<PAGE>
RULE NO. 424(b)(2)
REGISTRATION NO. 333-80231
PROSPECTUS SUPPLEMENT
(To prospectus dated June 9, 1999)
$125,000,000
PROVIDENT CAPITAL TRUST II
SKIS SM*
8 3/4% Subordinated Capital Income Securities
fully and unconditionally guaranteed by
PROVIDENT FINANCIAL GROUP, INC.
Maturity Date:June 30, 2029. Listing: Application has been made to
have the capital securities
listed on the New York Stock
Exchange.
Distributions: Quarterly, beginning
September 30, 1999.
Payable: Distributions may be Issuer: Provident Capital Trust II,
postponed for up to five which is issuing the capital
years but not past the securities, will have no assets
maturity date. other than junior subordinated
debentures issued by Provident
Financial Group, Inc. These
debentures will have
essentially the same terms as
the capital securities. As a
result, Provident Capital Trust
II can only make payments on
the capital securities if
Provident Financial Group, Inc.
first makes payments on the
junior subordinated debentures.
Subordination: The capital
securities are
effectively
subordinated to all
existing and future
senior debt of
Provident Financial
Group, Inc. and all
liabilities of its
subsidiaries.
Investing in the capital securities involves risks. Risk Factors begin on page
S-6.
These securities are not deposits or other obligations of a bank. They are not
insured by the FDIC or any other government agency.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
---------------
<TABLE>
<CAPTION>
Per Capital
Security Total
----------- -----
<S> <C> <C>
Public offering price.................................. $25 $125,000,000
Proceeds to Provident Capital Trust II................. $25 $125,000,000
</TABLE>
Provident Financial Group, Inc. will pay underwriting commissions of $0.7875
per capital security, which total $3,937,500.
Any accrued distributions on the capital securities from June 28, 1999 should
be added to the public offering price.
Lehman Brothers expects the capital securities to be ready for delivery in
book-entry form only through The Depository Trust Company on or about June 28,
1999.
---------------
(Joint book-running managers)
Lehman Brothers
Prudential Securities
Salomon Smith Barney
(Co-managers)
Paine Webber Incorporated
J.P. Morgan & Co.
June 23, 1999
* "SKIS" is a service mark of Lehman Brothers Inc.
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
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Page
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Summary Information Q&A.................................................. S-3
Risk Factors............................................................. S-6
Forward-Looking Statements............................................... S-8
Provident Financial Group, Inc. ......................................... S-9
Provident Capital Trust II............................................... S-9
Use of Proceeds.......................................................... S-10
Accounting Treatment..................................................... S-10
Regulatory Treatment..................................................... S-11
Capitalization........................................................... S-11
Selected Consolidated Financial Data..................................... S-12
Certain Terms of The Capital Securities.................................. S-13
Certain Terms of The Junior Subordinated Debentures...................... S-19
Relationship Among The Capital Securities, The Junior Subordinated
Debentures And The Guarantee............................................ S-22
United States Federal Income Tax Consequences............................ S-24
ERISA Considerations..................................................... S-28
Underwriting............................................................. S-31
</TABLE>
Prospectus
<TABLE>
<CAPTION>
Page
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<S> <C>
About This Prospectus.................................................... 1
Where You Can Find More Information About Provident Financial Group,
Inc. ................................................................... 2
Summary.................................................................. 3
Provident Financial Group, Inc. ......................................... 4
The Trusts............................................................... 4
Use of Proceeds.......................................................... 5
Ratio of Earnings to Fixed Charges And Ratio of Earnings to Combined
Fixed Charges And Preferred Stock Dividends............................. 6
Description of The Preferred Securities.................................. 7
Description of The Guarantees............................................ 14
Description of The Junior Subordinated Debentures........................ 17
Book-Entry Issuance...................................................... 26
ERISA Matters............................................................ 29
Plan of Distribution..................................................... 29
Legal Opinions........................................................... 30
Experts.................................................................. 30
</TABLE>
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Summary Information Q&A
This summary highlights selected information from this prospectus supplement
and the accompanying prospectus to help you understand the capital securities.
It may not contain all the information that is important to you. You should
carefully read this entire prospectus supplement and the accompanying
prospectus to understand fully the terms of the capital securities and the
related guarantees and junior subordinated debentures, as well as the tax and
other considerations that are important to you in making a decision about
whether to invest in the capital securities. You should pay special attention
to the "Risk Factors" section of this prospectus supplement to determine
whether an investment in the capital securities is appropriate for you.
What is Provident Financial Group, Inc.?
We are a Cincinnati-based commercial banking and financial services company
organized under the laws of the State of Ohio. We have full service banking
operations in Ohio, northern Kentucky and southwestern Florida.
At March 31, 1999, we had total assets of $8.6 billion, loans and leases of
$5.9 billion, deposits of $5.6 billion and shareholders' equity of $712
million. We also service an additional $3.6 billion of loans and leases.
What is Provident Capital Trust II?
Provident Capital Trust II is a Delaware business trust. It was created by
us for the sole purpose of issuing the 8 3/4% subordinated capital income
securities and engaging in the other transactions described below.
There will be five trustees of Provident Capital Trust II. The three regular
trustees are our officers. The Chase Manhattan Bank will act as the property
trustee of Provident Capital Trust II, and Chase Manhattan Bank Delaware will
act as the Delaware trustee of Provident Capital Trust II.
What are the 8 3/4%subordinated capital income securities?
Each capital security will represent an undivided beneficial ownership
interest in the assets of Provident Capital Trust II. Each capital security
will entitle the holders to receive quarterly cash distributions as described
below.
What are Provident Capital Trust II's assets?
Provident Capital Trust II will sell its capital securities to the public
and its common securities to us. Provident Capital Trust II will use the
proceeds from these sales to buy a corresponding principal amount of 8 3/4%
junior subordinated debentures due 2029 from us. We will pay interest on the
junior subordinated debentures at the same rate and at the same times as
Provident Capital Trust II makes payments on the capital securities. Provident
Capital Trust II will use the payments it receives on the junior subordinated
debentures to make the corresponding payments on the capital securities. We
will guarantee payments made on the capital securities to the extent described
below. Both the junior subordinated debentures and the guarantee will be
subordinated to our and our subsidiaries' existing and future creditors.
When will you receive quarterly distributions and how much will you be paid?
If you purchase the capital securities, you will be entitled to receive
cumulative cash distributions at an annual rate of 8 3/4%. Distributions will
accrue from June 28, 1999, and will be paid quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, beginning September 30,
1999, unless they are deferred as described below.
When can payment of your distributions be deferred?
We can, on one or more occasions, defer the quarterly interest payments on
the junior subordinated debentures for up to twenty consecutive quarterly
periods. In other words, we may declare at our discretion up to a five year
interest payment moratorium on the junior subordinated debentures and may
choose to do that on more than one occasion. A deferral of interest payments
cannot extend, however, beyond the maturity date of the junior subordinated
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debentures, nor can we begin a new interest deferral period until we have paid
all accrued interest on the junior subordinated debentures from the previous
interest deferral period.
If we defer interest payments on the junior subordinated debentures,
Provident Capital Trust II will also defer distributions on the capital
securities. Any deferred distributions will accumulate additional amounts at an
annual rate of 8 3/4%, compounded quarterly. Once we pay all deferred interest
payments on the junior subordinated debentures, with accrued interest, we can
again postpone interest payments on the junior subordinated debentures as
described above.
During any period in which we defer interest payments on the junior
subordinated debentures, we will not and our subsidiaries will not do any of
the following, with certain limited exceptions:
. pay a dividend or make any other payment or distribution on our capital
stock;
. redeem, purchase or make a liquidation payment on any of our capital
stock;
. make an interest, principal or premium payment on, or repay, repurchase
or redeem, any of our debt securities that rank equally with or junior to
the junior subordinated debentures; or
. make any guarantee payment regarding debt securities of any of our
subsidiaries, if the guarantee ranks equally with or junior to the junior
subordinated debentures.
If we defer payments of interest on the junior subordinated debentures, the
junior subordinated debentures will at that time be treated as being issued
with original issue discount for United States federal income tax purposes.
This means you would be required to accrue interest income in an amount equal
to the deferred distributions on your capital securities, even though you will
not be receiving any cash distributions on your capital securities, and include
these amounts in your gross income for United States federal income tax
purposes. For more information, see below under the caption "United States
Federal Income Tax Consequences" in this prospectus supplement.
When can Provident Capital Trust II redeem the capital securities?
Provident Capital Trust II will redeem all of the outstanding capital
securities when the junior subordinated debentures are repaid at maturity. The
junior subordinated debentures are scheduled to mature on June 30, 2029,
although we have the right in certain circumstances to shorten the maturity
date to not earlier than June 30, 2014. In addition, if we redeem any junior
subordinated debentures before their maturity, Provident Capital Trust II will
use the cash it receives on the redemption of the junior subordinated
debentures to redeem, on a proportionate basis, the capital securities and the
common securities.
We can redeem the junior subordinated debentures before their maturity at
100% of their principal amount plus accrued and unpaid interest:
. in whole or in part on one or more occasions any time on or after June
30, 2004; and
. in whole at any time, if certain changes occur in tax or investment
company laws and regulations or in the treatment of the capital
securities for bank regulatory purposes. These circumstances are more
fully described below under the caption "Certain Terms of the Capital
Securities--Redemption" in this prospectus supplement.
We will not redeem the junior subordinated debentures unless we obtain the
prior approval of the Board of Governors of the Federal Reserve System to do
so, if then required under the Federal Reserve Board's capital rules.
How are the capital securities guaranteed?
We will fully and unconditionally guarantee the payments of all amounts due
on the capital securities to the extent Provident Capital Trust II has funds
available for payment of such distributions.
We also are obligated to pay most of the expenses and obligations of
Provident Capital
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Trust II (other than Provident Capital Trust II's obligations to make payments
on the capital securities and common securities, which are covered only by the
guarantee).
The guarantee does not cover payments when Provident Capital Trust II does
not have sufficient funds to make payments on the capital securities. In other
words, if we do not make a payment on the junior subordinated debentures,
Provident Capital Trust II will not have sufficient funds to make payments on
the capital securities, and the guarantee will not obligate us to make those
payments on Provident Capital Trust II's behalf. In addition, our obligations
under the guarantee are subordinate to our obligations to other creditors to
the same extent as the junior subordinated debentures.
When could the junior subordinated debentures be distributed to you?
We can dissolve Provident Capital Trust II at any time, subject to
obtaining:
. the prior approval of the Federal Reserve Board to do so, if then
required under the Federal Reserve Board's capital rules; and
. an opinion of independent counsel stating that the distribution of the
junior subordinated debentures will not be taxable to you.
If we dissolve Provident Capital Trust II, or if Provident Capital Trust II
dissolves because of certain other specified events (such as our bankruptcy),
Provident Capital Trust II will distribute the junior subordinated debentures
to holders of the capital securities and the common securities on a
proportionate basis.
Upon any dissolution, winding-up or liquidation of Provident Capital Trust
II involving the liquidation of the junior subordinated debentures, the holders
of the capital securities will be entitled to receive, out of assets held by
Provident Capital Trust II, subject to the rights of any creditors of Provident
Capital Trust II, the liquidation distribution in cash. Provident Capital Trust
II will be able to make this distribution of cash only if we redeem the junior
subordinated debentures.
Can the junior subordinated debentures' maturity be shortened?
If a change in tax law occurs that would permit us to redeem the junior
subordinated debentures, we will have the right to shorten the maturity of the
junior subordinated debentures provided that we receive the prior approval of
the Federal Reserve Board, if then required under the Federal Reserve Board's
capital rules. We may only shorten the maturity enough so that interest paid on
the junior subordinated debentures will continue to be tax deductible. The
shortened term of the junior subordinated debentures may not, however, be less
than 15 years from the date of their original issuance.
Will the capital securities be listed on a stock exchange?
We expect that the capital securities will be approved for listing on the
New York Stock Exchange. If listed, trading is expected to commence within 30
days after the capital securities are first issued. You should be aware that
the listing of the capital securities will not necessarily ensure that an
active trading market will be available for the capital securities or that you
will be able to sell your capital securities at the price you originally paid
for them.
If Provident Capital Trust II distributes the junior subordinated
debentures, we will use our best efforts to list them on the New York Stock
Exchange or wherever the capital securities are then listed.
In what form will the capital securities be issued?
The capital securities will be represented by one or more global securities
that will be deposited with and registered in the name of The Depository Trust
Company, New York, New York. This means that you will not receive a certificate
for your capital securities and the capital securities will not be registered
in your name. For more details, see the information under the caption "Book-
Entry Issuance" in the accompanying prospectus.
