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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
September 28, 1998
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(Date of earliest event reported)
Fidelity Financial of Ohio, Inc.
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(Exact name of registrant as specified in its charter)
Ohio 0-27868 31-1455721
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4555 Montgomery Road, Cincinnati, Ohio 45212
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(Address of principal executive offices) (Zip Code)
(513) 351-6666
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
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<PAGE>
Item 5. Other Events
On September 28, 1998, Fidelity Financial of Ohio, Inc. ("Fidelity")
and Glenway Financial Corporation ("Glenway") announced a merger of equals,
forming a $835 million savings bank with 17 branches in Southwestern Ohio.
Fidelity is the holding company for Fidelity Federal Savings Bank ("Fidelity
Bank"), and Glenway is the holding company for Centennial Savings Bank
("Centennial Bank").
Pursuant to an Agreement of Merger among Fidelity, Fidelity Acquisition
Corporation ("Merger Corporation") and Glenway, dated as of September 28, 1998
(the "Agreement"), the merger of equals will involve the merger of Glenway into
Merger Corporation (the "Merger"), which will result in each shareholder of
Glenway receiving 1.50 shares of Fidelity common stock in exchange for each
share of Glenway common stock and cash in lieu of fractional shares, followed
immediately by the merger of Fidelity Bank into Centennial Bank (the "Bank
Merger"). Consummation of the Merger and the Bank Merger is subject to a number
of conditions, including, but not limited to, (i) the approval of the Agreement
and the transactions contemplated thereby by the respective shareholders of
Fidelity and Glenway and (ii) the receipt of requisite regulatory approvals. The
Merger and the Bank Merger are expected to be completed in the first quarter of
1999.
The Board of Directors of the combined company will consist of seven
representatives designated by Fidelity and five representatives designated by
Glenway. John R. Reusing will be the Chairman of the Board of Fidelity and
President of Centennial Bank and Robert R. Sudbrook will be the President and
Chief Executive Officer of Fidelity and Chairman of the Board and Chief
Executive Officer of Centennial Bank.
In connection with the Agreement, Fidelity and Glenway entered into a
Stock Option Agreement, dated as of September 28, 1998, pursuant to which
Glenway granted Fidelity an option to purchase up to 456,349 shares of Glenway's
common stock (subject to adjustment as set forth therein), which represents
19.9% of Glenway's outstanding shares of common stock, at a purchase price of
$17.25 per share (subject to adjustment as set forth therein). In addition, in
connection with the Agreement, Fidelity and Glenway entered into another Stock
Option Agreement, dated as of September 28, 1998, pursuant to which Fidelity
granted Glenway an option to purchase up to 1,114,793 shares of Fidelity's
common stock (subject to adjustment as set forth therein), which represents
19.9% of Fidelity's outstanding shares of common stock, at a purchase price of
$12.15 per share (subject to adjustment as set forth therein). The options will
become exercisable upon the occurrence of certain events, as specified in the
Stock Option Agreements, none of which has occurred as of September 28, 1998.
The press release issued by Fidelity and Glenway with respect to the
announcement of the transaction described herein is attached hereto as Exhibit
99.1 and is hereby incorporated herein by reference in its entirety. Also
attached as Exhibit 99.2 and incorporated herein by reference are
2
<PAGE>
certain forward-looking statements made by Fidelity and Glenway in connection
with an investor presentation given by Fidelity and Glenway.
The press release and the investor presentation incorporated herein by
reference contain forward-looking statements that involve risk and uncertainty.
It should be noted that a variety of factors could cause the combined company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the combined company's forward-looking
statements. The risks and uncertainties that may affect the operations,
performance, development, growth projections and results of the combined
company's business include, but are not limited to, the growth of the economy,
interest rate movements, timely development by the combined company of
technology enhancements for its products and operating systems, the impact of
competitive products, services and pricing, customer based requirements,
Federal and state legislation, acquisition cost savings and revenue enhancements
and similar matters. Readers of this Current Report on Form 8-K, including the
exhibits hereto, are cautioned not to place undue reliance on forward-looking
statements which are subject to influence by the named risk factors and
unanticipated future events. Actual results, accordingly, may differ materially
from management expectations.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) The following exhibits are included with this Report:
Exhibit 99.1 Press Release, dated September 28, 1998
Exhibit 99.2 Investor Presentation
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIDELITY FINANCIAL OF OHIO, INC.
