<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
------------------------
PROVIDENT FINANCIAL GROUP, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
OHIO 6711 31-0982792
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
ONE EAST FOURTH STREET
CINCINNATI, OHIO 45202
(513) 579-2000
(Address, including zip code, and telephone
number, including area code, of
Registrant's principal executive offices)
Mark E. Magee, Esq.
Vice President, General Counsel and Secretary
Provident Financial Group, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
(513) 579-2000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
With copies to:
David C. Shobe, Esq.
Gary P. Kreider, Esq. Fowler, White, Gillen, Boggs,
Keating, Muething & Klekamp, P.L.L. Villareal & Banker, P.A.
1800 Provident Tower 501 East Kennedy Boulevard
One East Fourth Street Suite 1700
Cincinnati, Ohio 45202 Tampa, Florida 33602
(513) 579-6411 (813) 228-7411
(513) 579-6956 - fax (813) 229-8313 - fax
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
------------------------
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box.
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
Proposed
Maximum
Title of Each Class of Aggregate Amount of
Securities to be Registered Offering Price(1) Registration Fee(2)
===============================================================================
Common Shares $34,923,000 $10,583
- -------------------------------------------------------------------------------
(1) Based on $21 in market value of Registrant Common Stock for 1,663,000
shares of Common Stock of Florida Gulfcoast Bancorp, Inc.
(2) Computed pursuant to Rule 457(0)
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
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SUBJECT TO COMPLETION, DATED JULY 30, 1997
PROVIDENT FINANCIAL GROUP, INC.
PROSPECTUS FOR UP TO
_____ SHARES OF COMMON STOCK
---------
FLORIDA GULFCOAST BANCORP, INC.
PROXY STATEMENT
----------
This Proxy Statement/Prospectus is being furnished to the holders of
the Common Stock, $1.00 par value per share of Florida Gulfcoast Bancorp, Inc.
("Florida Gulfcoast") in connection with the solicitation of proxies by the
Florida Gulfcoast Board of Directors for use at a Special Meeting of
Shareholders of Florida Gulfcoast to be held at 1549 Ringling Boulevard,
Sarasota, Florida on September 4, 1997 at 5:30 p.m. Eastern Daylight Time, and
at any postponements or adjournments thereof. The meeting is for the purpose of
considering an Agreement and Plan of Reorganization ("Reorganization Agreement")
and the related Agreement and Plan of Merger (the "Merger Agreement") whereby
Florida Gulfcoast will merge into a newly formed subsidiary of Provident
Financial Group, Inc. (the "Merger") and all holders of Common Stock of Florida
Gulfcoast will receive Common Stock of Provident Financial Group, Inc.
("Provident Financial"). A copy of the Reorganization Agreement is attached as
Annex A and incorporated herein by reference.
This Proxy Statement/Prospectus also constitutes part of a Registration
Statement filed by Provident Financial with the Securities and Exchange
Commission relating to the Provident Financial Common Stock to be issued in the
Merger.
Consummation of the Merger is subject, among other things, to approval
of the Merger by the affirmative vote of two-thirds of the outstanding shares of
Florida Gulfcoast Common Stock at the Special Meeting.
Provident Financial Common Stock is traded on the Nasdaq National
Market under the symbol "PFGI." On May 21, 1997, the last trading date prior to
public announcement of the signing of the Reorganization Agreement, the last
reported sales price for Provident Financial Common Stock was $39.75. On August
__, 1997 the last reported sales price for Provident Financial Common Stock was
$____. Florida Gulfcoast Common Stock is not actively traded.
This Proxy Statement/Prospectus and the accompanying Proxy are first
being mailed to shareholders of Florida Gulfcoast on August ___, 1997.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is August __, 1997
2
<PAGE> 3
FLORIDA GULFCOAST BANCORP, INC.
1549 Ringling Boulevard
Sarasota, Florida 34236
August ___, 1997
Dear Shareholder:
On behalf of the Board of Directors, we cordially invite you to attend
a Special Meeting of shareholders of Florida Gulfcoast Bancorp, Inc. which will
be held at 5:30 p.m. Eastern Standard Time, on Thursday, September 4, 1997, at
the main office of Florida Gulfcoast at 1549 Ringling Boulevard, Sarasota,
Florida 34236. The Special Meeting is being called for the following purposes:
1. To approve the Agreement and Plan of Reorganization dated as of May
21, 1997, among Provident Financial Group, Inc., its subsidiary FGBI
Acquisition Corp., Florida Gulfcoast and Enterprise National Bank
("Enterprise") and the related Agreement and Plan of Merger among
these parties. Pursuant to these agreements, Florida Gulfcoast will
merge into FGBI Acquisition Corp. At the time the Merger becomes
effective, the issued and outstanding shares of common stock, $1.00
par value per share, of Florida Gulfcoast ("Florida Gulfcoast Common
Stock"), including Florida Gulfcoast Common Stock issued pursuant to
the Stock Option Plan of Florida Gulfcoast, shall be converted, by
virtue of the Merger, into the right to receive Provident Financial
Group, Inc. Common Stock, no par value, having a market value of $21
for each share of Florida Gulfcoast Common Stock, based upon the
arithmetic mean of the average of the daily closing representative bid
and asked prices of Provident Financial Common Stock as reported on
the Nasdaq National Market for the twenty trading days preceding the
fifth day before the closing date. Only whole shares of Provident
Financial Common Stock will be issued. Any shareholder otherwise
entitled to receive a fractional share will receive cash in lieu of
such fractional share. The proposed Merger is discussed in detail in
the accompanying Proxy Statement/Prospectus and the Reorganization
Agreement and the Merger Agreement which are appended thereto as Annex
A. We urge you to read the entire Proxy Statement/Prospectus.
2. To adjourn the Special Meeting if necessary to solicit additional
proxies.
3. To transact such other business as may properly come before the
Special Meeting or any adjournments thereof. The Board of Directors is
not aware of any other business to come before the Special Meeting.
Pursuant to the Bylaws of Florida Gulfcoast, the Board of Directors has
fixed July 31, 1997 as the record date for the determination of shareholders
entitled to receive notice of, and to vote at, the Special Meeting and any
adjournments thereof. Only holders of record of Florida Gulfcoast Common Stock
at the close of business on such date will be entitled to vote at the Special
Meeting or any adjournments thereof. As more completely described in the Proxy
Statement/Prospectus, dissenting shareholders, who comply with applicable laws,
are entitled to receive payment in cash for the fair market value of their
shares in lieu of receiving Provident Financial Common Stock, provided the
Merger is consummated. Such dissenting shareholders will be entitled to payment
in cash of the value of only those shares held by the dissenting shareholders
which at the Special Meeting are not voted for approval of the Reorganization
Agreement and Merger Agreement and with respect to which the shareholder has
given written notice to Florida Gulfcoast before the vote is taken at the
Special Meeting that the shareholder dissents from the Reorganization Agreement
and Merger Agreement.
THE REORGANIZATION AGREEMENT AND THE MERGER AGREEMENT MUST BE APPROVED
BY THE AFFIRMATIVE VOTE OF TWO-THIRDS OF THE ISSUED AND OUTSTANDING SHARES OF
FLORIDA GULFCOAST COMMON STOCK ENTITLED TO VOTE. AN ABSTENTION OR FAILURE TO
VOTE HAS THE SAME EFFECT AS A VOTE AGAINST THE PROPOSED MERGER. IT IS,
THEREFORE, IMPORTANT THAT YOU VOTE ON THE MERGER.
EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE SPECIAL
MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT
DELAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
3
<PAGE> 4
IMPORTANT: If your Florida Gulfcoast Common Stock is held in the name of a
brokerage firm or nominee, only they can execute a proxy on your behalf. To
assure that your shares are voted, we urge you to telephone today the individual
responsible for your account at your brokerage firm and obtain instructions on
how to direct him or her to execute a proxy.
The Board of Directors has determined that the terms of the
Reorganization Agreement and the transactions contemplated thereby are fair to,
and in the best interests of, Florida Gulfcoast and Florida Gulfcoast's
shareholders. The Florida Gulfcoast Board of Directors recommends that you vote
"FOR" the approval and adoption of the Plan of Reorganization and the related
Agreement and Plan of Merger.
If you have any questions, please telephone either Stephen E. Kunk or
Tramm Hudson at telephone number (941) 954-5700.
Sarasota, Florida August __, 1997
By Order of the Board of Directors
- -----------------------------------------
Stephen E. Kunk, Chairman
- ------------------------------------------
Tramm Hudson, President
4
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TABLE OF CONTENTS
Page
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AVAILABLE INFORMATION..................................................................7
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................................7
SUMMARY ..............................................................................9
The Companies.................................................................9
The Reorganization Agreement..................................................9
Provident Financial Common Stock Outstanding..................................9
Florida Gulfcoast Special Meeting.............................................9
Regulatory Approvals..........................................................9
Recommendation of Florida Gulfcoast's Board of Directors......................9
Dissenters' Rights...........................................................10
Certain Income Tax Considerations............................................10
Comparative Per Share Data...................................................10
SELECTED FINANCIAL DATA...............................................................11
Provident Financial..........................................................11
Florida Gulfcoast ...........................................................13
MARKET PRICE AND DIVIDEND DATA........................................................15
FLORIDA GULFCOAST BANCORP, INC. SPECIAL MEETING.......................................16
Purpose of the Special Meeting...............................................16
Vote Required to Approve Reorganization Agreement............................16
Voting at the Special Meeting................................................16
Ownership of Florida Gulfcoast Common Stock..................................17
THE MERGER............................................................................17
Background and Reasons for Florida Gulfcoast Entering into the Merger........17
Opinion of Financial Advisor to Florida Gulfcoast............................19
Interests of Certain Named Persons in the Merger.............................24
Regulatory Requirements......................................................25
Accounting Treatment.........................................................25
Certain Federal Income Tax Consequences......................................25
Dissenters' Rights...........................................................26
Shares Received..............................................................27
THE AGREEMENT AND PLAN OF REORGANIZATION..............................................27
Terms of the Merger..........................................................27
Conditions to the Merger; Regulatory Approval................................28
Termination and Amendment....................................................28
Effectiveness of Merger......................................................29
PROVIDENT FINANCIAL GROUP, INC........................................................29
Introduction.................................................................29
Commercial Banking...........................................................29
Consumer Banking.............................................................29
Retail Distribution..........................................................29
Other Operations.............................................................29
New Financial Services.......................................................30
FLORIDA GULFCOAST BANCORP, INC........................................................30
Introduction.................................................................30
Regulation...................................................................31
Dividends....................................................................31
Non-Performing Assets........................................................32
Management's Discussion and Analysis of Financial Condition
and Results of Operations of Florida Gulfcoast...............................32
Results of Operations........................................................39
</TABLE>
5
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<TABLE>
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DESCRIPTION OF CAPITAL STOCKS....................................................................................46
Provident Financial.....................................................................................46
Florida Gulfcoast.......................................................................................47
Material Differences in Rights of Shareholders..........................................................48
LEGAL MATTERS....................................................................................................49
EXPERTS ........................................................................................................49
OTHER MATTERS....................................................................................................49
SHAREHOLDER PROPOSALS............................................................................................49
FLORIDA GULFCOAST BANCORP, INC. FINANCIAL STATEMENTS.............................................................50
Annex A -- Agreement and Plan of Reorganization between Florida Gulfcoast
Bancorp, Inc. and Provident Financial Group, Inc.
Annex B -- Quarterly Report on Form 10-Q for the quarter ended March 31,
1997 of Provident Financial Group, Inc.
Annex C -- Sections 607.1301, 607.1302 and 607.1320 of the Florida Statutes.
</TABLE>
6
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AVAILABLE INFORMATION
Provident Financial is subject to the informational requirements of the
Securities Exchange Act of 1934 and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission.
Such reports, proxy and information statements and other information filed with
the Commission by Provident Financial may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's Regional Offices located at the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois, and at
Seven World Trade Center, Suite 1300, New York, New York. Copies of such
material can also be obtained, at prescribed rates, by mail from the Public
Reference Section of the Commission at its Washington, D.C. address set forth
above. In addition, material filed by Provident Financial can be obtained and
inspected at the offices of The Nasdaq National Market, 9513 Key West Avenue,
Rockville, Maryland 20850, on which Provident Financial Common Stock is listed.
The Commission maintains a Web site (located at http://www.sec.gov) that
contains reports, proxy statements and other information regarding Provident
Financial.
Provident Financial has filed with the Commission a Registration
Statement on Form S-4 (together with any amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933 with respect to the
securities offered hereby. This Proxy Statement/Prospectus does not containall
ofall of the information set forth in the Registration Statement, certain parts
of which were omitted in accordance with the rules and regulations of the
Commission. Such additional information may be obtained from the public
reference room of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549. Statements contained in this Proxy Statement/Prospectus or in any
document incorporated by reference herein as to the contents of any contract or
other document referred to herein or therein are not necessarily complete, and
in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE CERTAIN
DOCUMENTS RELATING TO PROVIDENT FINANCIAL WHICH ARE NOT PRESENTED HEREIN OR
DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN THE EXHIBITS TO SUCH DOCUMENTS,
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH
DOCUMENTS) ARE AVAILABLE WITHOUT CHARGE UPON REQUEST FROM INVESTOR RELATIONS
DEPARTMENT, PROVIDENT FINANCIAL GROUP, INC., 801 LINN STREET, 855E, CINCINNATI,
OHIO 45203, TELEPHONE (513) 345-7102. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY AUGUST 30, 1997.
Provident Bancorp, Inc.'s (now known as Provident Financial Group,
Inc.) Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, which have
been filed by Provident Financial (File No. 1-8019) with the Commission, are
hereby incorporated by reference in this Proxy Statement/Prospectus. All
documents filed by Provident Financial pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Proxy Statement/Prospectus and
prior to the termination of the offering of the Securities offered hereby shall
be deemed to be incorporated by reference herein from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement/Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Proxy
Statement/Prospectus.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IN CONNECTION
WITH THE SOLICITATION OF PROXIES AND THE OFFERING MADE HEREBY AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY PROVIDENT FINANCIAL OR FLORIDA GULFCOAST.
THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE THE SOLICITATION OF
A PROXY OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE ANY
SECURITIES IN ANY JURISDICTION IN WHICH SUCH SOLICITATION OR OFFER MAY NOT
LAWFULLY BE MADE.
7
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THIS PROXY STATEMENT/PROSPECTUS DOES NOT COVER ANY RESALES OF THE
PROVIDENT FINANCIAL COMMON STOCK OFFERED HEREBY TO BE RECEIVED BY SHAREHOLDERS
OF FLORIDA GULFCOAST DEEMED TO BE AFFILIATES OF PROVIDENT FINANCIAL OR FLORIDA
GULFCOAST UPON THE CONSUMMATION OF THE MERGER. SEE "THE MERGER - SHARES
RECEIVED."
NEITHER THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR ANY
DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL IMPLY THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF PROVIDENT
FINANCIAL OR FLORIDA GULFCOAST SINCE THE DATE HEREOF.
8
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SUMMARY
The following is a summary of information contained elsewhere herein or
incorporated by reference.
THE COMPANIES
Provident Financial is a Cincinnati-based commercial banking and
financial services company which operates primarily in Ohio and northern
Kentucky. Provident Financial recently expanded its operations to provide
financial services on a national scale further reducing its dependence upon a
single geographic region. At March 31, 1997, Provident Financial had total
assets of $7 billion, total deposits of $4.8 billion and total shareholders'
equity of $541 million. Provident Financial's executive offices are located at
One East Fourth Street, Cincinnati, Ohio 45202, telephone (513) 579-2000.
Florida Gulfcoast is a holding company for Enterprise National Bank
located in Sarasota, Florida with assets of approximately $163 million. Its
executive offices are located at 1549 Ringling Boulevard, Sarasota, Florida
34236, telephone (941) 954-5700.
FGBI Acquisition Corp. is a subsidiary of Provident Financial formed
solely for purposes of the Merger.
THE REORGANIZATION AGREEMENT
If the Merger is approved, Florida Gulfcoast will merge into FGBI
Acquisition Corp. and shareholders of Florida Gulfcoast will receive Provident
Financial Common Stock with a market value of $21 for each outstanding share of
Florida Gulfcoast Common Stock. See "The Agreement and Plan of Reorganization"
for a description of the method of computing the market value and number of
shares of Provident Financial Common Stock to be issued. The consummation of the
Merger is subject to regulatory and other conditions. Florida Gulfcoast may
terminate the Merger Agreement if the market value, as determined, of Provident
Financial's Common Stock exceeds $46.7543 and Provident Financial does not elect
to proceed with a market value deemed to be $46.7543. Provident Financial may
terminate the Merger Agreement if that market value is less than $33.9958 and
Florida Gulfcoast does not elect to proceed with a market value deemed to be
$33.9958. On May 21, 1997, the last trading date prior to announcement of the
proposed Merger, the last reported sale price for Provident Financial's Common
Stock was $39.75 and on August __, 1997 it was $-------------.
PROVIDENT FINANCIAL COMMON STOCK OUTSTANDING
41,027,352 shares at March 31, 1997. The terms of Provident Financial's
Common Stock are described under "Description of Capital Stocks."
FLORIDA GULFCOAST SPECIAL MEETING
September 4, 1997 at 5:30 p.m., at Florida Gulfcoast's main office,
1549 Ringling Boulevard, Sarasota, Florida 34236. Approval of the Merger
requires the affirmative vote of two-thirds of the outstanding shares of Florida
Gulfcoast Common Stock.
REGULATORY APPROVALS
Consummation of the transactions contemplated by the Reorganization
Agreement is subject to approval by the Federal Reserve Board and the Florida
Department of Banking and Finance.
RECOMMENDATION OF FLORIDA GULFCOAST'S BOARD OF DIRECTORS
The Board of Directors of Florida Gulfcoast unanimously recommends
that the shareholders vote for approval of the Reorganization Agreement. See
"The Merger - Background and Reasons for Florida Gulfcoast Entering into the
Merger."
9
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DISSENTERS' RIGHTS
Shareholders of Florida Gulfcoast who comply with Section 607.1301,
607.1302 and 607.1320 of the Florida Statutes may exercise dissenters' rights.
See "The Merger - Dissenters' Rights."
CERTAIN INCOME TAX CONSIDERATIONS
The parties expect that the Merger will constitute a tax-free
transaction for Federal income tax purposes. See "The Merger - Certain Federal
Income Tax Consequences."
COMPARATIVE PER SHARE DATA
Provident Financial's fully diluted earnings per share were $1.94 for
1996 and $.63 for the three months ended March 31, 1997. Florida Gulfcoast's
fully diluted earnings per share for the same periods were $.94 and $.28,
respectively. Provident Financial paid $.467 per share in dividends in 1995,
$.542 per share in 1996 and $.32 per share for the first half of 1997.
Commencing with the third quarter of 1997 its dividend rate will be $.20 per
quarter. Florida Gulfcoast paid no dividends during these periods. Pro forma
information is not presented since the Merger will have no material effect on
the financial statements of Provident Financial.
10
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SELECTED FINANCIAL DATA
PROVIDENT FINANCIAL
The following is a summary of selected financial data for Provident
Financial and subsidiaries for the three month periods ended March 31, 1997 and
1996 and the five years ended December 31, 1996. This Summary should be read in
conjunction with the financial statements and notes thereto which are
incorporated by reference herein.
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
------------------------ ------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Unaudited)
(In thousands, except per share and ratio data)
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Earnings Statement Data:
Total interest income $ 137,286 $ 125,798 $ 520,325 $ 462,396 $ 345,829 $ 286,839 $ 287,622
Net interest income 63,533 57,464 240,068 202,649 181,958 162,836 145,260
Provision for loan and lease
losses 11,000 10,000 47,000 14,000 12,000 12,000 14,663
Earnings before cumulative
effect of changes in
accounting principles 27,307 19,675 81,200 71,860 57,666 51,272 45,764
Net earnings 27,307 19,675 81,200 71,860 57,666 51,272 43,618
Net earnings per common
share (1):
Primary .64 .48 1.97 1.93 1.53 1.37
Fully Diluted .63 .47 1.94 1.75 1.40 1.27
Cash dividends per common
share .160 .122 .542 .467 .418 .365 .302
BALANCE SHEET DATA:
Total loans and leases 5,071,712 4,890,020 5,311,448 4,896,076 4,204,538 3,389,888 2,900,761
Total assets 6,780,351 6,243,785 6,829,088 6,205,351 5,411,491 4,698,433 3,979,888
Total deposits 4,822,787 4,201,603 4,596,480 4,178,551 4,068,649 3,231,627 3,130,054
Long-term debt 766,170 820,003 949,913 820,083 383,433 275,527 38,643
Total shareholders' equity . 540,669 448,965 516,805 432,537 359,351 335,892 296,465
<FN>
- -----------------------
(1) Historical earnings per share for the year ended December 31, 1992 are
not presented above because they are not meaningful due to the
conversion merger transactions with four mutual savings and loan
associations in 1992.
The unaudited pro forma earnings per common share and the unaudited pro
forma fully diluted earnings per common share before cumulative effect
of changes in accounting principles would have been $1.33 and $1.22,
respectively, and the unaudited pro forma net earnings per common share
and the unaudited pro forma fully diluted net earnings per common share
would have been $1.27 and $1.16, respectively, in 1992. Earnings per
share on a pro forma basis for 1992 assumes the merger of the four
mutual associations and Provident Financial had occurred on January 1,
1992 and includes the increase in earnings associated with the
investment of the net proceeds raised in regard to the sale of
Provident Financial Common Stock in the subscription offerings. The
weighted average shares used in the computation of pro forma net
earnings per common share and the pro forma fully diluted net earnings
per common share were 32,143,500 shares and 37,899,000 shares,
respectively, in 1992.
</TABLE>
11
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PROVIDENT FINANCIAL AND SUBSIDIARIES
SELECTED FINANCIAL RATIOS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
--------------------- ----------------------------------------------------
(Based on average balances) 1997 1996 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------
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SELECTED RATIOS:
Performance Ratios: (1)
Return on average assets 1.62% 1.29% 1.28% 1.29% 1.24% 1.30% 1.20%
Return on average shareholders' equity 20.76 18.08 17.67 18.37 16.64 16.33 17.05
Net interest margin (2) 4.04 3.95 3.96 3.82 4.10 4.36 4.29
Net interest rate spread (3) 3.36 3.32 3.33 3.17 3.57 3.87 3.79
Noninterest expense to average assets (4) 2.70 2.35 2.62 2.48 2.55 2.79 2.89
Asset quality ratios (1):
Nonperforming assets to total loans, leases
and other real estate owned (period end) (5) .68 .86 .54 .98 .25 .80 1.40
Nonperforming loans to total loans and leases
(period end) (6) .47 .66 .41 .86 .17 .54 .88
Reserve for loan and lease losses to total
loans and leases (period end) 1.35 1.25 1.26 1.23 1.24 1.20 1.21
Reserve for loan and lease losses to
nonperforming loans (period end) 286.55 187.55 304.51 142.57 714.29 222.97 138.44
Net charge-offs to average net loans and .71 .77 .85 .13 .02 .24 .38
leases
Capital adequacy ratios:
Total shareholders' equity to assets (period
end) 7.97 7.19 7.57 6.97 6.64 7.15 7.45
Tier 1 leverage ratio 9.11 7.12 9.02 7.13 7.21 7.88 7.87
Risk-based capital ratios:
Tier 1 capital 9.48 7.71 9.23 7.52 7.86 8.89 9.20
Total capital 13.25 11.93 13.05 11.77 12.85 12.24 10.71
Book Value Per Share 12.47 10.77 12.09 10.47 8.74 8.24 7.37
<FN>
- ------------------------
(1) Certain performance and asset quality ratios for the three months ended
March 31, 1997 and 1996 have been annualized where applicable.
(2) Net interest margin represents net interest income, on a fully taxable
equivalent basis, divided by average interest earning assets.
(3) Net interest rate spread represents the difference between the average
yield on interest earning assets and the average cost of interest
bearing liabilities, on a fully taxable equivalent basis.
(4) Noninterest expense excludes expenses relating to real estate acquired
in settlement of loans and amortization of intangibles.
(5) Nonperforming assets consist of nonaccruing loans, renegotiated loans
and real estate owned. Real estate owned includes real estate acquired
in settlement of loans, including in-substance foreclosures.
(6) Nonperforming loans consist of nonaccruing loans and renegotiated
loans.
</TABLE>
12
<PAGE> 13
FLORIDA GULFCOAST
The following is a summary of selected financial data for Florida
Gulfcoast and subsidiary for the three month periods ended March 31, 1997 and
1996 and the five years ended December 31, 1996. This summary should be read in
conjunction with the financial statements and notes thereto of Florida Gulfcoast
and subsidiary which are presented elsewhere herein.
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
----------- ------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
(Unaudited)
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income $ 3,218 $ 2,654 $11,313 $ 9,711 $ 6,590 $ 5,885 $ 5,380
Net interest income 1,697 1,330 5,963 4,554 3,962 3,656 2,842
Provision for loan losses 60 75 225 132 160 320 250
Earnings before cumulative
effect of changes in
accounting principles 454 309 1,538 1,025 612 577 297
Net earnings 454 309 1,538 1,025 612 854 472
Fully diluted earnings per share 0.28 0.19 0.94 0.63 0.38 0.53 0.29
Dividends paid per common share -- -- -- -- -- -- --
Total loans 111,472 91,999 103,409 87,614 80,987 63,430 53,510
Total assets 163,001 139,725 158,291 136,594 109,964 90,771 75,943
Total deposits 142,420 123,917 137,900 116,467 94,496 80,518 67,213
Total shareholders' equity 11,788 10,330 11,568 10,225 8,118 8,197 7,300
Book value per share 7.22 6.35 7.08 6.28 5.07 5.12 4.56
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
FLORIDA GULFCOAST AND SUBSIDIARY
SELECTED FINANCIAL RATIOS
(Unaudited)
Three Months Ended
March 31, Year Ended December 31,
------------------ --------------------------------------------------
(Based on average balances) 1997 1996 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED RATIOS:
Performance Ratios: (1)
Return on average assets 1.13% 0.89% 1.04% .80% .62% 1.01% .71%
Return on average shareholders' equity 15.49 11.98 14.37 11.15 7.54 11.08 6.87
Net interest margin (2) 4.41 4.09 4.39 3.72 4.16 4.82 4.61
Net interest rate spread (3) 3.68 3.33 3.65 2.94 3.48 4.26 3.96
Noninterest expense to average assets 2.71 2.59 2.57 2.56 3.28 3.79 3.69
Asset quality ratios (1):
Nonperforming assets to total loans,
leases and other real estate owned
(period end) (4) .23 .23 .25 .81 .51 .33 .72
Nonperforming loans to total loans and
leases (period end) (5) .23 .23 .25 .60 .51 .33 .08
Reserve for loan and lease losses to total
loans and leases (period end) 1.19 1.21 1.23 1.17 1.23 1.35 1.33
Reserve for loan and lease losses to
nonperforming loans (period end) 512.31 533.65 500.00 194.36 241.40 402.36 1,690.48
Net charge-offs to average net loans
and leases .003 .003 (.01) .11 .02 .30 .09
Capital adequacy ratios:
Total shareholders' equity to assets 7.23 7.39 7.31 7.49 7.38 9.03 9.61
(period end)
Tier 1 leverage ratio (6) 7.19 7.16 7.25 7.37 8.25 8.90 9.94
Risk-based capital ratios:
Tier 1 capital (6) 10.72 10.75 10.62 10.72 11.59 12.63 13.15
Total capital (6) 11.96 11.96 11.84 11.88 12.84 13.88 14.39
<FN>
- -------------------
(1) Certain performance and asset quality ratios for the three months ended
March 31, 1997 and 1996 have been annualized where applicable.
(2) Net interest margin represents net interest income divided by average
interest earning assets.
(3) Net interest rate spread represents the difference between the average
yield on interest earning assets and the average cost of interest
bearing liabilities.
(4) Nonperforming assets consist of loans past due 90 days or more and
still accruing, nonaccrual loans, and real estate owned.
(5) Nonperforming loans consist of loans past due 90 days or more and still
accruing and nonaccrual loans.
(6) Florida Gulfcoast was formed in 1995. Risk-based capital for 1992, 1993
and 1994 represents the position of Enterprise. In 1995
Florida Gulfcoast was not required to report consolidated risk-based
capital ratios and as such 1995's figures represent the position of
Enterprise.
</TABLE>
14
<PAGE> 15
MARKET PRICE AND DIVIDEND DATA
Provident Financial Common Stock is traded on the Nasdaq National
Market under the symbol "PFGI." The following table sets forth, for the periods
indicated, quarterly dividends paid by Provident Financial and the high and low
closing sales prices for Provident Financial Common Stock:
<TABLE>
<CAPTION>
High Low Dividends Paid
---- --- --------------
1995
<S> <C> <C> <C>
First Quarter $15.67 $13.67 $.111
Second Quarter 15.78 13.83 .111
Third Quarter 18.67 15.22 .122
Fourth Quarter 21.56 17.89 .122
1996
First Quarter 23.33 20.67 .122
Second Quarter 25.33 22.11 .140
Third Quarter 29.25 22.67 .140
Fourth Quarter 38.00 28.83 .140
1997
First Quarter 39.38 33.50 .160
Second Quarter 47.00 33.50 .160
Third Quarter (through July 25, 1997) 52.25 43.13 .200
</TABLE>
On August ___, 1997 the last reported sales price for the Provident
Financial Common Stock on the Nasdaq National Market was $_____ per share. As of
___________, 1997 there were approximately _____ holders of record of Provident
Financial Common Stock on which Provident Financial believes represents
approximately ____________ beneficial holders.
Florida Gulfcoast Common Stock is not actively traded. The following
table sets forth, to the best knowledge of Florida Gulfcoast management, the
high and low sales prices for Florida Gulfcoast Common Stock for the periods
specified. However, it is possible that purchases and sales of Florida Gulfcoast
Common Stock, of which management is not aware, occurred between private parties
during this period. As of March 31, 1997, the number of holders of record of
Florida Gulfcoast Common Stock was 137. No dividends have been paid during these
periods.
<TABLE>
<CAPTION>
High Low
---- ---
1995
<S> <C> <C>
First Quarter $ 7.00 $ 7.00
Second Quarter no activity no activity
Third Quarter 9.00 5.88
Fourth Quarter 9.50 9.00
1996
First Quarter 11.00 9.00
Second Quarter 11.00 11.00
Third Quarter 11.00 11.00
Fourth Quarter 11.00 11.00
1997
First Quarter 12.00 12.00
Second Quarter no activity no activity
Third Quarter (through July 25, 1997) 18.50 18.50
</TABLE>
<PAGE> 16
FLORIDA GULFCOAST BANCORP, INC. SPECIAL MEETING
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, shareholders of Florida Gulfcoast will be asked
to vote upon the approval of a Reorganization Agreement between Florida
Gulfcoast and Provident Financial dated May 21, 1997. Pursuant to the
Reorganization Agreement, Florida Gulfcoast will merge into FGBI Acquisition
Corp., a newly-formed subsidiary of Provident Financial.
If the Merger is approved and consummated, for each share of Florida
Gulfcoast Common Stock, each Florida Gulfcoast shareholder shall receive
Provident Financial Common Stock having a market value of $21.00. The market
value will be based on the arithmetic mean of the average of the closing
representative bid and asked prices for Provident Financial Common Stock on the
Nasdaq National Market for the twenty trading days immediately preceding the
fifth day before the closing of the merger of Florida Gulfcoast into the
subsidiary of Provident Financial.
Florida Gulfcoast's Board of Directors has unanimously approved the
Reorganization Agreement and recommends that shareholders approve it. The Board
of Directors of Florida Gulfcoast believes that the terms of the Merger are
fair, from a financial point of view, to Florida Gulfcoast's shareholders. See
"The Merger - Background and Reasons for Florida Gulfcoast Entering into the
Merger."
VOTE REQUIRED TO APPROVE REORGANIZATION AGREEMENT
Approval of the Reorganization Agreement will require the affirmative
vote of two-thirds of the outstanding shares of Florida Gulfcoast Common Stock.
Abstentions and broker non-votes will be treated as votes that are not cast and,
therefore, will have the same effect as a negative vote.
VOTING AT THE SPECIAL MEETING
Shareholders of record of Florida Gulfcoast at the close of business on
July 31, 1997 are entitled to receive notice of and to vote at the Special
Meeting. At the close of business on March 31, 1997, there were 1,600,000 shares
of Florida Gulfcoast Common Stock outstanding. Each share of Florida Gulfcoast
Common Stock is entitled to one vote. Under Florida Statutes, shareholders of
Florida Gulfcoast will have the right to dissent from the Merger if the
Reorganization Agreement is approved and the Merger is consummated, and demand
the fair value of the shares of Florida Gulfcoast Common Stock held by such
holders in cash, if such dissenting shareholders follow the procedures provided
by applicable law which are described elsewhere in this Proxy
Statement/Prospectus. It is anticipated that 63,000 additional shares of Florida
Gulfcoast Common Stock will be issued pursuant to the exercise of all of Florida
Gulfcoast's outstanding stock options prior to the Special Meeting. See "The
Agreement and Plan of Reorganization - Terms of the Merger." Although those
shares will not be entitled to vote at the Special Meeting and will not be
entitled to dissenters' rights, since they will be issued after the record date
of July 31, 1997, they will receive the Merger consideration, if the Merger is
consummated.
Shareholders of Florida Gulfcoast may vote in person or by proxy at the
Special Meeting. Proxies given may be revoked at any time by filing with Florida
Gulfcoast either a written revocation or a duly executed proxy bearing a later
date, or by appearing at the Special Meeting and voting in person. All shares
will be voted as specified on each properly executed proxy. If no choice is
specified, the shares will be voted, as recommended by the Board of Directors,
in favor of the Merger. A proxy will also give authority for voting the shares
in favor of adjournment of the Special Meeting if necessary or upon any other
matter that may come before the Special Meeting. The Board of Directors of
Florida Gulfcoast knows of no other business which will be presented at the
Special Meeting. If such other matters are brought before the Special Meeting,
however, the persons appointed as proxies will have the discretion to vote those
shares in accordance with their judgment.
Proxies may be solicited by phone, mail, facsimile or in person by
officers, directors and employees of Florida Gulfcoast, none of whom will be
specifically compensated for such services. Florida Gulfcoast will bear the
expenses of its proxy solicitation.
16
<PAGE> 17
OWNERSHIP OF FLORIDA GULFCOAST COMMON STOCK
The only person who beneficially owns over 5% of the outstanding
Florida Gulfcoast Common Stock is:
<TABLE>
<CAPTION>
PERCENTAGE
NO. OUTSTANDING
NAME OF SHARES SHARES
---- --------- ------
<S> <C> <C>
James W. Heavener . . . .. . . . . . . . . . . . 85,726 5.36%
</TABLE>
Ownership of Florida Gulfcoast by its directors and certain executive
officers is as follows:
<TABLE>
<CAPTION>
No. of Percentage
Name Position Shares Outstanding Shares
- ------------------------------ -------------------------------------- ------------------------------------
<S> <C> <C> <C>
Robert M. Beall, III Director 55,200 3.45%
John B. Davidson Director 30,000 1.88%
Donald O. Featherman Director 30,000 1.88%
James W. Heavener Director 85,726 5.36%
Tramm Hudson Director/President 64,000 4.00%
Alyce W. Kalin Director 70,000 4.38%
Wendel F. Kent Director 57,000 3.56%
Stephen E. Kunk Chairman/CEO/Director 28,945 1.81%
Richard E. Nelson Director 50,000 3.13%
Dr. Alan H. Porter Director 60,000 3.75%
Ernest C. Sears, Jr. Director 20,000 1.25%
Thomas P. Abelmann Executive Vice President/ 1,000 0.06%
Treasurer/Secretary
All directors and executive
officers as a group 551,871 34.51%
</TABLE>
All of these persons have indicated that they will vote in favor of the
Reorganization Agreement.
THE MERGER
BACKGROUND AND REASONS FOR FLORIDA GULFCOAST ENTERING INTO THE MERGER
The initial contact between Florida Gulfcoast and Provident Financial
was the result of an introduction made by a Florida Gulfcoast Director who was
acquainted with Provident Financial CEO Allen Davis.
The first meeting between Florida Gulfcoast and Provident Financial
occurred in February 1997 when two Provident Financial executives, on a visit to
Florida, met with Florida Gulfcoast executives for the purpose of introducing
Provident Financial and a Florida expansion strategy Provident Financial had
developed focusing on the South West coast of Florida. They explained their
company's desire to expand into Florida via acquisitions and branching and
expressed their desire to identify a community bank and management team to serve
as the platform for this expansion. Provident Financial's acquisition of a small
community bank in southern Hillsborough County was explained as the first step
in their implementation of this strategy. This initial meeting
17
<PAGE> 18
was followed by a luncheon later in February including Florida Gulfcoast
Chairman and CEO Stephen E. Kunk and Provident Financial Senior Vice President
Charles W. Sulerzyski, the Provident Financial executive charged with
implementing their strategy in Florida, for further discussion of the Provident
Financial Florida strategy.
