Delaware | 34-1877137 | |
(State or Other Jurisdiction of
Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
V. Gerard Comizio
Thacher Profitt & Wood LLP 1700 Pennsylvania Avenue, NW, Suite 800 Washington, DC 20006 202.347.8400 |
Stanley E. Everett
Brouse McDowell Suite 500, 388 South Main Street Akron, Ohio 44311 330.535.5711 |
Proposed Maximum | Proposed Maximum | |||||||
Amount to | Offering Price | Aggregate Offering | Amount of | |||||
Title of Security to be Registered | be Registered | Per Share(1) | Price(1) | Registration Fee(1) | ||||
Common Stock, par value $0.01 per share
|
2,300,000 shares | $8.50 | $19,550,000.00 | $2,301.04 | ||||
(1) | The proposed maximum offering price per share has been determined pursuant to Rule 457(c) as the average of the high and low prices quoted for our common stock on the Nasdaq® Capital Market on October 25, 2005, and the proposed maximum aggregate offering price and the amount of registration fee have been calculated using that average price. |
The information in this prospectus is not
complete and may be changed. We may not sell these securities
until the registration statement filed with the Securities and
Exchange Commission is effective. 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.
|
Per Share | Total | |||||||
Public offering price
|
$ | $ | ||||||
Underwriting commissions to be paid by us(1)
|
$ | $ | ||||||
Net proceeds before expenses to be received by us
|
$ | $ | ||||||
(1) | This is a firm commitment underwriting by Ryan Beck & Co. We will pay underwriting commissions on the sale of the shares of common stock to the public. Ryan Beck & Co. has been granted a 30-day option to purchase up to an additional 300,000 shares of common stock to cover over-allotments, if any. See Underwriting. |
i
1
2
3
Table of Contents
Management
In 2003, we began to put in place
a strong senior management team with extensive banking
experience in the geographical and product markets we serve. We
believe it is unusual for a community bank to have a management
team as experienced as ours. There has been significant industry
consolidation in our markets in recent years, and we believe a
substantial segment of the market is eager to do business with
experienced bankers who provide exemplary service and prompt
decisions.
Growth Markets
With the change in management,
we also adopted an ambitious growth plan to reposition the bank.
In 2003, we began a transition from our historical role as a
thrift with an emphasis on making single family mortgage loans
in Columbiana County to a balanced community bank. As part of
the transition, we have opened additional offices in Franklin
and Summit Counties, Ohio, where higher population and median
income levels offer far greater potential for growth and
profitability. Along with our expansion into growth markets, we
are shifting our focus to more fully serving the more profitable
commercial and commercial real estate loan markets. We are also
enhancing our mortgage loan capabilities. We intend to consider
every reasonable channel to originate loans, including the
internet and other technology.
Customer Service
We intend to differentiate
ourselves from our competitors by providing excellent customer
service, including prompt credit decisions. We provide
personalized banking services, as we strive to meet the
individual financial needs and objectives of our customers and
offer appropriate services to meet those needs and objectives.
We pride ourselves on giving our customers ready access to
decision makers, and we limit the number of accounts served by
each of our officers so that our customers can receive personal
attention, and we can fully develop our business relationship
with each customer. We also provide courier service for
deposits, and we believe that we are a leader in our markets in
utilizing technology to enhance the level of convenience for our
customers.
Asset Quality
Historically, we have had
excellent asset quality, which we will be careful to maintain,
as we expand our lending activities. We have a team of very
experienced lenders, and we believe we have developed a stronger
credit review process than would typically be seen at a
community bank.
Table of Contents
With an increased legal lending limit as a result of this
offering, we plan to significantly increase our loan portfolio
while maintaining superior asset quality through conservative
underwriting practices. Historically, we have experienced a very
low level of charge-offs and past due loans.
Table of Contents
4
Securities Offered for Sale
2,000,000 shares of common stock
Shares of Common Stock Outstanding after the Offering (assuming
the underwriters over-allotment option is not exercised)
4,243,662 shares
Offering Price
$ per
share
Market for the Common Stock
Our common stock is quoted on the Nasdaq® Capital Market
under the symbol GCFC. We have filed an application
to have our common stock quoted on the Nasdaq® National
Market under the symbol CFBK.
Dividend Policy
We pay a quarterly dividend of $0.09 per share of common
stock, and we intend to continue that practice. However, we
reserve the right to change the amount of our dividend or
suspend or end the payment of the dividend at any time.
Use of Proceeds
The proceeds of this offering may be used to support growth and
expansion through additional lending activities, the addition of
bank offices and other general corporate purposes.
Purchases by Officers and Directors
Certain of our officers and directors have indicated an interest
in purchasing an aggregate of approximately 75,000 shares
in the offering.
Risk Factors
Investment in our common stock involves certain risks, including
the risk of loss of principal. You should read the Risk
Factors section beginning on page 5 before deciding
to purchase our common stock.
Table of Contents
5
| Commercial Mortgage Loans. Repayment is dependent upon income being generated in amounts sufficient to cover operating expenses and debt service. | |
| Commercial Loans. Repayment is dependent upon the successful operation of the borrowers business. | |
| Consumer Loans. Consumer loans (such as personal lines of credit) are collateralized, if at all, with assets that may not provide an adequate source of payment of the loan due to depreciation, damage, or loss. |
6
7
| announcements of developments related to our business, | |
| fluctuations in our results of operations, | |
| sales of substantial amounts of our securities into the marketplace, | |
| general conditions in our banking niche or the worldwide economy, | |
| a shortfall in revenues or earnings compared to securities analysts expectations, | |
| lack of an active trading market for the common stock, | |
| changes in analysts recommendations or projections, and | |
| our announcement of new acquisitions or other projects. |
8
9
10
11
High | Low | Dividend | |||||||||||
2005
|
|||||||||||||
Third Quarter
|
$ | 10.49 | $ | 8.07 | $ | 0.09 | |||||||
Second Quarter
|
10.99 | 9.53 | 0.09 | ||||||||||
First Quarter
|
13.72 | 10.15 | 0.09 | ||||||||||
2004
|
|||||||||||||
Fourth Quarter
|
$ | 13.73 | $ | 10.95 | $ | 0.09 | |||||||
Third Quarter
|
15.22 | 11.25 | 0.09 | ||||||||||
Second Quarter
|
18.00 | 12.35 | 0.09 | ||||||||||
First Quarter
|
16.10 | 12.00 | 0.09 | ||||||||||
2003
|
|||||||||||||
Fourth Quarter
|
$ | 16.18 | $ | 13.60 | $ | 0.09 | |||||||
Third Quarter
|
14.00 | 10.70 | 0.09 | ||||||||||
Second Quarter
|
13.13 | 10.49 | 0.09 | ||||||||||
First Quarter
|
11.03 | 9.28 | 0.09 |
Number of | Number of | |||||||||||
Securities to be | Securities | |||||||||||
Issued Upon | Weighted-Average | Remaining | ||||||||||
Exercise of | Exercise Price of | Available for Future | ||||||||||
Outstanding | Outstanding | Issuance under | ||||||||||
Options, Warrants | Options, Warrants | Equity | ||||||||||
Plan Category | and Rights | and Rights | Compensation Plans | |||||||||
Equity compensation plans approved by shareholders
|
300,872 | $ | 11.33 | 10,000 | ||||||||
Equity compensation plans not approved by shareholders
|
| | ||||||||||
Total
|
300,872 | $ | 11.33 | 10,000 | ||||||||
12
At September 30, 2005 | |||||||||||||
Pro Forma | |||||||||||||
Actual | Adjustments | Pro Forma | |||||||||||
(Dollars in thousands) | |||||||||||||
Long term debt:
|
|||||||||||||
Subordinated debentures
|
$ | 5,155 | $ | 5,155 | |||||||||
Total indebtedness
|
5,155 | 5,155 | |||||||||||
Shareholders equity:
|
|||||||||||||
Preferred stock, 1,000,000 shares authorized, none issued
|
| | |||||||||||
Common stock, $.01 par value, 6,000,000 shares
authorized:
|
|||||||||||||
2,312,195 shares issued before the offering
|
|||||||||||||
(4,312,195 shares pro forma)(1)
|
23 | 20 | 43 | ||||||||||
Additional paid-in capital(1)
|
12,801 | 15,330 | 28,131 | ||||||||||
Retained earnings
|
5,179 | 5,179 | |||||||||||
Accumulated other comprehensive income
|
316 | 316 | |||||||||||
Unearned stock based incentive plan shares
|
(354 | ) | (354 | ) | |||||||||
Treasury stock, at cost, 68,533 shares
|
(783 | ) | (783 | ) | |||||||||
Total shareholders equity
|
17,182 | 15,350 | 32,532 | ||||||||||
Total capitalization
|
$ | 22,337 | $ | 15,350 | $ | 37,687 | |||||||
(1) | Assumes the sale of 2,000,000 shares of common stock in this offering, generating net proceeds of $15.3 million after deducting offering expenses. |
13
For the | ||||||||||||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||||||||||
September 30, | For the Year Ended December 31, | |||||||||||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||||||
(Unaudited) | (Dollars in thousands) | |||||||||||||||||||||||||||||
Summary of Earnings:
|
||||||||||||||||||||||||||||||
Total interest income
|
$ | 6,223 | $ | 4,260 | $ | 6,144 | $ | 5,435 | $ | 7,067 | $ | 9,588 | $ | 9,834 | ||||||||||||||||
Total interest expense
|
2,585 | 1,405 | 2,149 | 3,521 | 3,462 | 5,299 | 5,802 | |||||||||||||||||||||||
Net interest income
|
3,638 | 2,855 | 3,995 | 1,914 | 3,605 | 4,289 | 4,032 | |||||||||||||||||||||||
Provision for loan losses
|
402 | 366 | 646 | 102 | 19 | 62 | | |||||||||||||||||||||||
Net interest income after provision for loan losses
|
3,236 | 2,489 | 3,349 | 1,812 | 3,586 | 4,227 | 4,032 | |||||||||||||||||||||||
Noninterest income
|
||||||||||||||||||||||||||||||
Net gain (loss) on sale of securities
|
| (55 | ) | (55 | ) | 42 | 16 | 15 | 10 | |||||||||||||||||||||
Other
