CORP
STOCK OWNERSHIP GUIDE
- --------------------------------------------------------------------------------
Instructions: See your legal advisor if you are unsure about the correct
registration of your stock.
INDIVIDUAL- The shares are to be registered in an individual's name only. You
may not list beneficiaries for this ownership.
JOINT TENANTS- Joint tenants with right of survivorship identifies two or more
owners. When shares are held by joint tenants with rights of survivorship,
ownership automatically passes to the surviving joint tenant(s) upon the death
of any joint tenant. You may not list beneficiaries for this ownership.
TENANTS IN COMMON- Tenants in common may also identify two or more owners. When
shares are held by tenants in common, upon the death of one co-tenant, ownership
of the shares will be held by the surviving co-tenant(s) and by the heirs of the
deceased co-tenant. All parties must agree to the transfer or sale of shares
held by tenants in common. You may not list beneficiaries for this ownership.
INDIVIDUAL RETIREMENT ACCOUNT- Individual Retirement Account ("IRA") holders may
make share purchases from their self-directed IRA's. The administrator or
trustee will need to fill out the appropriate forms and return them on a timely
basis.
UNIFORM GIFT TO MINORS- For residents of many states, shares may be held in the
name of a custodian for the benefit of a minor under the Uniform Transfer to
Minors Act. For residents in other states, shares may be held in a similar type
of ownership under the Uniform Gift to Minors Act of the individual states. For
either type of ownership, the minor is the actual owner of the shares with the
adult custodian being responsible for the investment until the child reaches
legal age.
On the first line, print the first name, middle initial and last name of the
custodian, with the abbreviation "CUST" and "Unif Tran Min Act" or "Unif Gift
Min Act" after the name. Print the first name, middle initial and last name of
the minor on the second "NAME" line. Standard U.S. Postal Service state
abbreviations should be used to describe the appropriate state. For example,
shares held by John Doe as custodian for Susan Doe under the Ohio Transfer to
Minors Act will be abbreviated John Doe, CUST Susan Doe Unif Tran Min Act. OH.
USE THE MINOR'S SOCIAL SECURITY NUMBER. Only one custodian and one minor may be
designated.
CORPORATION/PARTNERSHIP- Corporation/Partnerships may purchase shares. Please
provide the Corporation/Partnership's legal name and Tax I.D.
FIDUCIARY/TRUST- Generally, fiduciary relationships (such as trusts, estates,
guardianships, etc.) are established under a form of trust agreement or pursuant
to a court order. Without a legal document establishing a fiduciary
relationship, your shares may not be registered in a fiduciary capacity.
Instructions: On the first "NAME" line, print the first name, middle initial and
last name of the fiduciary if the fiduciary is an individual. If the fiduciary
is a corporation, list the corporate title on the first "NAME" line. Following
the name, print the fiduciary "title" such as trustee, executor, personal
representative, etc.
On the second "NAME" line, print either the name of the maker, donor or testator
OR the name of the beneficiary. Following the name, indicate the type of legal
document establishing the fiduciary relationship (agreement, court order, etc.).
In the blank after "Under Agreement Dated", fill in the date of the document
governing the relationship. The date of the document need not be provided for a
trust created by a will.
An example of fiduciary ownership of stock in the case of a trust is: John D.
Smith, Trustee for Thomas A. Smith Trust Under Agreement Dated 06/09/87.
ITEM INSTRUCTION
- --------------------------------------------------------------------------------
ITEMS 1 AND 2- Fill in the number of shares that you wish to purchase and the
total payment due. The amount due is determined by multiplying the number of
shares by the subscription price of $10.00 PER SHARE. THE MINIMUM PURCHASE IS
500 SHARES. The maximum amount any person may purchase is 50,000 shares. Ohio
Legacy Corp. has reserved the right to reject all or any part of any
subscription.