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RISK FACTORS
Before purchasing any capital securities, you should read carefully this
prospectus supplement and the accompanying prospectus and pay special attention
to the following risk factors.
Because Provident Capital Trust II will rely on the payments it receives on
the junior subordinated debentures to fund all payments on the capital
securities, and because Provident Capital Trust II may distribute the junior
subordinated debentures in exchange for the capital securities, you are making
an investment regarding the junior subordinated debentures as well as the
capital securities. You should carefully review the information in this
prospectus supplement and the accompanying prospectus about the capital
securities, the guarantee and the junior subordinated debentures.
Holders of Our Senior Indebtedness Will Get Paid Before You Will Get Paid Under
the Guarantee
Our obligations to you under the junior subordinated debentures and the
guarantee will be junior in right of payment to all of our existing and future
senior debt. This means that we cannot make any payments to you on the junior
subordinated debentures or the guarantee if we are in default on any of our
senior debt. Therefore, in the event of our bankruptcy, liquidation or
dissolution, our assets must be used to pay off our senior obligations in full
before any payments may be made on the junior subordinated debentures or the
guarantee.
As of March 31, 1999, we had outstanding senior debt of approximately $227.2
million. Moreover, the indenture pursuant to which the junior subordinated
debentures will be issued, the guarantee and the declaration of trust which
created Provident Capital Trust II do not limit our ability to incur additional
senior debt.
For more information, see below under the captions "Description of the
Junior Subordinated Debentures--Ranking" and "Description of the Guarantees--
Ranking" in the accompanying prospectus.
Our Results of Operations Depend Upon the Results of Operations of Our
Subsidiaries
We are a holding company which conducts substantially all of our operations
through our bank and other subsidiaries. As a result, our ability to make
payments on the junior subordinated debentures and the guarantee will depend
primarily upon the receipt of dividends and other distributions from our
subsidiaries.
There are various regulatory restrictions on the ability of our banking
subsidiaries, including our principal subsidiary, to pay dividends or make
other payments to us. At March 31, 1999, our banking subsidiaries could pay a
total of approximately $210.8 million in dividends to us without prior
regulatory approval.
In addition, our right to participate in any distribution of assets of any
of our subsidiaries, including our principal subsidiary, upon the subsidiary's
liquidation or otherwise, and thus your ability as a holder of the capital
securities to benefit indirectly from such distribution, will be subject to the
prior claims of creditors of that subsidiary, except to the extent that any of
our claims as a creditor of such subsidiary may be recognized. As a result, the
capital securities will effectively be subordinated to all existing and future
liabilities and obligations of our subsidiaries. Therefore, holders of the
capital securities should look only to our assets for payments on the capital
securities. Further, the junior subordinated debentures and the guarantee also
will be effectively subordinated to all existing and future obligations of our
subsidiaries.
At March 31, 1999, our subsidiaries had outstanding debt and other
liabilities, including deposits, of approximately $7.6 billion.
If We Do Not Make Payments on the Junior Subordinated Debentures, Provident
Capital Trust II Will Not Be Able to Pay Distributions and Other Payments on
the Capital Securities and the Guarantee Will Not Apply
Provident Capital Trust II's ability to make timely distribution and
redemption payments on the capital securities is completely dependent upon
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our making timely payments on the junior subordinated debentures. If we default
on the junior subordinated debentures, Provident Capital Trust II will lack
funds for the payments on the capital securities. If this happens, holders of
capital securities will not be able to rely upon the guarantee for payment of
such amounts because the guarantee only guarantees that we will make
distribution and redemption payments on the capital securities if Provident
Capital Trust II has the funds to do so itself but does not.
Instead, you or the property trustee may proceed directly against us for
payment of any amounts due on the capital securities of such holder.
For more information, see below under the caption "Certain Terms of the
Capital Securities--Trust Enforcement Events" in this prospectus supplement.
Distributions on the Capital Securities Could Be Deferred; You May Have to
Include Interest in Your Taxable Income Before You Receive Cash
As long as the junior subordinated debentures are not in default, we can, on
one or more occasions, defer interest payments on the junior subordinated
debentures for up to twenty consecutive quarters, but not beyond the maturity
date of the junior subordinated debentures. Because interest payments on the
junior subordinated debentures fund the distributions on the capital
securities, each such deferral would result in a corresponding deferral of
distributions on the capital securities.
We do not intend to defer interest payments on the junior subordinated
debentures. However, if we do so in the future, the capital securities may
trade at a price that does not reflect fully the value of the accrued but
unpaid distributions. Even if we do not do so, our right to defer interest
payments on the junior subordinated debentures could mean that the market price
for the capital securities may be more volatile than that of other securities
without interest deferral rights.
If we defer interest payments on the junior subordinated debentures, you
will be required to accrue interest income for United States federal income tax
purposes in respect of your proportionate share of the accrued but unpaid
interest on the junior subordinated debentures held by Provident Capital Trust
II, even if you normally report income when received. As a result, you will be
required to include the accrued interest in your gross income for United States
federal income tax purposes prior to your receiving any cash distribution. If
you sell your capital securities prior to the record date for the first
distribution after a deferral period, you will never receive the cash from us
related to the accrued interest that you reported for tax purposes.
For more information regarding the tax consequences of purchasing the
capital securities, see below under the caption "United States Federal Income
Tax Consequences--Interest Income and Original Issue Discount" and "--Sales of
Capital Securities or Redemption of Junior Subordinated Debentures" in this
prospectus supplement.
The Capital Securities May Be Redeemed Prior to Maturity; You May Be Taxed on
the Proceeds and You May Not Be Able to Reinvest the Proceeds at the Same or a
Higher Rate of Return
Generally, the junior subordinated debentures (and therefore the capital
securities) may not be redeemed prior to June 30, 2004. However, if certain
special events occur relating to changes in tax law, the Investment Company Act
of 1940 or the treatment of the capital securities for bank regulatory capital
purposes, then we will be able, subject to receipt of any necessary Federal
Reserve Board approval, to redeem all of the junior subordinated debentures at
a price equal to 100% of their principal amount plus any accrued and unpaid
interest. If such a redemption happens, Provident Capital Trust II must use the
redemption price it receives to redeem all of the capital securities.
Under current United States federal income tax law, the redemption of the
capital securities would be a taxable event to you.
In addition, you may not be able to reinvest the money that you receive in
the redemption at a
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rate that is equal to or higher than the rate of return on the capital
securities.
We Generally Will Control Provident Capital Trust II Because Your Voting Rights
Are Very Limited; Your Interests May Not Be the Same As Ours
You will only have limited voting rights. In particular, you may not elect
and remove any trustees, except when there is a default under the junior
subordinated debentures. If such a default occurs, a majority in liquidation
amount of the holders of the capital securities would be entitled to remove or
appoint the property trustee and the Delaware trustee.
For more information, see below under the caption "Provident Capital Trust
II" in this prospectus supplement.
Federal Banking Authorities May Restrict the Ability of Provident Capital Trust
II to Make Distributions on or Redeem the Capital Securities
Federal banking authorities will have the right to examine Provident Capital
Trust II and its activities because Provident Capital Trust II is our
subsidiary. Under certain circumstances, including any determination that our
relationship to Provident Capital Trust II would result in an unsafe and
unsound banking practice, these banking authorities have the authority to issue
orders which could restrict the ability of Provident Capital Trust II to make
distributions on or to redeem the capital securities.
An Active Trading Market For the Capital Securities May Not Develop
We expect that the capital securities will be approved for listing on the
New York Stock Exchange within 30 days after issuance. However, the listing of
the capital securities on an exchange does not guarantee that an active market
will be available for the capital securities or that you will be able to sell
your capital securities at the price you originally paid for them.
If the capital securities are not approved for listing on the New York Stock
Exchange, the underwriters have indicated that they expect to continue market-
making activities in the capital securities. They are not obligated to do so,
however, and could discontinue those activities at any time.
FORWARD-LOOKING STATEMENTS
This prospectus supplement, the accompanying prospectus and the information
incorporated by reference in them include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements relate to expectations
concerning matters that are not historical facts. Some of the forward-looking
statements can be identified by the use of forward-looking words such as
"believes", "expects", "may", "will", "should", "seeks", "approximately",
"intends", "plans", "estimates", "anticipates" or the negative version of those
words or other comparable terminology. Forward-looking statements involve
inherent risks and uncertainties. A number of important factors could cause our
actual results to differ materially from those in the forward-looking
statements. Some factors include fluctuations in interest rates, inflation,
government regulations, and economic conditions and competition in the
geographic and business areas in which we conduct our operations. For a
discussion of factors that could cause actual results to differ, see the
information contained in our publicly available filings with the SEC. These
filings are described under the caption "Where You Can Find More Information
About Provident Financial Group, Inc." in the accompanying prospectus.
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PROVIDENT FINANCIAL GROUP, INC.
PROVIDENT CAPITAL TRUST II
Our Plan for Expansion
Internal Growth and Acquisitions
We expanded our franchise in recent years through internal growth and
acquisitions. Business lines that we expanded to operate at a national level
include Provident Capital Corp. (a middle-market structured finance products
division), Provident Commercial Group and Information Leasing Corporation
(commercial leasing divisions) and Provident Consumer Financial Services (a
mortgage loan division).
Banking Services Expansion
We currently conduct our banking operations through The Provident Bank (in
Ohio) and Provident Bank of Florida.
We expanded our banking services through the acquisition of Florida
Gulfcoast Bancorp, Inc. located in Sarasota, Florida and South Hillsborough
Community Bank located in Hillsborough County, Florida. Further, the Provident
Bank of Kentucky merged into The Provident Bank on March 23, 1998.
Contact Information
Our executive offices are located at One East Fourth Street, Cincinnati,
Ohio 45202 and our Investors Relations telephone number is (513) 345-7102 or
800-851-9521.
Purpose and Ownership of Provident Capital Trust II
Provident Capital Trust II is a business trust recently organized under
Delaware law by the trustees and us. Provident Capital Trust II is being
established solely for the following purposes:
. to issue and sell the capital securities, which represent undivided
beneficial ownership interests in Provident Capital Trust II's assets;
. to issue and sell the common securities to us in a total liquidation
amount equal to 3% of Provident Capital Trust II's total capital;
. to use the proceeds from the sale of the common securities and the
capital securities to acquire the junior subordinated debentures from us;
and
. to engage in other activities that are directly related to the activities
described above, such as registering the transfer of the capital
securities.
Because Provident Capital Trust II is being established only for the
purposes listed above, the junior subordinated debentures will be Provident
Capital Trust II's sole assets. Payments on the junior subordinated debentures
will be Provident Capital Trust II's sole source of income.
As issuer of the junior subordinated debentures, we will pay:
. all fees, expenses and taxes related to Provident Capital Trust II and
the offering of the capital securities; and
. all ongoing costs, expenses and liabilities of Provident Capital Trust
II, except obligations to make distributions and other payments on the
common securities and the capital securities.
For so long as the capital securities remain outstanding, we will:
. own, directly or indirectly, all of the common securities;
. cause Provident Capital Trust II to remain a business trust and not to
voluntarily dissolve, wind-up, liquidate or be terminated, except as
permitted by the declaration of trust by which Provident Capital Trust II
was created;
. use our commercially reasonable efforts to ensure that Provident Capital
Trust II will not be an "investment company" for purposes of the
Investment Company Act of 1940; and
. take no action that would be reasonably likely to cause Provident Capital
Trust II to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.
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USE OF PROCEEDS
ACCOUNTING TREATMENT
The Trustees
The business and affairs of Provident Capital Trust II will be conducted by
its five trustees. The three regular trustees will be individuals who are our
employees. The fourth trustee, The Chase Manhattan Bank, as property trustee,
will hold title to the junior subordinated debentures for the benefit of the
holders of the capital securities and will have the power to exercise all the
rights and powers of a registered holder of the junior subordinated debentures.
The fifth trustee, Chase Manhattan Bank Delaware, as Delaware trustee,
maintains its principal place of business in Delaware and meets the
requirements of Delaware law for Delaware business trusts. In addition, The
Chase Manhattan Bank, as guarantee trustee, will hold the guarantee for the
benefit of the holders of the capital securities.
We have the sole right to appoint, remove and replace the trustees of
Provident Capital Trust II, unless an event of default occurs with respect to
the junior subordinated debentures. In that case, the holders of a majority in
liquidation amount of the capital securities will have the right to remove and
appoint the property trustee and the Delaware trustee.
Additional Information
For additional information concerning Provident Capital Trust II, see below
under the caption "Provident Capital Trust II" in the accompanying prospectus.