|
673 | 337 | 592 | 714 | 549 | 169 | 284 | |||||||||||||||||||||||
Total noninterest income
|
673 | 282 | 537 | 756 | 565 | 184 | 294 | |||||||||||||||||||||||
Impairment loss on goodwill and intangibles
|
1,966 | | | | | | | |||||||||||||||||||||||
Noninterest expense
|
5,117 | 4,671 | 6,420 | 5,930 | 3,164 | 3,501 | 3,900 | |||||||||||||||||||||||
Total noninterest expense
|
7,083 | 4,671 | 6,420 | 5,930 | 3,164 | 3,501 | 3,900 | |||||||||||||||||||||||
Income (loss) before income taxes
|
(3,174 | ) | (1,900 | ) | (2,534 | ) | (3,362 | ) | 987 | 910 | 426 | |||||||||||||||||||
Income tax expense (benefit)
|
(547 | ) | (683 | ) | (872 | ) | (988 | ) | 313 | 312 | 150 | |||||||||||||||||||
Net income (loss)
|
$ | (2,627 | ) | $ | (1,217 | ) | $ | (1,662 | ) | $ | (2,374 | ) | $ | 674 | $ | 598 | $ | 276 | ||||||||||||
14
At or For the Nine
Months Ended
September 30,
At or For the Year Ended December 31,
2005(2)
2004
2004
2003
2002
2001
2000
(Unaudited)
(2.19
)%
(1.30
)%
(1.23
)%
(2.19
)%
0.58
%
0.45
%
0.02
%
(18.22
)%
(8.48
)%
(8.60
)%
(12.34
)%
3.76
%
3.32
%
1.27
%
5.78
%
5.04
%
5.03
%
5.62
%
6.98
%
7.71
%
7.42
%
2.60
%
1.84
%
1.93
%
2.63
%
3.63
%
4.65
%
5.01
%
3.18
%
3.20
%
3.10
%
2.99
%
3.35
%
3.06
%
2.21
%
3.38
%
3.38
%
3.27
%
3.28
%
3.56
%
3.45
%
2.96
%
108.4
%
110.9
%
109.8
%
113.4
%
106.1
%
109.2
%
120.2
%
164.3
%
146.3
%
140.0
%
225.7
%
76.2
%
78.5
%
90.4
%
5.9
%
5.0
%
4.7
%
5.5
%
2.7
%
2.6
%
2.8
%
n/m
n/m
n/m
n/m
83.7
%
81.6
%
n/m
10.88
%
12.39
%
11.41
%
18.56
%
15.90
%
15.02
%
12.65
%
12.02
%
15.30
%
14.26
%
17.76
%
15.54
%
13.54
%
15.68
%
7.82
%
9.51
%
8.10
%
13.90
%
18.90
%
18.40
%
15.60
%
7.82
%
9.51
%
8.10
%
13.90
%
18.90
%
18.40
%
15.60
%
11.48
%
14.55
%
12.20
%
21.60
%
38.60
%
35.70
%
32.40
%
0.56
%
0.17
%
0.26
%
1.28
%
1.25
%
1.25
%
0.56
%
0.40
%
0.56
%
0.24
%
0.87
%
0.71
%
0.81
%
0.35
%
1.13
%
0.77
%
0.90
%
0.71
%
0.57
%
0.53
%
0.41
%
202.2
%
451.6
%
342.0
%
56.0
%
46.2
%
42.2
%
72.4
%
0.18
%
0.06
%
0.10
%
0.08
%
0.05
%
0.05
%
0.02
%
$
(1.19
)
$
(0.61
)
$
(0.82
)
$
(1.31
)
$
0.44
$
0.38
$
0.17
(1.19
)
(0.61
)
(0.82
)
(1.31
)
0.43
0.38
0.17
0.27
0.27
0.36
0.36
0.36
0.31
6.25
7.66
8.92
7.99
9.81
10.68
10.42
10.19
15
(1) | Loans, net represents gross loans receivable net of the allowance for loan losses, loans in process and deferred loan origination fees. | |
(2) | Performance ratios for the nine months ended September 30, 2005 were significantly affected by the pre-tax $2.0 million impairment loss on goodwill and intangibles |
(3) | Asset quality ratios and capital ratios are end-of-period ratios. All other ratios are based on average monthly balances during the indicated periods. | |
(4) | Calculations of yield are presented on a taxable equivalent basis using the federal income tax rate of 34%. | |
(5) | The average interest rate spread represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities. | |
(6) | The net interest margin represents net interest income as a percent of average interest-earning assets. | |
(7) | Calculated excluding the $1.3 million penalty on payment of FHLB advances in 2003 | |
(8) | The efficiency ratio equals noninterest expense divided by net interest income plus noninterest income (excluding gains or losses on securities transactions). | |
(9) | Regulatory capital ratios of CFBank. | |
(10) | Nonperforming loans consist of nonaccrual loans and other loans 90 days or more past due. | |
(11) | Nonperforming assets consist of nonperforming loans, other repossessed assets and REO. | |
(12) | We paid a return of capital dividend of $6.00 per share in 2000. |
16
17
18
19
20
21
22
23
24
25
For the Nine Months Ended September 30, | |||||||||||||||||||||||||
2005 | 2004 | ||||||||||||||||||||||||
Average | Interest | Average | Average | Interest | Average | ||||||||||||||||||||
Outstanding | Earned/ | Yield/ | Outstanding | Earned/ | Yield/ | ||||||||||||||||||||
Balance | Paid | Rate | Balance | Paid | Rate | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Interest-earning assets:
|
|||||||||||||||||||||||||
Securities(1)(2)
|
$ | 23,375 | $ | 727 | 4.19 | % | $ | 21,768 | $ | 650 | 4.01 | % | |||||||||||||
Loans(3)
|
112,002 | 5,274 | 6.28 | % | 74,404 | 3,328 | 5.96 | % | |||||||||||||||||
Other earning assets
|
4,490 | 86 | 2.55 | % | 13,189 | 180 | 1.82 | % | |||||||||||||||||
FHLB stock
|
3,836 | 136 | 4.73 | % | 3,675 | 112 | 4.06 | % | |||||||||||||||||
Total interest-earning assets
|
143,703 | 6,223 | 5.78 | % | 113,036 | 4,270 | 5.04 | % | |||||||||||||||||
Noninterest-earning assets
|
16,224 | 12,103 | |||||||||||||||||||||||
Total assets
|
$ | 159,927 | $ | 125,139 | |||||||||||||||||||||
Interest-bearing liabilities:
|
|||||||||||||||||||||||||
Deposits
|
108,135 | 1,939 | 2.39 | % | 76,243 | 993 | 1.74 | % | |||||||||||||||||
FHLB advances and other borrowings(4)
|
24,416 | 646 | 3.53 | % | 25,702 | 412 | 2.14 | % | |||||||||||||||||
Total interest-bearing liabilities
|
132,551 | 2,585 | 2.60 | % | 101,945 | 1,405 | 1.84 | % | |||||||||||||||||
Noninterest-bearing liabilities
|
8,156 | 4,052 | |||||||||||||||||||||||
Total liabilities
|
140,707 | 105,997 | |||||||||||||||||||||||
Equity
|
19,220 | 19,142 | |||||||||||||||||||||||
Total liabilities and equity
|
$ | 159,927 | $ | 125,139 | |||||||||||||||||||||
Net interest-earning assets
|
$ | 11,152 | $ | 11,091 | |||||||||||||||||||||
Net interest income/interest rate spread
|
$ | 3,638 | 3.18 | % | $ | 2,865 | 3.20 | % | |||||||||||||||||
Net interest margin
|
3.38 | % | 3.38 | % | |||||||||||||||||||||
Average interest-earning assets to average interest-bearing
liabilities
|
108.4 | % | 110.9 | % |
26
For the Year Ended December 31,
2004
2003
Average
Interest
Average
Average
Interest
Average
Outstanding
Earned/
Yield/
Outstanding
Earned/
Yield/
Balance
Paid
Rate
Balance
Paid
Rate
(Dollars in thousands)
$
19,605
$
780
4.01
%
$
23,675
$
942
4.02
%
81,900
4,855
5.93
%
57,449
4,203
7.32
%
17,329
367
2.12
%
12,410
152
1.22
%
3,694
152
4.11
%
3,557
141
3.96
%
122,528
6,154
5.03
%
97,091
5,438
5.62
%
13,034
11,268
$
135,562
$
108,359
80,305
1,436
1.79
%
$
73,440
1,570
2.14
%
31,265
713
2.28
%
12,192
681
5.59
%
111,570
2,149
1.93
%
85,632
2,251
2.63
%
4,658
3,484
116,228
89,116
19,334
19,243
$
135,562
$
108,359
$
10,958
$
11,459
$
4,005
3.10
%
$
3,187
2.99
%
3.27
%
3.28
%
109.8
%
113.4
%
(1) | Includes securities available for sale and held to maturity. Average balance is computed using the carrying value of securities. Average yield is computed using the historical amortized cost average balance for available for sale securities. |
(2) | Average yields and interest earned are stated on a fully taxable equivalent basis. |
(3) | Balance is net of deferred loan origination fees, undisbursed proceeds of construction loans and includes nonperforming loans. |
(4) | Interest paid does not include $1.3 million penalty on prepayment of FHLB advances in 2003. |
27
Nine Months Ended | Year Ended | ||||||||||||||||||||||||
September 30, 2005 | December 31, 2004 | ||||||||||||||||||||||||
Compared to Nine Months Ended | Compared to Year Ended | ||||||||||||||||||||||||
September 30, 2004 | December 31, 2003 | ||||||||||||||||||||||||
Increase (decrease) | Increase (decrease) | ||||||||||||||||||||||||
due to | due to | ||||||||||||||||||||||||
Rate | Volume | Net | Rate | Volume | Net | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Interest-earning assets:
|
|||||||||||||||||||||||||
Securities(1)
|
$ | 28 | $ | 49 | $ | 77 | $ | (2 | ) | $ | (160 | ) | $ | (162 | ) | ||||||||||
Loans
|
184 | 1,762 | 1,946 | (904 | ) | 1,556 | 652 | ||||||||||||||||||
Other earning assets
|
84 | (178 | ) | (94 | ) | 140 | 75 | 215 | |||||||||||||||||
FHLB stock
|
19 | 5 | 24 | 6 | 5 | 11 | |||||||||||||||||||
Total interest-earning assets
|
315 | 1,638 | 1,953 | (760 | ) | 1,476 | 716 | ||||||||||||||||||
Interest-bearing liabilities:
|
|||||||||||||||||||||||||
Deposits
|
448 | 498 | 946 | (272 | ) | 138 | (134 | ) | |||||||||||||||||
FHLB advances and other borrowings(2)
|
268 | (34 | ) | 234 | (576 | ) | 608 | 32 | |||||||||||||||||
Total interest-bearing liabilities
|
716 | 464 | 1,180 | (848 | ) | 746 | (102 | ) | |||||||||||||||||
Net change in net interest income
|
$ | (401 | ) | $ | 1,174 | $ | 773 | $ | 88 | $ | 730 | $ | 818 | ||||||||||||
(1) | Securities amounts presented on a fully taxable equivalent basis. |
(2) | Amounts do not include $1.3 million penalty on prepayment of FHLB advances in 2003. |
28
29
Basis Point Change in Rates | NPV Ratio | |||
+300
|
10.91 | % | ||
+200
|
11.29 | % | ||
+100
|
11.55 | % | ||
0
|
11.63 | % | ||
-100
|
11.42 | % | ||
-200
|
11.00 | % |
30
31
32
33
At December 31, | ||||||||||||||||||||||||||||||||||
At September 30, | ||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | |||||||||||||||||||||||||||||||
Percent | Percent | Percent | Percent | |||||||||||||||||||||||||||||||
of | of | of | of | |||||||||||||||||||||||||||||||
Amount | Total | Amount | Total | Amount | Total | Amount | Total | |||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||
Real estate mortgage loans:
|
||||||||||||||||||||||||||||||||||
Single-family
|
$ | 23,352 | 21.6 | % | $ | 41,450 | 38.0 | % | $ | 34,810 | 59.6 | % | $ | 47,108 | 74.8 | % | ||||||||||||||||||
Multi-family
|
25,620 | 23.6 | % | 25,602 | 23.4 | % | 1,250 | 2.1 | % | 1,536 | 2.5 | % | ||||||||||||||||||||||
Construction
|
| 0.0 | % | 1,127 | 1.0 | % | 610 | 1.1 | % | 134 | 0.2 | % | ||||||||||||||||||||||
Commercial real estate
|
26,753 | 24.7 | % | 20,105 | 18.4 | % | 5,040 | 8.6 | % | | 0.0 | % | ||||||||||||||||||||||
Total real estate mortgage loans
|
75,725 | 69.9 | % | 88,284 | 80.8 | % | 41,710 | 71.4 | % | 48,778 | 77.5 | % | ||||||||||||||||||||||
Consumer loans:
|
||||||||||||||||||||||||||||||||||
Home equity loans
|
880 | 0.8 | % | 663 | 0.6 | % | 1,003 | 1.7 | % | 1,378 | 2.2 | % | ||||||||||||||||||||||
Home equity lines of credit
|
13,921 | 12.9 | % | 5,928 | 5.4 | % | 1,640 | 2.8 | % | 1,109 | 1.8 | % | ||||||||||||||||||||||
Automobile
|
4,684 | 4.3 | % | 6,735 | 6.2 | % | 9,292 | 15.9 | % | 10,540 | 16.7 | % | ||||||||||||||||||||||
Other
|
696 | 0.6 | % | 626 | 0.6 | % | 663 | 1.2 | % | 877 | 1.4 | % | ||||||||||||||||||||||
Total consumer loans
|
20,181 | 18.6 | % | 13,952 | 12.8 | % | 12,598 | 21.6 | % | 13,904 | 22.1 | % | ||||||||||||||||||||||
Commercial loans
|