ITEM 3- Payment for shares may be made by check, bank draft or money order made
payable to "CHAMPAIGN NATIONAL BANK & TRUST, TRUST NO. OLCB80N01" DO NOT MAIL
CASH. Your funds will be returned promptly with interest if the offering is
terminated. Payment may also be made by wire transfer to the Escrow Agent. The
phone number of the Escrow Agent is (937) 653-1167. THE CONTACT PERSON IS
STEPHEN J. WALL.
ITEM 4- Please check this box if you are a director, officer or employee of Ohio
Legacy Corp. or a member of such person's immediate family.
ITEM 5- If purchasing through a broker/dealer please list the name, address and
phone number in this box.
ITEMS 6- The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of Ohio Legacy Corp.
common stock. Print the name(s) in which you want the shares registered and the
mailing address of the registration. Include the first name, middle initial and
last name of the shareholder. Avoid the use of two initials. Please omit words
that do not affect ownership rights, such as "Mrs.", "Mr.", "Dr.", "special
account", etc.
Enter the Social Security or Tax I.D. number of one registered owner. This
registered owner must be listed on the first "NAME" line. Be sure to include
your telephone number because we will need to contact you if we cannot execute
your order as given. Review the Stock Ownership Guide and refer to the
instructions for Uniform Gift to Minors/Uniform Transfer to Minors and
Fiduciaries.
68
Appendix B
ESCROW AGREEMENT
The Agreement is made and entered into as of ____________ __, 1999, by
and among Champaign National Bank and Trust (the "Escrow Agent"), Charles Webb &
Company (the "Underwriter"), and Ohio Legacy Corp (the "Company").
RECITALS
A. The Company proposes to offer for sale to investors through one or more
registered broker-dealers up to 1,200,000 shares of common stock (the
"Securities") at a price of $10.00 per share (the "Proceeds").
B. The Underwriter intends to sell the Securities as the Company's agent on a
best-efforts part-or-none basis for 900,000 shares and on a best-efforts
basis for the remaining Securities in a public offering (the "Offering").
C. The Company and the Underwriter desire to establish an escrow account in
which funds received from subscribers will be deposited pending completion
of the escrow period. Champaign National Bank and Trust agrees to serve as
Escrow Agent in accordance with the terms and conditions set forth herein.
D. The term Selected Dealer as used herein shall include the Underwriter and
other co-underwriters and/or other selected dealers as part of the selling
group. All Selected Dealers shall be bound by this Agreement. However, for
purposes of communications and directives, the Escrow Agent need only
accept those signed by Charles Webb & Company.
AGREEMENT
Now therefore, in consideration of the foregoing, it is hereby agreed as
follows:
1) Establishment of Escrow Account. On or prior to the date of the
commencement of the offering, the parties shall establish an
interest-bearing escrow account with the Escrow Agent, which escrow account
shall be entitled OLCB Escrow Account. The Selected Dealer will instruct
subscribers to make checks for subscriptions payable to the order of the
Escrow Agent. Any checks received that are made payable to a party other
than the Escrow Agent shall be returned to the Selected Dealer who
submitted the check.
2) Escrow Period. The Escrow Period shall begin with the commencement of the
Offering and shall terminate upon the earlier to occur of the following
dates:
a) The date upon which the Escrow Agent confirms that it has received in
the Escrow Account gross proceeds of $9,000,000 in deposited funds (the
"Minimum"); or
1 of 5
69
b) The expiration of 60 days from the date of commencement of the
Offering (unless extended as permitted in the offering document for an
additional 60 days by mutual written agreement between the Company and
the Underwriter with a copy of such extension to the Escrow Agent); or
c) The date upon which a determination is made by the Company and the
Underwriter to terminate the offering prior to the sale of the
Minimum.
During the escrow period, the Company is aware and understands that it is
not entitled to any funds received into escrow and no amounts deposited in
the Escrow Account shall become the property of the Company or any other
entity, or be subject to the debts of the Company or any other entity.