By: /s/ John R. Reusing
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Name: John R. Reusing
Title: President and Chief Executive Officer
Date: September 29, 1998
Exhibit 99.1
Corporate Headquarters:
4555 Montgomery Road
Cincinnati, Ohio 45212
Phone: 513.351.6666
FIDELITY FINANCIAL OF OHIO, INC. Facsimile: 513.458.3473
For Immediate Release
September 28, 1998
For more information contact:
Fidelity Federal Savings Bank Glenway Financial Corporation
4555 Montgomery Road 5535 Glenway Avenue
Cincinnati, OH 45212 Clincinnati, OH 45238
(513) 351-6666 (513) 922- 5959
Contact: John R. Reusing Contact: Robert R. Sudbrook
MERGER OF EQUALS
Fidelity Financial of Ohio, Inc. ("Fidelity") ( Nasdaq National Market: FFOH)
and Glenway Financial Corporation ("Glenway") (Nasdaq National Market: GFCO)
announced today a merger of equals, forming a $835 million savings bank with 17
branches in Southwestern Ohio. Fidelity is the holding company for Fidelity
Federal Savings Bank ("Fidelity Bank") and Glenway is the holding company for
Centennial Savings Bank ("Centennial Bank").
The merger of equals will involve the merger of Glenway into a subsidiary of
Fidelity which will result in each shareholder of Glenway receiving 1.50 shares
of Fidelity common stock in exchange for each share of Glenway common stock and
cash in lieu of fractional shares followed immediately by the merger of Fidelity
Bank into Centennial Bank.
The Board of Directors of the combined company will consist of seven
representatives designated by Fidelity and five representatives designated by
Glenway. John R. Reusing will be the Chairman of the Board of Fidelity and
President of Centennial Bank and Robert R. Sudbrook will be the President and
Chief Executive Officer of Fidelity and Chairman of the Board and Chief
Executive Officer of Centennial Bank.
The merger is expected to be completed in the first quarter of 1999, following
the receipt of all regulatory and shareholder approvals. It is intended that the
transactions constitute a tax-free reorganization under the Internal Revenue
Code, so that shareholders of Glenway will not recognize gain or loss in
connection with the exchange. In addition, it is intended that the merger be
accounted for as a "pooling of interest" so that no goodwill be created.
Robert R. Sudbrook, President and Chief Executive Officer of Glenway, commented:
"This merger of equals presents a unique opportunity for us to achieve an asset
size, and related economies of scale, more quickly as a combined company than
either of us could have achieved independently. Glenway and Fidelity complement
each other in many important ways that will enable the combined company to
maximize the individual strength of the two companies. The
Page 1 of 2
<PAGE>
combined company will benefit from a management team, operating systems and
capital level that will position us strategically to compete effectively in the
changing financial services industry. Our board took a long-term view in
assessing the merits of this combination.
John R. Reusing, President and Chief Executive Officer of Fidelity stated:
"Based on current asset sizes, the combined entity will be the largest savings
bank headquartered in Hamilton County when the merger is completed. As a result
of this merger of equals, we will achieve significant cost savings and are
confident that additional revenues will be generated as a result of our expanded
market share. In addition to geographic expansion, the larger infrastructure of
the combined company will support expansion of product lines, particularly
business and commercial financial services. We are excited about the
opportunities this merger presents to the shareholders, employees and customers
of both companies."
This transaction is expected to be accretive to earnings per share in the first
full year of combined operations for both sets of shareholders. Cost savings of
approximately $1.7 million or 12% of the combined last 12 months G&A expenses
are anticipated.
In connection with the agreement, Glenway granted Fidelity an option to acquire
up to 19.9% of the outstanding Glenway common stock upon the occurrence of
certain events. Concurrently, Fidelity granted Glenway an option to acquire up
to 19.9% of the outstanding Fidelity common stock upon the occurrence of certain
events, which events are essentially the same as those set forth in the Glenway
option.