12,481 | 11.5 | % | 7,030 | 6.4 | % | 4,116 | 7.0 | % | 261 | 0.4 | % | ||||||||||||||||||||||
Total loans receivable
|
108,387 | 100.0 | % | 109,266 | 100.0 | % | 58,424 | 100.0 | % | 62,943 | 100.0 | % | ||||||||||||||||||||||
Less:
|
||||||||||||||||||||||||||||||||||
Net deferred loan fees
|
(163 | ) | (139 | ) | 15 | (17 | ) | |||||||||||||||||||||||||||
Allowance for loan losses
|
(1,225 | ) | (978 | ) | (415 | ) | (361 | ) | ||||||||||||||||||||||||||
Loans receivable, net
|
$ | 106,999 | $ | 108,149 | $ | 58,024 | $ | 62,565 | ||||||||||||||||||||||||||
At September 30, 2005 | |||||||||||||||||||
Single-family, | |||||||||||||||||||
Multi-family | |||||||||||||||||||
and | Commercial | ||||||||||||||||||
Construction | and | ||||||||||||||||||
Real Estate | Commercial | Total Loans | |||||||||||||||||
Mortgage | Consumer | Real Estate | Receivable | ||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||
Amounts due:
|
|||||||||||||||||||
Within one year
|
$ | 1,329 | $ | 2,273 | $ | 11,080 | $ | 14,682 | |||||||||||
After one year:
|
|||||||||||||||||||
More than 1 year to 3 years
|
327 | 2,449 | 4,115 | 6,891 | |||||||||||||||
More than 3 years to 5 years
|
420 | 3,813 | 6,143 | 10,376 | |||||||||||||||
More than 5 years to 10 years
|
21,182 | 1,333 | 6,330 | 28,845 | |||||||||||||||
More than 10 years to 15 years
|
8,017 | 39 | 7,981 | 16,037 | |||||||||||||||
More than 15 years
|
17,697 | 10,274 | 3,585 | 31,556 | |||||||||||||||
Total due after one year
|
47,643 | 17,908 | 28,154 | 93,705 | |||||||||||||||
Total amount due
|
$ | 48,972 | $ | 20,181 | $ | 39,234 | $ | 108,387 | |||||||||||
34
At December 31, 2004
Single-family,
Multi-family
and
Commercial
Construction
and
Real Estate
Commercial
Total Loans
Mortgage
Consumer
Real Estate
Receivable
(Dollars in thousands)
$
1,027
$
625
$
6,264
$
7,916
2,483
2,549
2,874
7,906
1,257
4,359
3,219
8,835
24,197
1,801
3,995
29,993
13,074
7,831
20,905
26,141
4,618
2,952
33,711
67,152
13,327
20,871
101,350
$
68,179
$
13,952
$
27,135
$
109,266
Due after September 30, 2006 | |||||||||||||
Fixed | Adjustable | Total | |||||||||||
(Dollars in thousands) | |||||||||||||
Single-family, multi-family and construction real estate
mortgage loans
|
$ | 10,805 | $ | 36,838 | $ | 47,643 | |||||||
Consumer loans
|
5,483 | 12,425 | 17,908 | ||||||||||
Commercial and commercial real estate loans
|
7,544 | 20,610 | 28,154 | ||||||||||
Total loans
|
$ | 23,832 | $ | 69,873 | $ | 93,705 | |||||||
Due after December 31, 2005 | |||||||||||||
Fixed | Adjustable | Total | |||||||||||
(Dollars in thousands) | |||||||||||||
Single-family, multi-family and construction real estate
mortgage loans
|
$ | 21,131 | $ | 46,021 | $ | 67,152 | |||||||
Consumer loans
|
7,407 | 5,920 | 13,327 | ||||||||||
Commercial and commercial real estate loans
|
5,386 | 15,485 | 20,871 | ||||||||||
Total loans
|
$ | 33,924 | $ | 67,426 | $ | 101,350 | |||||||
35
36
37
38
September 30, 2005 | December 31, 2004 | |||||||||||||||||||||||||||||||||
60-89 Days | 90 Days or More | 60-89 Days | 90 Days or More | |||||||||||||||||||||||||||||||
Number | Principal | Number | Principal | Number | Principal | Number | Principal | |||||||||||||||||||||||||||
of | Balance | of | Balance | of | Balance | of | Balance | |||||||||||||||||||||||||||
Loans | of Loans | Loans | of Loans | Loans | of Loans | Loans | of Loans | |||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||
Real estate loans:
|
||||||||||||||||||||||||||||||||||
Single-family
|
| $ | | 9 | $ | 590 | 2 | $ | 49 | 8 | $ | 276 | ||||||||||||||||||||||
Multi-family
|
| | | | | | | | ||||||||||||||||||||||||||
Construction
|
| | | | | | | | ||||||||||||||||||||||||||
Commercial
|
| | | | | | | | ||||||||||||||||||||||||||
Consumer loans:
|
||||||||||||||||||||||||||||||||||
Home equity loans and lines of credit
|
| | | | 1 | 7 | | | ||||||||||||||||||||||||||
Automobile
|
3 | 10 | 2 | 16 | 5 | 43 | 2 | 9 | ||||||||||||||||||||||||||
Unsecured lines of credit
|
| | | | | | | | ||||||||||||||||||||||||||
Other
|
2 | 2 | | | | | 1 | 1 | ||||||||||||||||||||||||||
Commercial loans
|
| | | | | | | | ||||||||||||||||||||||||||
Total delinquent loans
|
5 | $ | 12 | 11 | $ | 606 | 8 | $ | 99 | 11 | $ | 286 | ||||||||||||||||||||||
Delinquent loans as a percent of total loans
|
0.01 | % | 0.56 | % | 0.09 | % | 0.26 | % |
December 31, 2003 | December 31, 2002 | ||||||||||||||||||||||||||||||||
60-89 Days | 90 Days or More | 60-89 Days | 90 Days or More | ||||||||||||||||||||||||||||||
Number | Principal | Number | Principal | Number | Principal | Number | Principal | ||||||||||||||||||||||||||
of | Balance | of | Balance | of | Balance | of | Balance | ||||||||||||||||||||||||||
Loans | of Loans | Loans | of Loans | Loans | of Loans | Loans | of Loans | ||||||||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||||||||||
Real estate loans:
|
|||||||||||||||||||||||||||||||||
Single-family
|
3 | $ | 97 | 9 | $ | 714 | 10 | $ | 559 | 10 | $ | 761 | |||||||||||||||||||||
Multi-family
|
| | | | | | | | |||||||||||||||||||||||||
Construction
|
| | | | | | | | |||||||||||||||||||||||||
Commercial
|
| | | | | | | | |||||||||||||||||||||||||
Consumer loans:
|
|||||||||||||||||||||||||||||||||
Home equity loans and lines of credit
|
3 | 37 | | | | | | | |||||||||||||||||||||||||
Automobile
|
2 | 13 | 2 | 6 | 1 | 5 | 3 | 19 | |||||||||||||||||||||||||
Unsecured lines of credit
|
| | 1 | 1 | | | 1 | 1 | |||||||||||||||||||||||||
Other
|
| | 4 | 20 | 2 | 6 | | | |||||||||||||||||||||||||
Commercial loans
|
1 | 25 | | | | | | | |||||||||||||||||||||||||
Total delinquent loans
|
9 | $ | 172 | 16 | $ | 741 | 13 | $ | 570 | 14 | $ | 781 | |||||||||||||||||||||
Delinquent loans as a percent of total loans
|
0.30 | % | 1.28 | % | 0.91 | % | 1.24 | % |
39
At December 31, | ||||||||||||||||||
At September 30, | ||||||||||||||||||
2005 | 2004 | 2003 | 2002 | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||
Nonaccrual loans:
|
||||||||||||||||||
Single-family real estate
|
$ | 590 | $ | 276 | $ | 714 | $ | 761 | ||||||||||
Consumer
|
16 | 10 | 27 | 20 | ||||||||||||||
Total(1)
|
606 | 286 | 741 | 781 | ||||||||||||||
Real estate owned (REO)
|
33 | 132 | 184 | | ||||||||||||||
Other repossessed assets
|
| | 9 | 2 | ||||||||||||||
Total nonperforming assets(2)
|
$ | 639 | $ | 418 | $ | 934 | $ | 783 | ||||||||||
Nonperforming loans to total loans
|
0.56 | % | 0.26 | % | 1.28 | % | 1.25 | % | ||||||||||
Nonperforming assets to total assets
|
0.40 | % | 0.24 | % | 0.87 | % | 0.71 | % |
(1) | Total nonaccrual loans equal total nonperforming loans. |
(2) | Nonperforming assets consist of nonperforming loans (and impaired loans), other repossessed assets and REO. |
40
At or For the | At or For the | |||||||||||||||||||||
Nine Months Ended | Year Ended | |||||||||||||||||||||
September 30, | December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Allowance for loan losses, beginning of period
|
$ | 978 | $ | 415 | $ | 415 | $ | 361 | $ | 373 | ||||||||||||
Charge-offs:
|
||||||||||||||||||||||
Single-family real estate
|
148 | | | | | |||||||||||||||||
Consumer
|
52 | 50 | 117 | 50 | 35 | |||||||||||||||||
Total charge-offs
|
200 | 50 | 117 | 50 | 35 | |||||||||||||||||
Recoveries on loans previously charged off:
|
||||||||||||||||||||||
Single-family real estate
|
9 | | | | | |||||||||||||||||
Consumer
|
36 | 16 | 34 | 2 | 4 | |||||||||||||||||
Total recoveries
|
45 | 16 | 34 | 2 | 4 | |||||||||||||||||
Net charge-offs
|
155 | 34 | 83 | 48 | 31 | |||||||||||||||||
Provision for loan losses
|
402 | 366 | 646 | 102 | 19 | |||||||||||||||||
Allowance for loan losses, end of period
|
$ | 1,225 | $ | 747 | $ | 978 | $ | 415 | $ | 361 | ||||||||||||
Allowance for loan losses to total loans
|
1.13 | % | 0.77 | % | 0.90 | % | 0.71 | % | 0.57 | % | ||||||||||||
Allowance for loan losses to nonperforming loans
|
202.23 | % | 451.55 | % | 341.96 | % | 56.01 | % | 46.22 | % | ||||||||||||
Net charge-offs to the allowance for losses
|
16.87 | % | 6.07 | % | 8.49 | % | 11.57 | % | 8.59 | % | ||||||||||||
Net charge-offs to average loans
|
0.18 | % | 0.06 | % | 0.10 | % | 0.08 | % | 0.05 | % |
At September 30 2005 | At December 31, 2004 | ||||||||||||||||||||||||
% of | % of | ||||||||||||||||||||||||
Allowance | Percent of | Allowance | Percent of | ||||||||||||||||||||||
in each | Loans in | in each | Loans in | ||||||||||||||||||||||
Category | Each | Category | Each | ||||||||||||||||||||||
to Total | Category to | to Total | Category to | ||||||||||||||||||||||
Amount | Allowance | Total Loans | Amount | Allowance | Total Loans | ||||||||||||||||||||
(Dollars in thousands) | |||||||||||||||||||||||||
Single-family real estate mortgage and
|
|||||||||||||||||||||||||
construction loans
|
$ | 55 | 4.5 | % | 21.6 | % | $ | 4 | 0.4 | % | 39.0 | % | |||||||||||||
Consumer loans
|
114 | 9.3 | % | 18.6 | % | 112 | 11.5 | % | 12.8 | % | |||||||||||||||
Commercial, commercial real estate and multi-family mortgage
loans
|
1,056 | 86.2 | % | 59.8 | % | 862 | 88.1 | % | 48.2 | % | |||||||||||||||
Total allowance for loan losses
|
$ | 1,225 | 100.0 | % | 100.0 | % | $ | 978 | 100.0 | % | 100.0 | % | |||||||||||||
41
At December 31,
2003
2002
% of
Percent of
% of
Allowance
Loans in
Allowance
Percent of
in each
Each
in each
Loans in
Category
Category
Category
Each
to Total
to Total
to Total
Category to
Amount
Allowance
Loans
Amount
Allowance
Total Loans
(Dollars in thousands)
$
213
51.3
%
60.7
%
$
296
82.0
%
75.0
%
102
24.6
%
21.6
%
64
17.7
%
22.1
%
100
24.1
%
17.7
%
1
0.3
%
2.9
%
$
415
100.0
%
100.0
%
$
361
100.0
%
100.0
%
42
At December 31, | ||||||||||||||||||||||||||||||||||||
At September 30, | ||||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | |||||||||||||||||||||||||||||||||
Amortized | Fair | Amortized | Fair | Amortized | Fair | Amortized | Fair | |||||||||||||||||||||||||||||
Cost | Value | Cost | Value | Cost | Value | Cost | Value | |||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||
Securities available for sale:
|
||||||||||||||||||||||||||||||||||||
Federal agency
|
$ | 6,007 | $ | 5,907 | $ | 5,018 | $ | 4,983 | $ | 12,755 | $ | 12,759 | $ | | $ | | ||||||||||||||||||||
Municipal
|
2,020 | 2,011 | | | 1,370 | 1,375 | | | ||||||||||||||||||||||||||||
Total securities available for sale
|
8,027 | 7,918 | 5,018 | 4,983 | 14,125 | 14,134 | | | ||||||||||||||||||||||||||||
Securities held to maturity:
|