We anticipate that Provident Capital Trust II will not be required to file any
reports with the SEC after the issuance of the capital securities. As discussed
below under the caption "Accounting Treatment" in this prospectus supplement,
we will provide certain information concerning Provident Capital Trust II and
the capital securities in the financial statements included in our own periodic
reports to the SEC.
Office of Provident Capital Trust II
The executive office of Provident Capital Trust II is c/o Provident
Financial Group, Inc., One East Fourth Street, Cincinnati, Ohio 45202,
Attention: General Counsel, and its telephone number is (513) 579-2861.
The Trust will invest all the proceeds from the sale of the capital
securities in the junior subordinated debentures.
We expect to use the proceeds from the sale of the junior subordinated
debentures for general corporate purposes, which may include the repayment of
debt, investments in or extensions of credit to its subsidiaries and the
financing of possible acquisitions. We currently have no agreements,
arrangements or understandings regarding possible material acquisitions.
Pending such use, the net proceeds may be temporarily invested in short-term
obligations. The precise amounts and timing of the application of the proceeds
will depend upon our funding requirements and the availability of other funds.
For financial reporting purposes, Provident Capital Trust II will be treated
as our subsidiary, and its accounts will be included in our consolidated
financial statements.
In our future financial reports, we will:
. present the junior subordinated debentures as part of a separate line
item on our consolidated balance sheets, as a component of long-term
debt;
. record distributions payable on the capital securities as an expense; and
. include a footnote in our consolidated financial statements stating that
the sole assets of Provident Capital Trust II are junior subordinated
debentures issued by us and providing information about the capital
securities, the junior subordinated debentures and the guarantee.
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REGULATORY TREATMENT
We are required by the Federal Reserve Board to maintain certain levels of
capital for bank regulatory purposes. We expect that the capital securities
will be treated as Tier 1 capital for these purposes.
CAPITALIZATION
We provide in the table below our to give effect to the issuance of
and our subsidiaries' audited the capital securities.
historical consolidated capitalization
at March 31, 1999 and as adjusted
<TABLE>
<CAPTION>
At March 31, 1999
----------------------
As
Actual Adjusted
---------- ----------
(dollars in
thousands)
<S> <C> <C>
Long-Term Debt:........................................ $ 805,440 $ 805,440
---------- ----------
Guaranteed Preferred Beneficial Interests in
Provident's Junior Subordinated Debentures(a):........ $ 98,894 $ 219,957
---------- ----------
Shareholders' Equity:
Preferred Stock(b)................................... $ 7,000 $ 7,000
Common Stock(c)...................................... 12,817 12,817
Capital Surplus...................................... 225,702 225,702
Retained Earnings.................................... 514,001 514,001
Treasury Stock(d).................................... (30,070) (30,070)
Accumulated Other Comprehensive Income(e)............ (16,978) (16,978)
---------- ----------
Total Shareholders' Equity......................... 712,472 712,472
---------- ----------
Total Capitalization............................. $1,616,806 $1,737,869
========== ==========
</TABLE>
- --------
(a) Shown net of discount.
(b) Preferred Stock, 5,000,000 shares authorized, Series "D", 70,272 issued.
(c) Common Stock, no par value, 110,000,000 shares authorized, 43,383,979
issued.
(d) 801,800 shares.
(e) Consists entirely of unrealized loss on marketable securities (net of
deferred income taxes).
S-11
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
We provide in the table below our the consolidated financial statements
selected consolidated financial data. that are incorporated by reference in
You should read the data below with the accompanying prospectus under the
the more detailed information, caption "Where You Can Find More
consolidated financial statements and Information About Provident".
the notes to
<TABLE>
<CAPTION>
Three Months Ended
March 31, Year Ended December 31,
---------------------- ----------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---------- ---------- ---------- ---------- ---------- ----------
(Dollars in Thousands Except Per Share Amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Total Interest Income... $ 157,475 $ 147,186 $ 633,760 $ 571,812 $ 520,325 $ 462,396 $ 345,829
Total Interest Expense.. (84,711) (80,510) (347,067) (309,212) (280,257) (259,747) (163,871)
Net Interest Income..... 72,764 66,676 286,693 262,600 240,068 202,649 181,958
Provision for Loan and
Lease Losses........... (12,900) (5,000) (31,200) (44,750) (47,000) (14,000) (12,000)
Noninterest Income...... 64,567 49,705 222,987 172,658 101,437 61,837 38,468
Noninterest Expense..... (72,297) (64,631) (302,406) (225,978) (175,162) (143,320) (120,889)
Income Before Income
Taxes.................. 52,134 46,750 176,074 164,530 119,343 107,166 87,537
Applicable Income
Taxes.................. (18,379) (16,090) (61,122) (57,093) (41,198) (35,306) (29,871)
Net Income(a)........... $ 33,755 $ 30,660 $ 114,952 $ 107,437 $ 78,145 $ 71,860 $ 57,666
---------- ---------- ---------- ---------- ---------- ---------- ----------
Per Common Share Data:
Basic Earnings(a)....... $ 0.79 $ 0.71 $ 2.66 $ 2.59 $ 1.96 $ 1.98 $ 1.56
Diluted Earnings(a)..... 0.76 0.68 2.56 2.45 1.87 1.75 1.40
Dividends Paid.......... 0.22 0.20 0.80 0.72 0.54 0.47 0.42
Book Value.............. 16.57 15.26 16.29 14.69 12.54 10.78 9.16
Balances at Period End:
Total Investment
Securities............. $1,723,954 $1,631,035 $1,514,153 $1,381,707 $1,028,207 $ 959,904 $ 685,920
Total Loans and Leases.. 5,937,622 5,265,159 5,623,505 5,051,842 5,311,448 4,896,076 4,204,538
Total Managed Loans and
Leases................. 9,585,804 7,255,920 8,843,543 6,584,528 5,568,709 4,896,076 4,204,538
Reserve for Loan and
Lease Losses........... 80,142 72,837 75,907 71,980 66,693 60,235 51,979
Total Assets............ 8,633,224 7,683,595 8,134,987 7,106,859 6,824,388 6,205,351 5,411,491
Noninterest Bearing
Deposits............... 680,737 595,321 669,840 605,166 554,262 523,631 452,458
Interest Bearing
Deposits............... 4,940,588 4,357,983 4,657,481 4,091,132 4,042,218 3,654,920 3,616,191
Total Deposits.......... 5,621,325 4,953,304 5,327,321 4,696,298 4,596,480 4,178,551 4,068,649
Long-Term Liabilities... 904,334 776,330 1,033,173 786,974 949,913 820,083 383,433
Total Shareholders'
Equity................. 712,472 661,701 703,854 626,341 513,750 432,537 359,351
Other Statistical
Information:
Return on Average
Assets(a).............. 1.55% 1.67% 1.45% 1.56% 1.23% 1.29% 1.24%
Return on Average
Equity(a).............. 18.62% 19.06% 16.61% 19.13% 17.03% 18.37% 16.64%
Dividend Payout Ratio... 28.16% 28.56% 30.72% 28.15% 28.12% 26.17% 30.62%
Capital Ratios at Period
End:
Total Equity to Total
Assets................. 8.25% 8.61% 8.65% 8.81% 7.53% 6.97% 6.64%
Tier 1 Leverage Ratio... 9.14% 10.01% 9.00% 9.94% 8.97% 7.13% 7.21%
Tier 1 Capital to Risk-
Weighted Assets........ 8.59% 9.74% 8.55% 9.67% 9.19% 7.52% 7.86%
Tier 2 Capital to Risk-
Weighted Assets........ 2.22% 3.29% 2.60% 3.44% 3.81% 4.25% 4.99%
Total Risk-Based Capital
to Risk-Weighted
Assets................. 10.81% 13.03% 11.15% 13.11% 13.00% 11.77% 12.85%
Loan Quality Ratios at
Period End:
Reserve for Loan and
Lease Losses to Total
Loans and Leases....... 1.35% 1.38% 1.35% 1.42% 1.26% 1.23% 1.24%
Reserve for Loan and
Lease Losses to
Nonperforming Loans.... 169.85% 138.10% 178.30% 153.82% 304.51% 142.57% 714.29%
Nonperforming Loans to
Total Loans and
Leases................. 0.79% 1.00% 0.76% 0.93% 0.41% 0.86% 0.17%
Net Charge-Offs to
Average Net Loans and
Leases................. 0.58% 0.32% 0.48% 0.78% 0.85% 0.13% 0.02%
(a) Selected Financial
Data on Operating
Income follows
(excludes Special
Charges and Exit Costs
(12/31/98) and One-
Time Deposit Insurance
Charge (12/31/96)):
Net Income.............. $ 33,755 $ 30,660 $ 129,255 $ 107,437 $ 83,450 $ 71,860 $ 57,666
Basic Earnings.......... 0.79 0.71 2.99 2.59 2.09 1.98 1.56
Diluted Earnings........ 0.76 0.68 2.88 2.45 1.99 1.75 1.40
Return on Average
Assets................. 1.55% 1.67% 1.63% 1.56% 1.31% 1.29% 1.24%
Return on Average
Equity................. 18.62% 19.06% 18.67% 19.13% 18.18% 18.37% 16.64%
</TABLE>
S-12
<PAGE>
CERTAIN TERMS OF THE CAPITAL SECURITIES
We have summarized below certain terms of the capital securities. This
summary supplements the general description of the capital securities in the
accompanying prospectus. To the extent that this summary is inconsistent with
the description in the accompanying prospectus, you should rely on the summary
below. This summary is not a complete description of all of the terms and
provisions of the capital securities. For more information, we refer you to the
declaration of trust, the form of the amended and restated declaration of trust
and the form of preferred securities (which will be substantially similar to
the form of the capital securities), which we filed as exhibits to the
registration statement of which the prospectus is a part.
The capital securities represent undivided beneficial ownership interests in
the assets of Provident Capital Trust II. The only assets of Provident Capital
Trust II will be the junior subordinated debentures. The capital securities
will rank equally with the common securities except as described below under
the caption "--Subordination of Common Securities" in this section.
Distributions
Distributions on the capital securities are cumulative and will accumulate
from June 28, 1999 at the annual rate of 8 3/4% of the liquidation amount of
$25 for each capital security. Distributions will be payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year,
beginning September 30, 1999. The amount of distributions payable for any
period will be computed on the basis of a 360 day year comprised of twelve 30
day months. The amount of distributions payable for any period shorter than a
full quarterly period will be computed on the basis of a 30 day month and, for
periods of less than a month, the actual number of days elapsed per 30 day
month.
Distributions not paid when due will accumulate additional distributions at
the annual rate of 8 3/4% on the amount of unpaid distributions, compounded
quarterly. When we refer to any payment of distributions, the term
"distributions" includes any such additional accumulated distributions.
If distributions are payable on a date that is not a "business day", payment
will be made on the next business day and without any interest or other payment
as a result of such delay. However, if the next business day is in the next
calendar year, payment of distributions will be made on the preceding business
day. A "business day" means each day except Saturday, Sunday and any day on
which banking institutions in The City of New York are authorized or required
by law to close or on which the corporate trust office of the property trustee
or the indenture trustee is closed for business.
Distributions on the capital securities will only be paid if Provident
Capital Trust II has sufficient funds available to make such payments.
Provident Capital Trust II's income available for the payment of distributions
will be limited to our payments made on the junior subordinated debentures. As
a result, if we do not make interest payments on the junior subordinated
debentures, then Provident Capital Trust II will not have funds to make
distributions on the capital securities.
Deferral of Distributions
If the junior subordinated debentures are not in default, we can, on one or
more occasions, defer interest payments on the junior subordinated debentures
for up to twenty consecutive quarterly interest payment periods. A deferral of
interest payments cannot extend, however, beyond the maturity date of the
junior subordinated debentures. If we defer interest payments on the junior
subordinated debentures, Provident Capital Trust II also will defer
distributions on the capital securities. During a deferral period, interest on
the junior subordinated debentures will accrue and compound quarterly at the
annual rate of 8 3/4% and, as a result, distributions otherwise due to you
would continue to accumulate, to the extent permitted by applicable law, from
the date that these distributions were due.
S-13
<PAGE>
Once we make all deferred interest payments on the junior subordinated
debentures, we again can defer interest payments on the junior subordinated
debentures as discussed above. As a result, there could be multiple periods of
varying length during which you would not receive cash distributions from
Provident Capital Trust II.
We currently do not intend to defer interest payments on the junior
subordinated debentures. If we defer such interest payments, however, neither
we nor our subsidiaries generally will be permitted to pay dividends on or
repurchase shares of our capital stock or make payments on debt securities or
guarantees that rank equal or junior to the junior subordinated debentures and
the guarantee. These limitations are described in greater detail below under
the caption "Certain Terms of the Junior Subordinated Debentures--Option to
Defer Interest Payments" in this prospectus supplement.