At June 30, 1998, Fidelity had consolidated assets of $531.9 million and total
stockholders' equity of $66.0 million. Fidelity Bank operates 12 banking offices
in the Greater Cincinnati area, including Hamilton and Butler Counties.
At June 30, 1998, Glenway had consolidated assets of $303.3 million and total
stockholders' equity of $29.2 million. Centennial Bank operates five banking
offices in the Greater Cincinnati area, primarily western Hamilton county.
Page 2 of 2
Exhibit 99.2
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Fidelity Financial of Ohio, Inc.
&
Glenway Financial Corporation
Merger of Equals
September 28, 1998
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This current report on Form 8-K, including the investor materials filed
as an exhibit hereto, contains forward-looking statements that involve risk and
uncertainty. It should be noted that a variety of factors could cause the
combined company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the combined company's
forward-looking statements.
The risks and uncertainties that may affect the operations,
performance, development, growth projections and results of the combined
company's business include, but are not limited to, the growth of the economy,
interest rate movements, timely development by the combined company of
technology enhancements for its products and operating systems, the impact of
competitive products, services and pricing, customer based requirements, Federal
and state legislation, acquisition cost savings and revenue enhancements and
similar matters. Readers of this report are cautioned not to place undue
reliance on forward-looking statements which are subject to influence by the
named risk factors and unanticipated future events. Actual results, accordingly,
may differ materially from management expectations.
CONTACTS:
FFOH - John Reusing (513) 351-6666 GFCO - Robert Sudbrook (513) 922-5959
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|-------------------------------------------------------------------------|
| FIDELITY FINANCIAL OF OHIO, INC. |
| Pro Forma Branch Locations |
|-------------------------------------------------------------------------|
[Graphic-Depiction Branch locations of Fidelity Financial of Ohio, Inc.
in the Indiana & Kentucky Regions]
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<TABLE>
<CAPTION>
Transaction Description - Term Sheet
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<S> <C>
Structure: Merger of equals
Tax-free exchange of common stock accounted for as a
"pooling of interest"
Cross options granted to each company for 19.9% of the other
partner
Exchange Ratio: Fixed exchange ratio of 1.50 Fidelity shares for each share
of Glenway; Fidelity shares remain outstanding (FFOH - NMS)
Pro Forma Diluted Shares Outstanding: 9 million
Pro Forma Holding Company: Combined assets: $835 million
Combined market capitalization: $120 million
Pro Forma Identities: Holding Company: Fidelity Financial of Ohio, Inc. (FFOH - NMS)
Bank: Centennial Bank
Expected Closing: First quarter 1999, subject to regulatory and shareholder
approvals
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Transaction Description - Term Sheet
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Management of Holding Company:
<S> <C>
Chairman - John R. Reusing (current Fidelity President & CEO)
President & CEO - Robert R. Sudbrook (current Glenway President & CEO)
Chairman of Executive Committee - Edgar a. Rust (current Glenway Chairman)
Chief Financial Officer - Paul D. Staubach (current Fidelity Chief Financial Officer)
Chief Lending Officer - Joseph D. Hughes (current Fidelity Chief Lend Officer)
Chief Operations Officer - Elaine M. Schmidt (current Glenway Chief Operating Officer)
Board of Directors: 12 members - 7 directors from Fidelity & 5 directors from
Glenway
Headquarters: 5535 Glenway Avenue - Current Glenway headquarters
</TABLE>
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Strategic Rationale for Merger
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o Combine two well-known Cincinnati thrift franchises.
o Enhanced deposit market share creates largest community bank presence
in existing counties.
o Added scale provides competitive advantage:
- More locations to serve customers
- Greater scale to absorb investment in commercial lending
- Enhanced image to attract quality lenders and customers
o Largest "Cincinnati" only lending institution.
o Intend to convert to commercial bank charter and develop commercial
lending business.