In March 1997, another exploratory meeting was scheduled to include
Florida Gulfcoast executives and the CEO of Provident Financial Allen Davis.
During this meeting there was additional discussion of the Provident Financial's
Florida strategy and the Florida Gulfcoast growth strategy in Sarasota and
Manatee counties. Provident Financial expressed interest in acquiring Florida
Gulfcoast, retaining it's management team, and building a Florida franchise
using Florida Gulfcoast as a platform. CEO Davis indicated a preliminary
proposal would be forthcoming.
Prior to the regular Florida Gulfcoast March Board of Directors meeting,
a preliminary proposal was received from Provident Financial indicating interest
in discussing a merger of Florida Gulfcoast and Provident Financial with an
indicated value of $31,900,000. This indication of interest was presented to the
Florida Gulfcoast Board on March 16, 1997 during the Board meeting. Attending
that meeting as advisors to the Board were representatives of Sandler O'Neill &
Partners, LP, an investment banking firm previously retained by the Board. Mr.
Kunk discussed with the Board the details of the discussions that took place at
the earlier meetings with Provident Financial, some history and background on
Provident Financial and its operations, its Florida expansion strategy, and its
plans for Florida Gulfcoast and management. The Sandler O'Neill representatives
discussed with the Board the current merger and acquisition climate in Florida
for community banks, the value of the initial Provident Financial expression of
interest, and a model the Board should consider in evaluating the proposal. The
Board discussed the future of Florida Gulfcoast and the challenges as well as
opportunities the company faces in the very competitive Florida banking market.
In addition, the Board discussed the potential impact a merger with Provident
Financial could have on shareholders, employees, customers, and the community.
After lengthy discussion, the Board instructed Mr. Kunk and Sandler O'Neill
representatives to schedule a meeting with Provident Financial to explore the
Provident Financial expression of interest and to determine if an acquisition
with an acceptable value and structure could be reached. Following this meeting
Mr. Kunk received from Provident Financial a proposed letter of intent and asked
the representative of Sandler O'Neill and Mr. David Shobe, a representative of
the law firm of Fowler, White, Gillen, Boggs, Villareal and Banker, P.A.,
Florida Gulfcoast's special legal counsel, to review the provisions of this
proposed letter of intent and suggest and assist in negotiating its terms.
During the same period, Mr. Kunk had informal discussions with two other bank
holding companies interested in Florida Gulfcoast. One of these was unsolicited
and the other had been approached by representatives of Sandler O'Neill with the
permission of Florida Gulfcoast. One of these companies submitted a written
indication of interest for a transaction with a transaction value of between
$28.7 and $31.9 million based upon the then market value of the potential
acquiror's stock.
On May 21, 1997, the Board discussed all potential transactions,
including the points negotiated in the letter of intent with Provident Financial
which contained an offer price of $21.00 per share, or $34,923,000, to be paid
in Provident Financial stock to Florida Gulfcoast shareholders and the other
agreements reached with Provident Financial as to the structure of the
transaction, management's role in the merged entity, and the expansion plans to
be implemented. After comparison of the possible alternatives and review of
analyses provided by Sandler O'Neill, the Board decided to pursue the Provident
Financial offer. In considering the offer of Provident Financial, the Board
considered the ability of the new institution to provide a greater variety of
deposit and loan products, higher lending limits, and the ability to provide
non-deposit products and services such as trust services and mutual funds.
Management noted their belief that the stated strategy of Provident Financial
mirrored that of Florida Gulfcoast, however, the financial resources and depth
of the larger organization would allow Florida Gulfcoast to accelerate the
implementation of it's strategic plan. The Board also considered the career
opportunities of bank employees which would be enhanced as a result of the
merger and the likelihood that jobs would be created in the community as a
result. The Board also recognized that shareholders would benefit from owning
stock in a larger more diversified company with an established trading market
and that the stock to be received would be more marketable than had been the
case with its stock. After careful review and consideration of all of the
factors cited above, no single factor being substantially more important in the
review process than any other, the Board determined that the Merger as outlined
in the letter of intent appeared to be in the best interests of Florida
Gulfcoast and its shareholders subject to negotiation of an acceptable
definitive purchase agreement and receipt of a favorable opinion of Sandler
O'Neill as to the fairness of the proposed exchange to the shareholders of
Florida Gulfcoast. Management was authorized to execute the letter of intent and
to immediately begin negotiation of a definitive agreement to be brought to the
Board for its review.
At its regular Board Meeting on May 21, 1997, the Board was presented
with a definitive agreement, which had been negotiated by Mr. Kunk, Mr. Shobe
and representatives of Sandler O'Neill with Provident Financial. Representatives
of Sandler O'Neill reviewed the proposal and informed the Board that they
believed that the exchange ratio as outlined was fair to the shareholders of
Florida Gulfcoast from a financial point of view. Upon careful review and
analysis of all the factors relating to shareholder interests, the potential
impact on Florida Gulfcoast customers, employees, and the communities served by
Florida Gulfcoast, the Board determined acceptance of the Provident Financial
offer was in the best interests of shareholders. Accordingly,
18
<PAGE> 19
the Board voted to accept the Provident Financial offer subject to the approval
of Florida Gulfcoast shareholders and appropriate government regulatory
authorities. All members of the Florida Gulfcoast Board of Directors have
indicated their intention to vote their shares of Florida Gulfcoast common stock
in favor of the Merger. As of March 31, 1997 such individuals beneficially,
directly or jointly owned 550,871 shares, or 34.43% of the outstanding shares of
Florida Gulfcoast Common Stock.
Certain of the statements in this section relating to Florida Gulfcoast
are forward-looking statements within the meaning of federal securities laws and
involve risks and uncertainties that may cause actual results to differ
materially from those contemplated by such statements. These factors include the
possibility that expected cost savings from the Merger would not be fully
realized, that deposit attrition, customer loss or revenue following the Merger
would be greater than expected and greater expected costs or difficulties
relating to the integration of the business of Provident Financial and Florida
Gulfcoast.
OPINION OF FINANCIAL ADVISOR TO FLORIDA GULFCOAST
Pursuant to a letter agreement dated as of August 1, 1994, Florida
Gulfcoast retained Sandler O'Neill as an independent financial advisor in
connection with strategic planning and merger and acquisition transactions.
Florida Gulfcoast selected Sandler O'Neill on the basis of its experience with
banks and savings institutions after interviewing a number of other financial
advisors. Florida Gulfcoast has been a client of Sandler O'Neill since 1994.
Sandler O'Neill is a nationally recognized investment banking firm whose
principal business specialty is banks and savings institutions and is regularly
engaged in the valuation of such businesses and their securities in connection
with mergers and acquisitions and other corporate transactions.
At the May 21, 1997 meeting at which the Florida Gulfcoast Board
approved and adopted the Reorganization Agreement, Sandler O'Neill delivered a
written opinion to the Florida Gulfcoast Board that, as of May 21, 1997, the
exchange ratio was fair from a financial point of view to the holders of Florida
Gulfcoast Common Stock. Sandler O'Neill will deliver an updated written opinion
dated the date of the mailing of this Joint Proxy Statement/Prospectus to
Florida Gulfcoast's Board of Directors confirming that, as of such date, the
exchange ratio was fair, from a financial point of view, to the holders of
Florida Gulfcoast's Common Stock. THE FULL TEXT OF THE FAIRNESS OPINION, WHICH
SETS FORTH THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND
QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN, IS SET FORTH BELOW.
HOLDERS OF FLORIDA GULFCOAST COMMON STOCK ARE URGED TO READ THE FAIRNESS OPINION
IN ITS ENTIRETY IN CONNECTION WITH THEIR CONSIDERATION OF THE PROPOSED MERGER.
SANDLER O'NEILL'S FAIRNESS OPINION SHOULD NOT BE CONSTRUED BY THE HOLDERS OF
SHARES OF FLORIDA GULFCOAST COMMON STOCK AS A RECOMMENDATION AS TO HOW THEY
SHOULD VOTE AT THE SPECIAL MEETING.
The following is the full text of Sandler O'Neill's opinion:
May 21, 1997
Board of Directors
Florida Gulfcoast Bancorp, Inc.
1549 Ringling Boulevard
Sarasota, Florida 34236
Ladies and Gentlemen:
Florida Gulfcoast Bancorp, Inc. ("FGBI"), Enterprise National Bank, a
wholly-owned subsidiary of FGBI, Provident Bancorp, Inc. ("Provident") and FGBI
Acquisition Corp., a wholly-owned subsidiary of Provident to be formed in
connection with the transaction ("Acquisition"), have entered into an Agreement
and Plan of Reorganization, dated as of May 21, 1997 (the "Agreement"), pursuant
to which FGBI will be merged with and into Provident (the "Merger"). Upon
consummation of the Merger, each outstanding share of FGBI common stock, par
value $1.00 per share (the "FGBI Shares"), other than dissenting shares as
defined in the Agreement, will be converted into the right to receive that
number of shares of Provident common stock, no par value (the "Provident
Shares"), as shall be equal to the fraction obtained by dividing twenty-one
dollars ($21.00) by the Market Value (as defined hereinafter) of the Provident
Shares (the "Exchange Ratio") subject to adjustment under certain circumstances
as set forth in the Agreement. The "Market Value" of the Provident Shares shall
be calculated based on the arithmetic mean of the average of the daily closing
bid and asked prices for the Provident Shares on the NASD National Market System
for the twenty (20) trading days immediately preceding the fifth day before the
closing of the Merger. The terms and conditions of the Merger are more fully set
forth in the Agreement. You have requested our opinion as to the fairness, from
a financial point of view, of the Exchange Ratio to the holders of the FGBI
Shares.
19
<PAGE> 20
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement and exhibits thereto; (ii) Provident's audited
consolidated financial statements and management's discussion and analysis of
the financial condition and results of operations contained in its annual
reports to shareholders for the years ended December 31, 1994, December 31, 1995
and December 31, 1996; (iii) Provident's unaudited consolidated financial
statements and management's discussion and analysis of the financial condition
and results of operations contained in its Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997; (iv) FGBI's audited consolidated financial
statements for the years ended December 31, 1994, December 31, 1995 and December
31, 1996; (v) FGBI's unaudited consolidated financial statements for the quarter
ended March 31, 1997; (vi) certain financial analyses and forecasts of FGBI
prepared by and reviewed with management of FGBI and the views of senior
management of FGBI regarding FGBI's past and current business operations,
results thereof, financial condition and future prospects; (vii) certain
financial analyses and forecasts of Provident prepared by and reviewed with
management of Provident and the views of senior management of Provident
regarding Provident's past and current business operations, results thereof,
financial condition and future prospects; (viii) the pro forma impact of the
Merger on Provident; (ix) the historical reported price and trading activity for
Provident's common stock, including a comparison of certain financial and stock
market information for Provident with similar information for certain other
companies the securities of which are publicly traded; (x) the financial terms
of recent business combinations in the savings institutions and banking
industries; (xi) the current market environment generally and the banking
environment in particular; and (xii) such other information, financial studies,
analyses and investigations and financial, economic and market criteria as we
considered relevant.
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information reviewed by and discussed with us,
and we did not make an independent evaluation or appraisal of the specific
assets, the collateral securing assets or the liabilities of Provident or FGBI
or any of their subsidiaries, or the collectibility of any such assets (relying,
where relevant, on the analyses and estimates of Provident and FGBI). With
respect to the financial projections reviewed with management, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the respective managements of FGBI and
Provident of the respective future financial performances of FGBI and Provident
and that such performances will be achieved. We have also assumed that there has
been no material change in Provident's or FGBI's assets, financial condition,
results of operations, business or prospects since March 31, 1997, the date of
the last financial statements noted above. We have assumed that FGBI and
Provident will remain as going concerns for all periods relevant to our analyses
and that the condition precedent to the Agreement are not waived.
Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof. Events occurring after the date hereof could materially affect the
assumptions used in preparing this opinion. We have not undertaken to reaffirm
or revise this opinion or otherwise comment upon events occurring after the date
hereof.
We have acted as FGBI's financial advisor in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon consummation of the Merger. We have also received a fee for
rendering this opinion. We have also provided and continue to provide general
financial advisory services for FGBI and have received and will continue to
receive fees for such services.
In the ordinary course of our business, we may actively trade the
equity securities of Provident for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
Our opinion is directed to the Board of Directors of FGBI and does not
constitute a recommendation to any stockholder of FGBI as to how such
stockholder should vote at any meeting of stockholders to consider and vote upon
the Merger. Our opinion is not to be quoted or referred to, in whole or in part,
in a registration statement, prospectus, proxy statement or in any other
document, nor shall this opinion be used for any other purposes, without Sandler
O'Neill's prior written consent.
Based upon and subject to the foregoing, it is our opinion that the
Exchange Ratio is fair, from a financial point of view, to the holders of FBGI
Shares.
Very truly yours,
SANDLER O'NEILL & PARTNERS, L.P.
20
<PAGE> 21
In connection with rendering the fairness opinion, Sandler O'Neill
performed a variety of financial analyses. The following is a summary of such
analyses, but does not purport to be a complete description of Sandler O'Neill's
analysis. The preparation of a fairness opinion is a complex process involving
subjective judgments and is not necessarily susceptible to a partial analysis or
summary description. Sandler O'Neill believes that its analyses must be
considered as a whole and that selecting portions of such analyses and the
factors considered therein, without considering all factors and analyses, could
create an incomplete view of the analyses and processes underlying the fairness
opinion. In performing its analyses, Sandler O'Neill made numerous assumptions
with respect to industry performance, business and economic conditions and
various other matters, many of which cannot be predicted and are beyond the
control of the Florida Gulfcoast, Provident Financial and Sandler O'Neill. Any
estimates contained in Sandler O'Neill's analyses are not necessarily indicative
of future results or values, which may be significantly more or less favorable
than such estimates. Estimates on the values of companies do not purport to be
appraisals or necessarily reflect the prices at which companies or their
securities may actually be sold. Because such estimates are inherently subject
to uncertainty, neither Florida Gulfcoast nor Sandler O'Neill assumes
responsibility for their accuracy.
STOCK TRADING HISTORY. Sandler O'Neill examined the history of the
trading prices and the volume of Provident Financial Common Stock, and the
relationship between the movements in the prices of Provident Financial Common
Stock to movements in certain stock indices, including the Standard & Poor's 500
Index, the NASDAQ Banking Index and a composite group of publicly traded
commercial banks in geographic proximity and of similar asset size to Provident
Financial and Florida Gulfcoast.
ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES. In preparing its
presentation, Sandler O'Neill used publicly available information to compare
selected financial and market trading information, including book value,
tangible book value, earnings, asset quality ratios, loan loss reserve levels,
profitability and capital adequacy, for Florida Gulfcoast and certain other
institutions. The 12 publicly-traded regional commercial banks (the "Regional
Bank Group") to which Sandler O'Neill compared Florida Gulfcoast were: Merit
Holding Corp., American Bancshares Inc., FNB Financial Services Corp., Southern
Financial Bancorp, First Southern Bancshares, ComSouth Bankshares Inc.,
Community Financial Group Inc., Summit Bank Corporation, Carolina Southern Bank,
First WV Bancorp Inc., Summit Financial Corp., and Savannah Bancorp Inc. Sandler
O'Neill also compared Florida Gulfcoast to a group of 12 publicly-traded
commercial banks which were considered to be highly-valued (the "Highly-Valued
Group") by investors because their price to tangible book value was greater than
175%. The Highly-Valued Group institutions were: Bryn Mawr Bank Corporation, FP
Bancorp Inc., SJNB Financial Corp., NSD Bancorp Inc., New Iberia Bancorp Inc.,
California Independent Bancorp, Prestige Financial Corp, Atlantic Bank & Trust
Company, High Point Financial Corp., Cascade Bancorp, Comstock Bank, and
Resource Bank. The analysis compared publicly available year-end financial
information as of and for the years ending December 31, 1992 through December
31, 1996, and for the twelve months ending March 31, 1997. The following
comparisons are based upon the March 31, 1997 financial information. The data
described below with respect to the Regional Bank Group and the Highly-Valued
Group consists of the median data for such groups.
The total assets of Florida Gulfcoast were approximately $163 million,
compared to approximately $167 million for the Regional Bank Group and
approximately $251 million for the Highly-Valued Group. The annual growth rate
of assets for Florida Gulfcoast was positive 16.66%, compared to a positive
growth rate of approximately 16.66% for the Regional Bank Group and
approximately 18.74% for the Highly-Valued Group. The total equity of Florida
Gulfcoast was approximately $11.8 million, compared to approximately $16.8
million for the Regional Bank Group and approximately $22.9 million for the
Highly-Valued Group. The tangible equity to total assets ratio was 7.23% for
Florida Gulfcoast, compared to approximately 9.35% for the Regional Bank Group
and approximately 8.54% for the Highly-Valued Group. The net loans to assets
ratio for Florida Gulfcoast was approximately 67.6%, compared to approximately
63.7% for the Regional Bank Group and approximately 63.0% for the Highly-Valued
Group. The cash and securities to total assets ratio was approximately 30.2% for
Florida Gulfcoast, compared to approximately 30.2% for the Regional Bank Group
and approximately 30.6% for the Highly-Valued Group. Total deposits were
approximately $142 million for Florida Gulfcoast, compared to approximately $141
million for the Regional Bank Group and approximately $229 million for the
Highly-Valued Group. Florida Gulfcoast had a gross loans to total deposits ratio
of approximately 78.3%, compared to approximately 78.3% for the Regional Bank
Group and approximately 73.3% for the Highly- Valued Group. The total borrowings
to total asset ratio for Florida Gulfcoast was approximately 4.9%, compared to
approximately 3.9% for the Regional Bank Group and approximately 1.0% for the
Highly-Valued Group. The ratio of non-performing assets to total assets for
Florida Gulfcoast was 0.16%, compared to approximately 0.31% for the Regional
Bank Group and approximately 0.56% for the Highly-Valued Group. The ratio of
loan loss reserves to gross loans for Florida Gulfcoast was 1.19%, compared to
approximately 1.45% for the Regional Bank Group and approximately 1.37% for the
Highly-Valued Group. The net interest margin of Florida Gulfcoast was 4.28%,
compared to approximately 4.38% for the Regional Bank Group and 6.14% for the
Highly- Valued Group. The ratio of non-interest income to average assets for
Florida Gulfcoast was 0.33%, compared to approximately 0.53% for the Regional
Bank Group and approximately 0.84% for the Highly-Valued Group. The ratio of
non-interest expense to average assets was 2.62% for Florida Gulfcoast, compared
to approximately 3.06% for the Regional Bank Group and approximately 4.28% for
the Highly-Valued Group. The efficiency ratio of Florida Gulfcoast was 58.2%,
compared to
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approximately 60.1% for the Regional Bank Group and approximately 61.8% for the
Highly-Valued Group. The return on average assets for Florida Gulfcoast was
1.11%, compared to approximately 1.21% for the Regional Bank Group and
approximately 1.48% for the Highly-Valued Group. The return on average equity
for Florida Gulfcoast was 15.22%, compared to approximately 12.23% for the
Regional Bank Group and approximately 16.55% for the Highly-Valued Group.
Sandler O'Neill also used publicly available information to perform a
similar comparison of selected financial and market trading information for
Provident Financial and certain other institutions. The 11 publicly-traded
regional commercial institutions (the "Peer Group") to which Sandler O'Neill
compared Provident Financial were: First of America Bank Corp., Fifth Third
Bancorp, Old Kent Financial Corporation, Star Banc Corporation, Old National
Bancorp, FirstMerit Corporation, Keystone Financial Inc., One Valley Bancorp
Inc., CNB Bancshares Inc., Fulton Financial Corporation, and Citizens Banking
Corporation. Sandler O'Neill also compared Provident Financial to a group of 10
publicly-traded savings institutions which were considered to be highly-valued
(the "Highly-Valued Bank Group" ) by investors because their price to tangible
book value was greater than 223%. The Highly-Valued Bank Group institutions
were: Synovus Financial Corp., TCF Financial Corp., Mercantile Bankshares Corp.,
North Fork Bancorporation Inc., Colonial BancGroup Inc., First Commercial
Corporation, CCB Financial Corporation, BOK Financial Corporation, Cullen/Frost
Bankers Inc., and Associated Banc-Corp. The analysis compared publicly available
year-end financial information as of and for the years ending December 31, 1992
through December 31, 1996, and for the three months ended March 31, 1997. The
following comparisons are based upon the March 31, 1997, financial information.
The data described below with respect to the Peer Group and the Highly-Valued
Bank Group consists of the median data for such groups.
The total assets of Provident Financial were approximately $6.78
billion, compared to $5.32 billion for the Peer Group and $5.80 billion for the
Highly-Valued Bank Group. The annual growth rate of assets for Provident
Financial was positive 8.59%, compared to a positive growth rate of
approximately 6.83% for the Peer Group and approximately 8.59% for the
Highly-Valued Bank Group. The total equity of Provident Financial was
approximately $540.7 million, compared to approximately $506.2 million for the
Peer Group and approximately $500.9 million for the Highly-Valued Bank Group.
The tangible equity to total assets ratio was 7.56% for Provident Financial,
compared to approximately 8.09% for the Peer Group and approximately 7.56% for
the Highly- Valued Bank Group. The net loans to total assets ratio for Provident
Financial was approximately 73.8%, compared to approximately 66.8% for the Peer
Group and approximately 68.6% for the Highly-Valued Bank Group. The cash and
securities to total assets ratio was approximately 22.0% for Provident
Financial, compared to approximately 26.2% for the Peer Group and approximately
25.8% for the Highly-Valued Bank Group. Total deposits were approximately $4.82
billion for Provident Financial, compared to approximately $4.16 billion for the
Peer Group and approximately $4.79 billion for the Highly-Valued Bank Group.
Provident Financial had a gross loans to total deposits ratio of approximately
105.2%, compared to approximately 84.5% for the Peer Group and approximately
85.63% for the Highly-Valued Bank Group. The total borrowings to total assets
ratio for Provident Financial was approximately 18.2%, compared to approximately
11.9% for the Peer Group and approximately 11.3% for the Highly-Valued Bank
Group. The non-performing assets to total assets ratio for Provident Financial
was 0.51%, compared to approximately 0.41% for the Peer Group and approximately
0.51% for the Highly-Valued Bank Group. The ratio of loan loss reserves to gross
loans for Provident Financial was 1.35%, compared to approximately 1.44% for the
Peer Group and approximately 1.52% for the Highly-Valued Bank Group. The net
interest margin of Provident Financial was 3.98%, compared to approximately
4.57% for the Peer Group and approximately 4.70% for the Highly-Valued Bank
Group. The ratio of non-interest income to average assets for Provident
Financial was 1.76%, compared to approximately 1.32% for the Peer Group and
approximately 1.76% for the Highly-Valued Bank Group. The ratio of non-interest
expense to average assets was 2.62% for Provident Financial, compared to
approximately 3.16% for the Peer Group and approximately 3.37% for the
Highly-Valued Bank Group. The efficiency ratio of Provident Financial was 46.6%,
compared to approximately 56.8% for the Peer Group and approximately 57.45% for
the Highly-Valued Bank Group. The return on average assets for Provident
Financial was 1.36%, compared to approximately 1.32% for the Peer Group and
approximately 1.33% for the Highly-Valued Bank Group. The return on average
equity for Provident Financial was 18.4%, compared to approximately 14.2% for
the Peer Group and approximately 15.8% for the Highly-Valued Bank Group. The
price to tangible book value for Provident Financial was 339.2%, compared to
approximately 264.6% for the Peer Group and approximately 264.4% for the
Highly-Valued Bank Group. The price to earnings per share multiple for Provident
Financial was 19.1x, compared to approximately 17.0x for the Peer Group and
approximately 16.1x for the Highly-Valued Bank Group.
ANALYSIS OF SELECTED MERGER TRANSACTIONS. Sandler O'Neill reviewed 181
transactions announced from January 1, 1996 to May 12, 1997, involving public
commercial banks nationwide as targets with transaction values over $15 million
("All Transactions") and 33 transactions announced from January 1, 1996, to May
12, 1997, involving Florida public commercial banks as targets with no minimum
transaction value ("Regional Transactions"). Sandler O'Neill reviewed the ratios
of price to earnings, price to book value, price to tangible book value, price
to deposits, price to assets, and deposit premium paid in each such transaction
and computed high, low, mean, and median ratios and premiums for the respective
groups of transactions. Based upon the median multiples for All Transactions,
Sandler O'Neill derived an imputed range of values per share of Florida
Gulfcoast
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Common Stock of $15.10 to $19.95. Based upon the median multiples for Regional
Transactions, Sandler O'Neill derived an imputed range of values per share of
Florida Gulfcoast Common Stock of $15.07 to $19.14.
DISCOUNTED DIVIDEND STREAM AND TERMINAL VALUE ANALYSIS. Sandler O'Neill
also performed an analysis which estimated the future stream of after-tax
dividend flows of Florida Gulfcoast through 2001 under various circumstances,
assuming Florida Gulfcoast performed in accordance with information regarding
potential future earnings provided by its management and certain variations
thereof (including variation with respect to the levels of assets, net interest
spread, non-interest income, non-interest expense and dividend payout ratio). To
approximate the terminal value of Florida Gulfcoast Common Stock at the end of
the five-year period, Sandler O'Neill applied price to earnings multiples
ranging from 13x to 22x and applied multiples of book value ranging from 180.0%
to 270.0%. The dividend income streams and terminal values were then discounted
to present values using different discount rates (ranging from 9.0% to 14.0%)
chosen to reflect different assumptions regarding required rates of return of
holders of prospective buyers of Florida Gulfcoast Common Stock. This analysis,
assuming the current dividend payout ratio, indicated an imputed range of values
per share of Florida Gulfcoast Common Stock between $15.27 and $31.98 when
applying the price to earnings multiples, and an imputed range of values per
share of Florida Gulfcoast Common Stock between $14.76 and $27.39 when applying
multiples of book value. In connection with its analysis, Sandler O'Neill used
sensitivity analyses to estimate the effects changes in the underlying
assumptions could have on the resulting present value.
In connection with rendering its fairness opinion, Sandler O'Neill
reviewed, among other things: (i) the Reorganization Agreement and exhibits
thereto; (ii) Provident Financial's audited consolidated financial statements
and management's discussion and analysis of the financial condition and results
of operations contained in its annual reports to shareholders for the years
ended December 31, 1994, December 31, 1995 and December 31, 1996; (iii)
Provident Financial's unaudited consolidated financial statements and
management's discussion and analysis of the financial condition and results of
operations contained in its Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997; (iv) Florida Gulfcoast's audited consolidated financial
statements for the years ended December 31, 1994, December 31, 1995 and December
31, 1996; (v) Florida Gulfcoast's unaudited consolidated financial statements
for the quarter ended March 31, 1997; (vi) certain financial analyses and
forecasts of Florida Gulfcoast prepared by and reviewed with management of
Florida Gulfcoast and the views of senior management of Florida Gulfcoast
regarding Florida Gulfcoast's past and current business operations, results
thereof, financial condition and future prospects; (vii) certain financial
analyses and forecasts of Provident Financial prepared by and reviewed with
management of Provident Financial and the views of senior management of
Provident Financial regarding Provident Financial's past and current business
operations, results thereof, financial condition and future prospects; (vii) the
pro forma impact of the Merger on Provident Financial; (ix) the historical
reported price and trading activity for Provident Financial's common stock,
including a comparison of certain financial and stock market information for
Provident Financial with similar information for certain other companies the
securities of which are publicly traded; (x) the financial terms of recent
business combinations in the savings institution and banking industries; (xi)
the current market environment generally and the banking environment in
particular; and (xii) such other information, financial studies analyses and
investigations and financial, economic and market criteria as we considered
relevant.
In performing its review, Sandler O'Neill assumed and relied upon,
without independent verification, the accuracy and completeness of all the
financial information, analyses and other information reviewed by and discussed
with Sandler O'Neill (relying, where relevant, on the analyses and estimates of
Florida Gulfcoast and Provident Financial), and Sandler O'Neill did not make an
independent evaluation or appraisal of the specific assets, the collateral
securing assets or the liabilities of Florida Gulfcoast or Provident Financial
or any of their subsidiaries, or the collectibility of any such assets. With
respect to the information regarding potential future financial performance
provided by each company's management, Sandler O'Neill assumed that they have
been reasonably prepared on bases reflecting reasonable estimates and judgments
of the respective managements of each company as to the respective future
financial performances of Florida Gulfcoast and Provident Financial and that
such performances will be achieved. Sandler O'Neill also assumed the following:
(i) that there has been no material change in Florida Gulfcoast's and Provident
Financial's assets, financial condition, results of operations, business or
prospects since the date of the last financial statements noted above and (ii)
that Provident Financial will remain as a going concern for all periods relevant
to our analyses and that the conditions precedent in the Agreement are not
waived.
Florida Gulfcoast has agreed to pay Sandler O'Neill a transaction fee
of $524,228 in connection with the Merger, a substantial portion of which is
contingent upon the consummation of the Merger. To date, Florida Gulfcoast has
paid Sandler O'Neill an installment fee of $131,057. In addition, Florida
Gulfcoast has paid Sandler O'Neill $10,000 to date this year for its services
under a retainer agreement and $25,000 upon delivery of the Opinion. Florida
Gulfcoast has also agreed to reimburse Sandler O'Neill for its reasonable
out-of-pocket expenses incurred in connection with its engagement and to
indemnify Sandler O'Neill and its affiliates and their respective partners,
directors, officers, employees, agents, and controlling persons against certain
expenses and liabilities, including liabilities under securities laws.
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INTERESTS OF CERTAIN NAMED PERSONS IN THE MERGER
Certain officers of Florida Gulfcoast and Enterprise and members of the
Florida Gulfcoast and Enterprise Boards of Directors have interests in the
Merger that are in addition to any interests they may have as shareholders of
Florida Gulfcoast generally. These interests include, among others, provisions
in the Reorganization Agreement relating to indemnification of Florida Gulfcoast
and Enterprise directors and officers, directors' and officers' liability
insurance, and certain severance and other employee benefits.
The Reorganization Agreement provides that the officers and directors
of FGBI Acquisition Corp. following the Merger, shall consist of those persons
who are serving in such capacity immediately prior to the effective time of the
Merger.
The Reorganization Agreement further provides that Florida Gulfcoast
and Enterprise may obtain an extended reporting period (otherwise known as "Tail
Coverage") for three years under Florida Gulfcoast's existing directors and
officers liability policy unless Provident Financial agrees to guarantee the
rights to indemnification that the officers and directors of Florida Gulfcoast
and Enterprise have pursuant to the Articles of Incorporation or Association, as
the case may be, the Organizational Certificate of Enterprise, and the
respective Bylaws of Florida Gulfcoast and Enterprise, or under applicable law.
These rights will survive the Closing and continue in full force and effect.
The parties have agreed in the Reorganization Agreement that Provident
Financial will cover the officers and employees of Enterprise who are employed
by Provident Financial under employee benefit plans of Provident Financial which
in the aggregate are no less favorable than those generally afforded to other
employees of Provident Financial holding similar positions as follows:
(a) Each employee of Enterprise will be entitled to credit for prior
service with Enterprise for all purposes under the employee welfare benefit
plans and other employee benefit plans and programs sponsored by Provident
Financial to the extent Enterprise sponsored a similar type of plan in which the
Enterprise employee participated prior to the Effective Time. Any preexisting
condition exclusion applicable to such plans and programs shall be waived with
respect to any Enterprise employee. For purposes of determining each Enterprise
employee's benefit for the year in which the Merger occurs under the Provident
Financial vacation program, any vacation taken by an Enterprise employee
immediately preceding the Effective Time for the year in which the Merger occurs
will be deducted from the total Provident Financial vacation benefit available
to such Enterprise employee during such year. The number of vacation days
available for Enterprise's employees during the year in which the Merger occurs
shall be determined under the Enterprise vacation policy in effect as of January
1, 1997. Unused sick leave and vacation leave accrued by employees of Enterprise
as of the Effective Time will be recognized by Provident Financial to the extent
it is used in the fiscal year of Provident Financial in which the Effective Time
occurs. Provident Financial has further agreed to credit each Enterprise
employee for the year during which such coverage under the Provident Financial
welfare benefit plan begins, with any deductibles already incurred during such
year under Enterprise's group health plan.
(b) On or before, but effective as of, the effective time of the
Merger, Enterprise may take such actions as may be necessary to cause each
individual employed by Enterprise immediately prior to the effective time to
have a fully vested and nonforfeitable interest in such employee's account
balance under the 401(k) plan sponsored by Enterprise as of the effective time.
(c) If the Merger closes while a calendar year of Enterprise is in
progress, all employees who are eligible to participate in any Enterprise bonus
plan in effect for such year will be entitled to receive their pro rata portion
of any bonus payable thereunder for such year determined on the basis of the
number of days of the year which elapsed prior to the Closing divided by 364.
For purposes of determining such bonus, the profit plan objectives shall be
deemed to have been met for the year.
Pursuant to the terms of existing Change in Control Agreements between
Florida Gulfcoast and Stephen Kunk, Tramm Hudson and Thomas Abelmann, effective
June 1, 1996, upon the consummation of the Merger, each of Messrs. Kunk, Hudson
and Abelmann will receive lump sum cash payments of $566,769, $395,378 and
$245,849, respectively.
The Reorganization Agreement further provides that, as a condition to
the obligation of Florida Gulfcoast to consummate the Merger, Provident
Financial shall have entered into and delivered certain Employment Agreements
with Mr. Hudson and Mr. Kunk, providing for a term of three years each, with a
base salary of $150,400 for Mr. Hudson and $205,400 for Mr. Kunk. Under the
Employment Agreements, if Provident Financial terminates the executive's
employment without having just cause (as defined therein) or if the executive
terminates his employment after a constructive termination event (as defined
therein), Provident Financial will continue to pay the executive's base salary
until the third anniversary of the Effective Date of the Merger.
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Mr. Hudson currently holds options to purchase 24,000 shares of Florida
Gulfcoast Common Stock at $5.64 per share. Mr. Kunk currently holds options to
purchase 39,000 shares of Florida Gulfcoast Common Stock at $5.64 per share. All
of Mr. Hudson's and Mr. Kunk's options are currently exercisable. By virtue of
the Merger, it is expected that these options will be exercised immediately
before the Effective Time and such shares may then be exchanged for the Merger
Consideration.
REGULATORY REQUIREMENTS
Consummation of the Merger is subject to the receipt of required
regulatory approvals from the Federal Reserve Board under the Bank Holding
Company Act of 1956, as amended. In addition, consummation of the Enterprise
Merger is subject to approval by the Federal Reserve Board and the Florida
Department of Banking and Finance. [The Federal Reserve Board and the Florida
Department have issued their respective approvals of the Merger and the
Enterprise Merger.]
[A formal application under the Bank Holding Company Act was approved
by the Federal Reserve on __________________, 1997 and the 15 day waiting period
following such approval during which the transaction could not be consummated
has expired. The Federal Reserve Board approval of the Enterprise merger dated
__________________, 1997 was also subject to a 15 day waiting period during
which the United States Department of Justice, pursuant to the Bank Merger Act,
could have opposed the Enterprise Merger under antitrust laws. This waiting
period has also expired with no objection or adverse action by the Justice
Department.]
ACCOUNTING TREATMENT
The Merger will be accounted for by Provident Financial as a pooling of
interests. Under the pooling of interest method of accounting, the recorded
amounts of the assets and liabilities of Florida Gulfcoast and Provident
Financial will be carried forward at their previously recorded amounts. CERTAIN
RESTRICTIONS WILL BE IMPOSED ON THE TRANSFERABILITY OF THE SHARES OF PROVIDENT
FINANCIAL COMMON STOCK RECEIVED BY THE AFFILIATES OF FLORIDA GULFCOAST IN THE
MERGER IN ORDER, AMONG OTHER THINGS, TO ASSURE THE AVAILABILITY OF POOLING OF
INTERESTS ACCOUNTING TREATMENT. See "The Merger - Shares Received."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes the principal Federal income tax
consequences of the Merger to holders of Florida Gulfcoast Common Stock and does
not purport to be a complete analysis or listing of all potential tax effects
relevant to the Merger. The discussion does not reflect the individual tax
position of any holder of Florida Gulfcoast Common Stock and does not address
the tax consequences that may be relevant to holders of Florida Gulfcoast Common
Stock with special tax status, including but not limited to financial
institutions, dealers in securities, holders that are not citizens or residents
of the United States, tax-exempt entities and holders that acquired Florida
Gulfcoast Common Stock upon the exercise of employee stock options or otherwise
as compensation. Moreover, the discussion does not address any consequences
arising under the laws of any state, locality or foreign jurisdiction. The
discussion is based on the Internal Revenue Code, Treasury Regulations
thereunder and administrative rulings and court decisions as of the date hereof.