If we choose to defer payments of interest on the junior subordinated
debentures, then the junior subordinated debentures would at that time be
treated as being issued with original issue discount for United States federal
income tax purposes. This means you will be required to include your share of
the accrued but unpaid interest on the junior subordinated debentures in your
gross income for United States federal income tax purposes before you receive
cash distributions from Provident Capital Trust II. This treatment will apply
as long as you own capital securities. For more information, see below under
the caption "United States Federal Income Tax Consequences--Interest Income and
Original Issue Discount" in this prospectus supplement.
Payment of Distributions
Distributions on the capital securities will be payable to holders on the
relevant record date. As long as the capital securities are only in book-entry
form, the record date for the payment of distributions will be one business day
before the distribution date. If the capital securities are ever issued in
certificated form, the record date for the payment of distributions will be
determined by the regular trustees and will be at least one business day before
the relevant payment date. Distributions payable on any capital securities that
are not paid on the scheduled distribution date will cease to be payable to the
person in whose name such capital securities are registered on the relevant
record date, and such distribution will instead be payable to the person in
whose name such capital securities are registered on a special record date set
for this purpose.
Payments on the capital securities while they are in book-entry form will be
made in immediately available funds to DTC, the depositary for the capital
securities.
Redemption
We may redeem the junior subordinated debentures before their maturity:
. in whole or in part on one or more occasions any time on or after June
30, 2004; and
. in whole at any time, if certain changes occur in tax or investment
company laws and regulations, or in the treatment of the capital
securities for bank regulatory capital purposes. These events, which we
refer to as "Special Events", are described in detail below under the
caption "--Redemption Upon a Special Event".
We may not redeem the junior subordinated debentures unless we receive the
prior approval of the Federal Reserve Board to do so, if that approval is then
required under the Federal Reserve Board's capital rules. The redemption price
for the junior subordinated debentures is 100% of their principal amount plus
accrued and unpaid interest.
General
When we repay the junior subordinated debentures, either at maturity on June
30, 2029 (or any earlier maturity date that may be set by us in certain
circumstances, as described below) or upon early redemption (as discussed
above), Provident Capital Trust II will use the cash it receives from the
repayment or redemption of the junior subordinated debentures to redeem a
corresponding amount of the capital securities and common securities.
S-14
<PAGE>
If less than all the capital securities and the common securities are
redeemed, the total amount of the capital securities and the common securities
to be redeemed will be allocated proportionately among the capital securities
and common securities, unless an event of default under the junior subordinated
debentures or similar event has occurred, as described below under the caption
"--Subordination of Common Securities" in this section.
Redemption Upon a Special Event
If a Special Event has occurred and is continuing, and we cannot cure that
event by some reasonable action, then we may redeem the junior subordinated
debentures within 90 days following the occurrence of the Special Event. A
"Special Event" means, for these purposes, the occurrence of a "Tax Event", a
"Regulatory Capital Event" or an "Investment Company Event". We summarize each
of these events below.
A "Tax Event" means the receipt by Provident Capital Trust II of an opinion
of independent tax counsel experienced in such matters, to the effect that, as
a result of
. any amendment to, change in or announced proposed change in the laws or
regulations interpreting such laws of the United States or any political
subdivision or taxing authority; or
. any official administrative pronouncement, action or judicial decision
interpreting or applying such laws or regulations;
which amendment or change becomes effective, or proposed change, pronouncement,
action or decision is announced, on or after the date of this prospectus
supplement, there is more than an insubstantial risk currently or within the 90
days following such opinion that:
. Provident Capital Trust II will be subject to United States federal
income tax regarding income received or accrued on the junior
subordinated debentures;
. interest payable by us on the junior subordinated debentures will not be
deductible by us, in whole or in part, for United States federal income
tax purposes; or
. Provident Capital Trust II will be subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
A "Regulatory Capital Event" means that we shall have received an opinion of
independent bank regulatory counsel experienced in such matters to the effect
that, as a result of:
. any amendment to or change (including any announced prospective change)
in the laws (or any regulations thereunder) of the United States or any
rules, guidelines or policies of the Federal Reserve System; or
. any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations,
which amendment or change is effective or pronouncement or decision is
announced on or after the date of original issuance of the capital securities,
the capital securities do not constitute, or within 90 days following the date
of such opinion, will not constitute Tier 1 capital or its equivalent at the
time.
An "Investment Company Event" means the receipt by Provident Capital Trust
II of an opinion of a nationally recognized independent counsel to the effect
that, as a result of:
. a change in law or regulation; or
. a written change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority,
there is more than an insubstantial risk that Provident Capital Trust II will
be considered an "investment company" under the Investment Company Act of 1940
that is required to be registered under this law on or after the date of the
issuance of the capital securities.
If we do not elect to redeem the junior subordinated debentures following a
Special Event, then the capital securities will remain outstanding until the
repayment of the junior
S-15
<PAGE>
subordinated debentures, unless we liquidate Provident Capital Trust II and
distribute the junior subordinated debentures to you. For more information, see
"--Optional Liquidation of Provident Capital Trust II and Distribution of
Junior Subordinated Debentures" in this section.
Redemption Procedures
Provident Capital Trust II will give you at least 30 days' but not more than
60 days' notice before any redemption of capital securities. To the extent
funds are available for payment, Provident Capital Trust II will irrevocably
deposit with DTC sufficient funds to pay the redemption amount for the capital
securities being redeemed. Provident Capital Trust II also will give DTC
irrevocable instructions and authority to pay the redemption amount to its
participants. Any distribution to be paid on or before a redemption date for
any capital securities called for redemption will be payable to the registered
holders on the record date for the distribution.
Once notice of redemption is given and Provident Capital Trust II
irrevocably deposits the redemption amount, additional distributions on the
capital securities will cease to accumulate from and after the redemption date.
In addition, all rights of the holders of the capital securities called for
redemption will cease, except for the right to receive distributions payable
prior to the redemption date and the redemption amount.
If any redemption date is not a business day, the redemption amount will be
payable on the next business day, without any interest or other payment in
respect of any such delay. However, if the next business day is in the next
calendar year, the redemption amount will be payable on the preceding business
day.
If payment of the redemption amount for any capital securities called for
redemption is improperly withheld or refused and not paid either by Provident
Capital Trust II or by us pursuant to the guarantee, distributions on the
capital securities will continue to accumulate from the originally scheduled
redemption date to the actual date of payment. In this case, the actual payment
date will be the redemption date for purposes of calculating the redemption
amount.
In addition, we may and our affiliates may, at any time, purchase
outstanding capital securities by tender, in the open market or by private
agreement.
Optional Liquidation of Provident Capital Trust II and Distribution of Junior
Subordinated Debentures
We may dissolve Provident Capital Trust II at any time, and after satisfying
the creditors of Provident Capital Trust II, may cause the junior subordinated
debentures to be distributed to the holders of the capital securities. We may
not dissolve Provident Capital Trust II, however, unless we first receive:
. the approval of the Federal Reserve System to do so, if that approval is
then required under the Federal Reserve System's capital rules; and
. an opinion of independent counsel to the effect that the distribution of
the junior subordinated debentures will not be taxable to you.
See below under the caption "Certain Terms of the Junior Subordinated
Debentures--Distribution of Junior Subordinated Debentures" in this prospectus
supplement.
If we elect to dissolve Provident Capital Trust II, thus causing the junior
subordinated debentures to be distributed to the holders of the capital
securities, we will continue to have the right to redeem the junior
subordinated debentures in certain circumstances as described above.
Subordination of Common Securities
Payment of distributions or any redemption or liquidation amounts by
Provident Capital Trust II regarding the capital securities and the common
securities will be made proportionately based on the total liquidation amounts
of the securities. However, if we are in default under the junior subordinated
debentures, Provident Capital Trust II will make no payments on the common
securities until all unpaid amounts on the capital securities have been
provided for or paid in full.
Trust Enforcement Events
An event of default under the indenture constitutes an event of default
under the
S-16
<PAGE>
declaration of trust. We refer to such an event as a "Trust Enforcement Event".
For more information on events of default under the Indenture, see below under
the caption "Description of the Junior Subordinated Debentures--Events of
Default" in the accompanying prospectus. Upon the occurrence and continuance of
a Trust Enforcement Event, the property trustee, as the sole holder of the
junior subordinated debentures, will have the right under the indenture to
declare the principal amount of the junior subordinated debentures due and
payable.
If the property trustee fails to enforce its rights under the junior
subordinated debentures, any holder of capital securities may, to the extent
permitted by applicable law, institute a legal proceeding against us to enforce
the property trustee's rights under the junior subordinated debentures and the
indenture without first instituting legal proceedings against the property
trustee or any other person. In addition, if a Trust Enforcement Event is due
to our failure to pay interest or principal on the junior subordinated
debentures when due, then the registered holder of capital securities may
institute a direct action on or after the due date directly against us for
enforcement of payment to that holder of the principal of or interest on the
junior subordinated debentures having a principal equal to the total
liquidation amount of that holder's capital securities. In connection with such
a direct action, we will have the right under the indenture to set off any
payment made to that holder by us. The holders of capital securities will not
be able to exercise directly any other remedy available to the holders of the
junior subordinated debentures.
Pursuant to the declaration of trust, the holder of the common securities
will be deemed to have waived any Trust Enforcement Event regarding the common
securities until all Trust Enforcement Events have been cured, waived or
otherwise eliminated. Until all Trust Enforcement Events have been so cured,
waived or otherwise eliminated, the property trustee will act solely on behalf
of the holders of the capital securities and only the holders of the capital
securities will have the right to direct the enforcement actions of the
property trustee.
Voting Rights
Except as provided below under the caption "Description of the Guarantees--
Amendments" in the accompanying prospectus and as otherwise required by law,
the holders of the capital securities will have no voting rights.
Remedies
So long as any junior subordinated debentures are held by the property
trustee, the holders of a majority of all outstanding capital securities will
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the property trustee, or to direct the
exercise of any power conferred upon the property trustee under the declaration
of trust, including the right to direct the property trustee, as holder of the
junior subordinated debentures, to:
. exercise the remedies available to it under the indenture as a holder of
the junior subordinated debentures, including the right to rescind or
annul a declaration that the principal of all the junior subordinated
indentures will be due and payable;
. consent to any amendment, modification or termination of the indenture or
the junior subordinated debentures; or
. waive any past default that is waivable under the indenture.
However, where a consent or action under the indenture would require the
consent or action of the holders of more than a majority of the total principal
amount of junior subordinated debentures affected by it, only the holders of
that greater percentage of the capital securities may direct the property
trustee to give the consent or to take such action. See below under the caption
"Description of the Junior Subordinated Debentures--Meetings, Modification and
Waiver" in the accompanying prospectus.
If an event of default under the indenture has occurred and is continuing,
the holders of 25% of the total liquidation amount of the capital securities
may direct the property trustee to declare the principal and interest on the
junior subordinated debentures due and payable.
S-17
<PAGE>
Meetings
Any required approval of holders of capital securities may be given at a
meeting of holders of capital securities convened for such purpose or pursuant
to written consent. The regular trustees will cause a notice of any meeting at
which holders of capital securities are entitled to vote to be given to each
holder of record of capital securities in the manner described in the
declaration of trust.
No vote or consent of the holders of capital securities will be required for
Provident Capital Trust II to redeem and cancel its capital securities in
accordance with the declaration of trust.
Global Securities; Book-Entry Issue
We expect that the capital securities will be issued in the form of global
securities held by The Depository Trust Company as described under the captions
"Description of the Capital Securities--Global Securities" and "Book-Entry
Issuance" in the accompanying prospectus.
Information Concerning the Property Trustee
The property trustee, other than during the occurrence and continuance of a
Trust Enforcement Event, undertakes to perform only the duties that are
specifically described in the declaration of trust and, after a Trust
Enforcement Event which has not been cured or waived, must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his own affairs. Subject to this provision, the property trustee is
under no obligation to exercise any of the powers vested in it by the
declaration of trust at the request of any holder of capital securities unless
it is offered reasonable security and indemnity against the costs, expenses and
liabilities that might be incurred in connection with taking that action.
S-18
<PAGE>
CERTAIN TERMS OF THE JUNIOR SUBORDINATED DEBENTURES
We have summarized below certain terms of the junior subordinated
debentures. This summary supplements the general description of these
securities in the accompanying prospectus. To the extent that this summary is
inconsistent with the description in the accompanying prospectus, you should
rely on the summary below. This summary is not a complete description of all of
the terms and provisions of the junior subordinated debentures. For more
information, we refer you to the indenture and the form of the junior
subordinated debentures, which we filed as exhibits to the registration
statement of which the accompanying prospectus is a part.