3) Deposits into the Escrow Account. The Selected Dealer agrees to direct
subscribers to submit funds directly to the Escrow Agent in the form of
wire transfer, check, draft, or money order for deposit in the Escrow
Account. If the funds are instead delivered to the Selected Dealer, it
shall promptly deliver all monies received from subscribers for the payment
of the Securities to the Escrow Agent for deposit in the Escrow Account.
For each subscriber, the Selected Dealer shall provide a written account of
each sale, which account shall set forth, among other things, the
subscriber's name and address, the subscriber's Taxpayer Identification
Number, the number of securities purchased, and the amount paid therefor.
All monies so deposited in the Escrow Account are hereinafter referred to
as the "Escrow Amount".
4) Disbursements from the Escrow Account. In the event the Escrow Agent does
not receive the Minimum deposits totaling $9,000,000 prior to the
termination of the Escrow Period, the Escrow Agent shall refund to each
subscriber the amount received from the subscriber, without deduction,
penalty, or expense to the subscriber, and the Escrow Agent shall notify
the Company and the Selected Dealer of its distribution of the funds. The
purchase money returned to each subscriber shall be free and clear of any
and all claims of the Company or any of its creditors.
In the event the Escrow Agent does receive the Minimum prior to termination
of the Escrow Period, in no event will the Escrow Amount be released to the
Company until such amount is received by the Escrow Agent in collected
funds. For purposes of this Agreement, the term "collected funds" shall
mean all funds received by the Escrow Agent which have cleared normal
banking channels and are in the form of cash.
The Minimum may be met by funds that are deposited from the effective date
of the offering up to an including the date on which the contingency must
be met, i.e., during the Escrow Period. However, the escrow cannot be
broken and the offering may not proceed to closing until customer checks
have been collected through the normal banking channels in an aggregate
amount sufficient to meet the Minimum. The Escrow Agent makes the
determination as to when sufficient funds have been deposited and collected
to break escrow. If the Minimum is met with checks
2 of 5
70
tendered on the last day of the Escrow Period and, subsequently, such
checks fail to clear the banking system, thereby reducing the funds
received by the escrow Agent to an amount less than that necessary to meet
the Minimum, the offering contingency has not been met. In this event, the
Escrow Agent must promptly return all funds to subscribers.
In this connection, it should also be noted that purchases made after the
Escrow Period has terminated, but prior to the date escrow is broken
pending clearance of subscribers' funds, may not be subsequently counted to
meet the Minimum should checks tendered prior to the termination of the
Escrow Period fail to clear the banking system. Further, under Securities
and Exchange Commission Rules 15c2-4 and 10b-9, a broker-dealer may not
substitute its own good check for the check of a customer that has
insufficient funds nor otherwise purchase to satisfy the offering
contingency unless the broker-dealer is purchasing for investment prior to
the termination of the Escrow Period and the offering document discloses
the maximum amount of such potential purchase.
5) Collection Procedure. The Escrow Agent is hereby authorized to forward each
check for collection and, upon collection of the proceeds of each check,
deposit the collected proceeds in the Escrow Account. As an alternative,
the Escrow Agent may telephone the bank on which the check is drawn to
confirm that the check has been paid.
Any check returned unpaid to the Escrow Agent shall be returned to the
Selected dealer that submitted the check. In such cases, the Escrow Agent
will promptly notify the Company of such return.
If the Company rejects any subscription for which the Escrow Agent has
already collected funds, the Escrow Agent shall promptly issue a refund
check to the rejected subscriber. If the Company rejects any subscription
for which the Escrow Agent has not yet collected funds but has submitted
the subscriber's check for collection, the Escrow Agent shall promptly
issue a check in the amount of the subscriber's check to the rejected
subscriber after the Escrow Agent has cleared such funds. If the Escrow
Agent has not yet submitted a rejected subscriber's check for collection,
the Escrow Agent shall promptly remit the subscriber's check directly to
the subscriber.