All of the foregoing are subject to change and any such change could affect the
continuing validity of this discussion. Holders of Florida Gulfcoast Common
Stock are urged to consult with their own tax advisors regarding the tax
consequences of the Merger to them, including the effects of federal, state,
local, foreign and other tax laws.
Provident Financial and Florida Gulfcoast believe that, if consummated
as described herein, the Merger will constitute a tax-free reorganization within
the meaning of Section 368 (a) of the Internal Revenue Code. Accordingly, the
following will be the material Federal income tax consequences of the Merger:
(i) no gain or loss will be recognized by the Florida Gulfcoast
shareholders upon receipt of Provident Financial Common Stock in exchange for
their Florida Gulfcoast Common Stock, except that a holder of Florida Gulfcoast
Common Stock who receives cash in lieu of a fractional share of Provident
Financial Common Stock will recognize gain or loss equal to the difference
between the amount of such cash and the tax basis allocated to such
shareholder's fractional share of Provident Financial Common Stock. Such gain or
loss will constitute long-term capital gain or loss if, at the effective time of
the Merger, such shareholder's Florida Gulfcoast Common Stock is held as a
capital asset and has been held for more than one year;
(ii) the tax basis of the Provident Financial Common Stock received by
Florida Gulfcoast shareholders will be the same as the tax basis of such
shareholders' Florida Gulfcoast Common Stock exchanged therefor;
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(iii) the holding period of the Provident Financial Group, Inc. Common
Stock in the hands of the Florida Gulfcoast shareholders will include the
holding period of such shareholders' Florida Gulfcoast Common Stock exchanged
therefor, provided that such Florida Gulfcoast Common Stock is held as a capital
asset at the effective time of the Merger; and
(iv) Florida Gulfcoast shareholders who exercise dissenters' rights and
receive cash will recognize a taxable gain for federal income tax purposes which
will be long or short-term, depending upon the holding period for their Florida
Gulfcoast Common Stock. The exchange of shares for cash upon the exercise of
dissenters' rights could also cause Florida Gulfcoast Common Stock deemed to be
constructively owned by the shareholder and exchanged for Provident Financial
Common Stock to be treated as substantially equivalent to a dividend and,
therefore, taxed as ordinary income. Shares owned by spouses, children,
grandchildren, parents and other relatives and by entities that are 50% owned by
a shareholder are generally treated as constructively owned by that shareholder.
Persons who become shareholders through the exercise of stock options after the
record date of July 31, 1997 will not be entitled to dissenters' rights.
The reorganization provides that, as a condition to closing, Florida
Gulfcoast shall have received an opinion of Keating, Muething & Klekamp, P.L.L.,
counsel to Provident Financial, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
and that no gain or loss will be recognized by a Florida Gulfcoast shareholder
who exchanges all of the shareholder's Florida Gulfcoast Common Stock for
Provident Financial Common Stock in the Merger, except with respect to cash
received in lieu of fractional shares.
DISSENTERS' RIGHTS
A shareholder of Florida Gulfcoast may dissent from the Merger and
receive in cash the fair value, as of the day prior to the Special Meeting, of
the shares of Florida Gulfcoast Common Stock held by such shareholder pursuant
to Sections 607.1301, 607.1302 and 607.1320 of the Florida Statutes (the
"Florida Dissent Provisions"). Such fair value is exclusive of any appreciation
or depreciation in anticipation of the Merger, unless such exclusion would be
inequitable. The fair value of the Florida Gulfcoast Common Stock may differ
from the consideration that a shareholder of Florida Gulfcoast is entitled to
receive in the Merger. The following is a summary of the Florida Dissent
Provisions, the full text of which is set forth as Annex C to this Proxy
Statement/Prospectus.
Under the Florida Dissent Provisions, a shareholder of Florida
Gulfcoast may dissent from the Merger by adhering to the following procedures:
(i) the dissenting shareholder must deliver to Florida Gulfcoast, prior to the
Special Meeting, written notice of his or her intent to demand payment for his
or her shares; (ii) the dissenting shareholder must refrain from voting in favor
of the Merger; (iii) within ten days after the date of the Special Meeting,
Florida Gulfcoast shall give written notice of authorization of the Merger by
the shareholders to such dissenting shareholder; and (iv) within twenty days
after the giving of notice to the dissenting shareholder, the dissenting
shareholder shall file with Florida Gulfcoast a notice of election and a demand
for payment of the fair value of his or her shares. Any dissenting shareholder
filing an election to dissent shall deposit his or her certificates for
certificated shares with Florida Gulfcoast simultaneously with the filing of the
election to dissent. A shareholder may dissent as to less than all of the shares
of Florida Gulfcoast Common Stock held by him or her, and in such event, he or
she is treated as two separate shareholders. Once Florida Gulfcoast offers to
pay the dissenting shareholder for his or her shares, the notice of election
cannot be withdrawn except with the consent of Florida Gulfcoast. However, the
right of a dissenting shareholder to be paid the fair value of his or her shares
shall cease if (i) the demand is withdrawn, (ii) the proposed Merger is
abandoned or rescinded or the shareholders of Florida Gulfcoast revoke the
authority to merge, (iii) no demand or petition for determination of fair value
by a court has been made or is filed within the time provided by law or (iv) a
court of competent jurisdiction determines that such shareholder is not entitled
to the relief provided by the Florida Dissent Provisions.
Within ten days after the later of the expiration of the period in
which the dissenting shareholder may file his or her notice of election to
dissent or the Effective Time of the Merger, the corporation is required to make
a written offer to each dissenting shareholder to purchase the shares of Florida
Gulfcoast Common Stock at a price deemed by the surviving corporation to be the
fair value of such shares. If, within thirty days after the making of such
offer, any shareholder accepts the same, payment therefor shall be made within
ninety (90) days after the later of the date such offer was made or the
consummation of the Merger. However, if, within such thirty (30) day period, the
surviving corporation and the dissenting shareholder are unable to agree with
respect to a price, then the surviving corporation, within thirty days after
receipt of written demand from such dissenting shareholder given within sixty
(60) days after the Effective Time of the Merger, shall, or at its election
within such period may, file an action in a court of competent jurisdiction in
the county in which Florida Gulfcoast maintained its registered office
requesting that the fair value of the shares of Florida Gulfcoast Common Stock
be determined. If Florida Gulfcoast or the surviving corporation shall fail to
institute such proceedings, any dissenting shareholder may do so in the name of
Florida Gulfcoast. All dissenting shareholders, except for those that have
agreed upon a value with the corporation, are deemed to be parties to the
proceeding as an action against
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their shares. In such proceeding, the court may, if it so elects, appoint one or
more persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The surviving corporation shall pay each dissenting
shareholder the amount found to be due within ten days after final determination
of the proceedings. Upon payment of such judgment, the dissenting shareholder
will cease to have any interest in the shares of Florida Gulfcoast Common Stock.
Any judgment rendered in any dissent proceeding may, at the discretion
of the court, include an allowance for interest at such rate as the court may
deem fair and equitable. The cost and expenses of any such dissent proceeding
shall be determined by the court and shall be assessed against the surviving
corporation, but all or any part of such costs and expenses may be apportioned
and assessed against the dissenting shareholders, in such amount as the court
deems equitable, if the court determines that the surviving corporation made an
offer to the dissenting shareholders and the shareholders' failure to accept
such offer was arbitrary, vexatious or not in good faith. The expenses awarded
by the court shall include compensation for, and reasonable expenses of any
appraiser but shall not include the fees and expenses of counsel or experts
employed by any party. If the fair value of the shares of Florida Gulfcoast
Common Stock, as determined by the proceeding, materially exceeds the amount
which the corporation initially offered to pay, or if no offer was made, the
court, in its discretion, may award to any shareholder who is a party to the
proceeding such sum as the court may determine to be reasonable compensation for
any expert attorney or expert employed by the shareholder in the proceeding.
The forgoing is only a summary of the Florida Dissent Provisions. The
full text of such provisions is set forth as Annex C to the Proxy
Statement/Prospectus and each Florida Gulfcoast shareholder is urged to read
these provisions carefully.
SHARES RECEIVED
Provident Financial shares received in the Merger will be listed for
quotation on the Nasdaq National Market and may be freely traded by Florida
Gulfcoast shareholders who are not affiliates of Florida Gulfcoast at the time
of the Merger. Those persons who are affiliates will be able to sell their
shares through the provisions of Rules 144 and 145 promulgated under the
Securities Act of 1933 without the necessity of observing any holding period for
their stock prior to the sale. However, the affiliates have also agreed not to
sell any of their shares until Provident Financial has published results of
operations covering a period of thirty days which include the operations of
Florida Gulfcoast.
THE AGREEMENT AND PLAN OF REORGANIZATION
If the Merger is consummated pursuant to the Reorganization Agreement,
Provident Financial will acquire Florida Gulfcoast through the merger of Florida
Gulfcoast into a newly-formed subsidiary of Provident Financial. Enterprise,
Florida Gulfcoast's wholly owned subsidiary bank will also be merged into
Provident Bank of Florida. A copy of the Reorganization Agreement is attached as
Annex A and this description is qualified by reference thereto. Shareholders of
Florida Gulfcoast are urged to read the Reorganization Agreement.
TERMS OF THE MERGER
The Reorganization Agreement provides in Article 2.4 that shareholders
of Florida Gulfcoast will receive Provident Financial Common Stock with a value
of $21.00 per share for their shares of Florida Gulfcoast Common Stock, subject
to the termination provisions of Section 7.1 of the Reorganization Agreement. It
is anticipated that the holders of 63,000 options of Florida Gulfcoast's
authorized but unissued common stock will exercise those options at an exercise
price of $5.64 per share immediately prior to the closing. Other than dissenting
shareholders, each share then issued and outstanding will be converted into the
right to receive that number of shares equal to $21.00 divided by the market
value of a share of Provident Financial Common Stock. The market value of a
share of Provident Financial Common Stock shall be the arithmetic mean of the
average of the daily closing representative bid and asked prices for Provident
Financial Common Stock for the twenty trading days immediately preceding the
fifth day before the closing. See "Market Price and Dividend Data."
By virtue of the Merger, all of the outstanding Florida Gulfcoast
Common Stock will be converted into the right to receive that number of shares
of Provident Financial Common Stock that is determined by the formula for
consideration described above. Certificates for shares of Provident Financial
Common Stock, together with any dividends declared and paid after the effective
date of the Merger, without interest thereon, will be issued in exchange for
Florida Gulfcoast Common Stock certificates. Instructions for submitting Florida
Gulfcoast Common Stock certificates will be issued upon consummation of the
Merger. No fractional shares of Provident Financial Common Stock will be issued
in the Merger.
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<PAGE> 28
In lieu of fractional shares, holders of Florida Gulfcoast Common Stock
will receive an amount in cash determined by multiplying the average of the
closing representative bid and asked prices for Provident Financial Common Stock
on the first trading day after the effective time of the Merger by the fraction
of a share of Provident Financial Common Stock to which the holder would
otherwise be entitled, without interest thereon, at the time of the exchange of
share certificates.
If the Merger is consummated pursuant to the Reorganization Agreement,
dissenting shareholders will be entitled to payment in cash of the value of
their shares upon compliance with the provisions of Sections 607.1301, 607.1302
and 607.1320 of the Florida Statutes. See "The Merger - Dissenters' Rights."
CONDITIONS TO THE MERGER; REGULATORY APPROVAL
Consummation of the Merger is subject to the satisfaction prior to the
effective time of the Merger of the conditions set forth in Article 6 of the
Reorganization Agreement. These conditions include approval of the
Reorganization Agreement by the respective Boards of Directors of Provident
Financial and Florida Gulfcoast, and approval of the Reorganization Agreement by
two-thirds of the outstanding shares of Florida Gulfcoast Common Stock at the
Special Meeting. Also, the parties must have received all regulatory approvals
required, and all notice or waiting periods required with respect to such
approvals must have passed and any conditions contained in any such approval
must have been met. Provident Financial and Florida Gulfcoast have submitted
applications regarding the Merger to the Florida Department of Banking and
Finance and the Federal Reserve Board.
In addition, no stop order suspending the effectiveness of the
Registration Statement, of which this Proxy Statement/Prospectus is a part,
shall have been received and Provident Financial shall have complied with all
applicable state securities laws with respect to the Merger. None of the parties
shall be subject to any order, decree or injunction of a court or agency joining
or prohibiting consummation of the transactions contemplated by the
Reorganization Agreement. The Provident Financial Common Stock to be issued in
the Merger shall have been authorized for trading on the Nasdaq National Market.
Both Provident Financial and Florida Gulfcoast shall have received an opinion of
the law firm of Keating, Muething & Klekamp, P.L.L. to the effect that the
Merger will constitute a reorganization under the Internal Revenue Code and that
no gain or loss will be recognized by Florida Gulfcoast shareholders who
exchange all of their Common Stock solely for Provident Financial Common Stock
except with respect to cash received in lieu of fractional share interests in
Provident Financial Common Stock. In addition, Florida Gulfcoast shall have
received the fairness opinion of Sandler O'Neill & Partners L.P. set forth under
"The Merger--Opinion of Financial Advisor to Florida Gulfcoast," which opinion
will be orally confirmed at the closing if Florida Gulfcoast so requests.
TERMINATION AND AMENDMENT
Either before or after approval by shareholders of Florida Gulfcoast,
the Reorganization Agreement may be terminated, as provided in Article 7 of the
Reorganization Agreement among other things, by either Provident Financial or
Florida Gulfcoast (i) if the other party has in any material respect breached
any covenant or agreement contained in the Reorganization Agreement or any
representation or warranty contained therein, (ii) if that failure has or is
reasonably likely to have a material adverse effect upon such party and (iii)
such breach has not been cured within thirty days after the date of written
notice of the breach. Either party may terminate the Reorganization Agreement if
the required applications for approval have been denied or shareholders do not
approve the transaction at the meeting called for that purpose. The
Reorganization Agreement may also be terminated at any time by either party if
such party determines in good faith that any condition precedent to such party's
obligations would be impossible to satisfy and the parties are unable to achieve
a mutually acceptable resolution. Either party may terminate the Reorganization
Agreement if the closing has not occurred by the close of business on March 31,
1998. Provident Financial may terminate the Reorganization Agreement if the
market value, calculated as described above, is less than $33.9958 and Florida
Gulfcoast does not elect to deem the market value to be equal to $33.9958.
Florida Gulfcoast may terminate the Reorganization Agreement if the market value
is greater than $46.7543 and Provident Financial does not elect to deem the
market value to be equal to $46.7543. Florida Gulfcoast may also terminate the
Reorganization Agreement if it is advised by its counsel that under corporate
principles of fiduciary law it must consider, and decides to accept, a competing
transaction, but only if Florida Gulfcoast agrees to pay Provident Financial a
break-up fee of $750,000 as set forth in Section 8.1(b) of the Reorganization
Agreement.
The parties may amend the Reorganization Agreement at any time, but any
amendment affecting the consideration to be paid to Florida Gulfcoast
shareholders must be approved by two-thirds of the outstanding Florida Gulfcoast
Common Stock.
28
<PAGE> 29
EFFECTIVENESS OF MERGER
The Merger of Florida Gulfcoast into Provident Financial's subsidiary
will become effective at such time as a Certificate of Merger is filed with the
Secretary of State of Florida.
PROVIDENT FINANCIAL GROUP, INC.
INTRODUCTION
Provident Financial is a Cincinnati-based commercial banking and
financial services company which operates primarily in Ohio and northern
Kentucky. Provident Financial recently expanded its operations to provide
financial services on a national scale further reducing its dependence upon a
single geographic region. At March 31, 1997, Provident Financial had total
assets of $7 billion, total deposits of $4.8 billion and total shareholders'
equity of $541 million.
Provident Financial was incorporated in 1980 for the purpose of
acquiring the common stock of The Provident Bank owned by American Financial
Group. At December 31, 1996, Carl H. Lindner, certain members of his family and
certain entities controlled by and/or established for the benefit of such family
members beneficially owned approximately 43% of AFG's and 58% of Provident
Financial's outstanding voting Common Stock. Provident Financial's executive
offices are located at One East Fourth Street, Cincinnati, Ohio 45202 and its
telephone number is (513) 579-2000.
COMMERCIAL BANKING
Central to Provident Financial's long term strategy is the concept of
relationship banking with commercial customers that emphasizes attracting new
small and middle market customers and cross-selling additional services to
established customers. These services include cash management, loan, lease,
letter of credit, trade financing and corporate trust activities. Provident
Financial implements this strategy by attracting and retaining experienced
banking officers and rewarding them for originating loans and cross-selling
additional services. In addition, Provident Financial originates regional and
national corporate loan and lease transactions that are consistent with the
overall relationship lending strategy of Provident Financial. At March 31, 1997,
Provident Financial's total commercial lending portfolio was $3.4 billion.
CONSUMER BANKING
Provident Financial offers deposit accounts providing pricing
incentives and various levels of services and benefits depending on the needs of
and balances maintained by the customer. Through these accounts, Provident
Financial believes it can more effectively offer additional banking services
such as credit cards, consumer and mortgage loans, home equity loans, auto loans
and leases, retirement accounts and investment accounts. Provident Financial's
total consumer lending portfolio was $1.7 billion as of March 31, 1997.
RETAIL DISTRIBUTION
Provident Financial's banking subsidiaries have 77 branch offices: 59
in the greater Cincinnati area (including 10 in northern Kentucky), 12 in the
greater Dayton area, 1 in Columbus, Ohio, 2 in Cleveland, Ohio and 3 near Tampa,
Florida. Of the 77 branch offices, 22 are located within food supermarkets. In
addition to the banking centers, Provident Financial operates 170 ATMs for
customers to perform their banking transactions. Provident Financial also
provides a seven day a week, 24 hour a day telephone customer service center
able to respond to customers' questions or instructions.
OTHER OPERATIONS
Provident Financial also provides trust, custodial, asset management
and securities brokerage to its customers.
NEW FINANCIAL SERVICES
In recent years, Provident Financial has expanded its business in both
the financial products it offers and the geographical area it services. The
following is a summary of these expansions:
In September 1995, Provident Consumer Financial Services ("PCFS"), a
division of The Provident Bank, began originating, on a national basis,
nonconforming consumer closed end home equity loans. Since its inception through
March 31,
29
<PAGE> 30
1997, PCFS has originated $530 million of these type of loans. During 1996 and
the first quarter of 1997, PCFS securitized and sold $450 million of these
mortgages to the secondary market for a pre-tax gain of $35 million. Provident
Financial expanded its PCFS's national network to originate conforming mortgage
loans during 1997.
During mid-1996, Provident Financial introduced its MeritValu program,
which is an on-line, multiple-merchant frequent shopper rewards program which
supports cash, credit card and all other methods of payment by the consumer. The
program allows consumers to earn rebates and spend them like cash on goods and
services at participating merchants, while the merchants benefit from increased
sales and customer data information. As of year-end 1996, the MeritValu program
had 68,000 active cardholders, supported by 65 retailers in the Cincinnati area.
In February 1997, Provident Financial announced an agreement to launch a private
label version of MeritValu through the Chambers of Commerce of Greater Ft.
Lauderdale, Greater Miami and Greater Boca Raton. The three Chambers of Commerce
represent more than 8,000 businesses in South Florida and a corresponding
employee base of about 350,000.
In December 1996, Provident Financial acquired Information Leasing
Corporation and its affiliated lease servicing company. ILC is a full service,
small ticket equipment leasing company which focuses on establishing strategic
relationships with high volume, quality equipment vendors and customers. ILC,
which operates throughout the United States, generates its business through
contractual vendor programs, master lease agreements, and from small ticket
vendor programs. ILC had over $110 million in assets at the time of acquisition.
In February 1997, Provident Financial purchased South Hillsborough
Community Bank, since renamed Provident Bank of Florida, a $40 million Florida
state chartered bank. This bank has three offices located in Southeast
Hillsborough County, approximately 20 miles south of Tampa. This acquisition
will allow Provident Financial to expand its presence in the Florida market.
FLORIDA GULFCOAST BANCORP, INC.
INTRODUCTION
Florida Gulfcoast Bancorp, Inc. is a Florida corporation operating as a
bank holding company which was authorized by the Federal Reserve Bank to own and
operate its principal subsidiary, Enterprise, in January, 1995.
Florida Gulfcoast has no other subsidiaries and has no operations of
significance other than its ownership of Enterprise. Florida Gulfcoast is
regulated by the Federal Reserve Bank under the Bank Holding Company Act of 1956
and its enabling Regulation Y. Regulation Y is primarily concerned with
permissible activities of holding companies and affiliates, and with
transactions with and among affiliates. The primary objective of such regulation
is to ensure that insured bank subsidiaries are operated in a safe and sound
manner and that the activities of the holding company and affiliates do not
jeopardize that safety and soundness.
Because Florida Gulfcoast has no operations which are separate and
distinct from those of Enterprise, and has only a nominal effect on the
financial results produced by that subsidiary, the discussion which follows
focuses on the condition, regulation and other attributes of Enterprise except
where noted. All of Florida Gulfcoast's assets other than its equity in
Enterprise consist, as of the dates shown, entirely of cash and intangible
assets such as capitalized organization costs and prepaid expenses. All of the
financial data is presented on a consolidated basis except where noted. When
reference is made to Enterprise it is because Florida Gulfcoast has no assets or
operations which affect the item under discussion.
Enterprise received authorization to operate as a National Bank from
the office of the Comptroller of the Currency on March 29, 1989. Enterprise's
deposits are insured by the Bank Insurance Fund to the maximum extent permitted
by the Federal Deposit Insurance Corporation ("FDIC"). At March 31, 1997,
Enterprise had approximately $163 million in assets, $142.4 million in deposits
and shareholders' equity of approximately $11.8 million.
Enterprise is engaged principally in the general banking business of
attracting deposits from the general public and using such deposits and other
funds to originate retail and commercial loans. Through its three offices
located in Sarasota County, Florida, Enterprise engages in a wide range of
commercial banking activities, including, without limitation, the acceptance of
deposits for checking, savings and time deposit accounts, making of most types
of loans and other services including wire transfer, collections and the rental
of safe deposit boxes. Enterprise's lending services include the making of
commercial, SBA, real estate, home equity and installment loans. Its operating
revenues are derived primarily from interest and fees on its loans, interest
earned on securities of the United States government and its agencies, and from
mortgage backed securities.
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<PAGE> 31
The banking industry in the Sarasota County market is highly
competitive. Enterprise competes for loans and deposits with other financial
institutions, many of which are larger than Enterprise. The larger commercial
banks, including branches of statewide and regional holding company banks, have
access to certain funding sources and investment vehicles which give them some
competitive advantages. In addition to competing with banks and thrifts for
deposits, Enterprise also competes with brokerage firms and trust companies
which make direct investment opportunities, such as corporate securities and
mutual funds, available to their deposit customers. There are also a number of
non financial institution lenders seeking the loan business typically provided
by banks and thrifts. These lenders include insurance companies, mortgage
brokers and small loan companies.
Enterprise employs 51 full-time employees. Enterprise is not a party to
a collective bargaining agreement and management considers employee relations to
be good.
Enterprise's main office is located at 1549 Ringling Blvd., Sarasota,
Florida, and its telephone number is (941) 954-5700.
REGULATION
Enterprise is a banking institution which is chartered by the office of
the Comptroller of the Currency ("OCC") under the National Bank Act. It is a
member of the Federal Reserve System and its deposit accounts are insured by the
FDIC. Although both the Federal Reserve Bank and FDIC promulgate regulations
which affect the bank, generally those agencies delegate enforcement and
supervision of the bank to the OCC. Various consumer laws and regulations also
affect the operations of Enterprise, including state usury laws, consumer credit
and equal credit laws and fair credit reporting. The OCC supervises and
regulates all areas of Enterprise's operations including, without limitation,
the making of loans, the gathering of deposits, the conduct of it's corporate
affairs, capital adequacy requirements, the payment of dividends and the
establishment or closing of branches.
Enterprise is required to maintain reserves with the Federal Reserve
against its transaction accounts. The amount of required reserves is subject to
adjustment by the Federal Reserve Board. The Federal Reserve Board also imposes
restrictions on the bank with respect to loans and extensions of credit to
certain related parties, and purchases from and other transactions with Florida
Gulfcoast and its principal shareholders, officers, directors and affiliates.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") enacted a number of significant bank supervisory and regulatory
reforms, including: (1) a risk-based system for deposit insurance assessments;
(2) the requirement for prompt corrective action in certain situations; (3) bank
interagency adoption of safety and soundness regulations and accompanying
guidelines setting standards for bank operations and management, asset quality,
earnings and stock valuation and employee compensation; (4) bank interagency
adoption of real estate lending guidelines which require depository institutions
to adopt and maintain written real estate lending policies that comply with
these prescribed guidelines; and (5) the Truth in Saving Act which requires
clear and uniform disclosure by depository institutions of the rates of interest
payable on their deposit accounts and the fees that are assessable against those
accounts.
DIVIDENDS
Florida Gulfcoast has paid no dividends to its shareholders. It is
limited in its ability to do so by regulations applicable to its insured
subsidiary Enterprise, which is the sole source of revenue from which dividends
would be paid. Generally, Enterprise cannot pay dividends which would exceed the
net income of the current and two prior years.
Additionally, the Federal Reserve Board may restrict Enterprise's
ability to pay dividends to Florida Gulfcoast if such payment would constitute
an unsafe or unsound banking practice.
NON-PERFORMING ASSETS
Non-performing loans consist of loans which have been placed on
non-accrual status, or loans which are 90 days past due for which Enterprise
continues to accrue interest. The accrual of interest on loans is generally
discontinued when a loan becomes 90 days past due as to principal or interest
payments, or in certain circumstances when management believes the collection of
such amounts is doubtful. In certain instances, management may elect to continue
the accrual of interest beyond 90 days when the loan is in the process of
collection and the estimated net realizable value of the collateral is
sufficient to cover the principal balance, accrued interest and collection
costs. Enterprise has no loans 90 days past due and still accruing or troubled
debt restructurings.
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<PAGE> 32
The following table summarizes the amount of non-performing loans and
assets and related ratios:
<TABLE>
<CAPTION>
December 31,
March 31, -----------------------
1997 1996 1995
--------- -------- -------
(Dollars in thousands)
Non-performing loans:
<S> <C> <C> <C>
Loans 90 or more days past due and still accruing interest $ 0 $ 0 $ 0
Non-accrual loans 261 255 534
---- ---- ----
261 255 534
Other real estate owned 0 0 184
---- ---- ----
Total non-performing assets $261 $255 $718
==== ==== ====
Ratio of non-performing assets to total loans and other real estate 0.234% 0.247% 0.818%
</TABLE>
Enterprise has an internal system for evaluating and grading loans.
Classified assets are those loans which have been graded especially mentioned,
substandard or doubtful by management or supervisory authorities due to a
potential weaknesses in the borrower's ability to repay the loan, the borrower's
financial condition, deficiencies in loan documentation, weaknesses in
collateral, or other factors. At March 31, 1997, $4,100,000 in loans were
included on Enterprise's Classified Loan List, of which $261,000 were
non-performing loans.
Classified loans at December 31, 1996 and 1995 were $4,236,000 and
$3,970,000, respectively. During the second quarter of 1997, the OCC completed
an examination of Enterprise. Enterprise's level and classification of
identified potential problem loans were not materially revised as a result of
this regulatory examination process.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF FLORIDA GULFCOAST
The following discussion and analysis is designed to provide an
understanding of the significant factors that influenced Florida Gulfcoast's
results of operations and financial condition for the three months ended March
31, 1997 and 1996 and for the years ended December 31, 1996 and 1995. This
discussion and analysis should be read in conjunction with Florida Gulfcoast's
financial statements and corresponding notes.
The southwest coast of Florida continues to experience some of the
strongest growth in the U.S., fueled by significant immigration and a strong
local economy. The asset size growth of Florida Gulfcoast's subsidiary,
Enterprise, in general reflects the continued growth of its primary business
area. The bank has not opened any new branches since December of 1992, however,
at March 31, 1997 it was actively involved in negotiations to acquire two sites
for additional branches and a consultant had been retained to search for
additional sites.
Loans
At March 31, 1997, total gross loans outstanding amounted to
$111,472,358 compared to $103,409,074 and $87,613,518 at December 31, 1996 and
1995 respectively. The following table presents the loans of Enterprise at the
dates noted:
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<PAGE> 33
<TABLE>
<CAPTION>
December 31,
March 31, ----------------------------------------
1997 1996 1995
--------------- ------------------ -----------------
Amount % Amount % Amount %
------ --- ----- --- ------ ---
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Loans secured by real estate:
Construction and land development $ 2,936 3 $ 3,133 3 $ 4,044 5
Secured by farmland 116 0 117 0 1,058 1
Secured by 1-4 family residential properties 41,552 37 38,180 37 30,655 35
Secured by multifamily residential properties 1,531 1 1,238 1 1,529 2
Secured by nonfarm nonresidential properties 46,699 42 42,591 41 32,842 37
-------- --- -------- --- -------- ---
92,834 83 85,259 82 70,128 80
Loans to finance agricultural production and
other loans to farmers 68 0 64 0 75 0
Commercial and industrial loans 15,181 14 14,596 14 14,684 17
Loans to individuals 3,358 3 3,395 3 2,680 3
All other loans 31 0 95 0 47 0
-------- --- -------- --- -------- ---
Total loans 111,472 100 103,409 100 87,614 100
=== === ===
Allowance for loan losses 1,332 1,275 1,038
-------- -------- --------
New loans $110,140 $102,134 $ 86,576
======== ======== ========
</TABLE>
Enterprise's loan portfolio consists primarily of loans made for
commercial and residential real estate as well as for other commercial purposes.
At March 31, 1997, real estate-secured loans comprised approximately 83% of the
entire loan portfolio.
The $23,564,553 (27.2%) increase in net loans from December 31, 1995 to
March 31, 1997, reflects Enterprise's 1996 growth plans and associated business
development efforts, and was generally spread among all loan categories.
The following table shows the scheduled principal payments, and/or
repricing opportunities, on loans outstanding at March 31, 1997.
<TABLE>
<CAPTION>
Within After one but After
one year through 5 years 5 years Total
-------- --------------- ------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Fixed interest rate loans(1) $ 5,242 $ 9,727 $ 461 $ 15,430
Variable interest rate loans(1) 53,894 41,888 0 95,782
------- ------- ----- --------
Total $59,136 $51,615 $ 461 $111,212
======= ======= ===== ========
</TABLE>
(1) These amounts do not include non-accrual loans.
Allowance for Loan Losses
The allowance for loan losses is established through provisions charged
to the statement of operations. Assessing the adequacy of the allowance for loan
losses involves substantial uncertainties and is based upon management's
evaluation of the amounts required to meet estimated charge-offs in the loan
portfolio after weighing various factors.
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<PAGE> 34
The following table summarizes the changes in the allowance for loan
losses and related ratios:
<TABLE>
<CAPTION>
Year Ended
Three Months Ended December 31,
------------------ ------------
March 31, 1997 1996 1995
-------------- ---- ----
(Dollars in thousands)
<S> <C> <C> <C>
Balance at beginning of period $ 1,275 $ 1,038 $ 997
Loans charged off:
Real estate 0 (1) (94)
Installment 0 (4) (15)
Credit cards and related plans 0 (2) (2)
Commercial and all other (4) (45) (5)
------- ------- -------
Total Charge Offs (4) (52) (116)
Recoveries:
Real estate 0 16 12
Installment 1 3 0
Credit cards and related plans 0 3 0
Commercial and all other 0 42 13
------- ------- -------
Total Recoveries 1 64 25
Net Charge Offs (3) 12 (91)
Provision for loan losses 60 225 132
------- ------- -------
Balance at end of period $ 1,332 $ 1,275 $ 1,038
======= ======= =======
Ratio of allowance for loan losses to total loans at end of period 1.19% 1.23% 1.18%
</TABLE>
Enterprise's provision for loan losses increased in 1996 primarily to
keep pace with volume growth in the loan portfolio.
Enterprise's determination of the adequacy of the allowance for loan
losses is based on an evaluation of the risk characteristics of its loan
portfolio, past loan loss experience, the quality of specific loans, the level
of non-accruing loans, the value of underlying collateral, current economic
conditions, volume, growth of the loan portfolio and other relevant factors.
Enterprise maintains the allowance for loan losses at a level
sufficient to absorb estimated losses inherent in the loan portfolio. The
allowance for loan losses is made up of two primary components: specific
reserves allocated to specified loans based upon borrower capacity, collateral
type, loan grade, and delinquency status; and general reserves designed to
recognize the inherent risk in the unclassified portion of the loan portfolio
and to supplement the amounts allocated to specific loans. For purposes of
complying with disclosure requirements, the table below presents, in thousands,
an allocation of the allowance for loan losses among various types of loans. The
distribution shown in the table should not be construed as an indication that
charge-offs in future periods will occur in these amounts or proportions, or
that the allocation of the allowance indicates future charge-off trends.
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<PAGE> 35
<TABLE>
<CAPTION>
December 31,
------------
March 31, 1997 1996 1995
-------------- -------- -------
(Dollars in thousands)
<S> <C> <C> <C>
Commercial real estate $ 527 $ 542 $ 510
Commercial 600 529 395
Residential 136 140 83
Loans to individuals 69 64 50
------ ------ ------
Total $1,332 $1,275 $1,038
====== ====== ======
</TABLE>
Other Earning Assets
The following table presents the other earning assets of Enterprise:
<TABLE>
<CAPTION>
December 31,
------------
March 31, 1997 1996 1995
-------------- ------- -------
(Dollars in thousands)
<S> <C> <C> <C>
Securities held to maturity
Municipals $ 2,744 $ 2,312 $ 0
Securities available for sale
U.S. Treasury 4,806 5,343 5,425
U.S. Government agencies 377 390 0
U.S. Government sponsored agencies 8,455 8,499 10,265
Mortgage backed securities 25,799 27,305 18,859
Other domestic debt securities 648 652 671
Equity securities 1,312 1,196 1,255
FHLB account balance 173 203 74
Federal funds sold 930 0 0
------- ------- -------
$45,244 $45,900 $36,549
======= ======= =======
</TABLE>
On January 1, 1994, the Financial Accounting Standards Board issued
Statement 115 ("FAS 115"), "Accounting for Investments in Certain Debt and
Equity Securities". FAS 115 requires classification of investments into three
categories. Debt securities that Enterprise has the positive intent and ability
to hold to maturity are classified as "Held to Maturity" and must be reported at
amortized cost. Debt and equity securities that are bought and held principally
for the purpose of selling them in the near term are classified as "Trading" and
must be reported at fair value, with unrealized gains and losses included in
earnings. All other debt and equity securities must be considered "Available for
Sale" and reported at fair value, with unrealized gains and losses excluded from
earnings and reported as a separate component of shareholders' equity, net of
tax effects. Enterprise implemented FAS 115 as of January 1, 1994.
The following table sets forth the amount and average yields of
investment securities by maturity range at March 31, 1997. Yields on tax exempt
obligations have not been calculated on a tax equivalent basis.
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<PAGE> 36
<TABLE>
<CAPTION>
Within After One but After 5 but After
One Year Within 5 Years Within 10 Years Ten Years
---------------------- -------------------- ------------------- ------------------
Amount Yield Amount Yield Amount Yield Amount Yield
------- ------ ------- ------ ------- ---- ------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities held to maturity
Municipals $ 0 0.00% $ 305 4.40% $ 586 4.81% $ 1,853 5.42%
Securities available for sale
U.S. Treasury 1,243 5.66% 3,563 7.38% 0 0.00% 0 0.00%
U.S. Government agencies and
government sponsored agencies 0 0.00% 4,690 6.54% 3,945 6.82% 197 6.25%
Mortgage backed securities 19 8.77% 2,544 7.17% 1,384 7.25% 21,852 7.24%
Other domestic debt securities 648 7.08% 0 0.00% 0 0.00% 0 0.00%
$ 1,910 6.17% $11,102 6.90% $ 5,915 6.72% $23,902 7.09%
</TABLE>
The maturity information shown does not include any assumptions
regarding regular payments or prepayments on Enterprise's mortgage backed
securities and collateralized mortgage obligations.
Deposits
The following tables present the average deposits of Enterprise and the
change therein:
AVERAGE DEPOSITS
<TABLE>
<CAPTION>
March 31,
----------------------------------------------------------------------------------------
1997 1996
--------------------------------------------- ---------------------------------------
Amount % of deposits avg. rate pd. Amount % of deposits avg. rate pd.
----------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Non interest bearing $18,040 12.95% -- $17,379 14.74% --
Interest bearing
NOW deposits 27,713 19.89% 3.19% 27,636 23.44% 3.30%
Money market 8,334 5.98% 2.83% 10,086 8.55% 3.09%
deposits
Savings deposits 11,433 8.20% 3.99% 6,540 5.55% 4.65%
Time deposits 73,832 52.98% 5.44% 56,267 47.72% 5.79%
-------- ------- -------- -------
$139,352 100.00% $117,908 100.00%
======= ====== ======== =======
</TABLE>
36
<PAGE> 37
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------------------------------------------
1996 1995
------------------------------------------------- --------------------------------------------
Amount % of deposits avg. rate pd. Amount % of deposits avg. rate pd.