||||||||||||||||||||||||||||||||||||
U.S. Government and federal agency
|
| | | | | | 2,527 | 2,557 | ||||||||||||||||||||||||||||
Corporate
|
| | | | | | 1,996 | 1,996 | ||||||||||||||||||||||||||||
Total securities held to maturity
|
| | | | | | 4,523 | 4,553 | ||||||||||||||||||||||||||||
Total federal agency and municipal securities
|
8,027 | 7,918 | 5,018 | 4,983 | 14,125 | 14,134 | 4,523 | 4,553 | ||||||||||||||||||||||||||||
Mortgage-backed securities:
|
||||||||||||||||||||||||||||||||||||
Available for sale
|
24,814 | 25,403 | 8,398 | 8,525 | 12,697 | 12,992 | 1,395 | 1,439 | ||||||||||||||||||||||||||||
Held to maturity
|
| | | | | | 13,299 | 13,616 | ||||||||||||||||||||||||||||
Total mortgage-backed securities
|
24,814 | 25,403 | 8,398 | 8,525 | 12,697 | 12,992 | 14,694 | 15,055 | ||||||||||||||||||||||||||||
Net unrealized gains on securities available for sale
|
480 | | 92 | | 304 | | 44 | | ||||||||||||||||||||||||||||
Total securities
|
$ | 33,321 | $ | 33,321 | $ | 13,508 | $ | 13,508 | $ | 27,126 | $ | 27,126 | $ | 19,261 | $ | 19,608 | ||||||||||||||||||||
At September 30, 2005 | ||||||||||||||||||||||||||||||||||||||||
More than One | More than Five | More than | ||||||||||||||||||||||||||||||||||||||
One Year or Less | Year to Five Years | Years to Ten Years | Ten Years | Total | ||||||||||||||||||||||||||||||||||||
Weighted | Weighted | Weighted | Weighted | Weighted | ||||||||||||||||||||||||||||||||||||
Carrying | Average | Carrying | Average | Carrying | Average | Carrying | Average | Carrying | Average | |||||||||||||||||||||||||||||||
Value | Yield | Value | Yield | Value | Yield | Value | Yield | Value | Yield | |||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||
Federal agency
|
$ | | | $ | 5,907 | 3.52 | % | $ | | $ | | $ | 5,907 | 3.52 | % | |||||||||||||||||||||||||
Mortgage-backed
|
| | 353 | 5.38 | % | 3,484 | 4.94 | % | 21,566 | 5.37 | % | 25,403 | 5.31 | % | ||||||||||||||||||||||||||
Municipal
|
| | 1,003 | 4.12 | % | 1,008 | 4.34 | % | | 2,011 | 4.23 | % | ||||||||||||||||||||||||||||
Total securities at fair value
|
$ | | | $ | 7,263 | 3.70 | % | $ | 4,492 | 4.80 | % | $ | 21,566 | 5.37 | % | $ | 33,321 | 4.93 | % | |||||||||||||||||||||
43
At December 31, 2004
More than One
More than Five
More than
One Year or Less
Year to Five Years
Years to Ten Years
Ten Years
Total
Weighted
Weighted
Weighted
Weighted
Weighted
Carrying
Average
Carrying
Average
Carrying
Average
Carrying
Average
Carrying
Average
Value
Yield
Value
Yield
Value
Yield
Value
Yield
Value
Yield
(Dollars in thousands)
$
$
4,983
3.37
%
$
$
$
4,983
3.37%
496
5.35
%
3,197
4.55
%
4,832
4.95%
8,525
4.82%
$
$
5,479
3.55
%
$
3,197
4.55
%
$
4,832
4.95%
$
13,508
4.28%
Weighted | |||||||||
Average | |||||||||
Maturity Period | Amount | Rate | |||||||
(Dollars in thousands) | |||||||||
Three months or less
|
$ | 5,013 | 3.29 | % | |||||
Over 3 through 6 months
|
4,054 | 3.37 | % | ||||||
Over 6 through 12 months
|
3,962 | 3.71 | % | ||||||
Over 12 months
|
8,620 | 3.96 | % | ||||||
Total
|
$ | 21,649 | |||||||
44
Weighted | |||||||||
Average | |||||||||
Maturity Period | Amount | Rate | |||||||
(Dollars in thousands) | |||||||||
Three months or less
|
$ | 3,704 | 2.47 | % | |||||
Over 3 through 6 months
|
226 | 1.82 | % | ||||||
Over 6 through 12 months
|
2,834 | 2.80 | % | ||||||
Over 12 months
|
4,495 | 3.67 | % | ||||||
Total
|
$ | 11,259 | |||||||
For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||
For the Nine Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
September 30, 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||||||||||||||||||||||||||||
Percent of | Percent of | Percent of | Percent of | |||||||||||||||||||||||||||||||||||||||||||||
Total | Average | Total | Average | Total | Average | Total | Average | |||||||||||||||||||||||||||||||||||||||||
Average | Average | Rate | Average | Average | Rate | Average | Average | Rate | Average | Average | Rate | |||||||||||||||||||||||||||||||||||||
Balance | Deposits | Paid | Balance | Deposits | Paid | Balance | Deposits | Paid | Balance | Deposits | Paid | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing checking accounts
|
$ | 11,389 | 9.9 | % | 1.42 | % | $ | 11,602 | 13.8 | % | 0.58 | % | $ | 8,463 | 11.3 | % | 0.86 | % | $ | 8,748 | 11.5 | % | 1.66 | % | ||||||||||||||||||||||||
Money market accounts
|
22,590 | 19.6 | % | 2.70 | % | 10,688 | 12.7 | % | 2.34 | % | 7,843 | 10.4 | % | 1.40 | % | 6,146 | 8.1 | % | 1.49 | % | ||||||||||||||||||||||||||||
Savings accounts
|
16,614 | 14.4 | % | 0.61 | % | 18,730 | 22.3 | % | 0.57 | % | 18,373 | 24.4 | % | 0.82 | % | 17,812 | 23.3 | % | 1.69 | % | ||||||||||||||||||||||||||||
Certificates of deposit
|
57,542 | 49.9 | % | 2.98 | % | 39,285 | 46.8 | % | 2.57 | % | 38,761 | 51.5 | % | 3.24 | % | 42,792 | 56.1 | % | 4.63 | % | ||||||||||||||||||||||||||||
Noninterest-bearing deposits:
|
||||||||||||||||||||||||||||||||||||||||||||||||
Demand deposits
|
7,140 | 6.2 | % | | 3,674 | 4.4 | % | | 1,781 | 2.4 | % | | 754 | 1.0 | % | | ||||||||||||||||||||||||||||||||
Total average deposits
|
$ | 115,275 | 100.0 | % | 2.39 | % | $ | 83,979 | 100.0 | % | 1.79 | % | $ | 75,221 | 100.0 | % | 2.14 | % | $ | 76,252 | 100.0 | % | 3.31 | % | ||||||||||||||||||||||||
Period to Maturity from September 30, 2005 | ||||||||||||||||||||||||||||||||
Two to | Over | At | At December 31, | |||||||||||||||||||||||||||||
Less than | One to | Three | Three | September 30, | ||||||||||||||||||||||||||||
One Year | Two Years | Years | Years | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Certificate accounts:
|
||||||||||||||||||||||||||||||||
0 to 1.99%
|
$ | 6,084 | $ | 40 | $ | | $ | | $ | 6,124 | $ | 11,847 | $ | 8,148 | $ | 5,980 | ||||||||||||||||
2.00 to 2.99%
|
7,897 | 3,786 | 213 | | 11,896 | 17,555 | 10,123 | 5,723 | ||||||||||||||||||||||||
3.00 to 3.99%
|
18,938 | 3,849 | 1,515 | 1,271 | 25,573 | 9,984 | 11,221 | 11,656 | ||||||||||||||||||||||||
4.00 to 4.99%
|
4,915 | 11,806 | 650 | 2,645 | 20,016 | 6,273 | 6,152 | 12,167 | ||||||||||||||||||||||||
5.00 to 5.99%
|
437 | | | | 437 | 655 | 977 | 3,421 | ||||||||||||||||||||||||
6.00% and above
|
| 10 | | | 10 | 10 | 72 | 1,774 | ||||||||||||||||||||||||
Total certificate accounts
|
$ | 38,271 | $ | 19,491 | $ | 2,378 | $ | 3,916 | $ | 64,056 | $ | 46,324 | $ | 36,693 | $ | 40,721 | ||||||||||||||||
45
At or For the | |||||||||||||||||
Nine Months | At or For the Year Ended | ||||||||||||||||
Ended | December 31, | ||||||||||||||||
September 30, | |||||||||||||||||
2005 | 2004 | 2003 | 2002 | ||||||||||||||
(Dollars in thousands) | |||||||||||||||||
FHLB advances and other borrowings:
|
|||||||||||||||||
Average balance outstanding
|
$ | 24,416 | 31,265 | $ | 12,192 | $ | 19,902 | ||||||||||
Maximum amount outstanding at any month-end during the period
|
47,062 | 48,574 | 16,542 | 19,370 | |||||||||||||
Balance outstanding at end of period
|
19,100 | 48,574 | 12,655 | 16,330 | |||||||||||||
Weighted average interest rate during period
|
3.53 | % | 2.28 | % | 5.59 | % | 4.83 | % | |||||||||
Weighted average interest rate at end of period
|
4.03 | % | 2.76 | % | 2.28 | % | 5.53 | % |
46
47
48
49
Excess | Capital | |||||||||||||||||||
Actual | Required | (Deficiency) | Actual | Required | ||||||||||||||||
Capital | Capital | Amount | Percent | Percent | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Tangible
|
$ | 12,165 | $ | 2,334 | $ | 9,831 | 7.8 | % | 1.5 | % | ||||||||||
Core (Leverage)
|
12,165 | 6,225 | 5,940 | 7.8 | % | 4.0 | % | |||||||||||||
Risk-based
|
13,390 | 9,334 | 4,056 | 11.5 | % | 8.0 | % |
50
51
52
53
| Pursuant to Section 352, all financial institutions must establish anti-money laundering programs that include, at minimum: (i) internal policies, procedures, and controls; (ii) specific designation of an anti-money laundering compliance officer; (iii) ongoing employee training programs; and (iv) an independent audit function to test the anti-money laundering program. | |
| Pursuant to Section 326, on May 9, 2003, the Secretary of the Department of Treasury, in conjunction with other bank regulators, issued Joint Final Rules that provide for minimum standards with respect to customer identification and verification. These rules became effective on October 1, 2003. |
| Effective December 25, 2001, financial institutions are prohibited from establishing, maintaining, administering, or managing correspondent accounts for foreign shell banks (foreign banks that do not have a physical presence in any country), and will be subject to certain record keeping obligations with respect to correspondent accounts of foreign banks. | |
| Bank regulators are directed to consider a holding companys effectiveness in combating money laundering when ruling on FRA and Bank Merger Act applications. |
54
55
Federal Taxation |
Ohio Taxation |
56
Delaware Taxation |
57
58
59
60
61
Amount and Nature | ||||||||
of Beneficial | ||||||||
Ownership | ||||||||
Name and Address of Beneficial Owner | Shares | Percent | ||||||
First Manhattan Company 437 Madison Avenue, New York, New York
10022
|
159,464 | 7.1 | % | |||||
Richard J. ODonnell 2923 Smith Road, Fairlawn, Ohio 44333
|
128,077 | 5.7 | % |
Amount and Nature | ||||||||
of Beneficial | ||||||||
Ownership | ||||||||
Name and Address of Beneficial Owner | Shares | Percent | ||||||
David C. Vernon, Chairman of the Board(1)
|
98,177 | 4.3 | % | |||||
Mark S. Allio, Vice-Chairman of the Board, President and Chief
Executive Officer(2)
|
48,451 | 2.2 | % | |||||
Jeffrey W. Aldrich, Director(3)
|
34,790 | 1.5 | % | |||||
Thomas P. Ash, Director(4)
|
34,572 | 1.5 | % | |||||
William R. Downing, Director(5)
|
18,692 | 0.8 | % | |||||
Gerry W. Grace, Director(4)
|
44,572 | 2.0 | % | |||||
Jerry F. Whitmer, Director(6)
|
7,500 | 0.3 | % | |||||
Raymond E. Heh, President and Chief Operating Officer, CFBank(7)
|
32,132 | 1.4 | % | |||||
Therese A. Liutkus, CPA, Treasurer & Chief Financial
Officer(8)
|
21,000 | 0.9 | % | |||||
R. Parker MacDonell, President, Columbus Region, CFBank(9)
|
72,171 | 3.2 | % | |||||
Eloise L. Mackus, Senior Vice President, General Counsel and
Secretary(10)
|
23,000 | 1.0 | % | |||||
Timothy M. OBrien, Senior Vice President, Mortgage
Services, CFBank
|
| | ||||||
Richard J. ODonnell, President, Mortgage Services,
CFBank(11)
|
128,077 | 5.7 | % | |||||
William R. Reed, Senior Credit Officer
|
| | ||||||