The junior subordinated debentures will be issued pursuant to an indenture
to be entered into between us and The Chase Manhattan Bank, as indenture
trustee.
Interest Rate and Maturity
The junior subordinated debentures will bear interest at the annual rate of
8 3/4%, payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, beginning September 30, 1999. Interest payments not
paid when due will themselves accrue additional interest at the annual rate of
8 3/4% on the amount of unpaid interest, to the extent permitted by law,
compounded quarterly. The amount of interest payable for any period will be
computed based on a 360 day year comprised of twelve 30 day months. The amount
of interest payable for any period shorter than a full quarterly period will be
computed on the basis of a 30 day month and, for periods of less than a month,
the actual number of days elapsed per 30 day month. The interest payment
provisions for the junior subordinated debentures correspond to the
distribution provisions of the capital securities.
The junior subordinated debentures do not have a sinking fund. This means
that we are not required to make any principal payments prior to maturity.
The junior subordinated debentures will mature on June 30, 2029. In certain
circumstances, however, we will have the right to shorten the maturity of the
junior subordinated debentures to not earlier than June 30, 2014. See below
under the caption "--Option to Shorten Maturity Date" in this section.
Ranking
The junior subordinated debentures will be unsecured and will rank junior
and be subordinate in right of payment to all our senior debt.
As a holding company, our assets primarily consist of the equity securities
of our subsidiaries. As a result, the ability of holders of the junior
subordinated debentures to benefit from any distribution of assets of any
subsidiary upon the liquidation or reorganization of such subsidiary is
subordinate to the prior claims of present and future creditors of that
subsidiary.
The capital securities, the junior subordinated debentures and the guarantee
do not limit our or our subsidiaries' ability to incur additional debt,
including debt that ranks senior in priority of payment to the junior
subordinated debentures and the guarantee. At March 31, 1999, approximately
$227.2 million of our senior debt was outstanding. In addition, the junior
subordinated debentures will be effectively subordinated to all our
subsidiaries' existing and future obligations. At March 31, 1999, approximately
$7.6 billion of debt of our subsidiaries was outstanding.
Redemption
We have the option to redeem some or all of the junior subordinated
debentures before their maturity. For more information, see above under the
caption "Certain Terms of the Capital Securities--Redemption" in this
prospectus supplement.
Option to Shorten Maturity Date
If a Tax Event, as described above under the caption "Certain Terms of the
Capital Securities
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- --Redemption--Redemption Upon a Special Event" in this prospectus supplement
occurs, we may shorten the stated maturity of the junior subordinated
debentures to the minimum extent required so that interest on the junior
subordinated debentures will be deductible by us for United States federal
income tax purposes. In no event, however, may the resulting maturity of the
junior subordinated debentures be less than 15 years from the date of original
issuance.
We may only shorten the stated maturity if we have received:
. an opinion of nationally recognized independent counsel experienced in
such matters to the effect that:
- after the shortening of maturity, interest paid on the junior
subordinated debentures will be deductible by us for United States
federal income tax purposes;
- the holders of capital securities will not recognize income, gain or
loss for United States federal income tax purposes as a result of the
shortening of maturity, and will be taxed under United States federal
income tax law in the same amount, in the manner and at the same times
as would have been the case if the shortening of maturity had not
occurred; and
- the shortening of maturity will not cause Provident Capital Trust II to
be classified as other than a grantor trust for United States federal
income tax purposes; and
. the prior approval of the Federal Reserve System, if then required to do
so under the Federal Reserve System's capital rules.
Distribution of Junior Subordinated Debentures
If the property trustee distributes the junior subordinated debentures to
the holders of the capital securities and the common securities upon the
liquidation of Provident Capital Trust II, we will cause the junior
subordinated debentures to be issued in denominations of $25 principal amount
and integral multiples thereof. We anticipate that the junior subordinated
debentures would be distributed in the form of one or more global securities
and that The Depository Trust Company, would act as depositary for the junior
subordinated debentures. The depositary arrangements for the junior
subordinated debentures would be substantially the same as those in effect for
the capital securities.
For a description of The Depository Trust Company and the terms of the
depositary arrangements relating to payments, transfers, voting rights,
redemption and other notices and other matters, see "Book-Entry Issuance" in
the accompanying prospectus.
Option to Defer Interest Payments
We can defer interest payments on the junior subordinated debentures for up
to twenty consecutive quarterly interest payment periods if the junior
subordinated debentures are not in default. A deferral of interest payments
cannot extend, however, beyond the maturity date of the junior subordinated
debentures. During the deferral period, interest will continue to accrue on the
junior subordinated debentures, compounded quarterly, and deferred interest
payments will accrue additional interest at 8 3/4%. No interest will be due and
payable on the junior subordinated debentures until the end of the deferral
period except upon a redemption of the junior subordinated debentures during a
deferral period.
We may pay at any time all or any portion of the interest accrued to that
point during a deferral period. At the end of the deferral period or on any
redemption date, we will be obligated to pay all accrued and unpaid interest.
Once we pay all accrued and unpaid interest on the junior subordinated
debentures, we again can defer interest payments on the junior subordinated
debentures as described above.
Certain Limitations During a Deferral Period
During any deferral period, we will not and our subsidiaries will not be
permitted to:
. pay a dividend or make any other payment or distribution on our capital
stock;
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. redeem, purchase or make a liquidation payment on any of our capital
stock;
. make an interest, principal or premium payment, or repay, repurchase or
redeem, any of our debt securities that rank equal with or junior to the
junior subordinated debentures; or
. make any guarantee payment regarding any guarantee by us of debt
securities of any of its subsidiaries, if the guarantee ranks equal with
or junior to the junior subordinated debentures.
However, at any time, including during any deferral period, we will be
permitted to:
. pay dividends or distributions in additional shares of its capital stock;
. make payments under the guarantee in respect of the capital securities
and common securities;
. declare or pay a dividend in connection with the implementation of a
shareholders' rights plan, issue stock under such a plan or repurchase
such rights; and
. purchase common stock for reissuance pursuant to an employee benefit,
dividend reinvestment or stock repurchase plan or for issuance in an
acquisition transaction that was entered into prior to the commencement
of that deferral period.
Notice
If the property trustee is the sole holder of the junior subordinated
debentures, then we will give Provident Capital Trust II, the regular trustees
and the property trustee notice if we decide to defer interest payments on the
junior subordinated debentures. We will give that notice one business day
before the earlier of:
. the next date distributions on the capital securities are payable; or
. the date Provident Capital Trust II is required to give notice to the New
York Stock Exchange (or any other applicable self-regulatory
organization) or to holders of the capital securities of the record date
or the date any distribution is payable, but in any event at least one
business day before the record date.
The regular trustees will give notice to the holders of capital securities
if we decide to defer interest payments on the junior subordinated debentures.
If the property trustee is not the sole holder of the junior subordinated
debentures, we will give the holders notice of any deferral period ten business
days prior to the earlier of:
. the next interest payment date; or
. the date we are required to give notice to the New York Stock Exchange
(or any other applicable self-regulatory organization) or to holders of
the junior subordinated debentures of the record date or payment date of
any related interest payment, but in any event at least two business days
prior to the record date.
Miscellaneous
The indenture requires us, as issuer of the junior subordinated securities,
to pay all fees and expenses related to:
. the issuance and exchange of the capital securities and the junior
subordinated debentures;
. the organization, maintenance and dissolution of Provident Capital Trust
II;
. the retention of the trustees; and
. the enforcement by the property trustee of the rights of the holders of
the capital securities.
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RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
Full and Unconditional Guarantee
Payments of distributions and other amounts due on the capital securities
are irrevocably guaranteed by us, to the extent Provident Capital Trust II has
funds available for the payment of such distributions, as described under
"Description of the Guarantees" in the accompanying prospectus.
If we do not make payments under the junior subordinated debentures,
Provident Capital Trust II will not have sufficient funds to pay distributions
or other amounts due on the capital securities. The guarantee does not cover
payment of distributions when Provident Capital Trust II does not have
sufficient funds to pay such distributions. In that event, a holder of capital
securities may institute a legal proceeding directly against us to enforce
payment of the junior subordinated debentures to such holder in accordance
with their terms, including our right to defer interest payments.
Taken together, our obligations under the declaration of trust, the junior
subordinated debentures, the indenture and the guarantee provide a full and
unconditional guarantee of payments of distributions and other amounts due on
the capital securities.
Sufficiency of Payments
As long as payments of interest, principal and other payments are made when
due on the junior subordinated debentures, those payments will be sufficient
to cover distributions and other payments due on the capital securities
because of the following factors:
. the total principal amount of the junior subordinated debentures will be
equal to the sum of the total stated liquidation amount of the capital
securities and the common securities;
. the interest rate and payment dates on the junior subordinated debentures
will match the distribution rate and payment dates for the capital
securities;
. as borrower, we will pay, and Provident Capital Trust II will not be
obligated to pay, all costs, expenses and liabilities of Provident
Capital Trust II except Provident Capital Trust II's obligations under
the capital securities and common securities; and
. the declaration of trust further provides that Provident Capital Trust II
will engage only in activity that is consistent with the limited purposes
of Provident Capital Trust II.
We have the right to set-off any payment we are otherwise required to make
under the indenture with and to the extent we make a related payment under the
guarantee.
Enforcement Rights of Holders of Capital Securities
If a Trust Enforcement Event occurs, the holders of capital securities
would rely on the enforcement by the property trustee of its rights as
registered holder of the junior subordinated debentures against us. In
addition, the holders of a majority in liquidation amount of the capital
securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the property trustee or
to direct the exercise of any trust or power conferred upon the property
trustee under the declaration of trust, including the right to direct the
property trustee to exercise the remedies available to it as the holder of the
junior subordinated debentures. The indenture provides that the indenture
trustee will give holders of junior subordinated debentures notice of all
events of default within 30 days after their occurrence.
If the property trustee fails to enforce its rights under the junior
subordinated debentures in respect of an event of default under the indenture
after a holder of capital securities has
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made a written request, such holder may, to the extent permitted by applicable
law, institute a legal proceeding against us to enforce the property trustee's
rights under the junior subordinated debentures. In addition, if we fail to pay
interest or principal on the junior subordinated debentures, a holder of
capital securities may institute a proceeding directly against us for
enforcement of payment to that holder of the principal of or interest on junior
subordinated debentures having a principal amount equal to the total
liquidation amount of that holder's capital securities (which we refer to as a
"direct action"). In connection with such a direct action, we will have the
right under the indenture to set off any payment made to such holder by us. The
holders of capital securities will not be able to exercise directly any other
remedy available to the holders of the junior subordinated debentures.
Limited Purpose of Trust
The capital securities evidence undivided beneficial ownership interests in
the assets of Provident Capital Trust II, and Provident Capital Trust II exists
for the sole purpose of issuing the common securities and capital securities
and investing the proceeds thereof in junior subordinated debentures. A
principal difference between the rights of a holder of capital securities and a
holder of junior subordinated debentures is that a holder of junior
subordinated debentures is entitled to receive from us the principal of and
interest accrued on junior subordinated debentures held, while a holder of
capital securities is entitled to receive distributions to the extent Provident
Capital Trust II has funds available for the payment of such distributions.
Rights Upon Termination
Upon any dissolution, winding-up or liquidation of Provident Capital Trust
II involving the liquidation of the junior subordinated debentures, the holders
of the capital securities will be entitled to receive, out of assets held by
Provident Capital Trust II, subject to the rights of any creditors of Provident
Capital Trust II, the liquidation distribution in cash. Upon our voluntary or
involuntary liquidation or bankruptcy, the property trustee, as holder of the
junior subordinated debentures, would be our subordinated creditor,
subordinated in right of payment to all senior debt as described in the
indenture, but entitled to receive payment in full of principal and interest
before any of our stockholders receive payments or distributions. Because we
are the guarantor under the guarantee and, under the indenture, we have agreed
to pay for all costs, expenses and liabilities of Provident Capital Trust II
(other than Provident Capital Trust II's obligations to the holders of the
capital securities), the positions of a holder of capital securities and a
holder of the junior subordinated debentures relative to other creditors and to
our stockholders in the event of our liquidation or bankruptcy would be
substantially the same.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a description of the material United States federal income
tax consequences of the purchase, ownership and disposition of the capital
securities. Where noted, it constitutes the opinion of Simpson Thacher &
Bartlett, special United States federal income tax counsel to Provident
Financial Group, Inc. and Provident Capital Trust II.