------ ------------- ------------- ------ ------------- -------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Non interest bearing $ 17,899 14.53% -- $ 15,887 14.57% --
Interest bearing
NOW deposits 28,440 23.08% 3.28% 28,400 26.04% 3.52%
Money market 10,026 8.14% 3.03% 11,435 10.48% 3.10%
deposits
Savings deposits 10,132 8.22% 4.30% 2,018 1.85% 2.08%
Time deposits 56,721 46.03% 5.57% 51,328 47.06% 6.17%
-------- ------ -------- ------
$123,218 100.00% $109,068 100.00%
======== ====== ======== ======
</TABLE>
<TABLE>
<CAPTION>
CHANGE IN AVERAGE DEPOSITS
March 31, 1997 December 31, 1996
compared to compared to
March 31, 1997 December 31, 1995
-------------- -----------------
Amount % Change Amount % Change
-------- -------- -------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Non interest bearing $ 661 3.80% $ 2,012 12.66%
Interest bearing
NOW deposits 77 0.28% 40 0.14%
Money market (1,752) (17.37)% (1,409) (12.32)%
deposits
Savings deposits 4,893 74.82% 8,114 402.08%
Time deposits 17,565 31.22% 5,393 10.51%
--------
$ 21,444 18.19% $ 14,150 12.97%
======== ======== ======== ========
</TABLE>
At March 31, 1997, Enterprise had total deposits of $142.4 million, an
increase of $4.5 million (3.3%) since December 31, 1996. At December 31, 1996,
Enterprise had total deposits of $137.9 million, an increase of $21.4 million
(18.4%) since December 31, 1995. This increase, achieved through the offering of
competitive interest rates on deposit accounts, was made necessary by continued
strong loan demand during those periods.
37
<PAGE> 38
The following table sets forth, in thousands, the maturity of
certificates of deposit of $100,000 or more at March 31, 1997:
<TABLE>
<S> <C>
Less than three months $ 9,868
Three months to less than six months 4,699
Six months to less than twelve months 6,463
Greater than twelve months 2,546
-------
$23,576
=======
</TABLE>
Other Borrowings
Enterprise's short term borrowings consist of federal funds purchased,
reverse repurchase agreements, and Treasury Tax and Loan Notes. The purchase of
federal funds is typically done on an overnight basis from correspondent banks
under pre-approved lines of credit. Reverse repurchase agreements are generally
secured by U.S. Treasury or Agency obligations and are for terms of one to sixty
days. Treasury Tax and Loan Notes ("TT&L") are funds which customers have
deposited in payment of various types of federal taxes and which have
temporarily been left on deposit by the U.S. Treasury. They are secured by a
pledge of U.S. Agency securities. On March 31, 1997, short term borrowings of
$6.0 million consisted of $4.8 million in reverse repurchase agreements and $1.2
million in TT&L deposits. At December 31, 1996 and 1995, short-term borrowings
by the Bank totaled $4.9 million and $2.7 million, respectively.
The remainder of Enterprise's other borrowings consist of Federal Home
Loan Bank advances of various maturities. Such advances are secured by a blanket
lien on Enterprise's residential loan portfolio in amounts of 133% of
outstanding advances. FHLB advances are negotiated on both a fixed rate and
variable rate basis. For March 31, 1997, outstanding advances were $2 million.
At December 31, 1996 and 1995, advances totaled $3 million and $6 million,
respectively.
The following table presents the short term borrowings of Enterprise:
<TABLE>
<CAPTION>
December 31,
March 31, --------------------------
1997 1996 1995
------- ------- -------
(Dollars in thousands)
<S> <C> <C> <C>
Period End Balance
Federal funds purchased $ 0 $ 248 $ 0
Securities sold under agreement to repurchase 4,815 3,480 2,691
Federal Home Loan Bank advances 2,000 3,000 6,000
Other borrowings 1,202 1,148 0
------- ------- -------
Total $ 8,017 $ 7,876 $ 8,691
======= ======= =======
Weighted Average Interest Rate at End of Period:
Federal funds purchased 0.00% 7.33% 0.00%
Securities sold under agreement to repurchase 5.61% 5.63% 4.49%
Federal Home Loan Bank advances 6.87% 7.33% 6.68%
Other borrowings 4.64% 4.14% 0.00%
------- ------- -------
Total 5.78% 6.11% 6.00%
======= ======= =======
Highest month end balance during periods
Federal funds purchased $ 0 $ 851 $ 525
Securities sold under agreement to repurchase 8,379 8,360 11,239
Federal Home Loan Bank advances 3,000 6,000 6,000
Other borrowings 1,202 1,268 0
</TABLE>
38
<PAGE> 39
Capital Resources
At March 31, 1997, Florida Gulfcoast had total shareholders' equity of
$11.8 million, an increase of $220,774 over December 31, 1996. This increase
resulted from retention of earnings which was partially offset by a $233,200
(net of tax effect) reduction in the value of "Available for Sale" securities.
At December 31, 1996, Florida Gulfcoast had total shareholders' equity
of $11.6 million, an increase of $1,342,963 over December 31, 1995. This
increase resulted from retention of earnings which was partially offset by a
$194,779 (net of tax effect) reduction in the value of "Available for Sale"
securities.
The following table presents the capital resources and the related
capital ratios of Florida Gulfcoast as of the dates shown:
<TABLE>
<CAPTION>
December 31,
March 31, -------------------------
1997 1996 1995(1)
---------- ---------- ----------
(Dollars in thousands)
<S> <C> <C> <C>
Total shareholders' equity $ 11,788 $ 11,568 $ 10,155
Less: unrealized gains (losses) on available for sale securities 6 239 434
Less: deferred tax asset disallowed 177 149 155
---------- ---------- ----------
Total Tier I capital 11,605 11,180 9,566
Plus allowance for loan losses includable as Tier 2 capital 1,332 1,275 1,038
---------- ---------- ----------
Total risk based capital $ 12,937 $ 12,455 $ 10,604
========== ========== ==========
Shareholders' equity to assets (period end) 7.23% 7.31% 7.49%
Tier I leverage ratio 7.19% 7.25% 7.37%
Tier I risk-based capital ratio 10.72% 10.62% 10.72%
Total risk based capital ratio 11.96% 11.84% 11.88%
Return to average assets 1.13% 1.04% 0.80%
Return to average equity 15.49% 14.37% 11.15%
Dividend payout ratio --% --% --%
Average equity to average asset ratio 7.29% 7.27% 7.14%
</TABLE>
(1) For December 31, 1995, Florida Gulfcoast was not required to report
risk-based capital on a consolidated basis. These ratios represent bank
only activity. The differences attributable to the holding company were
immaterial.
Results of Operations
The following is a condensed statement of income or loss from operations
for the three months ended March 31, 1997 and 1996 and the years ended December
31, 1996 and 1995.
39
<PAGE> 40
<TABLE>
<CAPTION>
Three Months Ending March 31, Year Ending December 31,
--------------------------------------------------------------------------------
1997 1996 1996 1995
----------------------------- ----------- ------------------ -------------------
Annualized Annualized Annualized
% of % of % of % of
Average Average Average Average
Amount Assets Amount Assets Amount Assets Amount Assets
---------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 3,218 8.01% $ 2,654 7.67% $11,313 7.69% $ 9,711 7.54%
Interest expense:
Deposits 1,394 3.47% 1,195 3.45% 4,825 3.28% 4,549 3.53%
Borrowings 127 0.32% 129 0.37% 525 0.36% 608 0.47%
------- ------- ------- ------- ------- ------- ------- -------
Net interest income 1,697 4.22% 1,330 3.85% 5,963 4.05% 4,554 3.54%
Provision for loan losses 60 0.15% 75 0.22% 225 0.15% 132 0.10%
------- ------- ------- ------- ------- ------- ------- -------
Net interest income after
loan loss provision 1,637 4.07% 1,255 3.63% 5,738 3.90% 4,422 3.44%
Non-interest income 155 0.39% 129 0.37% 472 0.32% 464 0.36%
Non-interest expense 1,090 2.71% 895 2.59% 3,777 2.57% 3,292 2.56%
------- ------- ------- ------- ------- ------- ------- -------
Pre-tax income 702 1.75% 489 1.41% 2,433 1.65% 1,594 1.24%
Income taxes 248 0.62% 180 0.52% 895 0.61% 569 0.44%
------- ------- ------- ------- ------- ------- ------- -------
Net income $ 454 1.13% $ 309 0.89% $ 1,538 1.04% $ 1,025 0.80%
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
Net Interest Income
Net interest income is the difference between interest and fees on
earning assets and interest paid on interest bearing deposits and other interest
bearing liabilities. Net interest income is affected by changes in interest
rates earned and paid, and by changes in the volume of earning assets and
interest bearing liabilities.
The following tables summarize the composition of interest-earning
assets and interest-bearing liabilities for the periods shown.
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------------------------------------
1997 1996
------------------------------------ --------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
---------------------------------------------------------------------------
(Dollars in thousands)
ASSETS
Interest earning assets:
<S> <C> <C> <C> <C> <C> <C>
Loans $106,449 $ 2,404 9.03% $ 90,788 $ 2,019 8.90%
Federal funds sold 1,762 23 5.22% 3,284 42 5.12%
Investment securities 45,682 791 6.93% 35,889 593 6.61%
-------- -------- -------- -------- -------- --------
Total interest earning assets 153,893 3,218 8.36% 129,961 2,654 8.17%
Non-interest earning assets 6,809 8,511
-------- --------
Total assets $160,702 $138,472
======== ========
</TABLE>
40
<PAGE> 41
<TABLE>
<CAPTION>
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest bearing liabilities:
<S> <C> <C> <C> <C> <C> <C>
NOW $ 27,713 221 3.19% $ 27,636 228 3.30%
Money market 8,334 59 2.83% 10,086 79 3.13%
Savings 11,433 114 3.99% 6,540 76 4.65%
Time 73,832 1,000 5.42% 56,267 813 5.78%
Federal funds purchased
and securities sold under
agreement to repurchase 5,558 74 5.33% 3,755 42 4.47%
FHLB advances & other
borrowings 3,242 53 6.54% 5,220 86 6.59%
-------- ------- ----- --------- ------- -----
Total interest bearing
liabilities 130,112 1,521 4.68% 109,504 1,324 4.84%
----- ----- ----- -----
Non-interest bearing liabilities 18,867 18,650
-------- --------
Total liabilities 148,979 128,154
Shareholders' equity 11,723 10,318
-------- --------
Total liabilities and
shareholders' equity $160,702 $138,472
======== ========
Net interest income $ 1,697 $ 1,330
======= ======
Net yield on interest
earning assets 4.41% 4.09%
===== ====
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------------------------------------
1996 1995
------------------------------------------------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------------------------------------------------------------------------------------------------
(Dollars in thousands)
ASSETS
Interest earning assets:
<S> <C> <C> <C> <C> <C> <C>
Loans $ 94,888 $8,551 9.01% $ 82,946 $7,207 8.69%
Federal funds sold 2,139 114 5.33% 2,287 132 5.77%
Investment securities 38,909 2,648 6.81% 37,238 2,372 6.37%
-------- ------- ----- -------- ------- -----
Total interest earning assets 135,936 11,313 8.32% 122,471 9,711 7.93%
Non-interest earning assets 11,163 6,354
-------- --------
Total assets $147,099 $128,825
======= =======
</TABLE>
41
<PAGE> 42
<TABLE>
<CAPTION>
LIABILITIES AND
SHAREHOLDERS' EQUITY
Interest bearing liabilities:
<S> <C> <C> <C> <C> <C> <C>
NOW $ 28,440 933 3.28% $ 28,400 1,000 3.52%
Money market 10,026 304 3.03% 11,435 355 3.10%
Savings 10,132 437 4.31% 2,018 41 2.03%
Time 56,721 3,151 5.56% 51,328 3,153 6.14%
Federal funds purchased
and securities sold under
agreement to repurchase 5,369 263 4.90% 5,563 290 5.21%
FHLB advances & other
borrowings 3,764 262 6.96% 4,673 318 6.81%
------- ------- ----- -------- ------- -----
Total interest bearing
liabilities 114,452 5,350 4.67% 103,417 5,157 4.99%
------- ----- ------- -----
Non-interest bearing liabilities 21,948 16,213
-------- --------
Total liabilities 136,400 119,630
Shareholders' equity 10,699 9,195
-------- --------
Total liabilities and
shareholders' equity $147,099 $128,825
======= =======
Net interest income $ 5,963 $ 4,554
======= ========
Net yield on interest earning assets 4.39% 3.72%
======= =======
</TABLE>
The following table presents the effect on net interest income of changes
from the prior period in volume and rate for the categories and periods
indicated. The effect of a change in volume has been determined by applying the
rate in the earlier period to the change in volume during the current period.
The effect of a change in rate has been determined by applying the volume in the
earlier period to the change in rate during the current period.
<TABLE>
<CAPTION>
Three Months Ended March 31, Year Ended December 31,
1997 Compared to 1996 1996 Compared to 1995
--------------------------------------------------------------------
Volume Rate Total Volume Rate Total
--------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest income
Loans $ 354 $ 31 $ 385 $ 1,068 $ 276 $ 1,344
Investment securities (20) 1 (19) (7) (11) (18)
Federal funds sold 169 29 198 110 166 276
------- ------- ------- ------- ------- -------
Total interest income 503 61 564 1,171 431 1,602
Interest expense
NOW 1 (8) (7) 0 (67) (67)
Money Market (13) (7) (20) (43) (8) (51)
Savings 50 (12) 38 306 90 396
</TABLE>
42
<PAGE> 43
<TABLE>
<CAPTION>
Three Months Ended March 31, Year Ended December 31,
1997 Compared to 1996 1996 Compared to 1995
----------------------------------------------------------------------------
Volume Rate Total Volume Rate Total
----------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Time 241 (54) 187 78 (80) (2)
Federal funds purchased and securities sold under
agreement to repurchase 23 9 32 (12) (15) (27)
FHLB advances & other borrowings (32) (1) (33) (53) (3) (56)
Total interest expense 270 (73) 197 276 (83) 193
----- ------ ----- ----- ------ -----
Net interest income $ 233 $ 134 $ 367 $ 895 $ 514 $1,409
==== ==== ==== ===== ==== =====
</TABLE>
Non-interest income
The following table presents the non-interest income of Florida Gulfcoast
for the three months ended March 31, 1997 and 1996 and the years ended December
31, 1996 and 1995.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
---------------------------------------------------------------------------------------------------------
Change Change
---------------------- ----------------------
1997 1996 Amount % 1996 1995 Amount %
------ ------ ------ ------ ------- ------ ------ ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fees $ 117 $ 95 $ 22 23.16% $ 426 $ 363 $ 63 17.36%
Other 38 34 4 11.76% 46 101 (55) (54.46)%
------ ------ ------ ------ ------- ------ ----- ------
$ 155 $129 $ 26 20.16% $ 472 $ 464 $ 8 1.72%
====== ==== ===== ====== ====== ===== ====== =======
</TABLE>
Non-interest expense
The following table presents the non-interest expense of Florida
Gulfcoast for the three months ended March 31, 1997 and 1996 and the years ended
December 31, 1996 and 1995.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
---------------------------------------------------------------------------------------------------------
Change Change
---------------------- ----------------------
1997 1996 Amount % 1996 1995 Amount %
------ ------ ------ ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Personnel $ 497 $ 395 $ 102 25.82% $ 1,727 $1,390 $ 337 24.24%
Occupancy 224 188 36 19.15% 816 747 69 9.24%
Other 369 312 57 18.27% 1,234 1,155 79 6.84%
------ ------ ------- ------ ------- ------- ------- -------
$1,090 $ 895 $ 195 21.79% $ 3,777 $3,292 $ 485 14.73%
====== ====== ======= ====== ======= ====== ====== ======
</TABLE>
43
<PAGE> 44
Comparison of the Three Months ended March 31, 1997 and 1996
The increase in total assets during the three month period ended March
31, 1997 reflects the effects of continued strong loan demand within the
Sarasota market area. Total assets increased from $158.3 million at year-end
1996 to $163 million at March 31, 1997, or an increase of 3.0%. Deposits
increased by 3.3% to $142.4 million during the three month period, while total
loans grew to $111.5 million, an increase of 7.8%.
The increase in net interest income to $1,696,508 for the three months
ended March 31, 1997 from $1,329,828 for the three months ended March 31, 1996
reflects a decline in interest rates paid on deposits as well as an increase in
yields on both the investment and loan portfolios. During the three months ended
March 31, 1997 Florida Gulfcoast recorded loan loss provision expense of $60,000
versus $75,000 for the three months ended March 31, 1996. This was primarily due
to reductions in the volume of non performing assets at year end 1996 as
compared to a year earlier.
Non-interest income increased to $155,345 for the three months ended
March 31, 1997, from $129,239 for the three months ended March 31, 1996. This
reflects an increase in deposit-related service charge income and an increase of
$13,000 in net gains on the sale of available for sale securities.
Non-interest expense increased to $1,090,099 for the three months ended
March 31, 1997, from $895,169 for the three months ended March 31, 1996,
primarily as a result of increased professional fees, salaries and benefits, and
occupancy expense.
Comparison of 1996 to 1995
Assets grew by 15.9% in 1996, from $136.6 million at December 31, 1995
to $158.3 million at December 31, 1996. Growth of the bank's loan portfolio over
that same time was $15.8 million or 18.0%. Deposits at December 31, 1996 stood
at $137.9 million as compared to $116.5 million at December 31, 1995, an
increase of 18.4%. Net income increased from $1,025,383 in 1995 to $1,537,742 in
1996, primarily as a result of improvements in net interest income.
Net interest income increased by 30.9%, from $4,554,093 in 1995 to
$5,963,267 in 1996. This increase reflects the growth in both the loan and
investment portfolios and overall deposit growth. The net yield on interest
earning assets increased from 3.72% during 1995 to 4.39% during 1996.
Enterprise's loan loss provision increased from $132,000 in 1995 to
$225,000 in 1996. Chargeoffs and non-accrual loans have been comparable to peer
group levels, however, continued rapid growth in the portfolio mandated
additions to the reserve.
Non-interest income increased from $463,704 in 1995 to $472,313 in
1996, primarily as a result of an increase in service charges on accounts
related to the growth in Enterprise's deposits.
Non-interest expense increased from $3,291,628 in 1995 to $3,777,251 in
1996 due to increases in staff size and the costs associated with several
technology enhancements.
Analysis of Interest Rate Sensitivity
Interest rate sensitivity management seeks to minimize the fluctuation
in net interest income during periods of changing interest rates. The difference
between interest rate sensitive assets and interest rate sensitive liabilities
for a specific period, or on a cumulative basis, is commonly referred to as a
rate sensitivity "gap". The gap is considered "positive" when rate sensitive
assets exceed rate sensitive liabilities and "negative" when rate sensitive
liabilities exceed rate sensitive assets. Institutions that have a "positive"
gap are generally considered to be in a position to benefit from rising rates
but to be adversely affected by falling rates, whereas those that have a
"negative" gap are generally considered to be in a position to benefit from
falling rates but to be adversely affected by rising rates.
While gap analysis is a valuable tool in assessing the potential impact
of interest rate changes on net interest income, other factors, such as changes
in balance sheet composition and the interest rate spread relationship between
interest earning assets and interest bearing liabilities, also have an important
impact in determining net income.
The following table sets forth the interest rate sensitivity of Florida
Gulfcoast's assets and liabilities at March 31, 1997. Amounts are classified as
to the earlier of the next possible repricing date or maturity.
44
<PAGE> 45
<TABLE>
<CAPTION>
Immediately
Adjustable 2 Days 3 Months
or 1 Day Through Through Over
Maturity 3 Months 1 Year 1 Year Total
-------- -------- -------- -------- -------
(Dollars in thousands)
ASSETS:
<S> <C> <C> <C> <C> <C>
Federal Funds sold $ 930 $ 930
Investment securities -- $ 1,392 $ 4,326 $ 38,423 44,141
Total Loans 29,897 9,060 20,439 52,076 111,472
-------- -------- -------- -------- --------
Total interest earning assets 30,827 10,452 24,765 90,499 156,543
LIABILITIES:
NOW 26,043 26,043
Money Market 7,941 7,941
Savings 12,736 12,736
Time 35,047 29,138 11,432 75,617
Federal Funds purchased and securities
sold under agreement to repurchase 4,815 4,815
FHLB advances and other borrowings 1,202 2,000 3,202
-------- -------- -------- -------- --------
Total interest bearing liabilities 40,001 37,047 29,138 24,168 130,354
-------- -------- -------- -------- --------
Interest rate sensitivity gap (9,174) (26,595) (4,373) 66,331 $ 26,189
-------- -------- -------- -------- ========
Cumulative interest rate sensitivity gap $ (9,174) $(35,769) $(40,142) $ 26,189
======== ======== ======== ========
Cumulative interest rate sensitivity gap
as a percentage of interest earning
assets (5.86)% (22.85)% (25.64)% 16.73%
</TABLE>
As of March 31, 1997, Florida Gulfcoast continued to be in a liability
sensitive position through the twelve month cumulative period.
Analysis of Liquidity
Liquidity management involves the ability to meet the cash flow
requirements of customers who may be either depositors wanting to withdraw funds
or borrowers needing assurance that sufficient funds will be available to meet
their credit needs. Unfunded commitments for loans and lines of credit at March
31, 1997 amounted to $27,059,671.
The primary sources of liquidity for Enterprise are short term
investments and cash flows generated by normal amortization and payoffs in the
investment and loan portfolios. These are supplemented by the bank's ability to
either sell or borrow against longer term securities, its ability to borrow from
the Federal Home Loan Bank and, when conditions warrant, its ability to sell
whole loans or participations in loans. Unanticipated liquidity requirements are
met primarily by borrowing from correspondent banks which provide unsecured
federal funds lines of credit. At March 31, 1997, Enterprise had no such
borrowings.
The liquidity position of Enterprise may also be affected by plans for
capital expenditures. Funding those needs will reduce funds available for other
purposes. As of March 31, 1997 Enterprise was negotiating for the acquisition of
two additional branch sites, the aggregate cost of which would be expected to be
between $2 million and $2.5 million.
45
<PAGE> 46
DESCRIPTION OF CAPITAL STOCKS
PROVIDENT FINANCIAL
The terms of Provident Financial's Common Stock are governed by the
laws of Ohio and Provident Financial's Articles of Incorporation and Code of
Regulations. The following is a summary of certain material provisions of, and
is qualified in its entirety by reference to Ohio law and Provident Financial
Group, Inc.'s Articles of Incorporation and Code of Regulations.
Common Stock
Provident Financial' s Articles of Incorporation authorize the issuance
of 110 million shares of Common Stock, no par value. At March 31, 1997,
Provident had 41,027,352 shares of Common Stock outstanding held by
approximately ___ holders of record.
Holders of Provident Financial Common Stock are entitled to one vote
for each share held of record on all matters submitted to a vote of
shareholders. Shareholders have the right to cumulate their votes in the
election of directors.
Subject to preferences which may be granted to holders of preferred
stock, holders of Provident Financial Common Stock are entitled to share in such
dividends as the Board of Directors, in its discretion, may validly declare from
funds legally available. In the event of liquidation, each outstanding share of
Provident Financial Common Stock entitles its holder to participate ratably in
the assets remaining after payment of liabilities and preferred stock
liquidation preferences.
Holders of Provident Financial Common Stock have no preemptive or other
rights to subscribe for or purchase additional shares of any class of stock or
any other securities of Provident Financial and there are no redemption or
sinking fund provisions with regard to the Common Stock. All outstanding shares
of Provident Financial Common Stock are fully paid, validly issued and
non-assessable. The vote of the holders of two-thirds of all outstanding shares
of Provident Financial Common Stock is required to amend the Articles of
Incorporation and to approve certain mergers, reorganizations and similar
transactions. The Registrar and Transfer Agent for Provident Financial's Common
Stock is The Provident Bank.
Preferred Stock
Provident Financial's Articles of Incorporation authorize five million
shares of preferred stock, no par value. Preferred stock may be issued from time
to time in series having such designated preferences and rights, qualifications
and limitations as the Board of Directors may determine without any approval of
shareholders. Preferred stock could be given voting and conversion rights which
would adversely affect the voting power and equity of holders of Provident
Financial Common Stock and could have preference to Provident Financial Common
Stock with respect to dividend and liquidation rights. The preferred stock could
have the effect of acting as an anti-takeover device to prevent a change of
control of Provident Financial. Provident Financial has 70,272 shares of
preferred stock, designated as its Series D Preferred Stock, outstanding. Each
share has a stated and liquidation value of $100, is convertible into 14.0625
shares of Provident Financial Common Stock, and pays an annual dividend equal to
the dividend payable on 14.0625 shares of Provident Financial Common Stock.
Provisions Affecting Business Combinations
Ohio law governs the rights of shareholders of Provident Financial.
Chapter 1704 of the Ohio Revised Code may be viewed as having an anti-takeover
effect. This statute, in general, prohibits an "issuing public corporation" (the
definition of which would include the Provident Financial) from entering into a
"Chapter 1704 Transaction" with the beneficial owner (or affiliates of such
beneficial owner) of 10% or more of the outstanding shares of the corporation
(an "interested shareholder") for at least three years following the date on
which the interested shareholder attains such 10% ownership, unless the Board of
Directors approves, prior to such person becoming an interested shareholder,
either the transaction or the acquisition of shares resulting in a 10%
ownership. A "Chapter 1704 Transaction" is broadly defined to include, among
other things, a merger or consolidation with, a sale of substantial assets to,
or the receipt of a loan, guaranty or other financial benefit (which is not
proportionately received by all shareholders) from the interested shareholder.
Following the expiration of such three-year period, a Chapter 1704 Transaction
with the interested shareholder is permitted only if either (i) the transaction
is approved by the holders of at least two-thirds of the voting power of the
corporation (or such different proportion as is set forth in the corporation's
articles of incorporation), including a majority of the outstanding shares,
excluding those owned by the interested shareholder, or (ii) the business
combination results in the shareholders other than the interested shareholder
receiving a prescribed "fair price" for their shares. One significant effect of
Chapter 1704 is
46
<PAGE> 47
to cause an interested shareholder to negotiate with the Board of Directors of a
corporation prior to becoming an interested share holder.
In addition, Section 1707.043 of the Ohio Revised Code requires a
person or entity that makes a proposal to acquire the control of a corporation
to repay to that corporation any profits made from trades in the corporation's
stock within 18 months after making the control proposal.
While Provident Financial believes that these provisions are in its
best interests, shareholders of Florida Gulfcoast should be aware that such
provisions could be disadvantageous to them because the overall effect of these
statutes may be to render more difficult or discourage the removal of incumbent
management or the assumption of effective control by other persons.
FLORIDA GULFCOAST
Common Stock
The terms of Florida Gulfcoast's Common Stock are governed by the laws
of Florida and Florida Gulfcoast's Articles of Incorporation and Bylaws. The
following description of Florida Gulfcoast's Common Stock and certain provisions
of Florida Gulfcoast's Articles and Bylaws is a summary and is qualified in its
entirety by reference to the provisions of the Florida Gulfcoast Articles and
Bylaws.
Florida Gulfcoast is authorized to issue 10,000,000 shares of common
stock, par value $1.00 per share. As of March 31, 1997, there were 1,600,000
shares of Common Stock outstanding which were held by 137 shareholders of
record.
The holders of Florida Gulfcoast Common Stock are entitled to one vote
per share on all matters to be voted upon by the shareholders. The holders of
Florida Gulfcoast Common Stock are entitled to receive ratably such dividends,
if any, as may be declared from time to time by the Board of Directors out of
funds legally available therefor. In the event of liquidation, dissolution or
winding up of Florida Gulfcoast, the holders of Florida Gulfcoast Common Stock
are entitled to shares ratably in all assets remaining after payment
liabilities. The Florida Gulfcoast Common Stock has no preemptive or conversion
rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to the Florida Gulfcoast Common Stock. All outstanding
shares of Florida Gulfcoast Common Stock are fully paid and non-assessable, and
the shares of Florida Gulfcoast Common Stock to be issued in anticipation of the
completion of the transaction will be fully paid and non-assessable. Cumulative
voting in the election of directors is not provided. The vote of the holders of
two-thirds of all outstanding shares of Florida Gulfcoast Common Stock is
required to amend the Articles of Incorporation and to approve certain mergers,
reorganizations and similar transactions.
Preferred Stock
The Articles of Incorporation of Florida Gulfcoast do not authorize the
issuance of preferred stock.
Certain Provisions of Florida Gulfcoast's Articles and Bylaws
Certain provisions of Florida Gulfcoast's Articles and Bylaws may make
it more difficult for a third party to acquire Florida Gulfcoast or to change
control of Florida Gulfcoast's Board of Directors, thereby reducing Florida
Gulfcoast's vulnerability to an unsolicited takeover bid. Florida Gulfcoast's
Articles authorize the issuance of 10,000,000 shares of common stock, thus
providing Florida Gulfcoast with the flexibility to issue stock for various
purposes, including deterrence of takeover bids, without further shareholder
approval.
Florida Gulfcoast's Articles also limit the circumstances under which
directors of Florida Gulfcoast may be held monetarily liable for their acts and
provide that any further elimination or limitation of such liability of
directors hereafter adopted under Florida law will be applicable to Florida
Gulfcoast's directors. Florida Gulfcoast's Articles further provide that any
repeal or modification of this provision by Florida Gulfcoast's shareholders
will not adversely affect any right or protection of a director existing at the
time of such repeal or modification. Under this provision, directors of Florida
Gulfcoast may be held monetarily liable only for: (i) a violation of the
criminal law; (ii) a transaction from which the director derived an improper
personal benefit; (iii) a circumstance under which the liability provisions of
the Florida General Corporation Act are applicable; (iv) in a proceeding by or
in the right of Florida Gulfcoast to procure a judgment in its favor by or in
the right of a shareholder, conscious disregard for the best interests of
Florida Gulfcoast, or willful misconduct; (v) in a proceeding by or in the right
of someone other than Florida Gulfcoast or a shareholder, recklessness or an act
or omission which was committed in bad faith or with malicious purpose or in a
manner
47
<PAGE> 48
exhibiting wanton and willful disregard for human rights, safety or property; or
(vi) behavior which is adjudged in an administrative proceeding or action
instituted by an appropriate regulatory agency to be deserving of a final order
assessing civil monetary penalties or requiring affirmative action by an
individual or individuals in the form of payments to Florida Gulfcoast.
The Articles of Incorporation of Florida Gulfcoast contain additional
provisions affecting business combinations with interested shareholders. Under
Florida Gulfcoast's Articles, no merger, reorganization or consolidation of
Florida Gulfcoast may be effected with any interested shareholder who
beneficially owns 10% or more of the outstanding voting shares of the
corporation unless certain conditions are met. Those conditions include
requirements that (i) the ratio of (a) the aggregate amount of the consideration
received in the business combination to (b) the market price of the Common Stock
of Florida Gulfcoast immediately prior to the announcement of the business
combination must meet or exceed a certain ratio set forth therein, (ii) the
aggregate amount of the consideration received by the shareholders of Florida
Gulfcoast in the business combination shall not be less than the highest price
per share previously paid by the interested shareholder, and (iii) the
consideration received by the shareholders of Florida Gulfcoast in the business
combination shall be in the same form and kind as the consideration paid by the
interested shareholder in acquiring the majority of the shares of Florida
Gulfcoast Common Stock already owned by the interested shareholder. Provident
Financial's Articles of Incorporation do not contain a similar provision.
Section 607.0901 of the Florida Business Corporation Act (the "Florida
Act") is a similar provision to Chapter 1704 of the Ohio law. It provides that
an affiliated transaction must be approved by, subject to certain exceptions,
the vote of the holders of two-thirds of the voting shares of the Florida
corporation other than those beneficially owned by an interested shareholder. An
affiliated transaction includes any merger with an interested shareholder or any
corporation which is an affiliate of the interested shareholder, any significant
sale or mortgage of assets of the corporation to the interested shareholder and
other transactions of similar effect. The Florida Act defines an interested
stockholder as a beneficial owner of 10% or more of the outstanding voting
shares of the corporation.
Certain of these provisions, particularly in light of the ownership of
approximately 35% of Florida Gulfcoast's outstanding Common Stock by its
officers and directors as of March 31, 1997, could have the effect of deterring
certain corporate transactions, including tender or exchange offers for Florida
Gulfcoast Common Stock. The provisions could also have the effect of maintaining
incumbent management or of discouraging or defeating proposals that might be
viewed as favorable by some holders of the Florida Gulfcoast Common Stock other
than Florida Gulfcoast's officers and directors.
Transfer Agent and Registrar
Florida Gulfcoast serves as its own Transfer Agent and Registrar.
MATERIAL DIFFERENCES IN RIGHTS OF SHAREHOLDERS
Cumulative voting is provided in the election of Provident Financial's
directors whereas it is not provided in the election of directors of Florida
Gulfcoast. All of Provident Financial's directors are elected annually whereas
directors of Florida Gulfcoast are divided into three classes, with each class
elected annually for a three year term. While directors of Provident Financial
may be removed by shareholders without cause by the vote of a majority entitled
to vote, cause must be assigned in order for shareholders of Florida Gulfcoast
to remove a director and then the vote required is two-thirds of all outstanding
shares. Vacancies on the Board of Directors of Provident Financial are filled by
a majority vote of directors in office whereas a two-thirds vote of the
remaining directors is required to fill vacancies on the Board of Directors of
Florida Gulfcoast. Florida Gulfcoast's Articles of Incorporation, unlike
Provident Financial's, do not provide for the issuance of preferred stock.
Provident Financial's Code of Regulations may be amended by vote of a
majority of outstanding shares at a meeting or in a written consent signed by
holders of two-thirds of all outstanding shares while Florida Gulfcoast's Bylaws
may be amended by the Board of Directors or the vote of two-thirds of all
outstanding shares.
Provident Financial is governed by certain provisions of Ohio law which
may be described as having an anti-takeover effect as described above. Similar
provisions are provided by Florida law and Florida Gulfcoast's Articles of
Incorporation as described above.
48
<PAGE> 49
LEGAL MATTERS
Certain legal matters in connection with the Provident Financial Common
Stock offered hereby and certain other legal matters in connection with the
offering will be passed upon for Provident Financial by Keating, Muething &
Klekamp, P.L.L., Cincinnati, Ohio. Members of that firm beneficially own
___________ shares of Provident Financial Common Stock. Certain legal matters in
connection with the Florida Gulfcoast Common Stock and certain other legal
matters in connection with the offering will be passed upon for Florida
Gulfcoast by Fowler, White, Gillen, Boggs, Villareal & Banker, P.A.
EXPERTS
The consolidated financial statements of Provident Bancorp, Inc. (now
known as Provident Financial Group, Inc.) appearing in Provident Bancorp's
Annual Report (Form 10-K) for the year ended December 31, 1996 have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such financial statements
are incorporated herein in reliance upon the report of Ernst & Young LLP
pertaining to such financial statements given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of Florida Gulfcoast as of
December 31, 1995 and December 31, 1996, and for each of the two years in the
period ended December 31, 1996 included in this Proxy Statement/Prospectus have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
reports appearing herein and elsewhere in the Registration Statement, and have
been so included in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
Representatives of Deloitte & Touche LLP are expected to be present at
the Special Meeting and will have the opportunity to make a statement if they
desire to do so and be available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors of Florida Gulfcoast knows of no other matters
to be presented at the Special Meeting other than as described in the Notice of
Special Meeting accompanying this Proxy Statement/Prospectus. If any other
matter does properly come before the Special Meeting, the appointees named in
the proxy will vote the proxies in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Florida Gulfcoast will hold a 1998 annual meeting of shareholders only
if the Merger is not consummated before the time of such meeting. In the event
that such a meeting is held, any proposals of shareholders intended to be
presented at the 1998 annual meeting must have been received by the Secretary of
Florida Gulfcoast no later than February 28, 1998 in order to be considered for
inclusion in the Florida Gulfcoast proxy materials.
49
<PAGE> 50
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Florida Gulfcoast Bancorp, Inc.