All directors and executive officers of Central Federal
Corporation and CFBank as a group (14 persons)(12)
|
563,124 | 23.4 | % |
(1) | Includes 12,235 shares awarded to Mr. Vernon pursuant to our equity compensation plans which have not yet vested, but as to which he may provide voting recommendations. Includes 54,390 shares which may be acquired by exercising stock options within 60 days. Also includes 412 shares owned by Catherine Vernon, Mr. Vernons spouse. | |
(2) | Includes 6,000 shares awarded to Mr. Allio pursuant to our equity compensation plans, which have not yet vested, but as to which he may provide voting recommendations. | |
(3) | Includes 1,000 shares awarded to Mr. Aldrich pursuant to pursuant to our equity compensation plans, which have not yet vested, but as to which he may provide voting recommendations, and 9,694 shares which may be acquired by exercising stock options within 60 days. Also includes 23,104 shares owned by Jean Aldrich, Mr. Aldrichs spouse. | |
(4) | Includes 1,000 shares awarded to each of Mr. Ash and Mr. Grace pursuant to pursuant to our equity compensation plans, which have not yet vested, but as to which he may provide voting recommendations, and 9,694 shares which may be acquired by exercising stock options within 60 days. |
62
(5) | Includes 2,000 shares awarded to Mr. Downing pursuant to our equity compensation plans which have not yet vested, but as to which he may provide voting recommendations, and 16,192 shares owned by R.H. Downing, Inc., which is 100% owned by Mr. Downing. | |
(6) | Includes 2,000 shares awarded to Mr. Whitmer pursuant to our equity compensation plans which have not yet vested, but as to which he may provide voting recommendations. | |
(7) | Includes 6,000 shares awarded to Mr. Heh pursuant to our equity compensation plans which have not yet vested, but as to which he may provide voting recommendations, and 23,132 shares which may be acquired by exercising stock options within 60 days. | |
(8) | Includes 2,000 shares awarded to Ms. Liutkus pursuant to our equity compensation plans which have not yet vested, but as to which she may provide voting recommendations, and 14,500 shares which may be acquired by exercising stock options within 60 days. | |
(9) | Includes 4,000 shares awarded to Mr. MacDonell pursuant to our equity compensation plans which have not yet vested, but as to which he may provide voting recommendations, and 21,500 shares which may be acquired by exercising stock options within 60 days. |
(10) | Includes 4,500 shares awarded to Ms. Mackus pursuant to our equity compensation plans which have not yet vested, but as to which she may provide voting recommendations, and 14,500 shares which may be acquired by exercising stock options within 60 days. |
(11) | Includes 5,000 shares which may be acquired by Mr. ODonnell by exercising stock options within 60 days. |
(12) | Includes 45,325 shares awarded to all directors and executive officers as a group pursuant to our equity compensation plans which have not yet vested, but as to which they may provide voting recommendations, and 162,014 shares which may be acquired by exercising stock options within 60 days. |
63
Without Option | With Option | |||||||
Per Share
|
$ | $ | ||||||
Total
|
$ | $ |
64
| Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. | |
| Over-allotment involves sales by the underwriter of shares in excess of the number of shares the underwriter is obligated to purchase, which creates a short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriter is not greater than the number of shares that it may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriter may close out any covered short position by either exercising its over-allotment option or purchasing shares in the open market. | |
| Covering transactions involve the purchase of common stock in the open market after the distribution has been completed in order to cover short positions. In determining the source of shares to close out the short position, the underwriter will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which it may purchase shares through the over-allotment option. If the underwriter sells more shares than could be covered by the over-allotment option (a naked short position), the position can be closed out only by buying shares in the open market. A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in this offering. | |
| Penalty bids permit the underwriter to reclaim a selling concession from a selected dealer when the common stock originally sold by the selected dealer is purchased in a stabilizing covering transaction to cover short positions. |
65
66
Page | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-17 | ||||
F-18 | ||||
F-19 | ||||
F-20 | ||||
F-21 | ||||
F-22 | ||||
F-24 |
F-1
September 30, 2005
December 31, 2004
(Dollars in thousands
except per share data)
ASSETS
$
2,335
$
32,675
33,321
13,508
178
106,999
108,149
3,914
3,778
286
208
33
132
2,839
2,690
1,749
299
3,504
3,401
1,057
1,888
1,952
1,491
1,435
1,037
$
157,853
$
171,005
LIABILITIES AND SHAREHOLDERS EQUITY
$
5,925
$
5,505
114,820
96,119
120,745
101,624
13,945
41,170
2,249
69
321
757
979
5,155
5,155
140,671
151,498
23
23
12,801
12,519
5,179
8,497
316
61
(354
)
(351
)
(783
)
(1,242
)
17,182
19,507
$
157,853
$
171,005
F-2
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
2005
2004
2005
2004
(Dollars in thousands
except per share data)
$
1,724
$
1,287
$
5,274
$
3,328
411
181
727
620
20
48
40
136
112
4
109
86
180
2,187
1,617
6,223
4,260
758
360
1,939
993
119
146
415
250
83
58
231
162
960
564
2,585
1,405
1,227
1,053
3,638
2,855
50
296
402
366
1,177
757
3,236
2,489
46
36
142
98
54
19
361
63
15
(6
)
22
49
(36
)
(55
)
35
36
103
110
11
7
45
17
161
56
673
282
901
977
2,685
2,513
117
84
350
222
117
105
360
315
54
55
163
168
145
90
376
282
46
47
127
127
31
89
128
184
16
22
114
71
28
20
94
64
6
8
25
38
15
12
22
3
99
98
311
252
20
82
1,966
1,966
82
226
280
432
3,643
1,833
7,083
4,671
(2,305
)
(1,020
)
(3,174
)
(1,900
)
(237
)
(355
)
(547
)
(683
)
$
(2,068
)
$
(665
)
$
(2,627
)
$
(1,217
)
$
(0.94
)
$
(0.33
)
$
(1.19
)
$
(0.61
)
$
(0.94
)
$
(0.33
)
$
(1.19
)
$
(0.61
)
F-3
Accumulated
Unearned
Additional
Other
Stock Based
Total
Common
Paid-In
Retained
Comprehensive
Incentive
Treasury
Shareholders
Stock
Capital
Earnings
Income
Plan Shares
Stock
Equity
(Dollars in thousands except per share data)
$
23
$
12,519
$
8,497
$
61
$
(351
)
$
(1,242
)
$
19,507
(2,627
)
(2,627
)
255
255
(2,372
)
193
(193
)
190
190
33
33
2
(86
)
459
375
54
54
(605
)
(605
)
$
23
$
12,801
$
5,179
$
316
$
(354
)
$
(783
)
$
17,182
F-4
Three Months Ended
Nine Months Ended
September 30,
September 30,
2005
2004
2005
2004
(Dollars in thousands)
$
(2,068
)
$
(665
)
$
(2,627
)
$
(1,217
)
(75
)
396
(142
)
(165
)
(36
)
(55
)
(75
)
432
(142
)
(110
)
530
(25
)
(147
)
(133
)
37
(50
)
285
255
(73
)
$
(2,118
)
$
(380
)
$
(2,372
)
$
(1,290
)
F-5
Nine Months Ended
September 30,
2005
2004
(Dollars in thousands)
$
(379
)
$
(929
)
1,289
1,435
15,191
2,550
4,503
(5,037
)
(6,076
)
(17,677
)
(34,262
)
(5,390
)
(462
)
(1,007
)
69
79
(19,122
)
(25,673
)
19,111
16,997
(27,474
)
13,900
12,270
(2,000
)
(252
)
(6
)
(599
)
(549
)
375
306
(131
)
(10,839
)
42,787
(30,340
)
16,185
32,675
8,936
$
2,335
$
25,121
$
2,509
$
1,407
$
18,497
$
728
F-6
Basis of Presentation: |
Operating Segments: |
Earnings Per Share: |
F-7
Three Months Ended
Nine Months Ended
September 30,
September 30,
2005
2004
2005
2004
$
(2,068
)
$
(665
)
$
(2,627
)
$
(1,217
)
2,208,071
2,017,645
2,200,176
2,001,276
$
(0.94
)
$
(0.33
)
$
(1.19
)
$
(0.61
)
$
(2,068
)
$
(665
)
$
(2,627
)
$
(1,217
)
2,208,071
2,017,645
2,200,176
2,001,276
2,208,071
2,017,645
2,200,176
2,001,276
$
(0.94
)
$
(0.33
)
$
(1.19
)
$
(0.61
)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Stock options
|
297,539 | 259,504 | 261,550 | 254,395 | ||||||||||||
Stock based incentive plan shares
|
33,537 | 34,524 | 30,187 | 34,549 |
F-8
Stock Compensation: |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Net loss as reported
|
$ | (2,068 | ) | $ | (665 | ) | $ | (2,627 | ) | $ | (1,217 | ) | ||||
Deduct: Stock-based compensation expense determined under fair
value based method
|
59 | 23 | 358 | 144 | ||||||||||||
Pro forma net loss
|
$ | (2,127 | ) | $ | (688 | ) | $ | (2,985 | ) | $ | (1,361 | ) | ||||
Basic loss per share as reported
|
$ | (0.94 | ) | $ | (0.33 | ) | $ | (1.19 | ) | $ | (0.61 | ) | ||||
Pro forma basic loss per share
|
(0.96 | ) | (0.34 | ) | (1.36 | ) | (0.68 | ) | ||||||||
Diluted loss per share as reported
|
$ | (0.94 | ) | $ | (0.33 | ) | $ | (1.19 | ) | $ | (0.61 | ) | ||||
Pro forma diluted loss per share
|
(0.96 | ) | (0.34 | ) | (1.36 | ) | (0.68 | ) |
Nine | ||||||||||||
Three | Months Ended | |||||||||||
Months Ended | September 30, | |||||||||||
September 30, | ||||||||||||
2005 | 2005 | 2004 | ||||||||||
Risk-free interest rate
|
3.98 | % | 3.85 | % | 3.26 | % | ||||||
Expected option life (years)
|
6 | 6 | 6 | |||||||||
Expected stock price volatility
|
26 | % | 27 | % | 24 | % | ||||||
Dividend yield
|
3.62 | % | 3.46 | % | 2.86 | % | ||||||
Weighted average fair value of options granted during the period
|
$ | 2.03 | $ | 2.27 | $ | 2.52 |
F-9
Reclassifications: |
Gross | Gross | |||||||||||||
Fair | Unrealized | Unrealized | ||||||||||||
Value | Gains | Losses | ||||||||||||
September 30, 2005
|
||||||||||||||
Federal agency
|
$ | 5,907 | $ | 1 | $ | (101 | ) | |||||||
Mortgage-backed
|
25,403 | 662 | (73 | ) | ||||||||||
Municipal
|
2,011 | | (9 | ) | ||||||||||
Total
|
$ | 33,321 | $ | 663 | $ | (183 | ) | |||||||
December 31, 2004
|
||||||||||||||
Federal agency
|
$ | 4,983 | $ | 2 | $ | (37 | ) | |||||||
Mortgage-backed
|
8,525 | 195 | (68 | ) | ||||||||||
Total
|
$ | 13,508 | $ | 197 | $ | (105 | ) | |||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Proceeds
|
$ | 1,435 | $ | 11,239 | $ | 1,435 | $ | 15,191 | ||||||||
Gross gains
|
| | | 41 | ||||||||||||
Gross losses
|
| (36 | ) | | (96 | ) |
F-10
Available for
Sale Fair
Value
$
6,910
1,008
25,403
$
33,321
Less than 12 Months | 12 Months or More | Total | ||||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||||
Description of Securities | Value | Loss | Value | Loss | Value | Loss | ||||||||||||||||||||
September 30, 2005
|
||||||||||||||||||||||||||
Federal agency
|
$ | 4,913 | $ | (101 | ) | $ | | $ | | $ | 4,913 | $ | (101 | ) | ||||||||||||
Mortgage-backed
|