Except where we state otherwise, this summary deals only with capital
securities held as capital assets by a holder who:
. is a United States person (as defined below), and
. purchases the capital securities upon original issuance at their original
issue price.
A "United States person" is a holder who is one of the following:
. a citizen or resident of the United States;
. a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision of the
United States;
. an estate the income of which is subject to United States federal income
taxation regardless of its source; or
. a trust:
- that is subject to the supervision of a court within the United States
and the control of one or more United States persons, or
- that has a valid election in effect under applicable Treasury
regulations to be treated as a United States person.
Your tax treatment may vary depending on your particular situation. This
summary does not address all the tax consequences that may be relevant to
holders that are subject to special tax treatment, such as:
. banks;
. real estate investment trusts;
. regulated investment companies;
. insurance companies;
. dealers in securities or currencies;
. tax-exempt investors;
. persons holding capital securities as part of a hedging, conversion,
integrated or constructive sale transaction;
. persons holding capital securities as part of a straddle; or
. foreign investors.
In addition, this summary does not include any description of the following,
either of which may be applicable to you:
. any alternative minimum tax consequences; or
. the tax laws of any state, local or foreign government.
This summary is based on the Internal Revenue Code of 1986, as amended
(which we refer to as the "Code"), the Treasury regulations promulgated under
the Code and administrative and judicial interpretations. These income tax
laws, regulations and interpretations, however, may change at any time. Any
change could be retroactive to the issuance date of the capital securities.
The authorities on which this summary is based are subject to various
interpretations and the opinions of Simpson Thacher & Bartlett are not binding
on the Internal Revenue Service (which we refer to as "IRS") or the courts.
Either the IRS or the courts could disagree with the explanations or
conclusions contained in this summary. Nevertheless, Simpson Thacher & Bartlett
has advised us that they believe that the opinions expressed in this summary,
if challenged, would be sustained by a court with jurisdiction in a properly
presented case.
You should consult your own tax advisor regarding the tax consequences to
you of the purchase, ownership and disposition of the capital securities,
including the tax consequences under state, local, foreign, and other tax laws.
For a discussion of the possible redemption of the capital securities upon the
occurrence of a tax
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event, see "Certain Terms of the Capital Securities--Special Event Redemption"
in this prospectus supplement.
Classification of Provident Capital Trust II
In connection with the issuance of the capital securities, Simpson Thacher &
Bartlett is of the opinion that under current law and assuming full compliance
with the terms of the declaration of trust, and based upon certain facts and
assumptions contained in such opinion, Provident Capital Trust II will be
classified as a grantor trust for United States federal income tax purposes and
not as an association taxable as a corporation. As a result, for United States
federal income tax purposes, you generally will be treated as owning an
undivided beneficial ownership interest in the junior subordinated debentures.
Thus, you will be required to include in your gross income your proportionate
share of the interest income or original issue discount that is paid or accrued
on the junior subordinated debentures. See below under the caption "--Interest
Income and Original Issue Discount" in this section.
Classification of the Junior Subordinated Debentures
Provident Financial Group, Inc. intends to take the position that the junior
subordinated debentures will be classified for all United States tax purposes
as indebtedness of Provident Financial Group, Inc. under current law and, by
acceptance of a capital security, you covenant to treat the junior subordinated
debentures as indebtedness for all United States tax purposes. The remainder of
this discussion assumes that the junior subordinated debentures will be
classified as indebtedness of Provident Financial Group, Inc.
Interest Income and Original Issue Discount
You will generally be taxed on the stated interest on the junior
subordinated debentures as ordinary income at the time it is paid or accrued in
accordance with your regular method of tax accounting. We anticipate that the
junior subordinated debentures will not be issued with an issue price that is
less than their stated redemption price at maturity and that the junior
subordinated debentures will therefore not be subject to the special original
issue discount (which we refer to as "OID") rules upon initial issuance.
If, however, we exercise our right to defer payments of interest on the
junior subordinated debentures, the junior subordinated debentures will become
OID instruments at such time. In such case, you will be subject to the special
OID rules described below. Once the junior subordinated debentures become OID
instruments, they will be taxed as OID instruments for as long as they remain
outstanding.
Under the OID economic accrual rules, the following occur:
. you would accrue an amount of interest income each year that approximates
the stated interest payments called for under the terms of the junior
subordinated debentures using the constant-yield-to-maturity method of
accrual described in section 1272 of the Code;
. any amount of OID included in your gross income (whether or not during a
deferral period) regarding the capital securities would increase your tax
basis in such capital securities; and
. the actual cash payments of interest you receive on the junior
subordinated debentures in respect of such accrued OID would reduce your
tax basis in such capital securities.
The Treasury regulations dealing with OID and the deferral of interest
payments have not yet been addressed in any rulings or other interpretations by
the IRS. It is possible that the IRS might assert that the junior subordinated
debentures were issued initially with OID. If the IRS were successful,
regardless of whether we exercise our option to defer payments of interest on
such junior subordinated debentures, you would be subject to the special OID
rules described above.
If you are a corporate holder of capital securities, you will not be
entitled to a dividends-received deduction regarding any income you recognize
on the capital securities.
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Distribution of Junior Subordinated Debentures or Cash Upon Liquidation of
Provident Capital Trust II
As described under the caption "Certain Terms of the Capital Securities--
Optional Liquidation of Provident Capital Trust II and Distribution of Junior
Subordinated Debentures" in this prospectus supplement, the junior subordinated
debentures held by Provident Capital Trust II may be distributed to you in
exchange for your capital securities if Provident Capital Trust II is
liquidated before the maturity of the junior subordinated debentures, as long
as it first receives:
. the approval of the Federal Reserve System to do so, if that approval is
then required under the Federal Reserve System's capital rules; and
. an opinion of an independent counsel to the effect that the distribution
of the junior subordinated debentures will not be taxable to you.
Upon such a distribution, you will receive your proportionate share of the
junior subordinated debentures previously held indirectly through Provident
Capital Trust II. Your holding period and total tax basis in the junior
subordinated debentures will equal the holding period and total tax basis that
you had in your capital securities before the distribution.
In certain circumstances described above under the captions "Certain Terms
of the Capital Securities--Special Event Redemption" and "--Redemption" in this
prospectus supplement, we may redeem the junior subordinated debentures and
distribute cash in liquidation of Provident Capital Trust II. This distribution
of cash would be taxable as described below under "--Sales of Capital
Securities or Redemption of Junior Subordinated Debentures" in this section.
If you receive junior subordinated debentures in exchange for your capital
securities, you would accrue interest in respect of the junior subordinated
debentures received from Provident Capital Trust II in the manner described
above under the caption "--Interest Income and Original Issue Discount" in this
prospectus supplement.
Sales of Capital Securities or Redemption of Junior Subordinated Debentures
If you sell your capital securities or receive cash upon redemption of the
junior subordinated debentures, you will recognize gain or loss equal to the
difference between:
. the amount realized on the sale or redemption; and
. your adjusted tax basis in your capital securities or junior subordinated
debentures.
Your gain or loss will be a capital gain or loss, provided that you held the
capital securities as a capital asset, except to the extent any amount realized
is treated as payment of accrued but unpaid interest not previously included in
income. The gain or loss will generally be a long-term capital gain or loss if
you have held your capital securities for more than one year. Long-term capital
gains of individuals are taxed at a maximum rate of 20%. The deductibility of
capital losses is subject to limitations.
Non-United States Holders
The following discussion only applies to you if you are not a United States
person. As discussed above, the capital securities will be treated by the
parties as evidence of indirect beneficial ownership interests in the junior
subordinated debentures. See above under the caption "--Classification of
Provident Capital Trust II" in this section.
U.S. Federal Withholding Tax
The 30% U.S. federal withholding tax will not apply to any payment of
principal or interest (including OID) on the capital security (or the Junior
Subordinated Debentures) provided that:
. you do not actually (or constructively) own 10% or more of the total
combined voting power of all classes of our voting stock within the
meaning of the Code and the Treasury Regulations;
. you are not a controlled foreign corporation that is related to us
through stock ownership;
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. you are not a bank whose receipt of interest on the capital securities
(or the junior subordinated debentures) is described in section
881(c)(3)(A) of the Code; and
. (a) you provide your name and address on an IRS Form W-8, and certify,
under penalty of perjury, that you are not a United States person or (b)
a financial institution holding the capital security (or the junior
subordinated debenture) on your behalf certifies, under penalty of
perjury, that it has received an IRS Form W-8 from you and provides us
with a copy.
If you cannot satisfy the requirements described above, payments of premium,
if any, and interest (including OID) made to you will be subject to the 30%
U.S. federal withholding tax, unless you provide us with a properly executed
(1) IRS Form 1001 claiming an exemption from withholding under the benefit of a
tax treaty or (2) IRS Form 4224 stating that interest paid on the capital
security (or the junior subordinated debenture) is not subject to withholding
tax because it is effectively connected with your conduct of a trade or
business in the United States.
The 30% U.S. federal withholding tax will not apply to any gain or income
that you realize on the sale, exchange, retirement or other disposition of the
capital security or junior subordinated debenture.
U.S. Federal Estate Tax
Your estate will not be subject to U.S. federal estate tax on the capital
securities (or the junior subordinated debentures) beneficially owned by you at
the time of your death, provided that (1) you do not own 10% or more of the
total combined voting power of all classes of our voting stock (within the
meaning of the Code and the Treasury Regulations) and (2) interest on that
capital security (or the junior subordinated debentures) would not have been,
if received at the time of your death, effectively connected with the conduct
by you of a trade or business in the United States.
U.S. Federal Income Tax
If you are engaged in a trade or business in the United States and interest
on the capital securities (or the junior subordinated debentures) is
effectively connected with the conduct of that trade or business (although
exempt from the 30% withholding tax), you will be subject to U.S. federal
income tax on that interest on a net income basis in the same manner as if you
were a United States person as defined under the Code. In addition, if you are
a foreign corporation, you may be subject to a branch profits tax equal to 30%
(or lower applicable treaty rate) of your earnings and profits for the taxable
year, subject to adjustments, that are effectively connected with the conduct
by you of a trade or business in the United States. For this purpose, interest
on capital securities (or the junior subordinated debentures) will be included
in earnings and profits.
Any gain or income realized on the disposition of a capital security (or a
junior subordinated debenture) generally will not be subject to U.S. federal
income tax unless (1) that gain or income is effectively connected with the
conduct of a trade or business by you in the United States, or (2) you are an
individual who is present in the United States for 183 days or more in the
taxable year of that disposition, and certain other conditions are met.
Information Reporting and Backup Withholding
If you are a United States person, in general, information reporting will
apply to certain payments of principal, interest (including OID) and premium,
if any, paid on the capital securities (or junior subordinated debentures) and
to the proceeds of sale of a capital security (or a junior subordinated
debenture) made to you unless you are an exempt recipient such as a
corporation. A 31 percent backup withholding tax will apply to such payments if
you fail to provide a taxpayer identification number or certification of
foreign or other exempt status or fail to report in full interest income.
If you are not a United States person, in general, you will not be required
to provide information reporting and backup withholding regarding payments that
we make to you provided
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that we do not have actual knowledge that you are a United States person and we
have received from you the statement described above under "U.S. Federal
Withholding Tax." In addition, you will not be required to pay backup
withholding and provide information reporting regarding the proceeds of the
sale of a capital security (or a junior subordinated debenture) within the
United States or conducted through certain U.S.-related financial
intermediaries, if the payor receives the statement described above and does
not have actual knowledge that you are a United States person, as defined under
the Code, or you otherwise establish an exemption.
Treasury Regulations were recently issued that generally modify the
information reporting and backup withholding rules applicable to certain
payments made after December 31, 2000. In general, the new Treasury Regulations
would not significantly alter the present rules discussed above, except in
certain special situations.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against your U.S. federal income tax liability provided the
required information is furnished to the IRS.
ERISA CONSIDERATIONS
Each fiduciary of an employee benefit plan subject to Title I of ERISA, a
plan described in Section 4975 of the Code, including an individual retirement
arrangement or a Keogh plan, and any entity whose underlying assets include
"plan assets" by reason of any such employee benefit plan's or plan's
investment in such entity (each of which we refer to as a "Plan") should
consider the fiduciary responsibility and prohibited transaction provisions of
ERISA and Section 4975 of the Code in the context of the Plan's particular
circumstances before authorizing an investment in the capital securities.