We have audited the accompanying consolidated balance sheets of Florida
Gulfcoast Bancorp, Inc. and subsidiary (the "Company") as of December 31, 1996
and 1995, and the related consolidated statements of operations, changes in
shareholder's equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 1996
and 1995, and the results of its operations and its cash flows for the years
then ended in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
February 19, 1997
Tampa, Florida
50
<PAGE> 51
<TABLE>
<CAPTION>
FLORIDA GULFCOAST BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31, December 31,
1997 1996 1995
------------- ------------- -------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 5,130,766 $ 6,766,887 $ 10,129,332
Investment securities held to maturity
(market values of $2,749,453, $2,387,559 and $0) 2,743,540 2,311,762 --
Investment securities available for sale
(book values of $41,391,314, $43,146,550 and
$36,041,182) 41,397,114 43,385,550 36,474,961
Loans, net of allowance for loan losses of
$1,331,991, $1,275,038 and $1,037,704 10,140,367 102,134,036 86,575,814
Premises and equipment, net 2,133,370 2,102,023 1,859,557
Interest receivable 1,158,600 1,219,632 975,510
Other assets 297,684 370,805 578,639
------------- ------------- -------------
TOTAL ASSETS $ 163,001,441 $ 158,290,695 $ 136,593,813
============= ============= =============
LIABILITIES & SHAREHOLDERS' EQUITY
Demand deposits $ 20,083,116 $ 17,268,924 $ 18,930,827
NOW deposits 26,042,729 29,628,261 29,696,481
Money market deposits 7,940,838 8,457,781 11,103,765
Savings deposits 12,736,311 10,227,541 2,214,143
Time deposits (under $100,000) 52,041,652 50,752,890 41,691,272
Time deposits ($100,000 and over) 23,575,084 21,564,161 12,830,149
------------- ------------- -------------
Total deposits 142,419,730 137,899,558 116,466,637
------------- ------------- -------------
Federal funds purchased and securities
sold under agreements to repurchase 4,815,000 3,728,000 2,691,094
FHLB advances and other borrowings 3,202,171 4,147,922 6,000,000
Accounts payable and accrued expenses 776,117 947,566 1,211,396
------------- ------------- -------------
Total liabilities 151,213,018 146,723,046 126,369,127
------------- ------------- -------------
Common stock; $1.00 par value, 10,000,000
shares authorized; 1,600,000 shares
issued and outstanding 1,600,000 1,600,000 1,600,000
Additional paid-in capital 6,600,000 6,600,000 6,600,000
Unrealized appreciation (depreciation) in investment
securities, net of related income tax effect 5,800 239,000 433,779
Undivided profits 3,582,623 3,128,649 1,590,907
------------- ------------- -------------
Total shareholders' equity 11,788,423 11,567,649 10,224,686
------------- ------------- -------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 163,001,441 $ 158,290,695 $ 136,593,813
============= ============= =============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE> 52
<TABLE>
<CAPTION>
FLORIDA GULFCOAST BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Year Ended
March 31, December 31,
1997 1996 1996 1995
------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans $ 2,404,074 $ 2,019,370 $ 8,550,850 $ 7,207,362
Federal funds sold 22,405 42,020 113,846 132,024
Investment securities 791,310 592,531 2,648,683 2,371,950
------------ ------------ ------------ ------------
Total interest income 3,217,789 2,653,921 11,313,379 9,711,336
------------ ------------ ------------ ------------
Interest expense:
NOW 220,531 227,853 933,551 999,730
Money market 59,377 78,623 303,829 355,155
Savings 113,706 75,889 436,578 41,408
Time 1,000,481 813,095 3,151,352 3,152,558
Federal funds purchased and securities sold
under agreement to repurchase 73,686 42,243 263,018 290,383
FHLB advances and other borrowings 53,500 86,390 261,784 318,009
------------ ------------ ------------ ------------
Total interest expense 1,521,281 1,324,093 5,350,112 5,157,243
------------ ------------ ------------ ------------
Net interest income 1,696,508 1,329,828 5,963,267 4,554,093
Provision for loan losses 60,000 75,000 225,000 132,000
------------ ------------ ------------ ------------
Net interest income after provision for
loan losses 1,636,508 1,254,828 5,738,267 4,422,093
------------ ------------ ------------ ------------
Noninterest income:
Service charges 116,864 95,381 426,361 362,483
Other 38,481 33,858 45,952 101,221
------------ ------------ ------------ ------------
Total noninterest income 155,345 129,239 472,313 463,704
------------ ------------ ------------ ------------
Noninterest expense:
Personnel expense 497,045 394,772 1,727,334 1,389,926
Occupancy expense 223,830 188,220 815,844 746,735
Other operating expense 369,224 312,177 1,234,073 1,154,967
------------ ------------ ------------ ------------
Total noninterest expense 1,090,099 895,169 3,777,251 3,291,628
------------ ------------ ------------ ------------
Income before provision for income taxes 701,754 488,898 2,433,329 1,594,169
Provision for income taxes 247,780 179,747 895,587 568,786
------------ ------------ ------------ ------------
NET INCOME $ 453,974 $ 309,151 $ 1,537,742 $ 1,025,383
============ ============ ============ ============
EARNINGS PER SHARE $ 0.28 $ 0.19 $ 0.94 $ 0.63
============ ============ ============ ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE> 53
<TABLE>
<CAPTION>
FLORIDA GULFCOAST BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Unrealized
appreciation
(depreciation)
Additional in investment Total
Common paid-in securities Undivided shareholders'
stock capital net of tax profits equity
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance,
January 1, 1995 $ 1,600,000 $ 6,600,000 $ (647,552) $ 565,524 $ 8,117,972
Net income 1,025,383 1,025,383
Unrealized appreciation in
investment securities, net of
related income tax effect 1,081,331 1,081,331
----------- ----------- ----------- ----------- -----------
Balance,
December 31, 1995 1,600,000 6,600,000 433,779 1,590,907 10,224,686
Net income 309,151 309,151
(unaudited)
Unrealized depreciation in
investment securities, net of
related income tax effect
(unaudited) (203,779) (203,779)
----------- ----------- ----------- ----------- -----------
Balance,
March 31, 1996
(unaudited) $ 1,600,000 $ 6,600,000 $ 230,000 $ 1,900,058 $10,330,058
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Unrealized
appreciation
(depreciation)
Additional in investment Total
Common paid-in securities Undivided shareholders'
stock capital net of tax profits equity
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance,
January 1, 1996 $ 1,600,000 $ 6,600,000 $ 433,779 $ 1,590,907 $10,224,686
Net income 1,537,742 1,537,742
Unrealized depreciation in
investment securities, net of
related income tax effect (194,779) (194,779)
----------- ----------- ----------- ----------- -----------
Balance,
December 31, 1996 1,600,000 6,600,000 239,000 3,128,649 11,567,649
Net income 453,974 453,974
(unaudited)
Unrealized depreciation in
investment securities, net of
related income tax effect
(unaudited) (233,200) (233,200)
----------- ----------- ----------- ----------- -----------
Balance,
March 31, 1997
(unaudited) $ 1,600,000 $ 6,600,000 $ 5,800 $ 3,582,623 $11,788,423
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE> 54
FLORIDA GULFCOAST BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
------------------------------ -------------------------------
1997 1996 1996 1995
------------- ------------- ------------- -------------
(Unaudited)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Interest and fee income received $ 3,259,341 $ 2,673,310 $ 11,174,596 $ 9,499,304
Noninterest income 155,345 129,239 472,313 463,704
Interest paid (1,510,879) (1,366,897) (5,343,728) (4,918,893)
Salaries and benefits paid (671,320) (556,922) (2,388,284) (2,049,687)
Occupancy expense (133,222) (119,577) (516,319) (468,030)
Income taxes (paid) refunds received 9,449 (281,343) (1,189,292) (330,346)
Other operating expenditures (735,183) (342,216) (1,002,747) (1,542,060)
------------- -------------- ------------- -------------
Net cash provided by operating activities 373,531 135,594 1,206,539 653,992
------------- -------------- ------------- -------------
Cash flows from investing activities:
Purchases of securities (4,693,292) (2,825,184) (23,409,531) (32,095,524)
Sales and maturities of securities 6,016,750 3,192,760 13,992,402 17,861,440
Net increase in loans (7,872,576) (4,238,537) (15,227,613) (6,179,302)
(Increase) decrease in premises and equipment (121,955) (48,875) (541,991) (111,943)
------------- -------------- ------------- -------------
Net cash used by investing activities (6,671,073) (3,919,836) (25,186,733) (20,525,329)
------------- -------------- ------------- -------------
Cash flows from financing activities
Increase (decrease) in demand deposits 2,814,192 (1,798,198) (1,661,903) 2,802,386
Increase (decrease) in NOW deposits (3,585,532) (1,750,580) (68,220) (563,668)
Increase (decrease) in money market deposits (516,943) (496,033) (2,645,984) (734,645)
Increase (decrease) in savings deposits 2,508,770 10,880,268 8,013,398 319,861
Increase (decrease) in time deposits 3,299,685 615,378 17,795,630 20,146,918
Increase (decrease) in other borrowings 141,249 (3,911,563) (815,172) 1,987,137
------------- -------------- ------------- -------------
Net cash provided by financing activities 4,661,421 3,539,272 20,617,749 23,957,989
------------- -------------- ------------- -------------
Net increase (decrease) in cash and cash equivalents (1,636,121) (244,970) (3,362,445) 4,086,652
Cash and cash equivalents at beginning of period 6,766,887 10,129,332 10,129,332 6,042,680
------------- -------------- ------------- -------------
Cash and cash equivalents at end of period $ 5,130,766 $ 9,884,362 $ 6,766,887 $ 10,129,332
============= ============== ============= =============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE> 55
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
1. Description of Business and Summary of Significant Accounting Policies:
Background
----------
Florida Gulfcoast Bancorp, Inc. (the "Company") is a bank holding
company formed on January 27, 1995. Its only subsidiary is Enterprise
National Bank of Sarasota (the "Bank"). The Bank is a federally
chartered bank regulated by the Office of Comptroller of the Currency.
The Bank is a member of the Federal Reserve System and commenced
operations on March 29, 1989.
Unaudited Interim Information
-----------------------------
In the opinion of management, the unaudited interim financial
information reflects all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation. The results of
operations for the three months ended March 31, 1997, are not
necessarily indicative of the results expected for the year ending
December 31, 1997.
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, the Bank. All intercompany
balances and transactions have been eliminated.
Prior to January 27, 1995, the Bank was owned directly by its
shareholders and issued financial statements under the Bank's name.
However, on January 27, 1995, shareholders of the Bank approved a plan
of reorganization whereby the Bank became a wholly owned subsidiary of
Florida Gulfcoast Bancorp, Inc., a newly organized one-bank holding
company. The shareholders of the Bank exchanged their 1,600,000 shares
of $2.50 par value stock of the Bank for 1,600,000 shares of $1.00 par
value stock of the Company. The transaction has been accounted for in a
manner similar to the pooling of interests method and, accordingly,
there was no change to the recorded historical cost basis of the Bank's
assets and liabilities. The pooling of interests method treats the
historical balance sheet and income statement accounts of the combining
companies as though the combination had occurred at the beginning of
the earliest period shown.
Investment Securities
---------------------
The Company accounts for its investment securities in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities."
SFAS 115 dictates that investments in such securities be classified as
either "Held to Maturity," "Held for Trading" or "Available for Sale."
The accounting treatment for unrealized gains and losses on those
investments is then dictated by the classification chosen.
The Company has elected to classify all investments held at March 31,
1997 and December 31, 1996 and 1995, as "Available for Sale" except for
municipal securities which are classified as "Held to Maturity." At
December 31, 1995, the Company owned no municipal securities, hence all
securities were classified as "Available for Sale."
"Available for Sale" securities are carried at cost adjusted for
unrealized gains and losses and further adjusted for amortization of
premiums and accretion of discounts using a method that approximates
the interest method.
<PAGE> 56
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
"Held to Maturity" securities are adjusted for amortization of premiums
and of discounts only, as the Company has both the intent and ability
to hold these securities until their maturity.
The effects of unrealized gains and losses on "Available for Sale"
securities are reflected as a separate component of Shareholders'
Equity and they are not reflected in income.
As of March 31, 1997, unrealized gains of $5,800, which is net of a
$3,220 tax effect, were included in Shareholders' Equity. For December
31, 1996, and 1995, unrealized gains of $239,000, net of a $130,729 tax
effect, and $433,779, net of a $240,838 tax effect, respectively, were
included in Shareholders' Equity.
Realized gains and losses, and unrealized gains and losses on mutual
funds, are reflected in the results of current operations.
Allowance for Loan Losses
-------------------------
The allowance for loan losses is increased by charges to income and
decreased by chargeoffs (net of recoveries). Management's periodic
evaluation of the adequacy of the allowance is based on the Company's
past loan loss experience, known and inherent risks in the portfolio,
adverse situations that may affect the borrower's ability to repay, the
estimated value of any underlying collateral, and current economic
conditions.
Impairment of Loans
-------------------
In October 1993, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 114, "Accounting
by Creditors for Impairment of a Loan." SFAS 114 requires that impaired
loans be measured based on the present value of expected future cash
flows discounted at the loan's effective interest rate or, as a
practical expedient, at the loan's observable market price or the fair
value of the collateral if the loan is collateral dependent.
In October 1994, SFAS 118, "Accounting by Creditors for Impairment of a
Loan - Income Recognition and Disclosure," was issued as an amendment
to SFAS 114. It allows creditors to use existing methods for
recognizing interest income on an impaired loan by eliminating the
provisions in SFAS 114 that describe how creditors should report income
on impaired loans. SFAS 118 also amends the disclosure requirements in
SFAS 114 to require information about the recorded investment in
certain impaired loans and about how a creditor recognizes interest
income related to those impaired loans.
SFAS 114 and SFAS 118 are required for financial statements for fiscal
years beginning after December 15, 1994 and have been adopted by the
Company. The Company has classified two loans with an aggregate gross
recorded investment of $233,000 as impaired as of March 31, 1997. As of
December 31, 1996, and 1995, respectively, the Company had classified
three loans with an aggregate gross recorded investment of $111,000 and
three loans with an aggregate gross recorded investment of $221,000.
Related loss allowances for these loans totaled $117,000, $100,000 and
$61,000, respectively, for a net investment of $116,000 for March 31,
1997, $11,000 and $160,000 for December 31, 1996 and 1995. Generally,
the Company records income on such loans on the cash basis, however,
during these periods, income was recorded on the accrual basis since
the results were not materially different and because adequate
allowances were established. Income recognized on the accrual basis was
insignificant. The Company's average net recorded investment in these
loans for the period was $234,000, $98,000 and $173,000, respectively.
<PAGE> 57
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
Mortgage Servicing Rights
-------------------------
In June 1996, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities".
This standard supersedes and amends several prior FASB Statements and
Technical Bulletins including SFAS No. 122 "Accounting for Mortgage
Servicing Rights" which applied to mortgage banking activities in which
a mortgage is originated or purchased and then sold, with the right to
service the mortgage retained by the seller. SFAS 125 provides
accounting and reporting standards for transfers and servicing of
financial assets and extinguishment of liabilities. Management has
concluded that the application of SFAS No. 125, which is applicable
only to periods beginning after December 31, 1996, is immaterial.
SFAS No. 122 became effective during 1996. Retroactive application was
not permitted, however, management evaluated the impact of its
application to the Company's Balance Sheets and Statements of
Operations and has determined that no amounts need to be recorded.
Application of the SFAS would not have had a material effect on either
the Balance Sheets or Statements of Operations since the Company
generally sells the right to service along with any loans which are
sold.
Income Recognition
------------------
Interest income on all loans is accrued based upon the principal amount
outstanding. Nonrefundable fees and costs associated with the
origination of loans are deferred and recognized over the life of the
loan using a method which approximates the interest method.
Management has established a policy of discontinuing the accrual of
interest (nonaccrual status) on a loan once it is 90 days delinquent as
to payment of principal or interest. In addition, a loan will be placed
on nonaccrual status before it becomes 90 days delinquent if management
believes that the borrower's financial condition is such that
collection of interest or principal is doubtful. When loans are placed
on nonaccrual status, any accrued or unpaid interest is reversed as a
charge to the Statement of Operations.
A loan may be restored to accrual status when, in management's opinion,
the borrower's financial condition indicates the ability to make future
payments of interest and principal, and none of the past due interest
and principal is due and unpaid.
Premises and Equipment
----------------------
Premises and equipment are stated at cost less accumulated depreciation
and amortization. Depreciation expense is computed on the straight-line
basis over the estimated useful life of each asset. Leasehold
improvements are amortized on the straight-line method over the shorter
of their estimated useful life or the lease term.
Additions to premises and equipment and major improvements are
capitalized. Maintenance and repairs are expensed as incurred.
Other Real Estate
-----------------
Other real estate owned is included in other assets and represents real
property acquired by foreclosure or in settlement of debt. Other real
estate owned is valued at the lower of the fair value minus estimated
costs to sell, or cost. The cost of such assets is defined as their
fair value at the time of foreclosure. Subsequent downward adjustments
<PAGE> 58
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
to fair value, if any, are recognized through charges to earnings and
corresponding increases in a valuation allowance. If the fair value
less estimated costs to sell subsequently increases, the valuation
allowance is reduced, and earnings credited; however, the valuation
allowance cannot be reduced below zero. Legal fees and other costs in
acquiring and holding foreclosed assets are charged to expense as
incurred.
Income Taxes
------------
The Company accounts for certain income and expense items (such as
pre-opening expenses, depreciation expense and provision for loan
losses) in different time periods for financial reporting purposes than
for income tax purposes. Provisions for deferred tax assets and
liabilities are made in recognition of such temporary differences.
The Company uses the liability method in accounting for the effects of
income taxes for financial reporting purposes. Changes in tax rates and
laws will be reflected in income from continuing operations in the
period such changes are enacted.
Earnings Per Share
------------------
Earnings per share are determined by dividing earnings by the
weighted-average number of common shares, including common share
equivalents, outstanding during each year. The average number of common
and common equivalent shares outstanding for the three-month periods
ending March 31, 1997 and 1996 were 1,633,390 and 1,630,698,
respectively, and for the years ending December 31, 1996 and 1995 were
1,630,698 and 1,625,598, respectively.
Cash Flows
----------
For purposes of reporting cash flows, "Cash and cash equivalents"
include cash on hand, amounts due from banks, and federal funds sold,
which are invested overnight.
2. Fair Values - SFAS No. 107:
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No.
107, "Disclosures about Fair Value of Financial Instruments." The
estimated fair value amounts have been determined by using available
market information and appropriate valuation methodologies. However,
considerable judgment is necessarily required to interpret market data
to develop the estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts the
Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair values.
<PAGE> 59
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
(in thousands) (in thousands
------------------- -------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents $ 6,767 $ 6,767 $ 10,129 $ 10,129
Securities held to maturity 2,312 2,361 -- --
Securities available for sale 42,689 42,689 35,721 35,721
Loans receivable 103,409 104,595 87,614 88,395
FRB and other stock 696 696 754 754
Liabilities:
Demand Deposits $ 65,583 $ 65,583 $ 61,946 $ 61,946
Time Deposits 72,317 72,603 54,521 54,894
Federal Funds purchased and
Repurchase Agreements 3,728 3,728 2,691 2,691
Other Borrowings 4,148 4,183 6,000 6,090
</TABLE>
Estimated values for March 31, 1997 were not available.
Cash and Cash Equivalents - For cash and cash equivalents, the carrying
amount is a reasonable estimate of fair value.
Securities - Estimated fair value for securities held to maturity and
available for sale is based on quoted market prices, if available. If a
quoted market price is not available, fair value is estimated using
quoted market prices for similar securities.
Loans Receivable - The fair value of fixed-rate loans is estimated by
discounting the future cash flows using the current rates at which
similar loans of comparable risk and duration would be made. The fair
value of adjustable-rate loans is calculated using price assumptions at
which similar adjustable rate loans of comparable risk and duration
would be made.
FRB and other stock - The fair value of Federal Reserve Bank stock and
other stock is equal to the carrying value since there is no readily
available market for the stock.
Demand Deposits and Time Deposits - The fair value of demand deposits,
savings accounts, and certain money market deposits is the amount
payable on demand at the reporting date. The fair value of fixed-
maturity certificates of deposit is estimated by discounting the cash
flows relating to those deposits using current local market averages
for deposits of comparable remaining maturity.
Federal Funds Purchased and Repurchase Agreements - The carrying value
is equal to the fair value since all are for terms of six months or
less and rates on outstanding repurchase agreements approximate current
rates.
Other Borrowings - Rates currently available to the Bank for debt with
similar terms and remaining maturities are used to estimate fair value
of existing debt.
<PAGE> 60
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
3. Investment Securities:
<TABLE>
<CAPTION>
Gross Gross
unrealized unrealized
Amortized gains net of losses net of Fair
cost basis tax effect tax effect Value
<S> <C> <C> <C> <C>
Held to Maturity
----------------
March 31, 1997 (unaudited)
Municipal securities $ 2,743,540 $ 15,162 $ (11,361) $ 2,747,341
=========== ======== ========= ============
December 31, 1996
Municipal securities $ 2,311,762 $ 50,023 $ (1,028) $ 2,360,757
=========== ======== ========= ===========
December 31, 1995
Municipal securities $ -- $ -- $ -- $ --
=========== ======== ========= ===========
Available for Sale
------------------
March 31, 1997 (unaudited)
U. S. Treasury securities $ 4,752,916 $ 54,262 $ (1,185) $ 4,805,993
Federal agency securities 35,326,295 113,386 (160,663) 35,279,018
Mutual funds 500,503 -- -- 500,503
Federal Reserve Bank stock
and other stock 811,600 -- -- 811,600
----------- -------- --------- -----------
$41,391,314 $167,648 $(161,848) $41,397,114
=========== ======== ========= ===========
December 31, 1996
U. S. Treasury securities $ 5,252,997 $ 90,758 $ (75) $ 5,343,680
Federal agency securities 36,697,450 244,170 (95,853) 36,845,767
Mutual funds 500,503 -- -- 500,503
Federal Reserve Bank stock
and other stock 695,600 -- -- 695,600
----------- -------- --------- -----------
$43,146,550 $334,928 $ (95,928) $43,385,550
=========== ======== ========= ===========
December 31, 1995
U. S. Treasury securities $ 5,272,188 $154,570 $ (1,559) $ 5,425,199
Federal agency securities 29,515,294 337,305 (57,507) 29,795,092
Mutual funds 500,970 -- -- 500,970
Federal Reserve Bank stock
and other stock 753,700 -- -- 753,700
----------- -------- --------- -----------
$36,042,152 $491,875 $ (59,066) $36,474,961
=========== ======== ========= ===========
</TABLE>
The amortized cost and fair value of debt securities at March 31, 1997
and December 31, 1996, by contractual maturity, are shown below.
Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<PAGE> 61
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
---------------------------- --------------------------
Amortized Fair Amortized Fair
cost basis Value cost basis Value
(unaudited)
<S> <C> <C> <C> <C>
Due in one year or less $ 1,907,038 $ 1,910,066 $ 751,053 $ 750,979
Due after one year through five years 11,017,677 11,099,385 13,682,960 13,820,083
Due after five years through ten years 5,976,104 5,913,477 6,180,156 6,185,501
Due after ten years 23,921,932 23,909,424 23,648,040 23,813,641
----------- ----------- ----------- -----------
Total debt securities 42,822,751 42,832,352 44,262,209 44,550,204
Equity securities including mutual funds 1,312,103 1,312,103 1,196,103 1,196,103
----------- ----------- ---------- -----------
Total securities $44,134,854 $44,144,455 $45,458,312 $45,746,307
=========== =========== =========== ===========
</TABLE>
Investment securities with a fair value at March 31, 1997 of
$11,208,716 were pledged as collateral for certain public funds
deposits and borrowings. For December 31, 1996, $11,312,714 of
investment securities were pledged.
4. Loans and Allowance for Loan Losses:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996 1995
(unaudited)
<S> <C> <C> <C>
Commercial $ 63,931,123 $ 59,226,885 $50,808,929
Mortgage 42,209,671 38,771,357 30,828,711
Construction 3,003,216 3,132,638 4,243,421
Consumer 2,328,348 2,278,194 1,732,457
------------ ------------ -----------
111,472,358 103,409,074 87,613,518
Less allowance for loan losses (1,331,991) (1,275,038) (1,037,704)
------------ ------------ -----------
$110,140,367 $102,134,036 $86,575,814
============ ============ ===========
</TABLE>
Commercial loans include those loans to businesses and individuals
generally for the purposes of providing working capital and/or
financing the acquisition of assets and are payable on demand or within
a specified period of time. Mortgage loans include primarily
intermediate term loans secured by real estate and payable in periodic
installments. Construction loans include loans to finance the
construction of property and become payable upon completion of
construction. Consumer loans are made to both businesses and
individuals and include installment loans and revolving personal lines
of credit.
<PAGE> 62
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
Activity in the allowance for loan losses account was as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996 1995
(unaudited)
<S> <C> <C> <C>
Beginning balance $1,275,038 $1,037,704 $ 997,395
Provision for loan losses 60,000 225,000 132,000
Charge-offs (3,623) (51,771) (117,179)
Recoveries 576 64,105 25,488
---------- ---------- ----------
$1,331,991 $1,275,038 $1,037,704
========== ========== ==========
</TABLE>
As of March 31, 1997 loans totaling $261,015 were on nonaccrual status,
the income effect of which was $9,675. As of December 31, 1996 and
1995, respectively, loans totaling $254,903 and $533,554 were on
nonaccrual status, the income effect of which was $8,241 and $17,427,
respectively.
5. Concentration of Credit Risk:
A credit risk concentration results when the Company has a significant
credit exposure to an individual or a group engaged in similar
activities or having similar economic characteristics that would cause
their ability to meet contractual obligations to be similarly affected
by changes in economic or other conditions.
Most of the Company's business activity is with customers located
within the Sarasota, Florida area. The loan portfolio is diversified
among individuals and types of industries. Loans are expected to be
repaid from cash flows and proceeds from the sale of selected assets of
the borrowers. The amount of collateral obtained upon extension of
credit is based on the Company's credit evaluation of each customer.
Collateral primarily includes income producing commercial properties
and residential homes as well as accounts receivable, inventory, and
equipment.
6. Financial Instruments With Off-Balance Sheet Risk:
In the normal course of business, the Company is party to financial
instruments with off-balance sheet risk to meet the financing needs of
its customers. These instruments are comprised of commitments to extend
credit and letters of credit and involve, in varying degrees, elements
of credit and interest rate risk in excess of the amounts recognized in
the financial statements.
The Company's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend
credit and letters of credit is represented by the contract amount of
those instruments. The Company uses the same credit policies in making
commitments as they do for on-balance sheet instruments.
Unfunded commitments, which generally have fixed expiration dates or
termination clauses, are legally binding agreements to lend to a
customer as long as there are no violations of any conditions
established in the contract. Since many commitments are expected to
expire without being drawn upon, the total commitment amounts do
<PAGE> 63
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
not necessarily represent future liquidity requirements. Fixed rate
commitments to extend credit are subject to market risk should interest
rates rise above contracted rates during the commitment period. Total
unfunded commitments for loans and lines of credit were $27,059,671 at
March 31, 1997, with $21,665,510 at December 31, 1996.
Letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. These
guarantees are primarily issued to support construction borrowing
arrangements or to guarantee a customer's payment for foreign goods.
The Company holds collateral supporting those commitments for which
collateral is deemed necessary. Outstanding letters of credit as of
March 31, 1997 were $853,635, with $494,243 at December 31, 1996.
7. Premises and Equipment:
<TABLE>
<CAPTION>
Estimated March 31, December 31,
useful life 1997 1996 1995
(unaudited)
<S> <C> <C> <C> <C>
Land $ 252,000 $ 212,000 $ 212,000
Buildings and leasehold improvements 3-30 years 1,509,839 1,509,839 1,394,714
Furniture and fixtures 7 years 475,063 467,527 404,892
Equipment 5 years 1,171,200 1,096,781 744,424
----------- ----------- ----------
3,408,102 3,286,147 2,756,030
Less accumulated depreciation and
amortization (1,274,732) (1,184,124) (896,473)
----------- ----------- ----------
$ 2,133,370 $ 2,102,023 $1,859,557
=========== =========== ==========
</TABLE>
The Bank operates principally in leased premises. The lease terms are
for periods of nine to 30 years and contain renewal options. Minimum
future rentals over the remaining noncancellable lease terms total
$4,410,808 to be paid as follows: remainder of 1997 - $275,009 1998 -
$368,303; 1999 - $401,622; 2000 - $414,123; 2001 - $416,247 and
$2,535,504 thereafter. Total rent expense under these operating leases
was $87,371 and $82,805 for the three months ended March 31, 1997 and
1996, respectively, and $345,993 and $325,322 for the years ended
December 31, 1996 and 1995, respectively.
8. Income Taxes:
The Company accounts for income taxes in accordance with SFAS 109
"Accounting for Income Taxes." Total deferred tax liabilities at March
31, 1997, December 31, 1996 and 1995 related primarily to depreciation
timing differences, differences in the timing of recognition of loan
fees and the fact that the Company previously used the cash method of
income measurement for tax purposes as opposed to the accrual method
which was used for book purposes. The amount of those deferred
liabilities was $189,591 at March 31, 1997, $200,516 and $167,832 at
December 31, 1996 and 1995, respectively. Deferred tax assets, which
totaled $470,464 at March 31, 1997 and $446,766 and $361,238 at
December 31, 1996 and 1995, respectively, related primarily to
temporary differences in accounting for organizational costs, franchise
fees and the allowance for loan losses.
<PAGE> 64
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
The significant components of income tax expense attributable to income
from continuing operations consisted primarily of:
<TABLE>
<CAPTION>
Three Months Ended, Year Ended,
March 31, December 31,
1997 1996 1996 1995
(unaudited)
<S> <C> <C> <C> <C>
Current tax expense $282,403 $216,330 $948,431 $632,635
Deferred tax expense (benefit) net (34,623) (36,583) (52,844) (63,849)
-------- -------- -------- --------
$247,780 $179,747 $895,587 $568,786
======== ======== ======== ========
</TABLE>
9. FHLB advances and other borrowings:
At March 31, 1997, the Bank had borrowings outstanding from the FHLB of
$2,000,000 as follows:
$2,000,000 Fixed rate of 6.87% repayable 6/30/97
At December 31, 1996, the Bank had borrowings outstanding from the FHLB
of $3,000,000 as follows:
$2,000,000 Fixed rate of 6.87% repayable 6/30/97
$1,000,000 Fixed rate of 8.24% repayable 1/24/98
The advances are collateralized by a blanket floating lien on first
lien, 1-4 family mortgages in an amount equal to 133% of the advances
outstanding and by the Bank's March 31, 1997 $565,600 investment in
FHLB stock. FHLB Stock at December 31, 1996 was valued at $449,600.
Other borrowings at March 31, 1997 and December 31, 1996 consist of a
short-term borrowing from the U.S. Treasury at a rate of 5%.
10. Employee Benefits:
In 1990 the Company implemented a Section 401(k) Employee Savings Plan
for all employees who meet various requirements related to age and
years of service. The Company's contributions under the Plan, which
aggregated $48,000 and $34,800 during 1996 and 1995, respectively, are
funded currently and are based on specified percentages of employee
contributions. As of March 31, 1997 and 1996, the Company had
contributed $17,250 and $12,000, respectively, with respect to its
obligation.
11. Related parties:
Several of the Bank's directors, officers and their affiliated
companies obtained loans and lines of credit from the Bank. These
loans and lines of credit were granted in accordance with the normal
lending policies of the Bank. At March 31, 1997, the total amount of
these borrowings outstanding was $3,462,332. This represented
$223,920 in new loans and $109,498 in repayments occurring since
December 31, 1996. At December 31, 1996 and 1995, the total amount of
these borrowings outstanding was $3,347,910 and $3,536,000,
respectively. Activity for 1996 consisted of $1,148,664 in new loans
and $1,338,754 in repayments and amounts no longer included because the
borrowers are no longer related parties.
In addition, deposits from these related parties totaling
approximately $2,257,278 for March 31, 1997, $2,889,314 and $4,636,084
for December 31, 1996 and 1995, respectively, were on hand.
One of the Company's directors is a partner in a firm that represents
the Company as legal counsel. Professional fees incurred for these
services through March 31, 1997 were $9,548. During 1996 and 1995 fees
totaled $56,276 and $33,054, respectively.
<PAGE> 65
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
12. Regulatory Matters:
The Company is currently dependent upon the Bank for dividends to fund
current operations, as the Company currently has no revenue generating
operations of its own. This directly limits the ability of the Company
to pay a dividend to its shareholders, since federal banking
regulations limit the amount of dividends that may be paid to the
Company. The Bank cannot pay dividends in any one year that exceed the
sum of net income for that year plus net income after dividends for the
two preceding years, without prior approval of the Comptroller of the
Currency. The amount available for dividends as of March 31, 1997 is
$2,953,556, and for December 31, 1996, $3,107,388.
The Company and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory - and
possibly additional discretionary - actions by regulators that, if
undertaken, could have a direct material effect on the Company's
financial statements. Under capital adequacy guidelines the Company and
the Bank must meet specific capital guidelines that involve
quantitative measures of their assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting
practices. The Company and the Bank's capital amounts and the Bank's
classification under the regulatory framework for prompt corrective
action are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Company to maintain minimum amounts and ratios
(set forth in the table below) of total and Tier 1 capital (as defined
in the regulations) to risk-weighted assets (as defined), and of Tier
1 capital (as defined) to average assets (as defined). Management
believes, as of December 31, 1996 and March 31, 1997, that the
Company and the Bank meet all capital adequacy requirements to which
it is subject.
As of March 31, 1997, the most recent notification from the Office of
the Comptroller of the Currency categorized the Company and the Bank as
well capitalized under the regulatory framework for prompt corrective
action. To be categorized as well capitalized, the Bank must maintain
minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios
as set forth in the table. There are no conditions or events since that
notification that management believes have changed the institution's
category.
<PAGE> 66
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited)
and the Years Ended December 31, 1996 and 1995
The Company's capital amounts and ratios are presented in the table
below.
<TABLE>
<CAPTION>
To Be Well
Capitalized
Under Prompt
For Capital Corrective
Adequacy Action
Actual Purposes Provisions
----------------------- --------------------- ----------------------
Amount Ratio Amount Ratio Amount Ratio
----------------------- --------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
As of March 31, 1997 (unaudited):
Total Capital
(to Risk Weighted Assets) $12,937 11.9% $8,658 8.0% $10,822 10.0%
Tier I Capital
(to Risk Weighted Assets) 11,605 10.7% 4,329 4.0% 6,493 6.0%
Tier I Capital
(to Average Assets) 11,605 7.2% 4,329 4.0% 5,411 5.0%
As of December 31,1996:
Total Capital
(to Risk Weighted Assets) $12,455 11.8% $8,418 8.0% $10,523 10.0%
Tier I Capital
(to Risk Weighted Assets) 11,180 10.6% 4,209 4.0% 6,314 6.0%
Tier I Capital
(to Average Assets) 11,180 7.2% 4,209 4.0% 5,262 5.0%
As of December 31,1995:
Total Capital
(to Risk Weighted Assets) $10,604 11.9% $7,140 8.0% $ 8,924 10.0%
Tier I Capital
(to Risk Weighted Assets) 9,566 10.7% 3,569 4.0% 5,355 6.0%
Tier I Capital
(to Average Assets) 9,566 7.4% 3,569 4.0% 4,462 5.0%
</TABLE>
For December 1995 the Company was not required to report consolidated
information. The 1995 information represents Bank only activity.
13. Reconciliation of Net Income to Net Cash Provided by Operating
Activities:
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
1997 1996 1996 1995
(unaudited)
<S> <C> <C> <C> <C>
Net income $ 453,974 $ 309,151 $1,537,742 $1,025,383
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 60,000 75,000 225,000 132,000
Depreciation and amortization 90,608 68,643 299,525 278,705
Increase in deferred loan costs/fees (193,755) (149,602) (555,610) (539,123)
Decrease (increase) in interest receivable 61,032 6,841 (244,122) (332,671)
Decrease (increase) in other assets 73,121 288,094 207,834 (474,986)
(Decrease) increase in accounts payable
and accrued expenses (171,449) (462,533) (263,830) 564,684
---------- --------- ---------- ----------
Net cash provided by operating activities $ 373,531 $ 135,594 $1,206,539 $ 653,992
========= ========= ========== ==========
</TABLE>
<PAGE> 67
FLORIDA GULFCOAST BANCORP, INC.
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 1997 and 1996 (Unaudited) and the Years
Ended December 31, 1996 and 1995
14. Stock Option Plan
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock- Based Compensation." As provided in
SFAS No. 123, the Company has elected not to apply a fair value
measurement to its stock-based compensation.
The Company's Stock Option Plan (the Plan) was approved April 26, 1995
and provides for the granting of options to purchase common stock of
the Company by key employees.
Options were granted on May 1, 1995 at an option price ($5.64) which
was equal to the market value at the date of the grant. The
participants, the Chairman and the President of the Company, were
granted 39,000 and 24,000 options, respectively. The options vested
immediately and expire on April 20, 2005. Options may not be exercised
if the issuance of shares of stock of the Company upon such exercise
would constitute a violation of any Federal or State securities,
banking or other law or valid regulation. The participants, as a
condition to the exercise of these options, shall represent to the
Company that the optioned shares that are being acquired for investment
and not with a present view to distribution or resale, unless counsel
for the Company is then of the opinion that such a representation is
not required under the Securities Act of 1933 or any other applicable
law, regulation, or rule of any governmental agency.