2,953 | (19 | ) | 2,076 | (54 | ) | 5,029 | (73 | ) | |||||||||||||||||
Municipal
|
2,011 | (9 | ) | 2,011 | (9 | ) | ||||||||||||||||||||
Total
|
$ | 9,877 | $ | (129 | ) | $ | 2,076 | $ | (54 | ) | $ | 11,953 | $ | (183 | ) | |||||||||||
December 31, 2004
|
||||||||||||||||||||||||||
Federal agency
|
$ | 3,976 | $ | (37 | ) | $ | | $ | | $ | 3,976 | $ | (37 | ) | ||||||||||||
Mortgage-backed
|
700 | (1 | ) | 2,476 | (67 | ) | 3,176 | (68 | ) | |||||||||||||||||
Total
|
$ | 4,676 | $ | (38 | ) | $ | 2,476 | $ | (67 | ) | $ | 7,152 | $ | (105 | ) | |||||||||||
F-11
September 30,
December 31,
2005
2004
$
12,481
$
7,030
23,352
41,450
25,620
25,602
26,753
20,105
1,127
20,181
13,952
108,387
109,266
(163
)
(139
)
(1,225
)
(978
)
$
106,999
$
108,149
Three Months | Nine Months | |||||||||||||||
Ended | Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Beginning balance
|
$ | 1,242 | $ | 465 | $ | 978 | $ | 415 | ||||||||
Provision for loan losses
|
50 | 296 | 402 | 366 | ||||||||||||
Loans charged-off
|
(83 | ) | (22 | ) | (200 | ) | (50 | ) | ||||||||
Recoveries
|
16 | 8 | 45 | 16 | ||||||||||||
Ending balance
|
$ | 1,225 | $ | 747 | $ | 1,225 | $ | 747 | ||||||||
September 30, | December 31, | |||||||
2005 | 2004 | |||||||
Loans past due over 90 days still on accrual
|
$ | | $ | | ||||
Nonaccrual loans
|
606 | 286 |
F-12
Three Months
Nine Months
Ended
Ended
September 30,
September 30,
2005
2004
2005
2004
$
302
$
237
$
208
$
221
120
3
(28
)
(11
)
(49
)
(40
)
12
(14
)
7
28
$
286
$
212
$
286
$
212
$
25
$
14
$
20
$
56
14
14
(12
)
(7
)
(42
)
$
13
$
28
$
13
$
28
September 30, 2006
|
$ | 63 | ||
September 30, 2007
|
63 | |||
September 30, 2008
|
63 | |||
September 30, 2009
|
63 | |||
September 30, 2010
|
47 |
F-13
Three and
Nine Months
Ended
September 30,
2005
$
1,749
(1,749
)
$
September 30, 2005 | December 31, 2004 | ||||||||||||||||
Gross | Gross | ||||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | ||||||||||||||
Amount | Amortization | Amount | Amortization | ||||||||||||||
Amortized intangible assets:
|
|||||||||||||||||
Noncompete agreement
|
$ | | $ | | $ | 25 | $ | 4 | |||||||||
Prior owner intangible
|
| | 295 | 17 | |||||||||||||
Total
|
$ | | $ | | $ | 320 | $ | 21 | |||||||||
F-14
September 30,
December 31,
2005
2004
$
3,675
$
28,900
10,270
12,270
$
13,945
$
41,170
September 30, | December 31, | ||||||||
2005 | 2004 | ||||||||
First mortgage loans under a blanket lien arrangement
|
$ | 23,131 | $ | 41,269 | |||||
Second mortgage loans
|
786 | 695 | |||||||
Multi-family mortgage loans
|
11,245 | 10,372 | |||||||
Home equity lines of credit
|
5,272 | 3,236 | |||||||
Commercial real estate loans
|
18,186 | 14,964 | |||||||
Securities
|
17,066 | 770 | |||||||
Total
|
$ | 75,686 | $ | 71,306 | |||||
September 30, 2006
|
$ | 7,675 | |||
September 30, 2007
|
4,270 | ||||
September 30, 2008
|
2,000 | ||||
September 30, 2009
|
| ||||
September 30, 2010
|
| ||||
Total
|
$ | 13,945 | |||
F-15
Banking | Mortgage Services | Parent and Other | Total | ||||||||||||||
Three months ended September 30, 2005
|
|||||||||||||||||
Net interest income (expense)
|
$ | 1,301 | $ | 10 | $ | (84 | ) | $ | 1,227 | ||||||||
Provision for loan losses
|
(50 | ) | | | (50 | ) | |||||||||||
Other revenue
|
67 | 87 | 7 | 161 | |||||||||||||
Impairment loss on goodwill and intangibles
|
| (1,966 | ) | | (1,966 | ) | |||||||||||
Other expense
|
(1,429 | ) | (185 | ) | (63 | ) | (1,677 | ) | |||||||||
Loss before income tax
|
(111 | ) | (2,054 | ) | (140 | ) | (2,305 | ) | |||||||||
Income tax benefit
|
(47 | ) | (104 | ) | (86 | ) | (237 | ) | |||||||||
Net loss
|
$ | (64 | ) | $ | (1,950 | ) | $ | (54 | ) | $ | (2,068 | ) | |||||
Nine months ended September 30, 2005
|
|||||||||||||||||
Net interest income (expense)
|
$ | 3,847 | $ | 22 | $ | (231 | ) | $ | 3,638 | ||||||||
Provision for loan losses
|
(402 | ) | | | (402 | ) | |||||||||||
Other revenue
|
252 | 394 | 27 | 673 | |||||||||||||
Impairment loss on goodwill and intangibles
|
| (1,966 | ) | | (1,966 | ) | |||||||||||
Other expense
|
(4,190 | ) | (681 | ) | (246 | ) | (5,117 | ) | |||||||||
Loss before income tax
|
(493 | ) | (2,231 | ) | (450 | ) | (3,174 | ) | |||||||||
Income tax benefit
|
(192 | ) | (164 | ) | (191 | ) | (547 | ) | |||||||||
Net loss
|
$ | (301 | ) | $ | (2,067 | ) | $ | (259 | ) | $ | (2,627 | ) | |||||
September 30, 2005
|
|||||||||||||||||
Segment assets
|
$ | 156,699 | $ | 480 | $ | 674 | $ | 157,853 | |||||||||
F-16
F-17
F-18
F-19
F-20
F-21
F-22
F-23
F-24
F-25
F-26
Table of Contents
For the Years Ended
December 31,
2004
2003
2002
(Dollars in thousands
except per share data)
$
4,855
$
4,203
$
5,255
750
934
1,518
20
5
152
141
157
367
152
137
6,144
5,435
7,067
1,436
1,570
2,501
488
1,940
961
225
11
2,149
3,521
3,462
3,995
1,914
3,605
646
102
19
3,349
1,812
3,586
141
165
130
222
429
313
62
(101
)
8
(55
)
42
16
145
188
68
22
33
30
537
756
565
3,454
3,549
1,713
327
224
96
431
246
196
196
301
287
424
673
212
169
119
84
167
198
133
171
27
20
91
48
23
48
91
143
57
14
(34
)
355
176
144
21
509
264
147
6,420
5,930
3,164
(2,534
)
(3,362
)
987
(872
)
(988
)
313
$
(1,662
)
$
(2,374
)
$
674
$
(0.82
)
$
(1.31
)
$
0.44
$
(0.82
)
$
(1.31
)
$
0.43
Table of Contents
For the Years Ended
December 31,
2004
2003
2002
(Dollars in thousands
except per share data)
$
(1,662
)
$
(2,374
)
$
674
(267
)
(154
)
34
(55
)
42
16
(212
)
(196
)
18
458
72
(89
)
(6
)
(140
)
173
12
$
(1,802
)
$
(2,201
)
$
686
Table of Contents
Unearned
Unearned
Stock
Accumulated
Employee
Based
Additional
Other
Stock
Incentive
Total
Common
Paid-In
Retained
Comprehensive
Ownership
Plan
Treasury
Shareholders
Stock
Capital
Earnings
Income
Plan Shares
Shares
Stock
Equity
(Dollars in thousands except per share data)
$
19
$
8,310
$
13,962
$
16
$
(1,651
)
$
(270
)
$
(2,226
)
$
18,160
674
674
12
12
686
(4
)
226
222
110
110
(1,044
)
(1,044
)
(551
)
(551
)
19
8,306
14,085
28
(1,425
)
(160
)
(3,270
)
17,583
(2,374
)
(2,374
)
173
173
(2,201
)
3
3,116
3,119
1
337
(338
)
125
748
873
(39
)
677
638
141
141
(72
)
417
345
47
47
(689
)
(689
)
23
11,845
10,997
201
(357
)
(2,853
)
19,856
(1,662
)
(1,662
)
(140
)
(140
)
(1,802
)
237
(237
)
243
243
(90
)
502
412
48
48
(319
)
(319
)
359
1,428
1,787
30
30
(748
)
(748
)
$
23
$
12,519
$
8,497
$
61
$
$
(351
)
$
(1,242
)
$
19,507
Table of Contents
2004
2003
2002
(Dollars in thousands
except per share data)
$
(1,662
)
$
(2,374
)
$
674
646
102
19
(36
)
56
355
176
144
184
(5
)
(77
)
55
(42
)
(16
)
(3
)
50
13
(152
)
(141
)
(157
)
638
222
243
141
110
106
(106
)
8,221
(145
)
(188
)
(68
)
(589
)
(589
)
(1,083
)
138
86
(22
)
(206
)
(42
)
(600
)
865
(1,530
)
(3,398
)
9,869
1,587
5,618
(199
)
15,191
3,078
386
5,114
28,968
594
(7,081
)
(46,914
)
(290
)
7,201
27,056
(21,508
)
(45,900
)
4,434
8,010
(5,574
)
(1,027
)
(1,326
)
(127
)
5
765
(3,000
)
(236
)
853
(37,156
)
1,912
10,922
Table of Contents
2004
2003
2002
(Dollars in thousands
except per share data)
28,266
(1,332
)
(1,478
)
22,417
7,500
12,270
(16,330
)
(9,063
)
114
(241
)
(123
)
5,155
(735
)
(655
)
(551
)
3,119
412
345
(319
)
(1,044
)
62,425
(2,439
)
(12,259
)
23,739
(3,925
)
8,532
8,936
12,861
4,329
$
32,675
$
8,936
$
12,861
$
2,178
$
3,519
$
3,495
106
160
$
$
10,533
$
716
193
1,787
Table of Contents
Table of Contents
Table of Contents
2004
2003
2002
$
(1,662
)
$
(2,374
)
$674
183
175
121
$
(1,845
)
$
(2,549
)
$553
$
(0.82
)
$
(1.31
)
$0.44
(0.91
)
(1.40
)
0.36
$
(0.82
)
$
(1.31
)
$0.43
(0.91
)
(1.40
)
0.35
Table of Contents
2004
2003
3.26%
2.96%
6.0 years
5.9 years
24%
44%
2.86%
3.13%
$2.53
$3.96
F-27
F-28
At October 22, 2004 | ||||
Cash
|
$ | 189 | ||
Loan sales proceeds receivable
|
1,299 | |||
Loans receivable
|
54 | |||
Premises and equipment
|
83 | |||
Other assets
|
3 | |||
Intangible assets
|
320 | |||
Goodwill
|
1,749 | |||
Total assets acquired
|
3,697 | |||
Loans payable
|
1,232 | |||
Other liabilities
|
259 | |||
Total liabilities assumed
|
1,491 | |||
Net assets acquired
|
$ | 2,206 | ||
F-29
2004
2003
2002
$
3,988
$
1,906
$
3,597
$
(1,682
)
$
(2,175
)
$
711
$
(0.79
)
$
(1.12
)
$
0.43
$
(0.79
)
$
(1.12
)
$
0.42
Gross
Gross
Fair
Unrealized
Unrealized
Value
Gains
Losses
$
4,983
$
2
$
(37
)
8,525
195
(68
)
$
13,508
$
197
$
(105
)
$
12,759
$
8
$
(4
)
1,375
5
12,992
400
(105
)
$
27,126
$
413
$
(109
)
2004 | 2003 | 2002 | ||||||||||
Proceeds
|
$ | 15,191 | $ | 3,078 | $ | 386 | ||||||
Gross gains
|
41 | 42 | 16 | |||||||||
Gross losses
|
(96 | ) | | |
Available | |||||
for Sale | |||||
Fair | |||||
Value | |||||
Due from one to five years
|
$ | 4,983 | |||
Mortgage-backed
|
8,525 | ||||
Total
|
$ | 13,508 | |||
F-30
Less than 12 Months
12 Months or More
Total
Unrealized
Unrealized
Unrealized
2004 Description of Securities
Fair Value
Loss
Fair Value
Loss
Fair Value
Loss
$
3,976
$
(37
)
$
$
$
3,976
$
(37
)
700
(1
)
2,476
(67
)
3,176
(68
)
$
4,676
$
(38
)
$
2,476
$
(67
)
$
7,152
$
(105
)
Less than 12 Months
12 Months or More
Total
Unrealized
Unrealized
Unrealized
2003 Description of Securities
Fair Value
Loss
Fair Value
Loss
Fair Value
Loss
$
4,026
$
(4
)
$
$
$
4,026
$
(4
)
4,021
(105
)
4,021
(105
)
$
8,047
$
(109
)
$
$
$
8,047
$
(109
)
F-31
2004
2003
$
7,030
$
4,116
41,450
34,810
25,602
1,250
20,105
5,040
1,127
610
13,952
12,598
109,266
58,424
(139
)
15
(978
)
(415
)
$
108,149
$
58,024
2004 | 2003 | 2002 | ||||||||||
Beginning balance
|
$ | 415 | $ | 361 | $ | 373 | ||||||
Provision for loan losses
|
646 | 102 | 19 | |||||||||
Loans charged-off
|
(117 | ) | (50 | ) | (35 | ) | ||||||
Recoveries
|
34 | 2 | 4 | |||||||||
Ending balance
|
$ | 978 | $ | 415 | $ | 361 | ||||||
2004 | 2003 | |||||||
Loans past due over 90 days still on accrual
|
$ | | $ | | ||||
Nonaccrual loans
|
286 | 741 |
F-32
2004
2003
2002
$
221
$
200
$
88
3
195
162
(52
)
(118
)
(50
)
36
(56
)
$
208
$
221
$
200
$
56
$
$
56
(36
)
$
20
$
56
$
2005
|
$ | 47 | ||
2006
|
47 | |||
2007
|
47 | |||
2008
|
47 | |||
2009
|
40 |
2004 | 2003 | |||||||
Land and land improvements
|
$ | 127 | $ | 117 | ||||
Buildings
|
1,880 | 1,713 | ||||||
Furniture, fixtures and equipment
|
2,020 | 1,416 | ||||||
Leasehold improvements
|
325 | 10 | ||||||
4,352 | 3,256 | |||||||
Less: accumulated depreciation
|
(1,662 | ) | (1,324 | ) | ||||
$ | 2,690 | $ | 1,932 | |||||
F-33
$
287
287
265
251
208
662
$
1,960
Goodwill |
2004 | ||||
Beginning of year
|
$ | | ||
Acquired goodwill
|
1,749 | |||
Impairment
|
| |||
End of year
|
$ | 1,749 | ||
2004 | |||||||||
Gross | |||||||||
Carrying | Accumulated | ||||||||