6) Investment of Escrow Amount. The Escrow Agent may invest the Escrow Amount
in a deposit account issued by the Escrow Agent, as long as the maturity
date of the account does not extend beyond the anticipated contingency
occurrence date or, if the maturity date does extend beyond the anticipated
contingency occurrence, the account can be closed without any dissipation
of the offering proceeds invested.
7) Compensation of Escrow Agent. The Company shall pay the Escrow Agent a fee
for its escrow services in an amount of $500. If it is necessary for the
Escrow
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Agent to return funds to the Purchasers of the Securities, the Company
shall pay to the Escrow Agent an additional amount sufficient to reimburse
it for the actual cost in disbursing such funds. However, no such fee,
reimbursement for costs or expenses, indemnification for any damages
incurred by the Escrow Agent, or any monies whatsoever shall be paid out of
or chargeable to the funds on deposit in the Escrow Account.
8) Indemnification of the Escrow Agent. The Company and the Underwriter agree
to indemnify and hold harmless the Escrow Agent against any and all losses,
claims, damages, liabilities and expenses which may be imposed upon the
Escrow Agent or incurred by the Escrow Agent in connection with the
performance of its duties hereunder, by reason of any litigation arising
from the agreement or involving the subject matter hereof of the funds
deposited hereunder; provided, however, that such indemnity shall not
extend to any of such losses, claims, damages, liabilities and expenses
which are so imposed upon or incurred by the Escrow Agent by reason of its
own negligence or willful misconduct.
Notwithstanding any provision contained in this agreement to the contrary,
the Escrow Agent, including its officers, directors, employees, and agents,
shall:
a) Have no responsibility to inquire into or determine the genuineness,
authenticity, or sufficiency of any securities, checks, subscription
agreements, confirmation of sales, or other documents or instruments
submitted to it in connection with its duties under this agreement;
and
b) Be entitled to deem the signatories of any documents or instruments to
it under this agreement as being those purported to be authorized to
sign such documents or instruments on behalf of the parties thereto
and shall be entitled to rely upon the genuineness of the signatures
of such signatories without inquiry and without requiring
substantiating evidence of any kind.
9) Notices. All notices, requests, demands, and other communications required
or permitted to be given hereunder shall be in writing and shall be deemed
to have been duly given if delivered personally, sent by overnight delivery
service, or mailed first-class mail, postage prepaid to the other parties
addressed to the address set forth below or to any other address hereafter
designated by the party to whom notice is given.
10) Governing Law. All questions concerning the validity, intention, or meaning
of this agreement or relating to the rights and obligations of the parties
with respect to performance hereunder shall be construed and resolved under
the laws of the State of Ohio.
11) Counterparts. This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute but one and the same
instrument, and any party hereto may execute this agreement by signing any
such counterpart.
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OHIO LEGACY CORP
305 West Liberty Street
Wooster, OH 44691
------------------------------------
By: H. Dwight Douce, President and Chief Executive Officer
CHARLES WEBB & COMPANY
211 Bradenton Avenue
Dublin, OH 43017
------------------------------------
By: Harold T. Hanley, III, Senior Vice President
CHAMPAIGN NATIONAL BANK AND TRUST
601 Scioto Street
P.O. Box 48
Urbana, OH 43078
------------------------------------
By: Stephen J. Wall, Vice President and Trust Officer
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PART II TO FORM SB-2
INFORMATION NOT REQUIRED IN THE PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
As authorized by Section 1701.13(E) of the Ohio Revised Code, Section
29 of Ohio Legacy's Code of Regulations provides that directors and officers of
Ohio Legacy may, under certain circumstances, be indemnified against expenses,
including attorneys' fees, and from other liabilities actually and reasonably
incurred by them as a result of any suit brought against them in their capacity
as a director or officer, if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if they had
no reasonable cause to believe their conduct was unlawful. Section 29 also
provides that directors and officers may also be indemnified against expenses,
including attorneys' fees, incurred by them in connection with a derivative suit
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, except that no
indemnification may be made without court approval if such person was adjudged
liable to the corporation.