Under the "fair value" measurement process as outlined in SFAS No. 123,
a minimum value for the stock option is calculated based on the present
value of the option at the grant date. With an exercise price of $5.64,
an expected life of approximately ten years and a risk-free rate of
7.06%, ignoring the effects of stock price volatility and dividends,
the minimum value of the options granted on May 1, 1995 was $2.75 per
share.
The pro forma net income and earnings per share amounts for 1995 which
would have been reported had compensation expense been recorded under
the fair value method, net of related tax effect, are $913,811 and
$0.56 per share, respectively.
<PAGE> 68
No options were granted or exercised during 1996 or 1997.
15. Contingencies and Litigation:
The Bank is made a party to various lawsuits in the ordinary course of
conducting its' commercial banking business. Management knows of no
pending or threatened litigation or other contingencies which, in
management's' opinion, present a significant risk or loss.
16. Subsequent Events:
On May 21, 1997, the Company entered into an Agreement and Plan of
Merger (the "Merger") whereby Florida Gulfcoast Bancorp, Inc. will be
merged with and into Provident Acquisition Corp., a wholly-owned
subsidiary of Provident Financial Group, Inc. ("PFGI"), an Ohio-based
company. In addition, Enterprise National Bank will be merged with and
into Provident Bank of Florida. In the Merger, each outstanding share
of common stock of Florida Gulfcoast Bancorp, Inc. will be converted to
PFGI common stock, based on an exchange ratio of $21 divided by the
"Market Value" of PFGI stock. Market value is defined as the arithmetic
mean of the average daily closing representative bid and asked prices
for PFGI stock for the twenty trading days immediately preceding the
fifth day before the Closing. Should the Market Value exceed $46.7543
or fall below $33.9958, the Merger could be terminated by the Company
or by PFGI, respectively, however the other party (PFGI or the Company,
respectively) would then have the option of deeming the Market Value
to be $45.7543 or $33.9958 respectively for the purposes of closing the
transaction. The Merger is subject to approval by the stockholders of
both companies and certain other conditions, including the receipt of
the opinion that the Merger may be accounted for as a pooling of
interest and will qualify as a tax-free reorganization.
17. Recently issued accounting pronouncements:
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
Per Share," which establishes new standards for computing and
presenting earnings per share. SFAS No. 128 requires presentation of
basic and diluted earnings per share on the face of the statement of
income. SFAS No. 128 is effective for financial statements issued for
periods ending after December 31, 1997 and requires restatement of all
prior periods presented. Earlier adoption is not permitted. The
adoption of SFAS No. 128 is not expected to have a significant effect
on the Company's earnings per share.
<PAGE> 69
ANNEX A
-------
AGREEMENT AND PLAN OF REORGANIZATION
among
FLORIDA GULFCOAST BANCORP, INC.,
ENTERPRISE NATIONAL BANK,
FGBI ACQUISITION CORP.
and
PROVIDENT BANCORP, INC.
DATED AS OF
MAY 21, 1997
<PAGE> 70
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C> <C>
ARTICLE 1
DEFINITIONS............................................................................................1
ARTICLE 2
BASIC TRANSACTION......................................................................................4
2.1 The Merger....................................................................................4
2.2 The Closing...................................................................................4
2.3 Actions at the Closing and on the Closing Date................................................5
2.4 Effect of Merger..............................................................................5
2.6 Closing of Transfer Records...................................................................7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ENTERPRISE PARENT AND
ENTERPRISE.............................................................................................8
3.1 Capital Structure of Enterprise Parent........................................................8
3.2 No Subsidiaries Other Than Enterprise; Capital Structure of Enterprise........................8
3.3 Organization, Standing and Authority of Enterprise Parent and Enterprise......................8
3.4 Authorized and Effective Reorganization Agreement.............................................9
3.5 Financial Statements; Minute Books...........................................................10
3.6 Material Adverse Change......................................................................10
3.7 Absence of Undisclosed Liabilities...........................................................10
3.8 Properties...................................................................................11
3.9 Loans........................................................................................11
3.10 Tax Matters..................................................................................11
3.11 Employee Benefit Plans.......................................................................12
3.12 Certain Contracts............................................................................13
3.13 Legal Proceedings............................................................................14
3.14 Compliance with Laws.........................................................................14
3.15 Brokers and Finders..........................................................................15
3.16 Insurance....................................................................................15
3.17 Deposit Insurance............................................................................15
3.18 Environmental Liability......................................................................15
3.19 Certain Information..........................................................................16
3.20 Pooling of Interests.........................................................................16
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER...........................................................16
4.1 Capital Structure of the Buyer...............................................................16
4.2 Organization, Standing and Authority of the Buyer............................................17
4.3 Organization, Standing and Authority of Acquisition; Ownership
of Acquisition...............................................................................17
4.4 Authorized and Effective Reorganization Agreement............................................17
4.5 SEC Documents; Regulatory Filings............................................................18
</TABLE>
<PAGE> 71
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<TABLE>
<S> <C> <C>
4.6 Financial Statements.........................................................................18
4.7 Material Adverse Change......................................................................19
4.8 Absence of Undisclosed Liabilities...........................................................19
4.9 Certain Information..........................................................................19
4.10 Brokers and Finders..........................................................................19
4.11 Compliance with Laws.........................................................................20
4.12 Accounting, Tax and Regulatory Matters.......................................................20
4.13 Legal Proceedings............................................................................20
ARTICLE 5
COVENANTS.............................................................................................20
5.1 Shareholders' Meeting........................................................................20
5.2 Proxy Statement; Registration Statement......................................................21
5.3 Plan of Merger...............................................................................22
5.4 Applications.................................................................................22
5.5 Best Efforts.................................................................................22
5.6 Investigation and Confidentiality............................................................23
5.7 Press Releases...............................................................................24
5.8 Covenants of Enterprise Parent and Enterprise................................................24
5.9 Enterprise Employees.........................................................................26
5.10 Affiliates...................................................................................28
5.11 NASDAQ Application...........................................................................28
5.12 Director and Officer Insurance Coverage and Indemnification..................................28
ARTICLE 6
CONDITIONS PRECEDENT..................................................................................28
6.1 Conditions Precedent - the Buyer and Enterprise Parent.......................................28
6.2 Conditions Precedent - Enterprise Parent.....................................................30
6.3 Conditions Precedent - the Buyer.............................................................30
ARTICLE 7
TERMINATION, WAIVER AND AMENDMENT.....................................................................32
7.1 Termination..................................................................................32
7.2 Effect of Termination........................................................................33
7.3 Survival of Representations, Warranties and Covenants........................................34
7.4 Waiver.......................................................................................34
7.5 Amendment or Supplement......................................................................34
ARTICLE 8
MISCELLANEOUS.........................................................................................35
8.1 Expenses.....................................................................................35
8.2 Entire Agreement.............................................................................36
</TABLE>
<PAGE> 72
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<TABLE>
<S> <C> <C>
8.3 No Assignment................................................................................36
8.4 Notices......................................................................................36
8.5 Captions.....................................................................................37
8.6 Counterparts.................................................................................37
8.7 Governing Law................................................................................37
8.8 Specific Performance.........................................................................37
</TABLE>
<PAGE> 73
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization Agreement")
is made as of May 21, 1997 among FLORIDA GULFCOAST BANCORP, INC., a Florida
corporation ("Enterprise Parent"), ENTERPRISE NATIONAL BANK, a national banking
association and wholly owned subsidiary of Enterprise Parent ("Enterprise"),
FGBI ACQUISITION CORP., a Florida corporation ("Acquisition"), and PROVIDENT
BANCORP, INC., an Ohio corporation and parent corporation of Acquisition (the
"Buyer").
W I T N E S S E T H:
WHEREAS, the Buyer desires to acquire Enterprise in a multi-step
transaction in which Enterprise Parent shall merge with and into Acquisition
(the "Merger") pursuant to the Agreement and Plan of Merger in the form attached
hereto as Exhibit A (the "Plan of Merger").
WHEREAS, in the Merger, shareholders of Enterprise Parent shall receive
shares of common stock, no par value per share, of the Buyer ("Buyer Common
Stock"); and,
WHEREAS, the parties hereto desire that, following consummation of the
Merger, Enterprise shall be merged (the "Bank Merger") with and into South
Hillsborough Community Bank, a Florida banking institution and wholly owned
subsidiary of Buyer ("SHCB"), pursuant to an Agreement and Plan of Merger in the
form attached hereto as Exhibit B (the "Bank Merger Agreement"); and,
WHEREAS, Enterprise Parent desires that Enterprise be acquired by the
Buyer pursuant to this Reorganization Agreement, the Plan of Merger and the Bank
Merger Agreement; and,
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Reorganization Agreement, the following terms have
the meanings specified or referred to in this Article 1.
1.1 "Bank Holding Company Act" shall mean the Bank Holding Company Act
of 1956, as amended.
1.2 "Bank Merger" shall mean the merger of Enterprise with and into
SHCB.
<PAGE> 74
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1.3 "Buyer Financial Statements" shall mean the consolidated balance
sheets of the Buyer as of March 31, 1997 and as of December 31, 1995 and 1996
and the related consolidated statements of income, cash flows and changes in
shareholders' equity (including related notes, if any) for the three (3) months
ended March 31, 1997 and each of the two (2) years ended December 31, 1995 and
1996 as filed by the Buyer in SEC Documents.
1.4 "Closing Date" shall mean the date specified pursuant to Section
2.2 hereof as the date on which the parties hereto shall close the transactions
contemplated herein.
1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.6 "Commission" or "SEC" shall mean the Securities and Exchange
Commission.
1.7 "Competing Transaction" shall mean any of the following involving
Enterprise Parent or Enterprise (other than the transactions contemplated by
this Reorganization Agreement): (a) any merger, consolidation, share exchange
for a controlling interest, business combination or other similar transaction;
or (b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 50% or more of the assets of Enterprise Parent or Enterprise in a
single transaction or series of related transactions.
1.8 "Department of Banking" shall mean the Florida Department of
Banking and Finance.
1.9 "Dissenting Share" shall mean any Share held of record by a
shareholder who or that has exercised his, her or its appraisal rights under the
Florida 1989 Business Corporation Act.
1.10 "Effective Time" shall mean the date specified pursuant to Section
2.4(a) hereof as the effective time of the Merger.
1.11 "Enterprise Parent Financial Statements" shall mean the
consolidated balance sheets of Enterprise Parent as of March 31, 1997 and as of
December 31, 1995 and 1996 and the related consolidated statements of income,
cash flows and changes in shareholders' equity (including related notes, if any)
for the three (3) months ended March 31, 1997 and each of the two (2) years
ended December 31, 1995 and 1996.
1.12 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.13 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
<PAGE> 75
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1.14 "Executive Officer" of Enterprise Parent and Enterprise shall mean
Stephen E. Kunk, Tramm Hudson, Thomas P. Abelmann or Thomas L. Radcliffe and of
Buyer shall mean Allen L. Davis, Philip R. Myers or Robert L. Hoverson.
1.15 "FDIA" shall mean the Federal Deposit Insurance Act.
1.16 "FDIC" shall mean the Federal Deposit Insurance Corporation.
1.17 "Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
1.18 "Investment Company Act" means the Investment Company Act of 1940,
as amended.
1.19 "Previously Disclosed" shall mean disclosed prior to the execution
hereof in a disclosure letter from Enterprise Parent and delivered to the Buyer,
which disclosure letter shall be in form and substance reasonably acceptable to
the Buyer.
1.20 "Proxy Statement" shall mean the proxy statement and any other
soliciting materials of Enterprise Parent (or similar documents), together with
any supplements thereto, sent to the shareholders of Enterprise Parent to
solicit their votes in connection with this Reorganization Agreement and the
Plan of Merger.
1.21 "Registration Statement" shall mean the registration statement
with respect to the Buyer Common Stock to be issued in connection with the
Merger as declared effective by the Commission under the Securities Act.
1.22 "Rights" shall mean warrants, options, rights, convertible
securities and other arrangements or commitments which obligate an entity to
issue, exchange or dispose of any of its capital stock or other equity
interests, and stock appreciation rights, performance units and other similar
stock-based rights, whether they obligate the issuer thereof to issue stock or
other securities or to pay cash.
1.23 "SEC Documents" shall mean all reports and registration statements
filed, or required to be filed, by a party hereto pursuant to the Securities
Laws.
1.24 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.25 "Securities Laws" shall mean: the Securities Act; the Exchange
Act; the Investment Company Act; the Investment Advisers Act of 1940, as
amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the Commission promulgated thereunder.
<PAGE> 76
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1.26 "Share" shall mean a share of Enterprise Parent common stock,
$1.00 par value per share.
1.27 "Tax" or "Taxes" shall mean all income, gross receipts, gains,
sales, use, employment, franchise, profits, excise, property, value added,
commercial rent or other taxes, fees, stamp taxes and duties, assessments or
charges of any kind whatsoever (whether payable directly or by withholding),
together with any interest and penalties, additions to tax or additional amounts
with respect thereto imposed by any taxing authority.
1.28 "Tax Returns" shall mean all federal, state, local and foreign tax
returns including, without limitation, estimated tax returns, returns required
under Sections 1441-1446 and 6031-6060 of the Code and any regulations
thereunder, and any comparable state and local laws and regulations, withholding
tax returns, FICA and FUTA returns and back-up withholding returns required
under Section 3406 of the Code and the regulations thereunder, and any
comparable state and local laws and regulations.
1.29 "Transactions" shall mean the Merger and the Bank Merger, taken
together.
Other terms used herein are defined in the preamble, the recitals to
and the other provisions of this Reorganization Agreement.
ARTICLE 2
BASIC TRANSACTION
2.1 The Merger
On and subject to the terms and conditions of this Reorganization
Agreement and the Plan of Merger, Enterprise Parent shall merge with and into
Acquisition. Acquisition shall be the corporation surviving the Merger (in this
capacity, the "Surviving Corporation"). Subsequent thereto, and on and subject
to the terms of the Bank Merger Agreement, Enterprise shall merge with and into
SHCB.
2.2 The Closing
The closing of the Merger (the "Closing") shall take place at the
offices of Keating, Muething & Klekamp, P.L.L., 1800 Provident Tower, One East
Fourth Street, Cincinnati, Ohio 45202, commencing at 9:00 a.m. local time no
later than fifteen (15) business days following the satisfaction or waiver of
all conditions set forth in Article 6 hereof (other than conditions with respect
to actions the respective parties hereto will take at the Closing itself) or
such other date as the parties hereto may mutually determine in writing (the
"Closing Date").
<PAGE> 77
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2.3 Actions at the Closing and on the Closing Date
At the Closing, (i) Enterprise Parent will deliver to the Buyer the
certificates, instruments and documents referred to in Section 6.3 below, (ii)
the Buyer will deliver to Enterprise Parent the certificates, instruments and
documents referred to in Section 6.2 below. On the Closing Date, (i) Acquisition
will file with the Secretary of State of the State of Florida the Plan of Merger
and other documentation required to give effect to the Merger; and (ii) the
Buyer will deliver the Payment Fund to the Paying Agent in the manner provided
below in Section 2.5.
2.4 Effect of Merger
(a) The Merger shall become effective at the time (or at such later
time as the parties hereto shall agree and specify in the Plan of Merger) (the
"Effective Time") Acquisition files the Plan of Merger with the Secretary of
State of the State of Florida. The Merger shall have the effects set forth in
the Florida 1989 Business Corporation Act. Subject to the terms and conditions
of this Agreement, the Surviving Corporation may, at any time after the
Effective Time, take any action (including executing and delivering any
document) in the name and on behalf of either Enterprise Parent or Acquisition
in order to carry out and effectuate the transactions contemplated by this
Reorganization Agreement.
(b) The Articles of Incorporation of the Surviving Corporation shall be
identical to the Articles of Incorporation of Acquisition immediately prior to
the Effective Time.
(c) The Bylaws of the Surviving Corporation shall be identical to the
Bylaws of Acquisition immediately prior to the Effective Time.
(d) The directors of Acquisition shall become the directors of the
Surviving Corporation at and as of the Effective Time (retaining their
respective positions and terms of office). The officers of Acquisition shall
become the officers of the Surviving Corporation at and as of the Effective
Time.
(e) At and as of the Effective Time, (A) each Share then issued and
outstanding (other than any Dissenting Share) shall be converted into the right
to receive that number of shares of Buyer Common Stock equal to: (x) Twenty One
Dollars ($21.00); DIVIDED BY (y) the Market Value (as defined hereinafter) of a
share of Buyer Common Stock (the "Merger Consideration") and (B) each Dissenting
Share shall be converted into the right to receive payment from the Surviving
Corporation with respect thereto to the extent provided by, and in accordance
with, the provisions of the Florida 1989 Business Corporation Act; provided,
however, that the Merger Consideration shall be subject to equitable adjustment
in the event of any stock split, stock dividend, reverse stock split, or other
change in the number of Shares outstanding. After the Effective Time, no Share
shall be deemed to be outstanding or to have any rights other than those rights
set forth above in this Section 2.4. The "Market Value" of a share of Buyer
Common Stock shall be calculated based on
<PAGE> 78
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the arithmetic mean of the average of the daily closing representative bid and
asked prices for Buyer Common Stock on the NASDAQ National Market System for the
twenty (20) trading days immediately preceding the fifth day before the Closing.
No fractional shares of Buyer Common Stock shall be issued in the
Merger. All fractional shares of Buyer Common Stock that a holder of Shares
would otherwise be entitled to receive as a result of the Merger shall be
aggregated and, if a fractional share of Buyer Common Stock results from such
aggregation, such holder shall be entitled to receive an amount in cash
determined by multiplying the average of the closing representative bid and
asked prices for Buyer Common Stock on the NASDAQ National Market System on the
first trading day after the Effective Time by the fraction of a share of Buyer
Common Stock to which such holder would otherwise have been entitled. The amount
of cash so received by such holder shall for all purposes of this Reorganization
Agreement be deemed to constitute a portion of the Merger Consideration. No such
holder shall be entitled to dividends, voting rights or any other shareholder
right in respect of any fractional share of Buyer Common Stock.
(f) At and as of the Effective Time, each share of common stock, no par
value per share, of Acquisition shall be converted into one share of common
stock, no par value per share, of the Surviving Corporation.
2.5 Procedure for Payment
(a) Immediately after the Effective Time, (A) the Buyer will deposit
with The Provident Bank, an Ohio banking corporation (the "Paying Agent"), a
corpus (the "Payment Fund") consisting of that number of shares of Buyer Common
Stock, and of cash in lieu of fractional shares of Buyer Common Stock,
sufficient in the aggregate for the Paying Agent to make full payment of the
Merger Consideration to the holders of record immediately prior to the Effective
Time of all of the outstanding Shares (other than any Dissenting Shares) and (B)
the Buyer will cause the Paying Agent to mail, within five (5) business days
after the Effective Time, a letter of transmittal in customary and reasonable
form (which shall specify that delivery shall be effected, and risk of loss and
title to the certificates (the "Certificates") which represented his, her or its
shares shall pass only upon actual delivery thereof to the Paying Agent and
which shall contain instructions for use in effecting the surrender of such
Certificates in exchange for the Merger Consideration) together with a duly
executed letter of transmittal and such other documents as may be reasonably
requested by the Paying Agent to each record holder of Shares for the holder to
use in surrendering the Certificates. In the event of a transfer of ownership of
Shares that is not registered in the transfer records of the Surviving
Corporation, payment may be made to a person other than the person in whose name
the Certificate so surrendered is registered if such Certificate shall be
properly endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of such Certificate
or establish to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 2.5, each Certificate
<PAGE> 79
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shall be deemed at anytime after the Effective Time to represent only the right
to receive upon such surrender that number of shares of Buyer Common Stock, into
which the Shares theretofore represented by such Certificate shall have been
converted at the Effective Time. No dividends will be paid on shares of Buyer
Common Stock into which the Shares theretofore represented by a Certificate
shall have been converted in the Merger until such Certificate shall have been
duly surrendered pursuant to this Section 2.5.
In the event a Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Buyer or
the Surviving Corporation, upon the posting by such person of a bond in such
amount as Buyer or the Surviving Corporation may reasonably direct as indemnity
against any claim that may be made against it with respect to such Certificate
and upon such person's compliance with the other requirements set forth in this
Section 2.5, the Paying Agent will issue in respect of such lost, stolen or
destroyed Certificate, the Merger Consideration to be received by virtue of the
Merger with respect to the Shares represented thereby.
Certificates surrendered for exchange by any person who is
an "affiliate" of Enterprise Parent for purposes of Rule 145(c) under the
Securities Act, shall not be exchanged for certificates representing shares of
Buyer Common Stock until the Buyer has received the written agreement of such
person contemplated by Section 5.10 of this Reorganization Agreement. If any
certificate for shares of Buyer Common Stock is to be issued in a name other
than that in which a Certificate surrendered for exchange is issued, the
Certificate so surrendered shall be properly endorsed and otherwise in proper
form for transfer and the person requesting such exchange shall affix any
requisite stock transfer tax stamps to the Certificate surrendered, or provide
funds for their purchase or establish to the reasonable satisfaction of the
Buyer or its agent that such taxes are not payable.
(b) The Buyer may cause the Paying Agent to pay over to the Surviving
Corporation any portion of the Payment Fund (including any earnings thereon)
remaining one hundred eighty (180) days after the Effective Time, and thereafter
all former holders of Shares shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat, and other similar laws) as
general creditors thereof with respect to the Merger Consideration payable upon
surrender of their Certificates.
(c) The Buyer shall pay all charges and expenses of the Paying Agent.
2.6 Closing of Transfer Records
After the close of business on the Closing Date, transfers of Shares
outstanding prior to the Effective Time shall not be made on the stock transfer
books of the Surviving Corporation.
<PAGE> 80
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ENTERPRISE PARENT AND ENTERPRISE
Each of Enterprise Parent and Enterprise hereby represents and
warrants, jointly and severally, to the Buyer as follows, which representations
and warranties are qualified by the matters Previously Disclosed:
3.1 Capital Structure of Enterprise Parent
The authorized capital stock of Enterprise Parent consists of Ten
Million (10,000,000) Shares, of which One Million Six Hundred Thousand
(1,600,000) Shares are issued and outstanding as of the date hereof. All
outstanding Shares have been duly issued and are validly outstanding, fully paid
and nonassessable. As of March 31, 1997, One Hundred Thousand (100,000) Shares
were reserved for issuance, pursuant to stock option and similar plans and
options to acquire Sixty Three Thousand (63,000) Shares were issued and
outstanding pursuant to such plans. Except for the foregoing, there are no
Rights authorized, issued or outstanding with respect to the capital stock of
Enterprise Parent. None of the shares of Enterprise Parent's capital stock has
been issued in violation of the preemptive rights of any person. There are no
shareholder agreements, voting trusts or other agreements or understandings to
which Enterprise Parent is a party or bound or relating to the voting or
transfer of shares of the capital stock of Enterprise Parent. There are no
outstanding contractual or other obligations of Enterprise Parent to purchase,
redeem or otherwise acquire any shares of the capital stock of Enterprise
Parent.
3.2 No Subsidiaries Other Than Enterprise; Capital Structure of Enterprise
Except as Previously Disclosed, other than Enterprise, Enterprise
Parent does not own, directly or indirectly, or have Rights to acquire, directly
or indirectly, 5% or more of the outstanding capital stock or other voting
securities or other equity interests of any corporation, bank, savings
association, partnership, joint venture, limited liability company or other
organization.
The authorized capital stock of Enterprise consists of two million four
hundred thousand (2,400,000) shares of common stock, $2.50 par value per share,
of which one million six hundred thousand (1,600,000) are issued and outstanding
as of the date hereof and all of which are owned, beneficially and of record, by
Enterprise Parent. There are no rights authorized, issued or outstanding with
respect to the capital stock of Enterprise. There are no shareholders
agreements, voting trusts or other agreements or understandings to which
Enterprise Parent or Enterprise is a party or bound or relating to the voting or
transfer of shares of the capital stock of Enterprise.
3.3 Organization, Standing and Authority of Enterprise Parent and
Enterprise
Enterprise Parent is a duly organized Florida corporation, validly
existing and in good standing under the laws of the State of Florida. Enterprise
is a duly organized national banking
<PAGE> 81
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association, validly existing and in good standing under applicable laws. Each
of Enterprise Parent and Enterprise has full corporate power and authority to
carry on its respective business as now conducted. Neither Enterprise Parent nor
Enterprise is required to be qualified to do business in any other jurisdiction
of the United States or any foreign jurisdiction. Each of Enterprise Parent and
Enterprise has all material federal, state and local governmental authorizations
necessary for it to own or lease its respective properties and assets and to
carry on its respective business as it is now being conducted.
3.4 Authorized and Effective Reorganization Agreement
(a) Each of Enterprise Parent and Enterprise has all requisite
corporate power and authority to enter into and perform all of its obligations
under this Reorganization Agreement subject to receipt of all required
regulatory approvals. The execution and delivery of this Reorganization
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action in respect thereof
on the part of Enterprise Parent and Enterprise, subject to approval thereof by
the shareholders of Enterprise Parent to the extent required by applicable law
and the Articles of Incorporation and By-Laws of Enterprise Parent.
(b) Upon the execution of the Plan of Merger and at all times
thereafter until the Closing Date, Enterprise Parent will have all requisite
corporate power and authority to enter into and perform all of its obligations
under the Plan of Merger, and the execution and delivery of the Plan of Merger
and the consummation of the transactions contemplated thereby (at the time of
such execution) will have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Enterprise Parent, except
that the affirmative vote of the holders of 662/3% of the outstanding shares of
Enterprise Parent Common Stock is required to approve the Plan of Merger
pursuant to applicable Florida law and the Articles of Incorporation of
Enterprise Parent.
(c) The Board of Directors of Enterprise Parent has directed that this
Reorganization Agreement and, following its execution, the Plan of Merger be
submitted to Enterprise Parent's shareholders for approval at a special meeting
to be held as soon as practicable.
(d) This Reorganization Agreement constitutes a legal, valid and
binding obligation of each of Enterprise Parent and Enterprise and the Plan of
Merger, upon the execution and delivery thereof by the parties thereto, will
constitute a legal, valid and binding obligation of Enterprise Parent, in each
case enforceable against them in accordance with their respective terms, and, as
to enforceability, subject to bankruptcy, insolvency, fraudulent conveyance and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(e) Neither the execution and delivery of this Reorganization Agreement
or of the Plan of Merger, nor consummation of the transactions contemplated
hereby or thereby, nor compliance by Enterprise Parent or Enterprise with any of
the provisions hereof or thereof will (i) conflict with
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or result in a breach of any provision of the Articles of Incorporation or
By-laws or other charter documents of Enterprise Parent or Enterprise, (ii)
except as Previously Disclosed, constitute or result in a breach of any material
term, condition or provision of, or constitute a default under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon any property or
asset of Enterprise Parent or Enterprise pursuant to, any material note, bond,
mortgage, indenture, license, agreement or other instrument or obligation, any
of which would be material to the combined business operations or financial
condition of Enterprise Parent and Enterprise, or (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Enterprise Parent
or Enterprise.
3.5 Financial Statements; Minute Books
The Enterprise Parent Financial Statements, except as noted therein,
accurately and correctly present in all material respects the consolidated
financial position of Enterprise Parent as of the dates indicated and the
consolidated results of operations of Enterprise Parent for the periods then
ended and have been prepared in all material respects in accordance with
generally accepted accounting principles applied on a consistent basis ("GAAP"),
except that any interim financial statements included in Enterprise Parent
Financial Statements are subject to normal year-end adjustments, none of which
will be material, and except for the absence of certain footnote information in
the interim financial statements. The books and records of Enterprise Parent and
of Enterprise accurately and correctly reflect in all material respects the
transactions to which Enterprise Parent or Enterprise, as the case may be, is a
party or by which its properties are subject or bound to the extent required by
GAAP. Such books and records have been properly kept and maintained and are in
compliance in all material respects with all applicable legal and accounting
requirements. The minute books of each of Enterprise Parent and Enterprise
contain accurate records of all material corporate actions of its shareholders
and Board of Directors (including any Executive Committee or other committee of
its Board of Directors).
3.6 Material Adverse Change
Neither Enterprise Parent nor Enterprise has suffered any material
adverse change in its consolidated financial condition, results of operations or
business since December 31, 1996 and, to the knowledge of the Executive Officers
of Enterprise Parent and Enterprise, no fact or condition exists that could
reasonably be expected to cause such a material adverse change.
3.7 Absence of Undisclosed Liabilities
Neither Enterprise Parent nor Enterprise has any liability (contingent
or otherwise) that is material to Enterprise Parent and Enterprise, taken as a
whole, or that, when combined with all similar liabilities, would be material to
Enterprise Parent and Enterprise, taken as a whole, except as disclosed in
Enterprise Parent Financial Statements or as Previously Disclosed or as incurred
in
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the ordinary course of Enterprise Parent's or Enterprise's business consistent
(both as to quality and quantity) with past practice.
3.8 Properties
Each of Enterprise Parent and Enterprise has good and marketable title
free and clear of all liens, encumbrances, charges, defaults or equitable
interests to all of its respective properties and assets, real and personal,
reflected on Enterprise Parent Financial Statements as being owned by such
entity as of December 31, 1996 or acquired after such date, except (i) as
reflected on the Enterprise Financial Statements, (ii) liens for taxes not yet
due and payable, (iii) pledges to secure deposits and other liens incurred in
the ordinary course of banking business, (iv) such imperfections of title,
easements and encumbrances, if any, as are not material in character, amount or
extent and that do not materially interfere with the use of such properties or
assets by Enterprise Parent or Enterprise and (v) dispositions and encumbrances
for reasonably adequate consideration in the ordinary course of business. All
leases pursuant to which either Enterprise Parent or Enterprise, as lessee,
leases real or personal property are valid and subsisting in accordance with
their respective terms.
3.9 Loans
To the knowledge of the Executive Officers of Enterprise Parent and
Enterprise, each loan reflected as an asset in Enterprise Parent Financial
Statements as of December 31, 1996, and each loan entered into by Enterprise
Parent or Enterprise subsequent thereto, (i) is evidenced in all material
respects by notes, agreements or other evidences of indebtedness which are true,
genuine and what they purport to be, (ii) to the extent secured, has been
secured by valid liens and security interests which have been perfected, and
(iii) is the legal, valid and binding obligation of the obligor named therein,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles. Except as
Previously Disclosed, neither Enterprise Parent or Enterprise is a party to any
loan, including any loan guaranty, with any director, executive officer or 5%
shareholder of Enterprise Parent or any person, corporation or enterprise
controlling, controlled by or under common control with any of the foregoing.
3.10 Tax Matters
(a) Enterprise Parent or Enterprise has timely filed federal income tax
returns for each year through December 31, 1996 and has timely filed, or caused
to be filed, all other federal, state, local Tax Returns required to be filed
with respect to Enterprise Parent or Enterprise.
(b) All Taxes due in respect of any tax periods have been paid or
adequate reserves have been established for the payment of such Taxes and, as of
the Closing Date, all Taxes due in respect of any subsequent tax periods
(including any periods ending on or prior to the Closing Date)
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will have been paid or adequate reserves will have been established for the
payment thereof except where such taxes (i) are not yet delinquent or are being
contested in good faith, with adequate reserves established, or (ii) have not
been finally determined. Neither Enterprise Parent nor Enterprise will have any
material liability for any Taxes in excess of the amounts so paid or reserves or
accruals so established. No audit examination or deficiency or refund litigation
with respect to such returns is pending.
(c) All federal, state and local Tax Returns filed by Enterprise Parent
are complete and accurate in all material respects. Neither Enterprise Parent
nor Enterprise is delinquent in the payment of any Tax, assessment or
governmental charge, and neither Enterprise Parent nor Enterprise has requested
any extension of time within which to file any Tax Returns in respect of any
fiscal year or portion thereof which have not since been filed. No deficiencies
for any Tax, assessment or governmental charge have been asserted or assessed
(tentatively or otherwise) or, to the knowledge of Enterprise Parent, proposed
against Enterprise Parent or Enterprise which have not been settled and paid.
There are currently no agreements in effect with respect to Enterprise Parent or
Enterprise to extend the period of limitations for the assessment or collection
of any Tax.
(d) Termination of the employment of any employee of Enterprise Parent
or Enterprise following consummation of the transactions contemplated hereby
will not cause Enterprise Parent or Enterprise to make or to be required to make
any "excess parachute payment" as that term is defined in Section 280G of the
Code.
3.11 Employee Benefit Plans
(a) Enterprise Parent has Previously Disclosed true and complete copies
of all qualified pension or profit-sharing plans, any deferred compensation,
consulting, bonus or group insurance contract or any other incentive, welfare or
employee benefit plan or agreement maintained for the benefit of employees or
former employees of Enterprise Parent or Enterprise, and will make available to
the Buyer (i) the most recent actuarial and financial reports prepared with
respect to any plans qualified under Section 401(a) of the Code, (ii) the most
recent annual reports filed with any government agency and (iii) all rulings and
determination letters and any open requests for rulings or letters that pertain
to any plan qualified under Section 401(a) of the Code.
(b) Neither Enterprise Parent nor Enterprise (nor any pension plan
maintained by either of them) has incurred or reasonably expects to incur any
material liability to the Internal Revenue Service with respect to any plan
qualified under Section 401(a) of the Code. Neither Enterprise Parent nor
Enterprise has ever sponsored, participated in or maintained any defined benefit
pension plan. Neither Enterprise Parent nor Enterprise has ever participated in
a "multiemployer plan" (as defined in ERISA).
(c) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each "employee pension plan" (as defined in
Section 3(2) of ERISA) of Enterprise
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Parent or Enterprise which is intended to be a qualified plan to the effect that
such plan is qualified under Section 401 of the Code and tax exempt under
Section 501 of the Code. No such letter has been revoked or threatened to be
revoked and neither Enterprise Parent or Enterprise knows of any ground on which
such revocation may be based. Such plans have been operated in all material
respects in accordance with their terms and applicable law.
(d) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)
has occurred with respect to any "employee benefit plan" (as defined in Section
3(3) of ERISA) maintained by Enterprise Parent or Enterprise which would result
in the imposition, directly or indirectly, of a material excise tax under
Section 4975 of the Code or the correction of which would have a material
adverse effect on the financial condition, results of operations or business of
Enterprise Parent and Enterprise, taken as a whole.
(e) The actuarial present value of accrued benefit obligations, whether
or not vested, under each "employee pension plan" maintained by Enterprise
Parent or Enterprise did not exceed as of the most recent actuarial valuation
date the then current fair market value of the assets of such plan and no
material adverse change has occurred with respect to the funded status of any
such plan since such date.
3.12 Certain Contracts
(a) Except as Previously Disclosed, neither Enterprise Parent nor
Enterprise is a party to, or is bound by, (i) any material agreement,
arrangement or commitment, whether or not made in the ordinary course of
business, other than loans or loan commitments made in the ordinary course of
the banking business of Enterprise Parent or Enterprise, (ii) any agreement,
indenture or other instrument relating to the borrowing of money by Enterprise
Parent or Enterprise or the guarantee by Enterprise Parent or Enterprise of any
such obligation, other than instruments relating to transactions entered into in
the customary course of the banking business of Enterprise Parent or Enterprise
and reflected in Enterprise Parent Financial Statements, (iii) any agreement,
arrangement or commitment relating to the employment of a consultant or the
employment, election, retention in office or severance of any present or former
director or officer, or (iv) any contract, agreement or understanding with a
labor union, in the case of each of clauses (i) through (iv), inclusive, whether
written or oral.
(b) Neither Enterprise Parent nor Enterprise is in default under any
material agreement, commitment, arrangement, lease, insurance policy or other
instrument, whether entered into in the ordinary course of business or
otherwise, and whether written or oral, and there has not occurred any event
that, with the lapse of time or giving of notice or both, would constitute such
a default.
(c) Since December 31, 1996, neither Enterprise Parent or Enterprise
has incurred or paid any obligation or liability that would be material to
Enterprise Parent and Enterprise, taken as
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a whole, except obligations incurred or paid in connection with transactions in
the ordinary course of business of Enterprise Parent or Enterprise consistent
with its past practices or except as Previously Disclosed or reflected in
Enterprise Parent Financial Statements.
(d) Except as Previously Disclosed, neither Enterprise Parent nor
Enterprise is a party to any transaction (other than agreements Previously
Disclosed in connection with Section 3.9 hereof) with (i) any person who has
been an executive officer or a director of Enterprise Parent or Enterprise since
December 31, 1996, (ii) any spouse of any such officer or director, (iii) any
parent, child, brother, sister, or other family relation of any such officer or
director who has the same principal residence as such officer or director, (iv)
any corporation or other entity of which any such officer or director or any
such family relation is an officer, director, partner, or greater than 5%
shareholder (based on percentage ownership of voting stock) or (v) any
"affiliate" or "associate" of any such persons or entities (as such terms are
defined in the rules and regulations promulgated under the Securities Act),
including, without limitation, (x) any transaction involving a contract,
agreement, or other arrangement providing for the employment of, furnishing of
materials, products or services by, rental of real or personal property from, or
otherwise requiring payments to, any such person or entity, and (y) loans
(including any loan guaranty) outstanding at the date hereof, but not (z)
deposit accounts maintained at Enterprise Parent in the ordinary course of its
banking business.