Amount | Amortization | ||||||||
Amortized intangible assets:
|
|||||||||
Noncompete agreement
|
$ | 25 | $ | 4 | |||||
Prior owner intangible
|
295 | 17 | |||||||
Total
|
$ | 320 | $ | 21 | |||||
F-34
2005
|
$ | 119 | ||
2006
|
98 | |||
2007
|
82 | |||
Total
|
$ | 299 | ||
2005
|
$ | 29,329 | ||
2006
|
9,822 | |||
2007
|
2,999 | |||
2008
|
1,019 | |||
2009
|
3,155 | |||
$ | 46,324 | |||
2004 | 2003 | |||||||
Maturity January 2005 at 2.20% floating rate
|
$ | 28,900 | $ | | ||||
Maturity January 2004 at 1.09% floating rate
|
| 7,500 | ||||||
Maturities March 2005 thru September 2008, fixed at rates from
1.50% to 3.41%, averaging 2.70%
|
12,270 | | ||||||
Total
|
$ | 41,170 | $ | 7,500 | ||||
F-35
Payment information
$
30,900
4,000
4,270
2,000
$
41,170
F-36
2004 | 2003 | 2002 | ||||||||||
Unvested shares outstanding at beginning of year
|
40,518 | 28,695 | 43,043 | |||||||||
Granted
|
26,028 | 28,500 | | |||||||||
Vested
|
(19,968 | ) | (12,024 | ) | (14,348 | ) | ||||||
Forfeited
|
(5,325 | ) | (4,653 | ) | | |||||||
Unvested shares outstanding at end of year
|
41,253 | 40,518 | 28,695 | |||||||||
Shares available for grant
|
8,659 | 10,028 | 3,875 | |||||||||
F-37
2004 | 2003 | 2002 | ||||||||||
Current federal
|
$ | (283 | ) | $ | 95 | $ | 175 | |||||
Deferred federal
|
(589 | ) | (1,083 | ) | 138 | |||||||
Total
|
$ | (872 | ) | $ | (988 | ) | $ | 313 | ||||
2004 | 2003 | 2002 | ||||||||||
Federal statutory rate times financial statement income (loss)
|
$ | (861 | ) | $ | (1,143 | ) | $ | 336 | ||||
Effect of:
|
||||||||||||
Bank owned life insurance income
|
(49 | ) | (64 | ) | (23 | ) | ||||||
ESOP shares released at fair market value
|
| 207 | 1 | |||||||||
Other
|
38 | 12 | (1 | ) | ||||||||
$ | (872 | ) | $ | (988 | ) | $ | 313 | |||||
Effective tax rate
|
(34.4 | )% | (29.4 | )% | 31.7 | % |
F-38
2004
2003
$
333
$
141
159
160
34
13
5
36
58
39
1,810
1,325
17
6
14
2,435
1,715
284
229
430
378
95
71
75
33
31
103
944
785
$
1,491
$
930
F-39
2004
2003
2002
Weighted
Weighted
Weighted
Average
Average
Average
Exercise
Exercise
Exercise
Shares
Price
Shares
Price
Shares
Price
209,721
$
10.17
182,497
$
9.23
182,497
$
9.23
110,864
12.63
77,758
11.79
(44,900
)
9.19
(37,302
)
9.23
(19,149
)
11.16
(13,232
)
9.26
256,536
$
11.32
209,721
$
10.17
182,497
$
9.23
106,386
$
9.86
101,285
$
9.20
107,903
$
9.22
12,149
18,364
11,390
Outstanding | Exercisable | |||||||||||||||||||
Weighted | ||||||||||||||||||||
Average | Weighted | Weighted | ||||||||||||||||||
Remaining | Average | Average | ||||||||||||||||||
Contractual | Exercise | Exercise | ||||||||||||||||||
Range of Exercise Prices | Number | Life | Price | Number | Price | |||||||||||||||
$9.19 - $10.05
|
92,638 | 5.0 years | $ | 9.32 | 82,726 | $ | 9.24 | |||||||||||||
$11.50 - $12.70
|
146,666 | 8.9 years | $ | 12.30 | 21,994 | $ | 11.91 | |||||||||||||
$13.76 - $13.94
|
17,232 | 9.1 years | $ | 13.81 | 1,666 | $ | 13.94 |
F-40
To Be Well
For Capital
Capitalized Under
Adequacy
Prompt Corrective
Actual
Purposes
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
$
14,555
12.2
%
$
9,580
8.0
%
$
11,975
10.0
%
13,576
11.3
4,790
4.0
7,185
6.0
13,576
8.1
6,726
4.0
8,408
5.0
13,576
8.1
2,522
1.5
N/A
$
15,093
21.6
%
$
5,597
8.0
%
$
6,997
10.0
%
14,678
21.0
2,799
4.0
4,198
6.0
14,678
13.9
4,217
4.0
5,272
5.0
14,678
13.9
1,584
1.5
N/A
F-41
2004
2003
Fixed
Variable
Fixed
Variable
Rate
Rate
Rate
Rate
$
882
$
917
$
486
$
520
543
8,406
4,257
2004 | 2003 | ||||||||||||||||
Carrying | Carrying | ||||||||||||||||
Amount | Fair Value | Amount | Fair Value | ||||||||||||||
Financial assets
|
|||||||||||||||||
Cash and cash equivalents
|
$ | 32,675 | $ | 32,675 | $ | 8,936 | $ | 8,936 | |||||||||
Interest-bearing deposits in other financial institutions
|
| | 1,587 | 1,587 | |||||||||||||
Securities available for sale
|
13,508 | 13,508 | 27,126 | 27,126 | |||||||||||||
Loans held for sale
|
| | 106 | 107 | |||||||||||||
Loans, net
|
108,149 | 108,712 | 58,024 | 59,341 | |||||||||||||
Federal Home Loan Bank stock
|
3,778 | 3,778 | 3,626 | 3,626 | |||||||||||||
Loan sales proceeds receivable
|
1,888 | 1,888 | | | |||||||||||||
Accrued interest receivable
|
501 | 501 | 487 | 487 | |||||||||||||
Financial liabilities
|
|||||||||||||||||
Deposits
|
(101,624 | ) | (102,030 | ) | (73,358 | ) | (73,927 | ) | |||||||||
Federal Home Loan Bank advances
|
(41,170 | ) | (41,017 | ) | (7,500 | ) | (7,500 | ) | |||||||||
Other borrowings
|
(2,249 | ) | (2,249 | ) | | | |||||||||||
Subordinated debentures
|
(5,155 | ) | (5,155 | ) | (5,155 | ) | (5,155 | ) | |||||||||
Accrued interest payable
|
(36 | ) | (36 | ) | (65 | ) | (65 | ) |
F-42
2004
2003
ASSETS
$
8,504
$
9,238
15,708
15,099
296
289
399
621
$
24,907
$
25,247
LIABILITIES AND EQUITY
$
5,155
$
5,155
245
236
19,507
19,856
$
24,907
$
25,247
2004 | 2003 | 2002 | ||||||||||
Interest income
|
$ | | $ | 20 | $ | 77 | ||||||
Dividends from subsidiaries
|
| 5,437 | 2,800 | |||||||||
Other income
|
| 11 | | |||||||||
Interest expense
|
225 | 59 | 297 | |||||||||
Other expense
|
306 | 338 | 173 | |||||||||
Income (loss) before income tax and undistributed subsidiaries
operations
|
(531 | ) | 5,071 | 2,407 | ||||||||
Income tax benefit
|
143 | 125 | 137 | |||||||||
Effect of subsidiaries operations
|
(1,274 | ) | (7,570 | ) | (1,870 | ) | ||||||
Net income (loss)
|
$ | (1,662 | ) | $ | (2,374 | ) | $ | 674 | ||||
F-43
2004
2003
2002
$
(1,662
)
$
(2,374
)
$
674
1,274
7,570
1,870
296
(102
)
(230
)
(92
)
5,094
2,314
853
212
(289
)
564
212
5,155
(4,900
)
(2,100
)
3,119
412
345
(319
)
(1,044
)
(735
)
(655
)
(551
)
(53
)
(642
)
3,064
(3,748
)
(734
)
8,722
(1,222
)
9,238
516
1,738
$
8,504
$
9,238
$
516
F-44
2004
2003
2002
$
(1,662
)
$
(2,374
)
$
674
2,033,376
1,815,210
1,530,429
$
(0.82
)
$
(1.31
)
$
0.44
$
(1,662
)
$
(2,374
)
$
674
2,033,376
1,815,210
1,530,429
31,570
2,033,376
1,815,210
1,561,999
$
(0.82
)
$
(1.31
)
$
0.43
2004 | 2003 | 2002 | ||||||||||
Stock options
|
263,400 | 225,285 | 8,000 | |||||||||
Stock based incentive plan shares
|
33,313 | 28,927 | |
F-45
Page | ||||
Prospectus Summary
|
1 | |||
Risk Factors
|
5 | |||
Forward-Looking Statements
|
10 | |||
Use of Proceeds
|
11 | |||
Market for Our Common Stock and Dividends
|
12 | |||
Capitalization
|
13 | |||
Selected Consolidated Financial Information
|
14 | |||
Managements Discussion and Analysis of Financial Condition
and Results of Operations
|
17 | |||
Quantitative and Qualitative Disclosures about Market Risk
|
30 | |||
Business
|
31 | |||
Management
|
47 | |||
Regulation and Supervision
|
49 | |||
Description of Our Common Stock
|
58 | |||
Principal Stockholders
|
||||
Underwriting
|
64 | |||
Interests of Named Experts and Counsel
|
66 | |||
Incorporation of Certain Information by Reference
|
66 | |||
Where You Can Find Additional Information
|
66 | |||
Commission Position on Indemnification for Securities Act
Liabilities
|
66 | |||
Index to Financial Statements
|
F-1 |
Item 14. | Other Expenses of Issuance and Distribution. |
Securities and Exchange Commission Registration Fee
|
$ | 2,302 | |||
Nasdaq® National Market Registration Fee
|
100,000 | ||||
Accounting Fees and Expenses*
|
60,000 | ||||
Printing Fees and Expenses*
|
30,000 | ||||
Legal Fees and Expenses *
|
225,000 | ||||
Transfer Agent Fees*
|
10,000 | ||||
Miscellaneous*
|
22,500 | ||||
Total*
|
$ | 449,802 |
* | Estimated |
Item 15. | Indemnification of Directors And Officers. |
(i) may indemnify any person who was, is or is threatened to be made, a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporations best interests and, with respect to any criminal action or proceeding, if he had no reasonable cause to believe that his conduct was illegal; and | |
(ii) may indemnify any person who is, was or is threatened to be made, a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person was a director, officer, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys fees) actually and reasonably incurred by any such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporations best interests and that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. |
II-1
II-2
Item 16. | Exhibits. |
Item 17. | Undertakings. |
II-3
II-4
CENTRAL FEDERAL CORPORATION
By: /s/ Eloise L. Mackus
Eloise L. Mackus, Secretary
Signature
Title
/s/ David C. Vernon
Chairman of the Board
/s/ Mark S. Allio
Vice Chairman of the Board; President and Chief Executive
Officer (principal executive officer)
/s/ Therese Ann Liutkus
Treasurer and Chief Financial Officer (principal
financial officer and principal accounting officer)
/s/ Jeffrey W. Aldrich
Director
/s/ Thomas P. Ash
Director
/s/ W. R. Downing
Director
/s/ Gerry W. Grace
Director
/s/ Jerry F. Whitmer
Director
Table of Contents
Exhibit
Number
Document Name
1*
Underwriting Agreement
3
.1
Certificate of Incorporation of the registrant (incorporated by
reference to Exhibit 3.1 to the registrants
Registration Statement on Form SB-2 No. 333-64089
filed with the Commission on September 23, 1998)
3
.2
Amendment to Certificate of Incorporation of the registrant
3
.3
Amended and Restated Bylaws of the registrant
4
Form of Stock Certificate of the registrant (incorporated by
reference to Exhibit 4.0 to the registrants
Registration Statement on Form SB-2 No. 333-64089
filed with the Commission on September 23, 1998)
5
Opinion of Brouse McDowell, A Legal Professional Association, on
legality of common stock
10
.1**
Salary Continuation Agreement between CFBank and David C. Vernon
(incorporated by reference to Exhibit 10.1 to the
registrants Form 10-KSB for the fiscal year ended
December 31, 2004, filed with the Commission on
March 30, 2005)
10
.2**
Employment Agreement between CFBank and Richard J.
ODonnell (incorporated by reference to Exhibit 10.2
to the registrants Form 10-KSB for the fiscal year
ended December 31, 2004, filed with the Commission on
March 30, 2005)
10
.3**
Employment Agreement between the registrant and David C. Vernon
(incorporated by reference to Exhibit 10.1 to the
registrants Form 10-KSB for the fiscal year ended
December 31, 2003, filed with the Commission on
March 30, 2004)
10
.4**
Amendment to Employment Agreement between the registrant and
David C. Vernon (incorporated by reference to Exhibit 10.3
to the registrants Form 10-KSB for the fiscal year
ended December 31, 2004, filed with the Commission on
March 30, 2005)
10
.5**
Amendment to Employment Agreement between CFBank and David C.