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Merger Benefits
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o Merger creates a $835 million asset size Cincinnati-based community
banking franchise with approximately $120 million in market
capitalization.
o Identified cost savings of approximately $1.7 million which represents
12% of combined last 12 months G&A expenses. Potential for enhanced
cost savings post acquisition following evaluation of employee
compensation and benefit plans.
o Significantly accretive to both shareholder groups' earnings per
share.
o Pro forma institution creates significant opportunities in the merger
market arena.
o Combined management team provides enhanced intellectual capital
positioning company for successful transition into commercial banking
markets.
<PAGE>
Pro Forma Market Share
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Pro Forma Market Share for Hamilton County, Ohio
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1. Fifth Third Bancorp 23.96%
2. Provident Financial Group 22.39%
3. Star Banc Corp. 14.81%
4. PNC Bank Corp. 12.59%
5. FIDELITY FINANCIAL OF OHIO 3.83%
6. KeyCorp 2.41%
7. Huntington Bancshares 1.94%
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Cost Savings / One-time Charges
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Dollars in Thousands
Cost Savings Detail
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Salaries and payroll taxes $1,000
Benefits $100
Branch closures $100
Back office / operating costs $500
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Total $1,700
One-Time Charges
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Estimated one-time charges are not expected to exceed $4 million.
<PAGE>
Financial Impact of Transaction
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Dollars in thousands except for per share numbers
FFOH GFCO
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1999 I.B.E.S. EPS Estimates $.91 $1.42*
Annual Pre-Tax Cost Savings 1,700
After-Tax Cost Savings 1,080
Actual 9 Month Impact** 810
Annual per Share Impact .12
Actual 9 Month Impact .09
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Pro Forma EPS - Annual Savings | $1.03 $1.55 |
| |
Earnings Accretion | 13% 9% |
| |
Pro Forma EPS - Actual 99 Savings | $1.00 $1.50 |
| |
Earnings Accretion | 10% 6% |
|---------------------------|
*I.B.E.S. estimates not available; internal estimates used
** Transaction is expected to close in the first quarter in 1999
<PAGE>
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| FIDELITY FINANCIAL OF OHIO, INC. |
|-------------------------------------------------------------------------|
Balance Sheet Items (As of 6/30/98):
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Total Assets - $531,926
Total Deposits - $418,404
[Graphic-Depiction of 14 Branchs of Total Equity - $66,015
Fidelity Financial of Ohio, Inc.
located in Hamilton, Butler Income Statement Items (As of 6/30/98):
and Clermont Counties] ---------------------------------------
ROAA (LTM) - 0.90%
ROAE (LTM) - 7.20%
Efficiency Ratio (LTM) - 52.31%
Market Share Rank Diluted EPS (LTM) - $0.88
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1. Hamilton County, OH - #5 Market Information:
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2. Butler County, OH - #14
Stock Price (Close 9/25/98) - $13.25
3. Clermont Count, OH - #19
Market Capitalization - $74,226
Branch Detail: Price/Tangible Book Value - 126.31%
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# of Offices - 12 Price/LTM EPS - 15.06x
Avg. Deposits per Office - $34,867
*Dollars in Thousands
<PAGE>
|-------------------------------------------------------------------------|
| GLENWAY FINANCIAL CORPORATION |
|-------------------------------------------------------------------------|
Balance Sheet Items (As of 6/30/98):
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Total Assets - $303,332
Total Deposits - $220,639
[Graphic-Depiction of 5 Branchs of Total Equity - $29,211
Glenway Financial Corporation
located in Hamilton County] Income Statement Items (As of 6/30/98):
---------------------------------------
ROAA (LTM) - 0.92%
ROAE (LTM) - 9.58%
Efficiency Ratio (LTM) - 58.01%
Market Share Rank Diluted EPS (LTM) - $1.16
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1. Hamilton County, OH - #5 Market Information:
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Stock Price (Close 9/25/98) - $18.25
Market Capitalization - $41,851
Branch Detail: Price/Tangible Book Value - 146.12%
- -------------------------------------
# of Offices - 5 Price/LTM EPS - 15.73x
Avg. Deposits per Office - $44,128
*Dollars in Thousands