3.13 Legal Proceedings
Except as Previously Disclosed, there are no actions, suits or
proceedings instituted, pending or, to the knowledge of Enterprise Parent or
Enterprise, threatened against Enterprise Parent or Enterprise or against any
asset, interest or right of Enterprise Parent or Enterprise that would, if
determined adversely to Enterprise Parent or Enterprise, have a material adverse
effect on Enterprise Parent and Enterprise, taken as a whole. To the knowledge
of Enterprise Parent or Enterprise, there are no actual or threatened actions,
suits or proceedings which present a claim to restrain or prohibit the
transactions contemplated herein or to impose upon the Buyer, Enterprise Parent
or Enterprise or any of their respective subsidiaries or affiliates any material
cost or obligation in connection therewith. There are no actions, suits
proceedings instituted, pending or, to the knowledge of Enterprise Parent,
threatened against any present or former director or executive officer of
Enterprise Parent or Enterprise that might give rise to a claim for
indemnification that would, if determined adversely to Enterprise Parent or
Enterprise, have a material adverse effect on Enterprise Parent and Enterprise,
taken as a whole, and, to the knowledge of the Executive Officers of Enterprise
Parent or Enterprise, there is no reasonable basis for any such action, suit or
proceeding.
3.14 Compliance with Laws
Each of Enterprise Parent and Enterprise is in compliance in all
material respects with all statutes and regulations applicable to the conduct of
its business as to which the failure to comply would have a material adverse
effect upon Enterprise Parent and Enterprise taken as a whole, and neither
Enterprise Parent nor Enterprise nor, to the knowledge of Enterprise Parent or
Enterprise,
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any director or officer thereof has received notification from any agency or
department of federal, state or local government (i) asserting a material
violation of any such statute or regulation, (ii) threatening to revoke any
license, franchise, permit or government authorization or (iii) restricting or
in any way limiting its operations. Neither Enterprise Parent nor Enterprise is
subject to any regulatory or supervisory cease and desist order, agreement,
directive, memorandum of understanding or commitment, and it has not received
any communication requesting that it enter into any of the foregoing.
3.15 Brokers and Finders
Except for the fees of Sandler O'Neill & Partners, L.P., neither
Enterprise Parent nor Enterprise nor any of their respective officers, directors
or employees has employed any broker, finder or financial advisor or incurred
any liability for any brokers or finders fees or commissions in connection with
the transactions contemplated herein or the Plan of Merger.
3.16 Insurance
Enterprise Parent has Previously Disclosed a complete and accurate
summary of all insurance policies and bonds maintained by Enterprise Parent or
Enterprise. Except as Previously Disclosed, neither the Executive Officers of
Enterprise Parent nor Enterprise has received any notice of a premium increase
or cancellation with respect to any of its insurance policies or bonds and,
within the last three years, neither Enterprise Parent nor Enterprise has been
refused any insurance coverage sought or applied for, and neither Enterprise
Parent nor Enterprise has any reason to believe that existing insurance coverage
cannot be renewed as and when the same shall expire, upon terms and conditions
as favorable as those presently in effect, other than possible increases in
premiums or unavailability in coverage that have not resulted from any
extraordinary loss experience of Enterprise Parent or Enterprise.
3.17 Deposit Insurance
Enterprise is an insured bank as defined in the FDIA, and Enterprise
has paid all assessments and filed all reports required by the FDIA.
3.18 Environmental Liability
There is no legal, administrative, arbitral or other proceedings, or,
to the knowledge of Enterprise Parent or Enterprise, claim, action, cause of
action, or governmental investigation of any nature seeking to impose, or that
could result in the imposition, on Enterprise Parent or Enterprise of any
liability arising under any local, state or federal environmental statute,
regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
pending or threatened against Enterprise Parent, which liability might have a
material adverse effect on the financial condition, results of operations or
business of
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Enterprise Parent and Enterprise, taken as a whole; except as Previously
Disclosed, to the knowledge of Enterprise Parent or Enterprise, there is no
reasonable basis for any such proceeding, claim, action or governmental
investigation that would impose any such liability; and neither Enterprise
Parent nor Enterprise are subject to any agreement, order judgment decree or
memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any such liability.
3.19 Certain Information
The information provided by Enterprise Parent to the Buyer for use in
the Registration Statement, other than information subject to Section 4.9
hereof, at the time the Proxy Statement is mailed to shareholders of Enterprise
Parent up to and including the time of Enterprise Parent shareholders' meeting
to vote upon the Merger, (i) will comply in all material respects with the
applicable provisions of the regulations of the Securities Laws and (ii) will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements contained
therein not misleading.
3.20 Pooling of Interests.
The Executive Officers of Enterprise Parent and Enterprise have no
knowledge that the Transactions will not qualify as a pooling of interests for
financial accounting purposes.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Each of the Buyer and Acquisition hereby jointly and severally
represents and warrants to Enterprise Parent as follows:
4.1 Capital Structure of the Buyer
The authorized capital stock of the Buyer consists at March 31, 1997 of
Sixty Million (60,000,000) shares of Buyer Common Stock, of which Forty One
Million Twenty Seven Thousand Three Hundred Fifty Two (41,027,352) shares were
issued and outstanding and none of which shares were held in treasury, and Five
Million (5,000,000) shares of preferred stock, of which Seventy Thousand Two
Hundred Seventy-Two (70,272) shares of Series D preferred stock were issued and
outstanding. All outstanding shares of the Buyer's capital stock have been duly
issued and are validly outstanding, fully paid and nonassessable. None of the
shares of the Buyer's capital stock has been issued in violation of the
preemptive rights of any person. The shares of the Buyer Common Stock to be
issued in connection with the Merger have been duly authorized and, when issued
in accordance with the terms of this Reorganization Agreement and the Plan of
Merger, will be validly issued, fully paid, nonassessable and free and clear of
any preemptive rights. As of March 31, 1997, Nine Million Two Hundred Eighty Two
Thousand Six Hundred Seventy Eight (9,282,678)
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shares of the Buyer Common Stock were reserved for issuance in connection with
option plans and other Rights. Except as previously disclosed to Enterprise
Parent or as set forth in the Buyer's SEC Documents, there are no Rights
authorized, issued or outstanding with respect to the capital stock of the
Buyer.
4.2 Organization, Standing and Authority of the Buyer
The Buyer is a duly organized corporation, validly existing and in good
standing under the laws of the State of Ohio, with full power and authority to
carry on its business as now conducted. The Buyer is registered as a bank
holding company under Bank Holding Company Act and has all material federal,
state and local governmental authorizations necessary for it to own or lease its
properties and assets, to carry on its business and to complete the transactions
contemplated hereby subject to applicable regulatory approvals.
4.3 Organization, Standing and Authority of Acquisition; Ownership of
Acquisition.
Acquisition is a duly organized Florida corporation, validly existing
and in good standing under applicable laws, and the outstanding shares of
capital stock of Acquisition are validly issued, fully paid, nonassessable and
owned directly by the Buyer free and clear of all liens, claims and
encumbrances. Acquisition has all material federal, state and local governmental
authorizations necessary for it to own or lease its properties and assets, to
carry on its business and to complete the transactions contemplated hereby.
4.4 Authorized and Effective Reorganization Agreement
(a) The Buyer has all requisite corporate power and authority to enter
into and perform all of its obligations under this Reorganization Agreement
subject to receipt of all required regulatory approvals. The execution and
delivery of this Reorganization Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
the Buyer.
(b) Upon the execution of the Plan of Merger and at all times
thereafter until the Closing Date, the Buyer will have all requisite corporate
power and authority to enter into and perform all of its obligations under the
Plan of Merger, and the execution and delivery of the Plan of Merger and the
consummation of the transactions contemplated thereby (at the time of such
execution) will have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of the Buyer.
(c) Acquisition has all requisite corporate power and authority to
enter into and perform all of its obligations under this Reorganization
Agreement. Upon the execution of the Plan of Merger and at all times thereafter
until the Closing Date, Acquisition will have all requisite corporate power and
authority to enter into and to perform all of its obligations under the Plan of
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Merger, and the execution and delivery of the Plan of Merger and the
consummation of the transactions contemplated thereby (at such time of
execution) will have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of Acquisition.
(d) This Reorganization Agreement constitutes a legal, valid and
binding obligation of the Buyer and Acquisition and the Plan of Merger, upon the
authorization, execution and delivery thereof by the parties thereof, will
constitute a legal, valid and binding obligation of the Buyer and Acquisition,
respectively, in each case enforceable against it in accordance with their
respective terms, subject to, as to enforceability, bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(e) Neither the execution and delivery of this Reorganization Agreement
or the Plan of Merger by the Buyer and Acquisition, nor consummation of the
transactions contemplated hereby or thereby, nor compliance by the Buyer or
Acquisition with any of the provisions hereof or thereof shall (i) conflict with
or result in a breach of any provision of the Articles of Incorporation, By-laws
or Regulations (as the case may be) of the Buyer or Acquisition, (ii) constitute
or result in a breach of any term, condition or provision of, or constitute a
default under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any lien, charge or
encumbrance upon any property or asset of the Buyer or Acquisition pursuant to,
any note, bond, mortgage, indenture, license, agreement or other instrument or
obligation, any of which would be material to the Buyer's business operations or
financial condition or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Buyer or Acquisition.
4.5 SEC Documents; Regulatory Filings
The Buyer has filed as of the date of this Agreement and will continue
to file between the date of this Agreement and the Closing or termination of
this Agreement all SEC Documents required by the Securities Laws and such SEC
Documents filed as of the date hereof complied, and those filed subsequent to
the date hereof will comply, as of their respective dates, in all material
respects with the Securities Laws. The Buyer and each subsidiary of the Buyer
that is a depository institution has filed as of the date hereof and will
continue to file between the date of this Agreement and the Closing or
termination of this Agreement all reports required by statute or regulation to
be filed with any federal or state bank regulatory agency and such reports that
have been filed were prepared, and those to be filed will be in all material
respects, in accordance with the applicable statutes, regulations and
instructions in existence as of the date of filing of such reports.
4.6 Financial Statements
The Buyer Financial Statements fairly present in all material respects
the consolidated financial position of the Buyer as of the dates indicated and
the results of operations, changes in shareholders' equity and cash flows of the
Buyer for the periods then ended in conformity with generally accepted
accounting principles applied on a consistent basis except as disclosed therein
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and except that any interim statements included in the Buyer Financial
Statements are subject to normal year-end adjustments, none of which will be
material.
4.7 Material Adverse Change
The Buyer has not suffered any material adverse change in its financial
condition, results of operations or business since December 31, 1996 and, to the
knowledge of the Executive Officers of Buyer, no fact or condition exists that
could reasonably be expected to cause such a material adverse change other than
the transactions contemplated by this Reorganization Agreement and the
reasonable expenses incurred by the Buyer in connection therewith.
4.8 Absence of Undisclosed Liabilities
The Buyer has no liability (contingent or otherwise) that is material
to the Buyer, or that, when combined with all similar liabilities, would be
material to the Buyer, except as disclosed in the Buyer Financial Statements.
4.9 Certain Information
(a) The information provided by the Buyer to Enterprise Parent for use
in the Proxy Statement, at the time the Proxy Statement is mailed to
shareholders of Enterprise Parent and at all subsequent times up to and
including the time of Enterprise Parent shareholders' meeting to vote upon the
Merger, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
(b) When the Registration Statement or any post-effective amendment
thereto shall become effective, and at all times subsequent to such
effectiveness up to and including the time of the Buyer shareholders' meeting to
vote upon the Merger, such Registration Statement and all amendments or
supplements thereto, with respect to all information set forth therein furnished
by the Buyer relating to the Buyer, (i) will comply in all material respects
with the applicable provisions of the Securities Laws, and (ii) will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading.
4.10 Brokers and Finders
Neither the Buyer nor any of its officers, directors or employees, has
employed any broker, finder or financial advisor or incurred any liability for
any fees or commissions in connection with the transactions contemplated herein
or the Plan of Merger.
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4.11 Compliance with Laws
The Buyer is in compliance in all material respects with all statutes
and regulations applicable to the conduct of its business as to which the
failure to comply would have a material adverse effect upon Buyer, and neither
the Buyer nor, to the knowledge of the Buyer, any director or officer thereof
has received notification from any agency or department of federal, state or
local government (i) asserting a material violation of any such statute or
regulation, (ii) threatening to revoke any license, franchise, permit or
government authorization or (iii) restricting or in any way limiting its
operations. The Buyer is not subject to any regulatory or supervisory cease and
desist order, agreement, directive, memorandum of understanding or commitment,
and it has not received any communication requesting that it enter into any of
the foregoing.
4.12 Accounting, Tax and Regulatory Matters
The Buyer has not agreed to take any action and has not agreed to any
circumstances that would prevent the Transactions contemplated hereby, including
the Merger, from qualifying as a reorganization within the meaning of Section
368 of the Code.
4.13 Legal Proceedings
Except as Previously Disclosed, there are no actions, suits or
proceedings instituted, pending or, to the knowledge of Buyer or Acquisition,
threatened against Buyer or Acquisition or against any asset, interest or right
of Buyer or Acquisition, that would have a material adverse effect on Buyer and
its subsidiaries, taken as a whole. To the knowledge of Buyer and Acquisition,
there are no actual or threatened actions, suits or proceedings which present a
claim or restrain or prohibit the transactions contemplated herein or to impose
upon the Buyer, Acquisition, Enterprise Parent or Enterprise or any of their
respective subsidiaries or affiliates any material cost or obligation in
connection therewith. There are no actions, suits or proceedings instituted,
pending or, to the knowledge of Buyer, threatened against any present or former
director or executive officer of Buyer or Acquisition that might give rise to a
claim for indemnification that would, if determined adversely to Buyer or
Acquisition, have a material adverse effect on Buyer and its subsidiaries, taken
as a whole.
ARTICLE 5
COVENANTS
5.1 Shareholders' Meeting
Subject to the provisions of Section 7.1(i) hereof, (i) Enterprise
Parent shall submit this Reorganization Agreement and the Plan of Merger to its
shareholders for approval at a special meeting to be duly called, commenced and
held as soon as practicable, and (ii) the Board of
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Directors of Enterprise Parent shall, in accordance with applicable law, include
in the Proxy Statement its recommendation that Enterprise Parent's shareholders
vote in favor of the transactions contemplated hereby and by the Plan of Merger.
5.2 Proxy Statement; Registration Statement
In connection with any solicitations of approval by the shareholders of
Enterprise Parent of this Reorganization Agreement and the transactions
contemplated hereby, the Buyer (assisted by Enterprise Parent) shall file with
the SEC and with the appropriate state governmental offices under the securities
or "blue sky" laws of such states, shall use all reasonable efforts to respond
to the comments of the staff of the Commission (the "Staff") or such state
governmental offices and have cleared by the Commission under the Exchange Act
and Enterprise Parent shall promptly thereafter mail to Enterprise Parent's
shareholders, proxy solicitation materials, including a letter to shareholders,
notice of meeting, proxy statement and appropriate related forms of proxies with
respect to Enterprise Parent's shareholders' meeting. Such Proxy Statement shall
also constitute a prospectus of the Buyer with respect to the shares of Buyer
Common Stock to be issued in the Merger (such proxy statement and prospectus,
together with all amendments and supplements thereto, are referred to herein as
the "Proxy Statement/Prospectus"), and shall be a part of a registration
statement (the "Registration Statement") to be filed by the Buyer with the
Commission for the purpose of registering the public offering of such shares of
Buyer Common Stock under the Securities Act. The Buyer shall file promptly such
Registration Statement and shall use its best efforts to respond to the comments
of the Staff with respect thereto and to have it declared effective by the
Commission. The Buyer shall notify Enterprise Parent promptly of the receipt of
any comments of the Staff and of any request by the Staff for amendments or
supplements to the Proxy Statement/Prospectus or the Registration Statement or
for additional information, and shall supply Enterprise Parent with copies of
all correspondence between the Buyer or its representatives, on the one hand,
and the Commission or members of the Staff, on the other hand, with respect to
the Proxy Statement/Prospectus, the Registration Statement or the transactions
contemplated hereby.
Each of Enterprise Parent and the Buyer shall correct promptly any
information specifically provided by it for inclusion in the Proxy
Statement/Prospectus which shall have become false or misleading in any material
respect. Each of Enterprise Parent and the Buyer shall take all steps necessary
to file or to cause to be filed with the Commission and have declared effective
or cleared by the Commission any amendment or supplement to the Registration
Statement or the Proxy Statement/Prospectus so as to correct the same and to
cause the Registration or the Proxy Statement/Prospectus as so corrected to be
disseminated to the shareholders of Enterprise Parent as and to the extent
required by applicable law. The Registration Statement and the Proxy
Statement/Prospectus shall comply as to form in all material respects with the
provisions of the Securities Act, the Exchange Act and other applicable law.
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5.3 Plan of Merger
The terms of the Plan of Merger and Bank Merger Agreement are
incorporated herein by reference. Enterprise Parent shall execute and deliver
the Plan of Merger, and Enterprise shall execute and deliver the Bank Merger
Agreement, as soon as practicable following the Buyer's request therefor.
5.4 Applications
As promptly as practicable after the date hereof but in any event no
later than July 31, 1997, the Buyer shall submit any requisite applications for
prior approval of the Transactions (i) to the Federal Reserve Board pursuant to
the Bank Holding Company Act, and (ii) to the OCC pursuant to the National
Banking Act, the Department of Banking pursuant to Florida Statutes section
658.01 et. seq., and to the FDIC under the Bank Merger Act, and each of the
parties hereto shall submit any applications, notices or other filings to any
other state or federal government agency, department or body the approval of
which is required for consummation of the Transactions. The Buyer, and
Enterprise Parent and Enterprise each represents and warrants to the others that
all information concerning it and its directors, officers and shareholders
included (or submitted for inclusion) in any such application and furnished by
it shall be true, correct and complete in all material respects.
If required, each of the parties will file any Notification and Report
Forms and related material that it may be required to file with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice under the Hart-Scott-Rodino Act, will use its reasonable best efforts to
obtain an early termination of the applicable waiting period and will make any
further filings pursuant thereto that may be necessary, proper or advisable. All
costs associated with such filings shall be paid by the Buyer.
5.5 Best Efforts
(a) Each of the Buyer, Enterprise Parent and Enterprise shall use its
respective best efforts in good faith to (i) furnish such information as may be
required in connection with the preparation of the documents referred to in
Sections 5.2 and 5.4 above and (ii) take or cause to be taken all action
necessary or desirable on its part so as to permit consummation of the
Transactions at the earliest possible date, including, without limitation, (1)
obtaining the consent or approval of each individual, partnership, corporation,
association or other business or professional entity whose consent or approval
is required for consummation of the transactions contemplated hereby, provided
that Enterprise Parent and Enterprise shall not agree to make any payments or
modifications to agreements in connection therewith without the prior written
consent of the Buyer, except where such payment or modification would not have a
material adverse effect on Enterprise Parent or Enterprise, and (2) requesting
the delivery of appropriate opinions, consents and letters from its counsel and
independent auditors. Subject to the provisions of Section 5.8(b)(12) and 7.1(i)
hereof, no party hereto shall take or fail to take, or to the best of its
ability permit to be taken or omitted to
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be taken by any third persons, any action that would substantially impair the
prospects of completing the Transactions pursuant to this Reorganization
Agreement and the Plan of Merger, that would materially delay such completion,
or that would adversely affect the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code or that would
impair the Buyer's ability to account for the acquisition effected hereby as a
"pooling of interests."
(b) Enterprise Parent shall give prompt notice to the Buyer, and the
Buyer shall give prompt notice to Enterprise Parent, of (i) the occurrence, or
failure to occur, of any event which occurrence or failure would be likely to
cause any representation or warranty contained in this Reorganization Agreement
to be untrue or inaccurate in any material respect at any time from the date
hereof to the Closing Date and (ii) any material failure of the Buyer,
Enterprise Parent or Enterprise, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder, and each party shall use all reasonable efforts to remedy such
failure.
(c) Each party shall provide and shall request its auditors to provide
the other party with such historical financial information regarding it (and
related audit reports and consents) as the other party may reasonably request
for securities disclosure purposes.
5.6 Investigation and Confidentiality
Enterprise Parent and the Buyer will each keep the other advised of all
material developments relevant to its business and to the consummation of the
transactions contemplated herein. Enterprise Parent and the Buyer may make or
cause to be made such investigation of the financial and legal condition of the
other as such party reasonably deems necessary or advisable in connection with
the transactions contemplated herein and in the Plan of Merger, provided,
however, that such investigation shall be reasonably related to such
transactions and shall not interfere unnecessarily with normal operations.
Enterprise Parent and the Buyer agree to furnish the other and the other's
advisors with such financial data and other information with respect to its
business and properties as such other party shall from time to time reasonably
request. No investigation pursuant to this Section 5.6 shall affect or be deemed
to modify any representation or warranty made by, or the conditions to the
obligations to consummate the Merger of, any party hereto. Each party shall, and
shall cause its directors, officers, attorneys and advisors to, maintain the
confidentiality of all information obtained in such investigation which is not
otherwise publicly disclosed by the other party, said undertaking with respect
to confidentiality to survive any termination of this Agreement pursuant to
Section 7.1 hereof. In the event of termination of this Reorganization
Agreement, each party shall return to the furnishing party or destroy and
certify the destruction of all information previously furnished in connection
with the transactions contemplated by this Reorganization Agreement.
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5.7 Press Releases
Enterprise Parent and the Buyer shall agree with each other as to the
form and substance of any press release related to this Reorganization Agreement
and the Plan of Merger or the transactions contemplated hereby or thereby, and
shall consult each other as to the form and substance of other public
disclosures related thereto, provided, however, that nothing contained herein
shall prohibit any party, following notification to the other parties, from
making any disclosure which its counsel deems necessary under the provisions of
applicable law.
5.8 Covenants of Enterprise Parent and Enterprise
(a) Prior to the Closing Date, and except as otherwise provided for by
this Reorganization Agreement, the Plan of Merger or consented to or approved by
the Buyer, Enterprise Parent and Enterprise shall each use its reasonable
efforts to preserve its properties, business and relationships with customers,
employees and other persons.
(b) Except with the prior written consent of the Buyer, between the
date hereof and the Effective Date, neither Enterprise Parent nor Enterprise
shall:
(1) carry on its business other than in the usual, regular
and ordinary course consistent with past practice;
(2) declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock;
(3) issue any shares of its capital stock or permit any
treasury shares to become outstanding, incur any additional debt obligation or
other obligation for borrowed money, other than in the ordinary course of
business of Enterprise Parent or Enterprise, as the case may be, consistent with
past practice provided that Enterprise Parent may issue shares in connection
with the exercise of any Rights outstanding as of the date of this Agreement;
(4) issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock dividend, stock split or like change
in capitalization;
(5) amend its Articles of Incorporation or By-laws or other
charter documents;
(6) merge with any other corporation, savings association or
bank or permit any other corporation, savings association or bank to merge into
it or consolidate with any other corporation, savings association or bank;
acquire control over any other firm, bank, corporation, savings association or
organization; or create any subsidiary;
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(7) fail to comply in any material respect with any material
laws, regulations, ordinances or governmental actions applicable to it and to
the conduct of its business where such failure would have a material adverse
effect upon Enterprise Parent and Enterprise taken as a whole; enter into any
material swap, hedge or other similar off-balance sheet transaction; waive or
release any material right or cancel or compromise any material debt or claim
where such action would have a material adverse effect upon Enterprise Parent
and Enterprise taken as a whole; restructure, extend or modify any loan
Previously Disclosed pursuant to the second sentence of Section 3.9 hereof or
that would have been required to have been so disclosed if it had been
outstanding at March 31, 1997 (an "Affiliate Loan"), waive or release any right
or cancel or compromise any debt or claim in connection with any such Affiliate
Loan, or make any new Affiliate Loan that would have been required to have been
so disclosed if it had been outstanding at March 31, 1997;
(8) except for the sale of securities in the ordinary course
of business, liquidate or sell or dispose of any material assets or acquire any
material assets; make any capital expenditures in excess of $50,000 in the
aggregate; or establish new branches or other similar facilities; or enter into
or modify any leases or other contracts that involve annual payments by
Enterprise Parent that exceed $25,000 in any instance or $50,000 in the
aggregate; provided, however, that Enterprise may expend up to $1,100,000 to
acquire land for two (2) branches in Sarasota or Manatee County, Florida without
the approval of Buyer;
(9) increase the rate of compensation of, pay or agree to
pay any bonus to, or provide any other employee benefit or incentive to, any of
its directors, officers or employees except in accordance with Enterprise
Parent's or Enterprise's standard compensation and benefits practices; enter
into, modify or extend any employment or severance contracts with any of its
present or former directors, officers or employees; or enter into or
substantially modify (except as may be required by applicable law) any pension,
retirement, stock option, stock purchase, stock appreciation right, savings,
profit sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement related thereto, in respect of any of its directors,
officers or other employees;
(10) change its lending, investment, asset, liability
management or other material banking policies in any material respect except as
may be required by changes in applicable law, regulation or regulatory
directives;
(11) change its methods of accounting in effect at December
31, 1996, except as required by changes in generally accepted accounting
principles concurred in by its independent certified public accountants or
change any of its methods of reporting income and deductions for federal income
tax purposes from those employed in the preparation of its federal income tax
returns for the year ended December 31, 1996, except as required by changes in
law or applicable regulations;
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(12) solicit, initiate inquiries or proposals or enter into
negotiations with respect to any Competing Transaction, or furnish any written
information relating to or in connection with any such Competing Transaction,
other than as contemplated by this Reorganization Agreement; or authorize or
permit any officer, director, agent or affiliate of it to do any of the above;
or fail to notify the Buyer immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated with Enterprise Parent; provided that
nothing contained herein shall prohibit the Board of Directors of Enterprise
Parent from furnishing information to or entering into discussions or
negotiations with, any person or entity, if, and only to the extent that (A) the
Board of Directors of Enterprise Parent, based upon the advice of outside
counsel, determines in good faith that such action is required by the Board of
Directors to comply with its fiduciary duties to shareholders imposed by law,
(B) prior to furnishing such information to, or entering into discussions or
negotiations with, such person or entity relating to a Competing Transaction,
Enterprise Parent provides written notice to Buyer to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity relating to a Competing Transaction, and (C) Enterprise
Parent keeps Buyer reasonably informed as to the status and all material
information with respect to any such discussions or negotiations;
(13) permit total shareholders' equity (excluding the
effects of FASB 115) to be less than 7% of total assets at any time for
Enterprise Parent on a consolidated basis;
(14) permit the total risk-based capital ratio of Enterprise
Parent on a consolidated basis to be less than ten percent (10%);
(15) permit Enterprise Parent's consolidated loan loss
reserve as of the Closing to be less than 1.15% of total loans outstanding; or
(16) agree to do any of the foregoing.
(c) As soon as practicable, Enterprise Parent shall cause (i)
financial statements to be prepared in conformity with generally accepted
accounting principles for whatever full fiscal year periods are necessary to
comply with the requirements of Form S-4 under the Securities Act, with respect
to this transaction, and with the other requirements of the rules and
regulations under the Securities Act and the Exchange Act as may be applicable
to the Buyer, (ii) to the extent not already performed, its independent public
accountants to perform an audit of such financial statements in conformity with
generally accepted auditing standards, and (iii) its independent public
accountants to consent to the use of their opinion with respect to such
financial statement in registration statements filed by the Buyer under the
Securities Act.
5.9 Enterprise Employees
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All employees of Enterprise as of the Effective Time shall become
employees of the Buyer or a subsidiary of the Buyer. At the Closing, the Buyer
shall enter into employment agreements with Mr. Tramm Hudson and Mr. Stephen E.
Kunk in the forms attached hereto as Exhibit 5.9 (the "Employment Agreements").
Nothing in the Reorganization Agreement shall give any employee of Enterprise a
right to continuing employment with the Buyer after the Effective Time. As soon
as practicable after the Effective Time, the Buyer shall provide or cause to be
provided to all employees of Enterprise who remain employed by the Buyer
benefits which in the aggregate are no less favorable than those generally
afforded to other employees of the Buyer holding similar positions as follows:
(a) Each employee of Enterprise will be entitled to credit for prior
service with Enterprise for all purposes under the employee welfare benefit
plans and other employee benefit plans and programs (other than those described
in subparagraph (ii) below and any stock option plans) sponsored by Buyer to the
extent Enterprise sponsored a similar type of plan in which the Enterprise
employee participated immediately prior to the Effective Time. Any preexisting
condition exclusion applicable to such plans and programs shall be waived with
respect to any Enterprise employee. for purposes of determining each Enterprise
employee's benefit for the year in which the Merger occurs under the Buyer
vacation program, any vacation taken by an Enterprise employee immediately
preceding the Effective Time for the year in which the Merger Occurs will be
deducted from the total Buyer vacation benefit available to such Enterprise
employee for such year. Buyer agrees that for purposes of determining the number
of vacation days available with respect to each Enterprise employee for the year
in which the Merger occurs, that the number of vacation days for such year shall
be determined under Enterprise vacation policy in effect as of January 1, 1997.
Unused sick leave and vacation leave accrued by employees of Enterprise as of
the Effective Time will be recognized by Buyer to the extent it is used in the
fiscal year of Buyer in which the Effective Time occurs. Buyer further agrees to
credit each Enterprise employee for the year during which such coverage under
the Buyer welfare benefit plan begins, with any deductibles already incurred
during such year under Enterprise's group health plan.
(b) On or before, but effective as of, the Effective Time, Enterprise
may take such actions as may be necessary to cause each individual employed by
Enterprise immediately prior to the Effective Time to have a fully vested and
nonforfeitable interest in such employee's account balance under the 401(k) plan
sponsored by Enterprise as of the Effective Time.
(c) If the transaction contemplated hereby closes while a calendar year
of Enterprise is in progress, all employees who are eligible to participate in
any Enterprise bonus plan in effect for such year shall be entitled to receive
their pro rata portion of any bonus payable thereunder for such year determined
on the basis of the number of days of the year which elapsed prior to the
closing divided by 364. for purposes of determining such bonus, the profit plan
objectives shall be deemed to have been met for the year.
<PAGE> 100
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It is provided, however, that this Section 5.9 shall not be construed
(i) to limit the ability of the Buyer and its affiliates to terminate the
employment of any employee or to review employee benefits programs from time to
time and to make such changes as they deem appropriate or (ii) to require the
Buyer or its affiliates to provide employees or former employees with
post-retirement medical benefits.
5.10 Affiliates
The Buyer and Enterprise Parent shall cooperate and use their best
efforts to identify those persons who may be deemed to be "affiliates" of
Enterprise Parent within the meaning of Rule 145 promulgated by the Commission
under the Securities Act. Enterprise Parent shall use its best efforts to cause
each affiliate of Enterprise Parent so identified to deliver to the Buyer after
their receipt of the Proxy Statement, but no later than 30 days prior to the
Effective Time, a written agreement providing that such person will not dispose
of the Buyer Common Stock received in the Merger except (i) in compliance with
the Securities Act and the rules and regulations promulgated thereunder, and
(ii) in a manner which will not cause the Transactions to fail to qualify as a
pooling of interests for financial accounting purposes.
5.11 NASDAQ Application
The Buyer shall apply to have the shares of the Buyer Common Stock to
be issued in the Merger authorized for trading on the NASDAQ National Market
System.
5.12 Director and Officer Insurance Coverage and Indemnification
Buyer agrees to permit Enterprise Parent and Enterprise to obtain an
extended reporting period (otherwise known as "Tail Coverage") for three (3)
years under Enterprise Parent's existing directors and officers liability policy
unless Buyer agrees to guaranty the rights to indemnification that the officers
and directors of Enterprise Parent and Enterprise have pursuant to the Articles
or Certificate of Incorporation or Association and Bylaws of Enterprise Parent
and Enterprise or under applicable law.
Buyer and Acquisition agree that all rights to indemnification that the
directors and officers of Enterprise Parent and Enterprise have pursuant to the
Articles or Certificate of Incorporation or Association, or Bylaws of Enterprise
Parent and Enterprise or under applicable law shall survive the Merger and shall
continue in full force and effect.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 Conditions Precedent - the Buyer and Enterprise Parent
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The respective obligations of Enterprise Parent or Enterprise to effect
the Transactions, or of the Buyer to cause Acquisition or SHCB to effect the
Transactions, shall be subject to satisfaction or waiver of the following
conditions at or prior to the Closing Date:
(a) The shareholders of Enterprise Parent shall have duly and validly
approved the execution, delivery and performance of this Reorganization
Agreement and the Plan of Merger and consummation of the transactions
contemplated hereby in accordance with applicable law;
(b) The parties hereto shall have received all regulatory approvals
required or deemed necessary in connection with the Transactions all notice
periods and waiting periods required after the granting of any such approvals
shall have passed and all conditions contained in any such approval required to
have been satisfied prior to consummation of such Transactions shall have been
satisfied, provided, however, that no such approval shall have imposed any
condition or requirement which materially and adversely affects the economic
business benefits to the Buyer of the Transactions, taken as a whole;
(c) The Registration Statement (including any post-effective amendment
thereto) shall be effective under the Securities Act, and no proceeding shall be
pending or to the knowledge of the Buyer threatened by the Commission to suspend
the effectiveness of such Registration Statement, and the Buyer shall have
received all state securities or "blue sky" permits or other authorizations, or
confirmations as to the availability of an exemption from registration
requirements as may be necessary;
(d) None of the parties hereto or to the Plan of Merger shall be
subject to any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation of the Transactions;
(e) The shares of the Buyer Common Stock that may be issued in the
Merger shall have been authorized for trading on the NASDAQ National Market
System and will be freely tradeable upon receipt, provided that those shares
received by affiliates of Enterprise Parent who are not also or who do not
become affiliates of Buyer will be tradeable in accordance with the provisions
of Rule 145 as promulgated by the SEC and the agreements pursuant to Section
5.10; and
(f) The Buyer and Enterprise Parent shall have received an opinion of
Keating, Muething & Klekamp, P.L.L. substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such opinion, (i)
the Merger will constitute a reorganization within the meaning of Section 368(a)
of the Code and (ii) no gain or loss will be recognized by a shareholder of
Enterprise Parent who exchanges all of shareholder's Enterprise Parent Common
Stock solely for the Buyer Common Stock in the Merger (except with respect to
cash received in lieu of a fractional share interest in the Buyer Common Stock).
The Buyer and Enterprise Parent shall each deliver a letter of representations
to Keating, Muething & Klekamp, P.L.L. at Closing in the form attached as
Exhibit 6.1(f).
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6.2 Conditions Precedent - Enterprise Parent and Enterprise
The obligations of Enterprise Parent and Enterprise to effect the
Transactions shall be subject to satisfaction of the following additional
conditions at or prior to the Closing Date unless waived by Enterprise Parent
pursuant to Section 7.4 hereof:
(a) The representations and warranties of the Buyer set forth in
Article 4 hereof shall be true and correct in all material respects as of the
date of this Reorganization Agreement and as of the Closing Date as though made
on and as of the Closing Date (or on the date when made in the case of any
representation and warranty which specifically relates to an earlier date),
except (i) as otherwise contemplated by this Reorganization Agreement or
consented to in writing by Enterprise Parent and (ii) insofar as the failure of
any representation and warranty to be true and correct does not have, and is not
reasonably likely to have, a material adverse effect on the Buyer;
(b) The Buyer shall have in all material respects performed all
obligations and complied with all covenants required by this Reorganization
Agreement and the Plan of Merger except to the extent that such failure to
perform or comply with such covenants has not had a material adverse effect upon
Buyer or on its ability to close the transactions contemplated hereby;
(c) The Buyer shall have delivered to Enterprise Parent a certificate,
dated the Closing Date and signed by its President and Chief Executive Officer
or Executive Vice President to the effect that the conditions set forth in this
section have been satisfied except to the extent waived by the other party;
(d) Enterprise Parent shall have received an opinion of Keating,
Muething & Klekamp, P.L.L. dated the Closing Date in the form attached as
Exhibit 6.2(d);
(e) Enterprise Parent shall have received the favorable written
fairness opinion of Sandler O'Neill & Partners with respect to the Merger and
this Reorganization Agreement prior to the mailing of the Proxy Statement, which
opinion shall be orally confirmed at the Closing if requested by Enterprise
Parent; and
(f) The Buyer shall have executed and delivered the Employment
Agreements with each of Messrs. Hudson and Kunk.