Vernon (incorporated by reference to Exhibit 10.4 to the
registrants Form 10-KSB for the fiscal year ended
December 31, 2004, filed with the Commission on
March 30, 2005)
10
.6**
Second Amendment to Employment Agreement between the registrant
and David C. Vernon (incorporated by reference to
Exhibit 10.5 to the registrants Form 10-KSB for
the fiscal year ended December 31, 2004, filed with the
Commission on March 30, 2005)
10
.7**
Second Amendment to Employment Agreement between CFBank and
David C. Vernon (incorporated by reference to Exhibit 10.6
to the registrants Form 10-KSB for the fiscal year
ended December 31, 2004, filed with the Commission on
March 30, 2005)
11
Statement Re: Computation of Per Share Earnings
21
Subsidiaries of the registrant
23
.1
Consent of Independent Registered Public Accounting Firm
23
.2
Consent of Brouse McDowell (included in Exhibit 5)
24
Power of Attorney
*
To be filed by amendment
**
Denotes management contract or other compensatory plan or
arrangement
Delaware
The First State |
PAGE 1 | |||
|
[SEAL] |
/s/ Harriet Smith Windsor
|
||
|
||||
|
Harriet Smith Windsor, Secretary of State
|
|||
|
||||
2934702 8100H
|
AUTHENTICATION: 2780106 | |||
|
||||
030768951
|
DATE: 12-02-03 |
2
Dated: 5/6/03 | /s/ David C. Vernon | |||
David C. Vernon | ||||
President and Chief Executive Officer | ||||
1. | One million (1,000,000) shares of Preferred Stock, par value one cent ($.01) per share (the Preferred Stock); and | ||
2. | Six million (6,000,000) shares of Common Stock, par value one cent ($.01) per share (the Common Stock). |
C. | 1. | Notwithstanding any other provision of this Certificate of Incorporation, in no event shall any record owner of any outstanding Common Stock which is beneficially owned, directly or indirectly, by a person who, as of any record date for the determination of stockholders entitled to vote on any matter, beneficially owns in excess of 10% of the then-outstanding shares of Common Stock (the |
Limit), be entitled, or permitted to any vote in respect of the shares held in excess of the Limit. The number of votes which may be cast by any record owner by virtue of the provisions hereof in respect of Common Stock beneficially owned by such person beneficially owning shares in excess of the Limit shall be a number equal to the total number of vores which a single record owner of all Common Stock beneficially owned by such person would be entitled to cast, (subject to the provisions of this Article FOURTH) multiplied by a fraction, the numerator of which is the number of shares of such class or series which are both beneficially owned by such person and owned of record by such record owner and the denominator of which is the total number of shares of Common Stock beneficially owned by such person owning shares in excess of the Limit. |
2. | The following definitions shall apply to this Section C of this Article FOURTH: |
a. | Affiliate shall have the meaning ascribed to it in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, as in effect on the date of filing of this Certificate of Incorporation. |
b. | Beneficial ownership shall be determined pursuant to Rule l3d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or provision thereto, pursuant to said Rule 13d-3 as in effect on the date of filing of this Certificate of Incorporation; provided, however, that a person shall, in any event, also be deemed the beneficial owner of any Common Stock: |
(1) | which such person or any of its affiliates beneficially owns, directly or indirectly; or | ||
(2) | which such person or any of its affiliates has: (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of an agreement, contract, or other arrangement with this Corporation to effect any transaction which is |
2
described in any one or more of clauses 1 through 5 of Section A of Article EIGHTH of this Certificate of Incorporation (Article EIGHTH)), or upon the exercise of conversion rights, exchange rights, warrants, or options or otherwise, or (ii) sole or shared voting or investment power with, respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, With respect to shares of which neither such poison nor any such Affiliate is otherwise deemed the beneficial owner); or | |||
(3) | which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates acts as a partnership, limited partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock, of this Corporation; and provided further, however, that: (1) no Director or Officer of this Corporation (or any Affiliate of any such Director or Officer) shall, solely by reason of any or all of such Directors or Officers acting in their capacities as such, be deemed, for any purposes hereof, to beneficially own any Common Stock beneficially owned by any other such Director or Officer (or any Affiliate thereof); and (2) neither any employee stock ownership or similar plan of this Corporation or any subsidiary of this Corporation, nor any trustee with, respect thereto or any Affiliate of such trustee (solely by reason of such capacity of such trustee), shall be deemed, for any purposes hereof, to beneficially own any Common Stock held under any such plan. For purposes only of computing the percentage of beneficial ownership of Common Stock of a person, the outstanding Common Stock shall include shares deemed owned by such, person through application of this subsection but shall not include any other Common Stock which may be issuable by this |
3
Corporation, pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise. For all other purposes, the outstanding Common Stock shall include only Common Stock then outstanding and shall not include any Common Stock which may be issuable by this Corporation pursuant to any agreement, or upon the exercise of conversion rights, warrants or options, or otherwise. |
c. | The Limit shall mean 10% of the then-outstanding shares of Common Stock. | ||
d. | A person shall include an individual, a firm, a group acting in concert, a corporation, a partnership, an association, a joint venture, a pool, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities or any other entity. |
3. | The Board of Directors shall have the power to construe and apply the provisions of this section and to make all determinations necessary or desirable to implement such provisions, including but not limited to matters with respect to: (i) the number of shares of Common Stock beneficially owned by any person; (ii) whether a person is an affiliate of another; (iii) whether a person has an agreement, arrangement, or understanding with another as to the matters referred to in the definition of beneficial ownership; (iv) the application of any other definition or operative provision of the section to the given facts; or (v) any other matter relating to the applicability or effect of this section. | ||
4. | The Board of Directors shall have the right to demand that any person. who is reasonably believed to beneficially own Common Stock in. excess of the Limit (or holds of record Common Stock beneficially owned by any person in excess of the Limit) supply the Corporation with complete information as to: (i) the record owner(s) of all shares beneficially owned by such person who is reasonably believed to own shares in excess of the Limit; and (ii) any other factual matter relating to the applicability or effect of this section as may reasonably be requested of such person. | ||
5. | Except as otherwise provided by law or expressly provided in this Section C, the presence, in person or by proxy, of the holders of |
4
record of shares of capital stock of the Corporation entitling the holders thereof to cast a majority of the votes (after giving effect, if required, to the provisions of this Section C) entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote shall constitute a quorum at all meetings of the stockholders, and every reference in this Certificate of Incorporation to a majority or other proportion of capital stock (or the holders thereof) for purposes of determining any quorum requirement or any requirement for stockholder consent or approval shall be deemed to refer to such majority or other proportion of the votes (or the holders thereof) then entitled to be cast in respect of such capital stock. | |||
6. | Any constructions, applications, or determinations made by the Board of Directors pursuant to this section in good faith and on the basis of such information and assistance as was then reasonably available for such purpose shall be conclusive and binding upon the Corporation and its stockholders. | ||
7. | In the event any provision (or portion thereof) of this Section C shall he found to be invalid, prohibited or unenforceable for any reason, the remaining provisions (or portions thereof) of this Section shall remain in full force and effect, and shall be construed as if such invalid, prohibited or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of this Corporation and its stockholders that each such remaining provision (or portion thereof) of this Section C remain, to the fullest extent permitted by law, applicable and enforceable as to all stockholders, including stockholders owning an amount of stock over the Limit., notwithstanding any such finding. |
5
6
1. | any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with; (1) any Interested Stockholder (as hereinafter defined); or (ii) any other corporation (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Stockholder, or | ||
2. | any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Stockholder, or any Affiliate of any Interested Stockholder, of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value (as hereinafter defined) equaling or exceeding 25% or more of the combined assets of the Corporation and its Subsidiaries; or | ||
3. | the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value (as hereinafter defined) equaling or exceeding 25% of the combined Fair Market Value of the outstanding |
7
common stock of the Corporation and its Subsidiaries, except for any issuance or transfer pursuant to an employee benefit plan of the Corporation or any Subsidiary thereof; or | |||
4. | the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of an Interested Stockholder or any Affiliate of any Interested Stockholder; or | ||
5. | any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder or any Affiliate of any Interested Stockholder; |
1. | The Business Combination shall have been approved by a majority of the Disinterested Directors (as hereinafter defined). |
8
2. | All of the following conditions shall have been met: |
a. | The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received pet share by the holders of Common Stock in such Business Combination shall at least be equal to the higher of the following: |
(1) | (if applicable) the Highest Per Share Price (as hereinafter defined), including any brokerage commissions, transfer taxes and soliciting dealers fees, paid by the Interested Stockholder or any of its Affiliates for any shares of Common Stock acquired by it: (i) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination (the Announcement Date); or (ii) in the transaction in which it became an Interested Stockholder, whichever is higher; or | ||
(2) | the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Stockholder became an Interested Stockholder (such latter date is referred to in this Article EIGHTH as the Determination Date), whichever is higher. |
b. | The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of shares of any class of outstanding Voting Stock other than Common Stock shall be at least equal to the highest of the following (it being intended that the requirements of this subparagraph (b) shall be required to be met with respect to every such class of outstanding Voting Stock, whether or not the Interested Stockholder has previously acquired any shares of a particular class of Voting Stock): |
(I) | (if applicable) the Highest Per Share Price (as hereinafter defined), including any brokerage commissions, transfer taxes and soliciting dealers fees, paid by the Interested Stockholder for any shares |
9
of such class of Voting Stock acquired by It: (i) within the two-year period immediately prior to the Announcement Date; or (ii) in the transaction in which it became an Interested Stockholder, whichever is higher; or | |||
(2) | (if applicable) the highest preferential amount per share to which the holders of shares of such class of Voting Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation; or | ||
(3) | the Fair Market Value pet share of such class of Voting Stock on the Announcement Date or on the Determination Date, whichever is higher. |
c. | The consideration to be received by holders of a particular class of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as the Interested Stockholder has previously paid for shares of such class of Voting Stock. If the Interested Stockholder has paid for shares of any class of Voting Stock with varying forms of consideration, the form of consideration to be received per share by holders of shares of such class of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class of Voting Stock previously acquired by the Interested Stockholder. The price determined in accordance with subparagraph B.2 of this Article EIGHTH shall be subject to appropriate adjustment in the event of any stock dividend, stock split, combination of shares or similar event. | ||
d. | After such Interested Stockholder has become an Interested Stockholder and prior to the consummation of such Business Combination: (1) except as approved by a majority of the Disinterested Directors (as hereinafter defined), there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on any outstanding stock having preference over the Common Stock as to dividends or liquidation; (2) there shall have been: (i) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as |
10
approved by a majority of the Disinterested Directors; and (ii) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure to so increase such annual rate is approved by a majority of the Disinterested Directors, and (3) neither such Interested Stockholder or any of its Affiliates shall have become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Stockholder becoming an Interested Stockholder. | |||
e. | After such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided, directly or indirectly, by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise. | ||
f. | A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (or any subsequent provisions replacing such Act, and the rules or regulations thereunder) shall be mailed to stockholders of the Corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). |
1. | A Person shall include an individual, a firm, a group acting in concert, a corporation, a partnership, an association, a joint venture, a pool, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities or any other entity. |
11
2. | Interested Stockholder shall mean any person (other than the Corporation or any Holding Company or Subsidiary thereof) who or which: |
a. | is the beneficial owner, directly or indirectly, of more than 10% of the voting power of the outstanding Voting Stock; or | ||
b. | is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding Voting Stock; or | ||
c. | is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in. question, beneficially owned by any Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933, as amended. |
3. | For purposes of this Article EIGHTH, beneficial ownership shall be determined in the manner provided in Section C of Article FOURTH hereof. | ||
4. | Affiliate and Associate shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on the date of filing of this Certificate of Incorporation. | ||
5. | Subsidiary means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Interested Stockholder set forth in Paragraph 2 of this Section C, the term Subsidiary shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. | ||
6. | Disinterested Director means any member of thc Board of Directors who is unaffiliated with the Interested Stockholder and was a member of the Board of Directors prior to the time that the Interested Stockholder became an Interested Stockholder, and any Director who is thereafter chosen to fill any vacancy of the Board of Directors or who is elected and who, in either event, is unaffiliated with the |
12
Interested Stockholder and in connection with his or her initial assumption of office is recommended for appointment or election by a majority of Disinterested Directors then on the Board of Directors. | |||
7. | Fair Market Value means: |
a. | in the case of stock, the highest closing sales price of the stock during the 30-day period immediately preceding the date in question of a share of such stock on the National Association of Securities Dealers Automated Quotation, System or any system then in use, or, if such stock is admitted to trading on a principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, Fair Market Value shall be the highest sale price reported during the 30-day period preceding the date in question, or, if no such quotations are available, the Fair Market Value on the date in question of a share of such stock as determined by the Board of Directors in good faith, in each case with respect to any class of stock, appropriately adjusted for any dividend or distribution in shares of such stock or any stock split or reclassification of outstanding shares of such stock into a greater number of shares of such stock or any combination or reclassification of outstanding shares of such stock into a smaller number of shares of such stock; and | ||
b. | in the case of property other than cash or stock, the Fair Market Value of such property on the date in question as determined by the Board of Directors in good faith. |
8. | Reference to Highest Per Share Price shall in each case with respect to any class of stock reflect an appropriate adjustment for any dividend or distribution in shares of such stock or any stock split or reclassification of outstanding shares of such stock into a greater number of shares of such stock or any combination or reclassification of outstanding shares of such stock into a smaller number of shares of such stock. | ||
9. | In the event of any Business Combination in which the Corporation survives, the phrase consideration other than cash to be received as used in Subparagraphs (a) and (b) of Paragraph 2 of Section B of this Article EIGHTH shall include the shares of Common Stock and/or the shares of any other class of outstanding Voting Stock retained by the holders of such shares. |
13
14
15
16
Name | Mailing Address | |
Mia Sunmee Kim
|
Muldoon, Murphy & Faucette | |
|
5101 Wisconsin Avenue, N.W. | |
|
Washington, D.C. 20016 |
17
|
/s/ Mia Sunmee Kim | |||
|
|
|||
|
Incorporator |
18
ORIGINAL EFFECTIVE DATE:
|
AS OF SEPTEMBER 18, 1998 | |
AMENDED AND RESTATED:
|
AS OF FEBRUARY 20, 2003 |
Very truly yours,
|
||||
/s/ Brouse McDowell | ||||
Brouse McDowell, | ||||
A Legal Professional Association | ||||
Signature | Title | |
/s/David C. Vernon
|
Chairman of the Board | |
|
||
/s/Mark S. Allio
|
Vice Chairman of the Board; President and Chief Executive Officer (principal executive officer) | |
|
||
/s/Therese Ann Liutkus
|
Treasurer and Chief Financial Officer (principal financial officer and principal accounting officer) | |
|
||
/s/Jeffrey W. Aldrich
|
Director | |
|
||
/s/Thomas P. Ash
|
Director | |
|
||
/s/W. R. Downing
|
Director | |
|
||
/s/Gerry W. Grace
|
Director | |
|
||
/s/Jerry F. Whitmer
|
Director |