Accordingly, such a fiduciary should consider, among other factors, that each
Plan investing in the capital securities will be deemed to have represented
that the Plan's purchase of the capital securities is covered by one or more
specified prohibited transaction class exemptions. Plan fiduciaries should also
consider whether the Plan's investment in the capital securities would satisfy
the prudence and diversification requirements of ERISA and would be consistent
with the documents and instruments governing their Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit Plans from
engaging in certain transactions involving "plan assets" with persons who are
"parties in interest" under ERISA or "disqualified persons" under the Code
("Parties in Interest") regarding such a Plan. A violation of these "prohibited
transaction" rules may result in an excise tax, penalty or other liabilities
under ERISA and/or Section 4975 of the Code for such persons or, in the case of
an individual retirement account, the occurrence of a prohibited transaction
involving the individual who established the individual retirement account, or
his or her beneficiaries, would cause the individual retirement account to lose
its tax-exempt status, unless exemptive relief is available under an applicable
statutory or administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA), certain church plans
(as defined in Section 3(33) of ERISA or Section 4975(g)(2) of the Code) and
foreign plans (as described in Section 4(b)(4) of ERISA) are not subject to the
requirements of ERISA or Section 4975 of the Code.
Under a regulation (which we refer to as the "Plan Assets Regulation")
issued by the United States Department of Labor (the "DOL"), the assets of
Provident Capital Trust II would be deemed to be "plan assets" of a Plan for
purposes of ERISA and Section 4975 of the Code if assets of a Plan were used to
acquire an equity interest in Provident Capital Trust II and no exception were
applicable under the Plan Assets Regulation. An "equity interest" is defined
under the Plan Assets Regulation as any interest in an entity other than an
instrument which is treated as debt under applicable local law and which has no
substantial equity features. Under one such exception contained in the Plan
Assets Regulation, the assets of Provident Capital Trust II would not be deemed
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to be "plan assets" of investing Plans if, immediately after the most recent
acquisition of any equity interest in Provident Capital Trust II, less than 25%
of the value of each class of equity interests in Provident Capital Trust II
were held by Plans, other employee benefit plans not subject to ERISA or
Section 4975 of the Code (such as governmental, church or foreign plans), and
entities holding assets deemed to be "plan assets" of any Plan (which we refer
to collectively, as "Benefit Plan Investors"). No assurance can be given that
the value of the capital securities held by Benefit Plan Investors will be less
than 25% of the total value of such capital securities at the completion of the
initial offering of the capital securities or thereafter, and no monitoring or
other measures will be taken regarding the satisfaction of the conditions to
this exception. All of the common securities will be purchased and held by
Provident.
It is possible that the capital securities may qualify as "publicly-offered
securities" under the Plan Assets Regulation. "Publicly-offered securities"
within the meaning of the Plan Assets Regulation are:
. widely held (i.e., owned by more than 100 investors independent of
Provident Financial Group, Inc. and of each other);
. freely transferable; and
. sold as part of an offering pursuant to an effective registration
statement under the Securities Act of 1933 and then timely registered
under Section 12(b) or 12(g) of the Securities Exchange Act of 1934.
If the capital securities are "publicly offered securities", the underlying
assets of Provident Capital Trust II would not be deemed to be "plan assets" of
investing Plans. The underwriters expect:
. that the capital securities will be held by at least 100 independent
investors at the conclusion of the offering of the capital securities;
. that there will be no restrictions imposed on the transfer of the capital
securities; and
. that the capital securities will be sold as part of an offering pursuant
to an effective registration statement under the Securities Act of 1933
and then will be timely registered under the Securities Exchange Act of
1934.
There can be no assurance that this or any of the other exceptions set forth
in the Plan Assets Regulation will apply to the capital securities, and, as a
result, under the terms of the Plan Assets Regulation, an investing Plan's
assets could be considered to include an undivided interest in the assets held
by Provident Capital Trust II (including the junior subordinated debentures),
and transactions by Provident Capital Trust II could be subject to the
fiduciary responsibility provision of Title I of ERISA.
Regardless of whether the assets of Provident Capital Trust II are deemed to
be "plan assets" of Plans investing in Provident Capital Trust II, as discussed
above, the acquisition and holding of the capital securities with "plan assets"
of a Plan could itself result in a prohibited transaction. The DOL has issued
five prohibited transaction class exemptions ("PTCEs") that may provide
exemptive relief for direct or indirect prohibited transactions resulting from
the purchase and/or holding of the capital securities by a Plan. These class
exemptions are:
. PTCE 96-23 (for certain transactions determined by "in-house asset
managers");
. PTCE 95-60 (for certain transactions involving insurance company general
accounts);
. PTCE 91-38 (for certain transactions involving bank collective investment
funds);
. PTCE 90-1 (for certain transactions involving insurance company pooled
separate accounts); and
. PTCE 84-14 (for certain transactions determined by independent "qualified
professional asset managers").
S-29
<PAGE>
Such class exemptions may not, however, apply to all of the transactions
that could be deemed prohibited transactions in connection with a Plan's
investment in the capital securities.
Any purchaser of the capital securities that is an insurance company using
assets of its general account should note that, based on the reasoning of the
United States Supreme Court set forth in John Hancock Mutual Life Insurance
Company v. Harris Trust & Savings Bank, 114 S. Ct. 517 (1993), an insurance
company's general account may be deemed to include assets of Plans investing in
such general account (e.g., through the purchase of an annuity contract).
On December 22, 1997, the DOL issued a proposed regulation (64 F.R. 66908)
under Section 401(c) of ERISA intended to provide guidance on which assets held
by an insurance company in its general account constitute "plan assets" in
cases where such insurer has issued, on or before December 31, 1998, policies
or contracts to or for the benefit of a Plan that are supported by assets of
such insurer's general account and when the underlying general account assets
will not be deemed to be assets of such Plan if the insurer satisfies the
requirements of such regulation (if adopted as proposed).
Section 401(c) of ERISA also provides for certain other temporary and
transitional rules concerning the application of the fiduciary responsibility
and prohibited transaction provisions of ERISA and Section 4975 of the Code to
assets of an insurer's general account that support insurance policies or
contracts issued by the insurer. The plan asset status of insurance company
separate accounts is unaffected by Section 401(c) of ERISA and the proposed
regulations thereunder. Any insurance company considering the use of its
general account assets to purchase capital securities should consult with its
counsel concerning these and other matters affecting its purchase decision.
Because of ERISA's prohibitions and those of Section 4975 of the Code,
discussed above, the capital securities, or any interest therein, should not be
purchased or held by any Plan or any person investing "plan assets" of any
Plan, unless such purchase and holding is covered by the exemptive relief
available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 (or some other
applicable class or individual exemption). Accordingly, each purchaser or
holder of the capital securities or any interest therein will be deemed to have
represented by its purchase and holding thereof that either:
. it is not a Plan and no part of the assets to be used by it to purchase
and/or hold such capital securities or any interest therein constitutes
"plan assets" of any Plan; or
. it is itself a Plan, or is purchasing or holding the capital securities
or an interest therein on behalf of or with "plan assets" of one or more
Plans, and each such purchase and holding of such securities satisfies
the requirements of, and is entitled to full exemptive relief under, PTCE
96-23, 95-60, 91-38, 90-1 or 84-14 (or some other applicable class or
individual exemption).
Although, as noted above, governmental plans are not subject to ERISA,
including the prohibited transaction provisions thereof, or of Section 4975 of
the Code, state laws or regulations governing the investment and management of
the assets of such plans may contain fiduciary and prohibited transaction
provisions similar to those under ERISA and Section 4975 of the Code discussed
above. Similarly, fiduciaries of other plans not subject to ERISA may be
subject to other legal restrictions under applicable laws that are similar to
ERISA. Accordingly, fiduciaries of governmental plans or other plans not
subject to ERISA, in consultation with their advisors, should consider the
impact of their respective state laws on their investment in capital
securities, and the considerations discussed above, to the extent applicable.
Due to the complexity of the fiduciary responsibility and prohibited
transaction rules described above and the penalties that may be imposed upon
persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing the capital
securities on behalf of or with "plan assets" of any Plan consult with their
counsel, prior to any such purchase, regarding the potential applicability of
ERISA and Section 4975 of the Code to such investment and whether any exemption
would be applicable and determine on their own whether all conditions of such
exemption or exemptions have been satisfied such that the acquisition and
holding of capital securities by the purchaser Plan are entitled to full
exemption relief thereunder.
S-30
<PAGE>
UNDERWRITING
Based on the terms and conditions of an underwriting agreement, Provident
Capital Trust II has agreed to sell to each of the underwriters named below and
each of the underwriters has severally agreed to purchase from Provident
Capital Trust II the liquidation amount of capital securities set forth
opposite its name below:
<TABLE>
<CAPTION>
Provident Capital Trust II # of
$125,000,000 8 3/4% SKIS due 2029 Shares
--------------------------------- -------
<S> <C>
Lehman Brothers Inc..................................................... 798,750
Prudential Securities Incorporated...................................... 798,750
Salomon Smith Barney Inc. .............................................. 798,750
PaineWebber Incorporated................................................ 798,750
J.P. Morgan Securities Inc. ............................................ 125,000
ABN AMRO Incorporated................................................... 70,000
Banc of America Securities LLC.......................................... 70,000
Bear, Stearns & Co. Inc. ............................................... 70,000
CIBC World Markets Corp................................................. 70,000
Dain Rauscher Incorporated.............................................. 70,000
Deutsche Bank Securities Inc. .......................................... 70,000
A.G. Edwards & Sons, Inc. .............................................. 70,000
Everen Securities, Inc. ................................................ 70,000
First Security Van Kasper............................................... 70,000
Goldman, Sachs & Co..................................................... 70,000
Legg Mason Wood Walker, Incorporated.................................... 70,000
McDonald Investments Inc., a KeyCorp Company............................ 70,000
SG Cowen Securities Corporation......................................... 70,000
Advest, Inc. ........................................................... 35,000
Robert W. Baird & Co. Incorporated...................................... 35,000
BB&T Capital Markets, a Division of Scott & Stringfellow................ 35,000
J.C. Bradford & Co...................................................... 35,000
Davenport & Company LLC................................................. 35,000
Fahnestock & Co. Inc. .................................................. 35,000
First Albany Corporation................................................ 35,000
First Union Capital Markets Corp........................................ 35,000
JWGenesis Securities, Inc. ............................................. 35,000
Gibraltar Securities Co................................................. 35,000
Gruntal & Co., L.L.C.................................................... 35,000
J.J.B. Hilliard, W.L. Lyons, Inc. ...................................... 35,000
Janney Montgomery Scott Inc. ........................................... 35,000
Mesirow Financial, Inc. ................................................ 35,000
Morgan Keegan & Company, Inc. .......................................... 35,000
Parker/Hunter Incorporated.............................................. 35,000
Raymond James & Associates, Inc. ....................................... 35,000
The Robinson-Humphrey Company, LLC...................................... 35,000
Tucker Anthony Cleary Gull.............................................. 35,000
</TABLE>
<TABLE>
<S> <C>
U.S. Bancorp Piper Jaffray Inc. .................................... 35,000
Wachovia Securities, Inc. .......................................... 35,000
The Williams Capital Group, L.P..................................... 35,000
----------
Total............................................................. $5,000,000
==========
</TABLE>
The underwriting agreement provides that the obligations of the underwriters
to purchase the capital securities are subject to the satisfaction of certain
conditions, including the approval of certain legal matters by their counsel.
The underwriters are obligated to purchase all of the capital securities if
they purchase any of them.
We and Provident Capital Trust II have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, or to contribute regarding payments which the underwriters may be
required to make.
Commissions and Discounts
The underwriters will offer the capital securities directly to the public at
$25 per capital security plus accrued and unpaid distributions, if any. The
underwriters may also offer the capital securities to certain selected
securities dealers at the above mentioned offering price less a concession of
$0.50 per capital security. The underwriters may allow, and such dealers may
reallow, a discount not in excess of $0.35 per capital security to certain
other dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
Since the proceeds from the sale of the capital securities will be used to
purchase the junior subordinated debentures, we have agreed to pay to the
underwriters an underwriting commission of $0.7875 per capital security.
We will pay certain other fees and expenses, which we expect to be
approximately $501,100, in connection with the offer and sale of the capital
securities.
S-31
<PAGE>
New York Stock Exchange Listing
Before this offering, there has been no established public trading market
for the capital securities. We expect that the capital securities will be
approved for listing on the New York Stock Exchange within 30 days of their
issuance. If listed, trading of the capital securities is expected to begin
within 30 days of the issuance of the capital securities. In order to meet all
of the requirements for listing the capital securities on the New York Stock
Exchange, the underwriters have agreed to sell the capital securities to a
minimum of 400 beneficial holders. The underwriters have advised us that they
intend to make a market in the capital securities prior to the commencement of
trading on the New York Stock Exchange. The underwriters are not, however,
obligated to do so and may discontinue market making at any time without
notice. We cannot assure you that an active trading market will be available
for the capital securities, whether or not they are listed on the New York
Stock Exchange, or that you will be able to sell capital securities at the
price you originally paid for them.