RECENT SALES OF UNREGISTERED SECURITIES
In August 1999, as part of its initial capitalization Ohio Legacy sold
135 common shares at a price of $1,000 per share to its nine (9) organizing
directors, totaling $135,000, in an offering exempt from registration under
Section 4(2) of the Securities Act. No underwriters were involved in the sale
and no underwriting discounts or commissions were paid.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated costs and expenses of Ohio
Legacy in connection with the offering other than underwriting discounts or
commissions.
SEC Registration Fee $ 4,000
Legal Fees and Expenses 65,000
Accounting Fees and Expenses 15,000
Printing and Engraving Expenses 21,000
Blue Sky Fees and Expenses 10,000
Miscellaneous 10,000
--------
Total $125,000
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
The information required by this Item 21(a) is set forth in the Index
to Exhibits accompanying this Registration Statement and is incorporated herein
by reference.
(B) FINANCIAL STATEMENT SCHEDULES
The financial statement schedules listed below follow:
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UNDERTAKINGS
1. The undersigned Registrant hereby undertakes to file, during any period
in which offers or sales are being made, a post-effective amendment to
this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and,
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
2. The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. The undersigned Registrant hereby undertakes to remove from
registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of
the offering.
4. The Registrant will provide to the underwriter at the closing specified
in the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriter to permit
prompt delivery to each purchaser.
5. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of
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appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
6. The undersigned Registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
Rule 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was
declared effective.
(b) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Wooster and State of Ohio on October 13, 1999.
OHIO LEGACY CORP
By: /s/ L. Dwight Douce
----------------------------------
L. Dwight Douce,
Chief Executive Officer and
President
(Principal Executive and
Accounting Officer)
SIGNATURE TITLE
- --------- -----
/s/ L. Dwight Douce President, Chief Executive Officer
- ------------------------------- and Director
L. Dwight Douce
/s/ Gregory Long* Director
- -------------------------------
Gregory Long
/s/ Michael Meenan* Director
- -------------------------------
Michael Meenan
/s/ Daniel H. Plumly* Director
- -------------------------------
Daniel H. Plumly
/s/ D. William Allen* Director
- -------------------------------
D. William Allen
/s/ Robert Belden* Director
- -------------------------------
Robert Belden
/s/ J. Edward Diamond* Director
- -------------------------------
J. Edward Diamond
/s/ Thomas Schervish* Director
- -------------------------------
Thomas Schervish
/s/ Scott Fitzpatrick* Director
- -------------------------------
Scott Fitzpatrick
* By L. Dwight Douce pursuant to a power of attorney dated September 30, 1999.
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EXHIBIT INDEX
Exhibit
No. Description
- -------- -----------
1 *Sales Agency Agreement.
3.1 Form of Articles of Incorporation.
3.2 Form of Code of Regulations.
4 *Form of Ohio Legacy Corp common share certificate.
5.1 Opinion of Squire, Sanders & Dempsey L.L.P.
10.1 Omnibus Stock Option, Stock Ownership and Long Term Incentive Plan.
10.2 *Form of Employment Agreement by and between Ohio Legacy Bank and
L. Dwight Douce.
10.3 *Form of Employment Agreement by and between Ohio Legacy Bank and
Steven G. Pettit.
10.4 Lease Agreement dated August 24, 1999 by and between Jack K. and
Heidi M. Gant and Ohio Legacy Corp.
10.5 *Form of Lease Agreement for Canton property.
21 List of subsidiaries of Ohio Legacy Corp.
23.1 Consent of Squire, Sanders & Dempsey L.L.P. (see Exhibit 5).
23.2 Consent of Crowe, Chizek and Company L.L.P.
24 Power of Attorney.
27 Financial Data Schedule.
* To be filed by amendment.