6.3 Conditions Precedent - the Buyer
The obligations of the Buyer and Acquisition to effect the Transactions
shall be subject to satisfaction of the following additional conditions at or
prior to the Closing Date unless waived by the Buyer pursuant to Section 7.4
hereof:
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(a) The representations and warranties of Enterprise Parent and
Enterprise set forth in Article 3 hereof shall be true and correct in all
material respects as of the date of this Reorganization Agreement and as of the
Closing Date as though made on and as of the Closing Date (or on the date when
made in the case of any representation and warranty which specifically relates
to an earlier date), except (i) as otherwise contemplated by this Reorganization
Agreement or consented to in writing by the Buyer and (ii) insofar as the
failure of any representation and warranty to be true and correct does not have,
and is not reasonably likely to have, a material adverse effect on Enterprise
Parent or Enterprise;
(b) Enterprise Parent and Enterprise shall have in all material
respects performed all obligations and complied with all covenants required by
this Reorganization Agreement and the Plan of Merger except to the extent that
such failure to perform or comply with such covenants has not had a material
adverse effect upon Enterprise Parent or Enterprise on a combined basis or on
their ability to close the transactions contemplated hereby;
(c) Enterprise Parent shall have delivered to the Buyer a certificate,
dated the Closing Date and signed by its Chairman and Chief Executive Officer or
its President to the effect that the conditions set forth in this section have
been satisfied except to the extent waived by the other party;
(d) The Buyer shall have received an opinion or opinions of Fowler,
White, Gillen, Boggs, Villareal and Banker, P.A., dated the Closing Date in the
form attached as Exhibit 6.3(d);
(e) All Rights relating to the capital stock of Enterprise Parent or
Enterprise shall have been either fully exercised prior to the Closing or
canceled without any consideration therefor (other than the issuance of
Enterprise Parent Stock pursuant to exercise of such rights in accordance with
their terms) payable by Enterprise Parent or Enterprise or the Buyer;
(f) The Buyer shall have executed and delivered Employment Agreements
with each of Messrs. Hudson and Kunk;
(g) To the extent that any lease, license, loan, financing agreement or
other contract or agreement to which Enterprise Parent of Enterprise is a party
requires the consent of or waiver from the other party thereto as a result of
the Transactions, such consent or waiver shall have been obtained, unless the
failure to obtain such consents or waivers, individually or in the aggregate,
would not have a material adverse effect on Enterprise Parent and Enterprise,
taken as a whole;
(h) No event shall have occurred that shall preclude the Transactions
from qualifying as a pooling of interests for financial accounting purposes and
Enterprise Parent's public accounting firm shall have delivered a letter in the
form of Exhibit 6.3(h) to Ernst & Young, LLP upon request;
(i) Each affiliate of Buyer shall have executed and delivered the
agreement required pursuant to Section 5.10 hereof; and
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(j) As of the month ending immediately prior to Closing, Enterprise
Parent shall have a minimum shareholders' equity, determined in accordance with
GAAP except without adjustment under FASB 115 and without taking into account
gain or loss on the sale of securities after the date hereof, of not less than
$12,300,000 as of any of June 30, 1997, July 31, 1997 and August 31, 1997;
$12,700,000 as of any of September 30, 1997, October 31, 1997 and November 30,
1997 and $13,200,000 as of any of December 31, 1997, January 31, 1998 and
February 28, 1998. In determining such net worth: (i) no expenses which are
related to the transactions contemplated hereby shall be taken into account,
(ii) no expenses related to opening of new branches shall be taken into account,
(iii) capital used to acquire branching sites will be increased to reflect the
impact of lost earnings thereon utilizing an 8% per annum interest rate
assumption; (iv) no expenses caused by write-offs of capital assets rendered
valueless because of the transactions contemplated hereby shall be taken into
account, and (v) any expenses incurred at the request of Buyer shall not be
taken into account.
ARTICLE 7
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination
This Reorganization Agreement and the Plan of Merger may be terminated,
either before or after approval by the shareholders of Enterprise Parent:
(a) At any time on or prior to the Effective Date, by the mutual
consent in writing of the parties hereto;
(b) At any time on or prior to the Closing Date, by the Buyer in
writing, if Enterprise Parent or Enterprise has, or by Enterprise Parent in
writing, if the Buyer has, in any material respect, breached (i) Section 5.8
hereof, or (ii) any other covenant or agreement contained herein or in the Plan
of Merger, the breach of which has caused the transactions contemplated hereby
not to receive a required approval or made it impossible for the transactions
contemplated hereby to close or has a material adverse effect upon the breaching
party on a consolidated basis, or (iii) any representation or warranty contained
herein if the failure of any such representation and warranty to be true and
correct has, or is reasonably likely to have, a material adverse effect upon the
Buyer or Enterprise Parent, and in either case if such breach has not been cured
by the earlier of thirty (30) days after the date on which written notice of
such breach is given to the party committing such breach or the Closing Date;
(c) At any time, by any party hereto in writing, if the applications
for prior approval referred to in Section 5.4 hereof have been denied, and the
time period for appeals and requests for reconsideration has run;
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(d) At any time, by any party hereto in writing, if the shareholders of
Enterprise Parent do not approve the transactions contemplated herein at the
annual or special meetings duly called for that purpose;
(e) At any time, by any party in writing, if such party determines in
good faith that any condition precedent to such party's obligations to
consummate the Transactions is or would be impossible to satisfy and such
impossibility is not due to such party's own actions or failure to act or does
not result from a breach of such party's representations, warranties or
covenants, provided that the terminating party has given the other party written
notice with respect thereto at least ten (10) days prior to such termination and
has given the other party a reasonable opportunity to discuss the matter with a
view to achieving a mutually acceptable resolution;
(f) By either party hereto in writing, if the Closing Date has not
occurred by the close of business on March 31, 1998, provided that such failure
to close does not result from the Terminating Party's breach of any agreement,
representation, warranty or covenant contained herein;
(g) By Enterprise Parent, if (i) the Market Value is greater than
$46.7543, (ii) Enterprise Parent provides written notice to the Buyer prior to
9:00 A.M. on the Closing Date of its intent to terminate this Reorganization
Agreement and (iii) Buyer does not elect to deem the Market Value to be equal to
$46.7543 for purposes of the Closing;
(h) By the Buyer, if (i) the Market Value is less than $33.9958, (ii)
the Buyer provides written notice to Enterprise Parent prior to 9:00 A.M. on the
Closing Date of its intent to terminate this Reorganization Agreement and (iii)
Enterprise Parent does not elect to deem the Market Value to be equal to
$33.9958 for purposes of the Closing; or
(i) By Enterprise Parent if, after being advised by its counsel that
under principles of fiduciary law its Board must consider a Competing
Transaction, its Board decides to accept such Competing Transaction, but in such
event this Agreement shall terminate only if Enterprise Parent agrees to pay the
break up fee set forth in Section 8.1(b) upon execution and delivery of an
agreement or agreement in principle to enter into a Competing Transaction.
7.2 Effect of Termination
In the event this Reorganization Agreement or the Plan of Merger is
terminated pursuant to Section 7.1 hereof, this Reorganization Agreement and
Plan of Merger shall become void and have no effect, except that (i) the
provisions relating to confidentiality and expenses set forth in Sections 5.6
and 8.1 hereof, respectively, shall survive any such termination and (ii) a
termination pursuant to Section 7.1(b) (other than a termination by the Buyer
due to Enterprise Parent's or Enterprise's breach of any of Sections 5.8(b)(13),
5.8(b)(14) or 5.8(b)(15)) shall not relieve the
<PAGE> 106
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breaching party from liability for an uncured breach of a covenant or agreement
giving rise to such termination.
7.3 Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Reorganization
Agreement and the Plan of Merger or in any instrument delivered pursuant hereto
or thereto shall expire on, and be terminated and extinguished at, the Effective
Date other than covenants that by their terms are to survive or be performed
after the Effective Date, provided that no such representations, warranties or
covenants shall be deemed to be terminated or extinguished so as to deprive the
Buyer or Enterprise Parent (or any director, officer or controlling person
thereof) of any defense in law or equity which otherwise would be available
against the claims of any person, including, without limitation, any shareholder
or former shareholder of either the Buyer or Enterprise Parent, the aforesaid
representations, warranties and covenants being material inducements to the
consummation by the Buyer, Acquisition, Enterprise Parent and Enterprise of the
transactions contemplated herein.
7.4 Waiver
Except with respect to any required shareholder or regulatory approval,
the Buyer, Enterprise Parent and Enterprise, respectively, by written instrument
signed by an executive officer of such party, may at any time (whether before or
after approval of this Reorganization Agreement and the Plan of Merger by the
shareholders of the Buyer and Enterprise Parent) extend the time for the
performance of any of the obligations or other acts of Enterprise Parent, on the
one hand, or the Buyer, on the other hand, and may waive (i) any inaccuracies of
such parties in the representations or warranties contained in this
Reorganization Agreement, the Plan of Merger or any document delivered pursuant
hereto or thereto, (ii) compliance with any of the covenants, undertakings or
agreements of such parties, or satisfaction of any of the conditions precedent
to its obligations, contained herein or in the Plan of Merger or (iii) the
performance by such parties of any of its obligations set out herein or therein;
provided, however, that no such waiver executed after approval of this
Reorganization Agreement and the Plan of Merger by the shareholders of
Enterprise Parent shall change the number of shares of the Buyer Common Stock
into which each Share shall be converted pursuant to the Merger.
7.5 Amendment or Supplement
This Reorganization Agreement and the Plan of Merger may be amended or
supplemented at any time by mutual agreement of the parties hereto, in the case
of this Reorganization Agreement, or thereto, in the case of the Plan of Merger.
Any such amendment or supplement must be in writing and approved by their
respective boards of directors and Enterprise Parent or officers authorized
thereby; provided, however, that no such amendment executed after approval of
this Reorganization Agreement and the Plan of Merger by the shareholders of
Enterprise Parent shall change the number
<PAGE> 107
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of shares of the Buyer Common Stock into which each Share shall be converted
pursuant to the Merger.
ARTICLE 8
MISCELLANEOUS
8.1 Expenses
(a) Each party shall bear and pay all costs and expenses incurred in
connection with the transactions contemplated in this Reorganization Agreement,
including fees and expenses of financial consultants, accountants and counsel,
except that the Buyer and Enterprise Parent shall each bear and pay fifty
percent (50%) of all costs and expenses incurred in connection with printing the
Registration Statement and joint Proxy Statement and prospectus of the Buyer and
Enterprise Parent.
(b) Enterprise Parent and the Buyer each acknowledge that the other has
spent, and will be required to spend, substantial time and effort in examining
the business, properties, affairs, financial condition and prospects of the
other, has incurred, and will continue to incur, substantial fees and expenses
in connection with such examination, the preparation of this Reorganization
Agreement and the accomplishment of the transactions contemplated hereby, and
will be unable to evaluate and, possibly, make investments in or acquire other
entities due to the limited number of personnel available for such purpose and
the constraints of time. Therefore, to induce each other to enter into this
Reorganization Agreement, (i) if the Buyer terminates this Reorganization
Agreement pursuant to Section 7.1(b) or 7.1(c) by reason of Enterprise Parent's
failure to meet any condition contained in Section 6.3(a) or 6.3(b) due to
Enterprise Parent's material misrepresentation or material breach of warranty or
material breach of any covenant or agreement, and within twelve (12) months from
the date of termination a Competing Transaction is consummated or Enterprise
Parent shall have entered into an agreement or an agreement in principle which
if consummated would constitute a Competing Transaction or (ii) if Enterprise
Parent terminates this Agreement pursuant to Section 7.1(i), then Enterprise
Parent shall pay to the Buyer a fee in the amount of Seven Hundred Fifty
Thousand Dollars ($750,000), not as a penalty but as full and complete
liquidated damages. Upon payment of such fee, Enterprise Parent shall have no
further liability to the Buyer at law or equity. The fee shall be payable to the
Buyer notwithstanding that any action taken by the Board of Directors of
Enterprise Parent which may give rise to the obligation to pay the fee may have
been taken in accordance with the fiduciary duties of the Board of Directors. If
Enterprise terminates this Reorganization Agreement pursuant to Sections 7.1(b)
or 7.1(c) by reason of Buyer's or Acquisition's failure to meet any condition
contained in Section 6.2(a) or Section 6.2(b) due to Buyer's material
misrepresentation or material breach of warranty or material breach of any
covenant or agreement, then Buyer shall pay all of Enterprise Parent's and
Enterprise's expenses incurred in connection with the negotiation of this
Reorganization Agreement and the transactions contemplated hereby. Any payment
required pursuant to this Section 8.1(b) shall be made as promptly as
<PAGE> 108
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practicable, but in no event later than two business days after the date it
becomes payable hereunder and shall be made by wire transfer of immediately
available funds to an account designated by the person to receive payment. In
the event that a person is entitled to a fee hereunder, the payor shall also pay
the person to receive payment interest at the rate of 6% per year on any amounts
that are not paid when due, plus all costs and expenses in connection with or
arising out of the enforcement of the obligation of payor to pay the fee or such
interest.
8.2 Entire Agreement
This Reorganization Agreement and the Plan of Merger contain the entire
agreement between the parties with respect to the transactions contemplated
hereunder and thereunder and supersede all prior arrangements or understandings
with respect thereto, written or oral, other than documents referred to herein
or therein. The terms and conditions of this Reorganization Agreement and the
Plan of Merger shall inure to the benefit of and be binding upon the parties
hereto and thereto and their respective successors. Nothing in this
Reorganization Agreement or the Plan of Merger, expressed or implied, is
intended to confer upon any party, other than the parties hereto and thereto,
and their respective successors, any rights, remedies, obligations or
liabilities.
8.3 No Assignment
No party hereto may assign any of its rights or obligations under this
Reorganization Agreement to any other person.
8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
facsimile transmission or overnight express or by registered or certified mail,
postage prepaid, addressed as follows:
If to Enterprise Parent or Enterprise:
Enterprise National Bank
1549 Ringling Boulevard
P.O. Box 49557
Sarasota, Florida 34230
Attention: Stephen E. Kunk
Chairman and Chief Executive Officer
<PAGE> 109
- 37 -
With a required copy to:
David C. Shobe, Esq.
Fowler White Gillen Boggs Villareal & Banker, P.A.
501 E. Kentucky Blvd.
Tampa, Florida 33601
Attention: David C. Shobe, Esq.
If to the Buyer or Acquisition:
Provident Bancorp, Inc.
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Charles Sulerzyski, Sr. Vice President
With a required copy to:
<TABLE>
<S> <C>
Provident Bancorp, Inc. and Keating, Muething & Klekamp, P.L.L.
Fourth Floor 1800 Provident Tower
One East Fourth Street One East Fourth Street
Cincinnati, Ohio 45202 Cincinnati, Ohio 45202
Attention: Mark E. Magee, Esq. Attention: Edward E. Steiner, Esq.
</TABLE>
8.5 Captions
The captions contained in this Reorganization Agreement are for
reference purposes only and are not part of this Reorganization Agreement.
8.6 Counterparts
This Reorganization Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
8.7 Governing Law
This Reorganization Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio applicable to agreements made and
entirely to be performed within such jurisdiction, except to the extent federal
law may be applicable.
<PAGE> 110
- 38 -
8.8 Specific Performance
Each party shall be entitled to seek and to obtain specific performance
of the transactions contemplated by this Reorganization Agreement.
(remainder of page intentionally blank)
<PAGE> 111
- 39 -
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Reorganization Agreement to be executed in counterparts
by their duly authorized officers and their corporate seal to be hereunto
affixed and attested by their officers thereunto duly authorized, all as of the
date and year first above written.
Attest FLORIDA GULFCOAST BANCORP, INC.
/s/ BY: /s/ Stephen E. Kunk
- ------------------------------------ -------------------------------------
(SEAL)
Attest ENTERPRISE NATIONAL BANK
/s/ BY: /s/ Stephen E. Kunk
- ------------------------------------ -------------------------------------
(SEAL)
Attest FBGI ACQUISITION CORP.
/s/ Mark E. Magee BY: /s/ Allen L. Davis
- ------------------------------------ -------------------------------------
(SEAL)
Attest PROVIDENT BANCORP, INC.
/s/ Mark E. Magee BY: /s/ Allen L. Davis
- ------------------------------------ -------------------------------------
(SEAL)
462929.8
<PAGE> 112
ANNEX B
-------
AGREEMENT AND PLAN OF MERGER
----------------------------
This Agreement and Plan of Merger ("Merger Agreement") is made this
____ day of __________, 1997 among Provident Bancorp, Inc., an Ohio corporation
("Parent"), Florida Gulfcoast Bancorp, Inc., a Florida corporation ("Enterprise
Parent"), and FGBI Acquisition Corp., a Florida corporation ("Acquisition").
R E C I T A L S:
----------------
WHEREAS, the board of directors of each of Enterprise Parent and
Acquisition believe that it is in their best interests of their respective
shareholders that Enterprise Parent be merged with and into Acquisition, with
Acquisition continuing as the surviving corporation (the "Merger");
WHEREAS, Acquisition is a wholly-owned subsidiary of Parent; and
WHEREAS, Enterprise Parent, Acquisition, Parent and Enterprise National
Bank have entered into an Agreement and Plan of Reorganization ("Reorganization
Agreement") dated as of May 21, 1997 pursuant to which the parties have set
forth the additional terms and conditions of the Merger.
NOW, THEREFORE, the undersigned corporations, in accordance with
Section 607.1101 of the Florida 1989 Business Corporation Act, and in
consideration of the premises and the mutual agreements and covenants herein
contained hereby adopt these Articles of Merger and agree as follows:
ARTICLE 1
MERGER OF ENTERPRISE PARENT INTO ACQUISITION
--------------------------------------------
1.1 At the Effective Time, Enterprise Parent shall be merged with and
into Acquisition, which shall be the Surviving Corporation (the "Surviving
Corporation") and which shall continue in its corporate existence under the laws
of the State of Florida.
1.2 The Articles of Merger shall be filed as promptly as possible with
the Secretary of State of Florida, and the date and time of such filing shall be
the effective time of the Merger (the "Effective Time").
<PAGE> 113
- 2 -
ARTICLE 2
CONVERSION OF SHARES
--------------------
2.1 The manner and basis of converting the shares of Enterprise Parent
into the shares of the Parent is as follows: at and as of the Effective Time (as
hereinafter defined), (a) each share of Enterprise Parent then issued and
outstanding (other than any dissenting share) shall be converted into the right
to receive that number of shares of the Parent's Common Stock equal to: (x)
Twenty One Dollars ($21.00); DIVIDED BY (y) the Market Value (as defined
hereinafter) of a share of the Parent's Common Stock (the "Merger
Consideration") and (b) each dissenting share shall be converted into the right
to receive payment from the Surviving Corporation with respect thereto to the
extent provided by, and in accordance with, the provisions of the Florida 1989
Business Corporation Act; PROVIDED, HOWEVER, that the Merger Consideration shall
be subject to equitable adjustment in the event of any stock split, stock
dividend, reverse stock split, or other change in the number of shares of
Enterprise Parent outstanding. After the Effective Time, no share of Enterprise
Parent shall be deemed to be outstanding or to have any rights other than those
rights set forth above. The "Market Value" of a share of Parent Common Stock
shall be calculated based on the arithmetic mean of the average of the daily
closing representative bid and asked prices for Parent Common Stock on the NASD
National Market System for the twenty (20) trading days immediately preceding
the fifth day before the closing.
No fractional shares of Parent Common Stock shall be issued in the
Merger. All fractional shares of Parent Common Stock that a holder of shares of
Enterprise Parent would otherwise be entitled to receive as a result of the
Merger shall be aggregated and, if a fractional share of Parent Common Stock
results from such aggregation, such holder shall be entitled to receive an
amount in cash determined by multiplying the average of the closing
representative bid and asked prices for Parent Common Stock on the NASD National
Market System on the first trading day after the Effective Time by the fraction
of a share of Parent Common Stock to which such holder would otherwise have been
entitled. The amount of cash so received by such holder shall for all purposes
be deemed to constitute a portion of the Merger Consideration. No such holder
shall be entitled to dividends, voting rights or any other shareholder right in
respect of any fractional share of Parent Common Stock.
2.2 The capital stock of Acquisition shall be unaffected by the Merger
and all presently issued and outstanding shares of capital stock of Acquisition
shall remain the issued and outstanding shares of capital stock of the Surviving
Corporation immediately after the Effective Time of the Merger.
<PAGE> 114
- 3 -
ARTICLE 3
LEGAL AND FINANCIAL ASPECTS OF THE MERGER
-----------------------------------------
3.1 The Articles of Incorporation and By-Laws of Acquisition in effect
as of the Effective Time of Merger shall continue to be the Articles of
Incorporation and By-Laws of the Surviving Corporation.
3.2 The directors and officers of Acquisition shall continue to be the
directors and officers of the Surviving Corporation and shall continue in office
until the next annual meetings of shareholders and directors or until their
successors are duly qualified and elected.
ARTICLE 4
TERMINATION OF THE AGREEMENT
----------------------------
At any time prior to the Effective Time, the parties to this Agreement
may terminate this Agreement as set forth in the Reorganization Agreement. In
the event of such termination, this Agreement shall become void and neither
Parent, Enterprise Parent nor Acquisition shall be held liable with respect to
such termination except as set forth in the Reorganization Agreement.
ARTICLE 5
MISCELLANEOUS
-------------
5.1 This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Florida.
5.2 This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which shall together
constitute one and the same Agreement.
(remainder of page intentionally left blank)
<PAGE> 115
- 4 -
IN WITNESS WHEREOF, the parties hereunto have caused this Agreement to
be executed as of the date first stated above by their duly authorized officers.
FLORIDA GULFCOAST BANCORP, INC.
By:_____________________________________
Its:____________________________________
FGBI ACQUISITION CORP.
By:_____________________________________
Its:____________________________________
PROVIDENT BANCORP, INC.
By:_____________________________________
Its:____________________________________
<PAGE> 116
ANNEX C
FLORIDA STATUTES
FLORIDA BUSINESS CORPORATION ACT
607.1301 DISSENTER'S RIGHTS; DEFINITIONS. -- The following definitions apply
to ss. 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value of the
shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which the shareholders'
vote authorizing the proposed action was taken, the date on which the
corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of a
merger pursuant to s. 607.1104, the day prior to the date on which a copy of the
plan of merger was mailed to each shareholder of record of the subsidiary
corporation.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT. --
(1) Any shareholder of a corporation has the right to dissent from, and obtain
payment of the fair value of his shares in the event of, any of the following
corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its
parent under s. 607.1104, and the shareholders would have been entitled to vote
on action taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation, other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange
pursuant to s. 607.1202, including a sale in dissolution but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to the
shareholders within 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation is a
party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely affect
such shareholder by:
1. Altering or abolishing any preemptive rights attached to any
of his shares;
2. Altering or abolishing the voting rights pertaining to any of
his shares, except as such rights may be affected by the voting rights of new
shares then being authorized of any existing or new class or series of shares;
3. Effecting an exchange, cancellation, or reclassification of any of
his shares, when such exchange, cancellation, or reclassification would alter or
abolish his voting rights or alter his percentage of equity in the corporation,
or effecting a reduction or cancellation of accrued dividends or other
arrearages in respect to such shares;
4. Reducing the stated redemption price of any of his redeemable
shares, altering or abolishing any provision relating to any sinking fund for
the redemption or purchase of any of his shares, or making any of his shares
subject to redemption when they are not otherwise redeemable;
<PAGE> 117
5. Making noncumulative, in whole or in part, dividends of any of his
preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of his preferred
shares; or
7. Reducing any stated preferential amount payable on any of his
preferred shares upon voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of incorporation
provide that a voting or nonvoting shareholder is entitled to dissent and obtain
payment for his shares.
(2) A shareholder dissenting from any amendment specified in paragraph (1)(e)
has the right to dissent only as to those of his shares which are adversely
affected by the amendment.
(3) A shareholder may dissent as to less than all the shares registered in his
name. In that event, his rights shall be determined as if the shares as to which
he has dissented and his other shares were registered in the names of different
shareholders.
(4) Unless the articles of incorporation otherwise provide, this section does
not apply with respect to a plan of merger or share exchange or a proposed sale
or exchange of property, to the holders of shares of any class or series which,
on the record date fixed to determine the shareholders entitled to vote at the
meeting of shareholders at which such action is to be acted upon or to consent
to any such action without a meeting, were either registered on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc., or held of record by not fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment for his shares under
this section may not challenge the corporate action creating his entitlement
unless the action is unlawful or fraudulent with respect to the shareholder or
the corporation.
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS. --
(1)(a) If a proposed corporate action creating dissenters' rights under s.
607.1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights and be accompanied by a copy of ss. 607.1301, 607.1302, and 607.1320. A
shareholder who wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written notice
of his intent to demand payment for his shares if the proposed action is
effectuated, and
2. Not vote his shares in favor of the proposed action. A proxy or vote
against the proposed action does not constitute such a notice of intent to
demand payment.
(b) If proposed corporate action creating dissenters' rights under s. 607.1302
is effectuated by written consent without a meeting, the corporation shall
deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each shareholder
simultaneously with any request for his written consent or, if such a request is
not made, within 10 days after the date the corporation received written
consents without a meeting from the requisite number of shareholders necessary
to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the corporation
shall give written notice of such authorization or consent or adoption of the
plan of merger, as the case may be, to each shareholder who filed a notice of
intent to demand payment for his shares pursuant to paragraph (1)(a) or, in the
case of action authorized by written consent, to each shareholder, excepting any
who voted for, or consented in writing to, the proposed action.
(3) Within 20 days after the giving of notice to him, any shareholder who elects
to dissent shall file with the corporation a notice of such election, stating
his name and address, the number, classes, and series of shares as to which he
dissents, and a demand for payment of the fair value of his shares. Any
shareholder failing to file such election to dissent within the period set forth
shall be bound by the terms of the proposed corporate action. Any shareholder
filing an election to dissent shall deposit his certificates for certificated
shares with the corporation simultaneously with the filing of the election to
dissent. The corporation may restrict the transfer of uncertificated shares from
the date the shareholder's election to dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice
of election may be withdrawn in
<PAGE> 118
writing by the shareholder at any time before an offer is made by the
corporation, as provided in subsection (5), to pay for his shares. After such
offer, no such notice of election may be withdrawn unless the corporation
consents thereto. However, the right of such shareholder to be paid the fair
value of his shares shall cease, and he shall be reinstated to have all his
rights as a shareholder as of the filing of his notice of election, including
any intervening preemptive rights and the right to payment of any intervening
dividend or other distribution or, if any such rights have expired or any such
dividend or distribution other than in cash has been completed, in lieu thereof,
at the election of the corporation, the fair value thereof in cash as determined
by the board as of the time of such expiration or completion, but without
prejudice otherwise to any corporate proceedings that may have been taken in the
interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a court
has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder is not
entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which shareholders may
file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value for
such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the dissenting
shareholder holds, as of the latest available date and not more than 12 months
prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month period
ended on the date of such balance sheet or, if the corporation was not in
existence throughout such 12-month period, for the portion thereof during which
it was in existence.
(6) If within 30 days after the making of such offer any shareholder accepts the
same, payment for his shares shall be made within 90 days after the making of
such offer or the consummation of the proposed action, whichever is later. Upon
payment of the agreed value, the dissenting shareholder shall cease to have any
interest in such shares.
(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their value of their shares, shall be made
parties to the proceeding as an action against their shares. The corporation
shall serve a copy of the initial pleading in such proceeding upon each
dissenting shareholder who is a resident of this state in the manner provided by
law for the service of a summons and complaint and upon each nonresident
dissenting shareholder either by registered or certified mail and publication or
in such other manner as is permitted by law. The jurisdiction of the court is
plenary and exclusive. All shareholders who are proper parties to the proceeding
are entitled to judgment against the corporation for the amount of the fair
value of their shares. The court may, if it so elects, appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers shall have such power and authority as is
specified in the order of their appointment or an amendment thereof. The
corporation shall pay each dissenting shareholder the amount found to be due him
within 10 days after the final determination of the proceedings. Upon payment of
the judgment, the dissenting shareholder shall cease to have any interest in
such shares.
<PAGE> 119
(8) The judgment may, at the discretion of the court, include a fair rate of
interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined by the
court and shall be assessed against the corporation, but all or any part of such
costs and expenses may be apportioned and assessed as the court deems equitable
against any or all of the dissenting shareholders who are parties to the
proceeding, to whom the corporation has made an offer to pay for the shares, if
the court finds that the action of such shareholders in failing to accept such
offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the corporation offered to pay therefore or if no offer was
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed value
thereof or pursuant to payment of the judgment entered therefor, as provided in
this section, may be held and disposed of by such corporation as authorized but
unissued shares of the corporation, except that, in the case of a merger, they
may be held and disposed of as the plan of merger otherwise provides. The shares
of the surviving corporation into which the shares of such dissenting
shareholders would have been converted had they assented to the merger shall
have the status of authorized but unissued shares of the surviving corporation.
<PAGE> 120
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Ohio Revised Code, Section 1701.13(E), allows indemnification by the
Registrant to any person made or threatened to be made a party to any
proceedings, other than a proceeding by or in the right of the Registrant, by
reason of the fact that he is or was a director, officer, employee or agent of
the Registrant, against expenses, including judgment and fines, if he acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the Registrant and, with respect to criminal actions, in which
he had no reasonable cause to believe that his conduct was unlawful. Similar
provisions apply to actions brought by or in the right of the Registrant, except
that no indemnification shall be made in such cases when the person shall have
been adjudged to be liable for negligence or misconduct to the Registrant unless
deemed otherwise by the court. Indemnification may be authorized by a majority
vote of a quorum of disinterested directors or upon the written opinion of
independent counsel or by the shareholders or by court order. The Registrant's
Code of Regulations extends such indemnification.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibit Number Description of Document
-------------- -----------------------
2.1 Agreement and Plan of Reorganization among Florida
Gulfcoast Bancorp, Inc., Provident Bancorp, Inc.
(now known as Provident Financial Group, Inc.) and
others (incorporated by reference to Annex A to
the accompanying Proxy Statement/Prospectus)
2.2 Agreement and Plan of Merger (incorporated by
reference to Annex A to the accompanying Proxy
Statement/Prospectus)
5 Opinion of Keating, Muething & Klekamp, PLL
23.1 Consent of Ernst & Young L.L.P., Independent
Accountants
23.2 Consent of Deloitte &Touche LLP, Independent
Accountants
23.3 Consent of Keating, Muething & Klekamp, PLL
(Contained in Exhibit 5)
*23.4 Consent of Sandler O'Neill & Partners, L.P.*
24 Powers of Attorney (contained on the signature
page)
99 Form of Proxy
*To be filed by amendment.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act, (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
Registration Statement for the most recent post-effective amendment thereof
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement, and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold in the termination of the
offering.
4. To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form,
within one business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
II - 1
<PAGE> 121
5. For purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's Annual Report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
6. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of Provident Financial Group, Inc. pursuant to the provisions described
under Item 20 above, or otherwise (other than insurance), Provident Financial
Group, Inc. has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Provident Financial Group,
Inc. of expenses incurred or paid by a director, officer or controlling person
of Provident Financial Group, Inc. in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the Securities being registered, Provident Financial Group, Inc.
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it, other than indemnification pursuant
to court order and not including any coverage under, or agreement to pay
premiums for, any policy of insurance, is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
II - 2
<PAGE> 122
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Provident
Financial Group, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-4 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Cincinnati, State of Ohio, as of the 30th day of
July, 1997.
PROVIDENT FINANCIAL GROUP, INC.
By: /s/Allen L. Davis
----------------------------
Allen L. Davis
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. The persons whose names are marked an
asterisk (*) below hereby designate John F. Farrenkopf or Mark E. Magee to sign
all amendments, including post effective amendments to this Registration
Statement as well as any related Registration Statement, or amendment thereto,
filed pursuant to Rule 462(b) promulgated under the Securities Act of 1933.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
*/s/Allen L. Davis President, Chief Executive Officer July 30, 1997
- ---------------------------- and Director (principal executive
Allen L. Davis officer)
*/s/John R. Farrenkopf Vice President and Chief Financial July 30, 1997
- ---------------------------- Officer (principal financial officer
John R. Farrenkopf and principal accounting officer)
*/s/Jack M. Cook Director July 30, 1997
- ----------------------------
Jack M. Cook
*/s/Thomas D. Grote Director July 30, 1997
- ----------------------------
Thomas D. Grote
*/s/Philip R. Myers Director July 30, 1997
- ----------------------------
Philip R. Myers
*/s/Joseph A. Pedoto Director July 30, 1997
- ----------------------------
Joseph A. Pedoto
*/s/Sidney A. Peerless Director July 30, 1997
- ----------------------------
Sidney A. Peerless
*/s/Joseph A. Steger Director July 30, 1997
- ----------------------------
Joseph A. Steger
</TABLE>
II - 3
<PAGE> 1
EXHIBIT 5
[Keating, Muething & Klekamp, P.L.L. Letterhead]
FACSIMILE (513) 579-8956
July 30, 1997
Direct Dial: (513) 579-6411
E-Mail: [email protected]
Provident Financial Group
One East Fourth Street
Cincinnati, Ohio 45202
Gentlemen:
We have examined the corporate records and proceedings of Provident
Financial Group, Inc. (the "Corporation") as well as the Agreement and Plan of
Reorganization (the "Reorganization Agreement") dated as of May 21, 1997 among
Florida Gulfcoast Bancorp, Inc., a Florida corporation, Enterprise National
Bank, FGBI Acquisition Corp. and the Corporation, and the related Agreement and
Plan of Merger with respect to:
1. The organization of the Corporation; and
2. the legal sufficiency of all corporate proceedings taken in connection
with the authorization of the issuance of up to $34,923,000 in market value of
Common Stock measured and determined in accordance with the Reorganization
Agreement and registered pursuant to a Registration Statement on Form S-4 filed
with the Securities and Exchange Commission.
Based upon such examination, we are of the opinion:
1. That the Corporation is a duly organized and validly existing
corporation in good standing under the laws of the State of Ohio; and
2. That the Corporation has taken all necessary and required corporate
action in connection with the proposed issuance of the aforesaid Common Stock,
and that at and after the effective time, as defined in the Reorganization
Agreement, and upon issuance as contemplated by the Reorganization Agreement,
such Common Stock will be duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock of the Corporation free of any claim of
preemptive rights.
We hereby consent to be named in the Registration Statement and the
Prospectus part thereof as the attorneys who will pass upon legal matters in
connection with the aforesaid Common Stock and to the filing of this opinion as
an exhibit to the Registration Statement, and furthermore consent to all
reference made to this firm in the Registration Statement.
Very truly yours,
KEATING, MUETHING & KLEKAMP, P.L.L.
BY: /s/ GARY P. KREIDER
---------------------------
Gary P. Kreider
jmm
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Provident Financial
Group, Inc. for the registration of shares of its common stock and to the
incorporation by reference therein of our report dated January 13, 1997, with
respect to the consolidated financial statements of Provident Bancorp, Inc. (now
known as Provident Financial Group, Inc.) included in its Annual Report (Form
10-K) for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
- --------------------------
ERNST & YOUNG LLP
July 28, 1997
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in this Registration Statement of Provident Financial
Group, Inc. on Form S-4 of our report on Florida Gulfcoast Bancorp, Inc. dated
February 19, 1997, appearing in the Prospectus, which is part of this
Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte and Touche LLP
- ---------------------------
DELOITTE AND TOUCHE LLP
Tampa, Florida
July 30, 1997
<PAGE> 1
EXHIBIT 99
FLORIDA GULFCOAST BANCORP, INC.
PROXY - Special Meeting of Stockholders - September 4, 1997
The undersigned hereby appoint(s) William A. Dooley and Steven H. Judd,
or any one of them, with full power of substitution, to represent the
undersigned and to vote all shares of the undersigned at the Special Meeting of
Florida Gulfcoast Bancorp, Inc. to be held at 5:30 p.m. Eastern Daylight Time,
on Thursday, September 4, 1997, at 1549 Ringling Boulevard, Sarasota, Florida
34236, and any adjournment thereof.
To approve an Agreement and Plan of Reorganization and Plan
of Merger and Merger Agreement dated as of May 21, 1997 whereby Florida
Gulfcoast Bancorp, Inc. would be merged with a subsidiary of Provident Financial
Group, Inc. and all shares of Common Stock of Florida Gulfcoast Bancorp, Inc.
would be converted into Common Stock of Provident Financial Group, Inc.
|_| For |_| Against |_| Abstain
Any other business which may properly come before the meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NONE OF THE
CHOICES SPECIFIED IN THE PROPOSAL IS MARKED, THE PROXY IS AUTHORIZED AND
DIRECTED TO VOTE FOR THE PROPOSAL.
Dated:
----------- ----------------------------- ---------------------------
(Signature of Stockholder) (Signature of Stockholder)
Please sign exactly as name appears hereon. If shares are held jointly, all
holders must sign. When signing as attorney, executor, administrator, trustee or
other official position or representative capacity, please give your title as
such.
New Address
------------------
(Place Mailing Label Here) -----------------------------