No Sales of Similar Securities
We and Provident Capital Trust II have agreed that for 30 business days
after the date of this prospectus supplement not directly or indirectly to
offer, sell, offer to sell, or grant any option for the sale of any capital
securities or junior subordinated debentures or any securities convertible or
exchangeable into, or exercisable for, capital securities or junior
subordinated debentures, or any debt securities substantially similar to junior
subordinated debentures or any equity securities substantially similar to the
capital securities, except for the capital securities and junior subordinated
debentures described in this prospectus supplement, without the prior written
consent of the underwriters.
Confirmation to Discretionary Accounts Not Permitted
The underwriters may not confirm sales to any accounts over which they
exercise discretionary authority without the prior approval of the customer.
Price Stabilization and Short Positions
In connection with the sale of the capital securities, SEC rules permit the
underwriters to engage in transactions that stabilize the price of the capital
securities. These transactions may include purchases for the purpose of fixing
or maintaining the price of the capital securities. The underwriters may create
a short position in the capital securities in connection with the offering.
That means they may sell a larger number of the capital securities than is
shown on the cover page of this prospectus supplement. If they create a short
position, the underwriters may purchase capital securities in the open market
to reduce the short position. If the underwriters purchase the capital
securities to stabilize the price or to reduce their short position, the price
of the capital securities could be higher than it might be if they had not made
such purchases. The underwriters make no representation or prediction about any
effect that these purchases may have on the price of the capital securities.
The underwriters may suspend any of these activities at any time.
The underwriters may also impose a penalty bid on certain dealers and
selling group members. This means that if the representatives of the
underwriters purchase capital securities in the open market to reduce the
underwriters' short position or to stabilize the price of the capital
securities, they may reclaim the amount of the selling concession from the
underwriters or selling group members who sold those securities as part of this
offering.
Affiliations
The underwriters and their affiliates have in the past and expect that they
may in the future engage in transactions with and perform services for us and
our subsidiaries in the ordinary course of their businesses, for which they
received, and in the future expect that they will receive, customary fees.
S-32
<PAGE>
PROSPECTUS
$200,000,000
PROVIDENT CAPITAL TRUST II
PROVIDENT CAPITAL TRUST III
Preferred Securities
fully and unconditionally guaranteed by
PROVIDENT FINANCIAL GROUP, INC.
----------------
One East Fourth Street
Cincinnati, Ohio 45202
(513) 579-2000
----------------
These securities may be offered from time to time, in amounts, on terms and at
prices that will be determined at the time they are offered for sale. These
terms and prices will be described in more detail in one or more supplements to
this prospectus, which will be distributed at the time the securities are
offered.
----------------
You should read this prospectus and any supplement carefully before you invest.
----------------
This prospectus may not be used to sell any of the securities unless it is
accompanied by a prospectus supplement.
----------------
The securities may be sold to or through underwriters, through dealers or
agents, directly to purchasers or through a combination of these methods. If an
offering of securities involves any underwriters, dealers or agents, then the
applicable prospectus supplement will name the underwriters, dealers or agents
and will provide information regarding any fee, commission or discount
arrangements made with those underwriters, dealers or agents.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
----------------
This prospectus is dated June 9, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
About this Prospectus.................................................... 1
Where You Can Find More Information About Provident Financial Group,
Inc. ................................................................... 2
Summary.................................................................. 3
Provident Financial Group, Inc. ......................................... 4
The Trusts............................................................... 4
Use of Proceeds.......................................................... 5
Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends............................. 6
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Description of The Preferred Securities.................................... 7
Description of The Guarantees.............................................. 14
Description of The Junior Subordinated Debentures.......................... 17
Book-Entry Issuance........................................................ 26
ERISA Matters.............................................................. 29
Plan of Distribution....................................................... 29
Legal Opinions............................................................. 30
Experts.................................................................... 30
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that Provident Financial
Group, Inc., Provident Capital Trust II and Provident Capital Trust III have
filed with the Securities and Exchange Commission (which we refer to as the
"SEC") using a "shelf" registration process. Under this shelf process, each of
Provident Capital Trust II and Provident Capital Trust III (which we refer to
as the "Trusts") may sell its own preferred securities, guaranteed by the
related guarantees of Provident Financial Group, Inc., as described in this
prospectus, in one or more offerings up to a total dollar amount of
$200,000,000 and invest the proceeds in junior subordinated debentures issued
by Provident Financial Group, Inc. This prospectus provides you with a general
description of the capital securities of each Trust and the related guarantees
and junior subordinated debentures. Each time that one of the Trusts sells its
capital securities, we will provide a prospectus supplement that will contain
specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. References to this prospectus or the prospectus supplement also
mean the information contained in such other documents filed with the SEC. If
this prospectus is inconsistent with the prospectus supplement, you should rely
on the prospectus supplement. You should read both this prospectus and any
prospectus supplement together with any additional information that we refer
you to as discussed under "Where You Can Find More Information About Provident
Financial Group, Inc."
1
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION ABOUT PROVIDENT FINANCIAL GROUP, INC.
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document which we file at
the SEC's public reference rooms in Washington, D.C., New York, New York,
Chicago, Illinois and Denver, Colorado. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our SEC filings are
available to the public over the Internet at the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" in this prospectus the
information that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14,
or 15(d) of the Securities Exchange Act of 1934 until we sell all of the
Preferred Securities:
. Annual Report on Form 10-K for the year ended December 31, 1998, as
amended;
. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999; and
. Current Report on Form 8-K filed on January 29, 1999.
You may request a copy of these filings at no cost, by writing or
telephoning Provident Financial Group, Inc., Attention: Investor Relations, One
East Fourth Street, Cincinnati, Ohio 45202, telephone (513) 345-7102 or 800-
851-9521.
This prospectus does not contain or incorporate by reference any separate
financial statements of the Trusts. We do not believe that these financial
statements are material to prospective holders of the preferred securities
because:
. all of the voting securities of the Trusts will be owned, directly or
indirectly, by us, a reporting company under the Securities Exchange Act
of 1934;
. the Trusts have no independent operations but exist for the sole purpose
of issuing securities representing undivided beneficial ownership
interests in their respective assets and investing these proceeds in the
junior subordinated debentures issued by us; and
. the obligations of the Trusts under the preferred securities are
guaranteed by us to the extent described in this prospectus.
The Trusts are not currently subject to the informational reporting
requirements of the Securities Exchange Act of 1934. The Trusts will become
subject to such requirements upon the effectiveness of the registration
statement, although we intend and the Trusts intend to seek and expect to
receive exemptions from those reporting requirements.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of those documents.
2
<PAGE>
SUMMARY
Each of the Trusts is a business trust recently organized under Delaware law
by us. They may each offer, at prices and on terms to be determined at the time
of sale, one series of their preferred securities. Each Trust will issue only
one series of preferred securities. The preferred securities will represent
undivided beneficial ownership interests in the assets of the applicable Trust.
Unless the applicable prospectus supplement states otherwise, holders of
preferred securities will receive cash distributions on a periodic basis and
payments on liquidation, redemption or otherwise of the preferred securities as
described in the applicable prospectus supplement.
The preferred securities will be guaranteed on a subordinated basis by us to
the extent described in this prospectus and the applicable prospectus
supplement. Our obligations under the guarantees will be subordinated to the
same extent as our obligations under the junior subordinated debentures.
When a Trust issues a series of its preferred securities, it will also issue
and sell to us a series of common securities. The Trust will use the proceeds
from the issuances of the preferred securities and common securities to
purchase a corresponding series of junior subordinated debentures from us. The
junior subordinated debentures purchased by the applicable Trust may be
distributed subsequently on a proportionate basis to holders of preferred
securities and common securities if that Trust were to be dissolved. The Trust
may be dissolved subject to certain conditions that will be described in an
accompanying prospectus supplement.
Each guarantee, when taken together with our obligations under the
corresponding series of junior subordinated debentures, the indenture under
which the junior subordinated debentures will be issued and the relevant
declaration of trust, including our obligations to pay the costs, expenses,
debts and liabilities of each Trust (other than regarding the preferred
securities and the common securities of the Trust), will constitute a full and
unconditional guarantee on a subordinated basis by us of all payments due on
the preferred securities.
3
<PAGE>
PROVIDENT FINANCIAL GROUP, INC.
Current Status
We are a Cincinnati-based commercial banking and financial services company
organized under the laws of the State of Ohio. We have full service banking
operations in Ohio, northern Kentucky and southwestern Florida. At March 31,
1999, we had total assets of $8.6 billion, loans and leases of $5.9 billion,
deposits of $5.6 billion and shareholders' equity of $712 million. We also
service an additional $3.6 billion of loans and leases.
Our Plan for Expansion
Internal Growth and Acquisitions
We have expanded our franchise in recent years through internal growth and
acquisitions. Business lines that have been expanded to operate at a national
level include Provident Capital Corp. (a middle-market structured finance
products division), Provident Commercial Group and Information Leasing
Corporation (commercial leasing divisions) and Provident Consumer Financial
Services (a mortgage loan division).
Banking Services Expansion
We currently conduct our banking operations through The Provident Bank (in
Ohio) and Provident Bank of Florida.
We expanded our banking services by acquisitions of Florida Gulfcoast
Bancorp, Inc. located in Sarasota, Florida and South Hillsborough Community
Bank located in Hillsborough County, Florida. Further, the Provident Bank of
Kentucky merged into The Provident Bank on March 23, 1998.
Contact Information
Our executive offices are located at One East Fourth Street, Cincinnati,
Ohio 45202 and its Investors Relations telephone number is (513) 345-7102 or
800-851-9521.
THE TRUSTS
Purpose and Ownership of the Trusts
Each of the Trusts is a business trust recently organized under Delaware law
by us and the trustees. The Trusts are being established solely for the
following purposes:
. to issue and sell the preferred securities, which represent undivided
beneficial ownership interests in the assets of each Trust;
. to issue and sell the common securities to us in a total liquidation
amount equal to 3% of the total capital of each Trust;
. to use the proceeds from the sale of the common securities and the
preferred securities to acquire the junior subordinated debentures from
us; and
. to engage in other activities that are directly related to the activities
described above, such as registering the transfer of the preferred
securities.
Because each Trust is being established only for the purposes listed above,
the applicable series of junior subordinated debentures will be the sole assets
of the applicable Trust, and payments under the junior subordinated debentures
will be the sole source of income to that Trust.
As issuer of the junior subordinated debentures, we will pay:
. all fees, expenses and taxes related to each Trust and the offering of
each Trust's preferred securities; and
. all ongoing costs, expenses and liabilities of the Trusts, except
obligations to make distributions and other payments on the common
securities and the preferred securities.
For so long as the preferred securities remain outstanding, we will promise
to:
. own directly or indirectly all of the common securities;
. cause each Trust to remain a business trust and not to voluntarily
dissolve, wind-up, liquidate or be terminated, except as permitted by the
relevant declaration of trust;
4
<PAGE>
. use its commercially reasonable efforts to ensure that each Trust will
not be an "investment company" for purposes of the Investment Company Act
of 1940; and
. take no action that would be reasonably likely to cause each Trust to be
classified as an association or a publicly traded partnership taxable as
a corporation for United States federal income tax purposes.
The Trustees
Each of the Trust's business and affairs will be conducted by its five
trustees. In each case, the three regular trustees of each Trust will be
individuals who are our employees. The property trustee of each Trust will hold
title to the junior subordinated debentures for the benefit of the holders of
the preferred securities of each Trust and will have the power to execute all
rights and powers of a registered holder of junior subordinated debentures
under the indenture. The Delaware trustee will maintain its principal place of
business in Delaware and meet the requirements of Delaware law for Delaware
business trusts.
We have the sole right to appoint, remove and replace any of the trustees of
each Trust unless an event of default occurs under the indenture. In that
event, the holders of a majority in liquidation amount of the applicable
preferred securities will have the right to remove and appoint the property
trustee and the Delaware trustee.
Additional Information
For additional information concerning the particular Trust issuing a series
of preferred securities, see "The Trust" in the applicable prospectus
supplement. We anticipate that the Trusts will not be required to file any
reports with the SEC after the issuance of the preferred securities. As
discussed below under the caption "Accounting Treatment", we will provide
certain information concerning each of the Trusts and the preferred securities
in the financial statements included in its own periodic reports to the SEC.
Offices of the Trusts
The executive office of each Trust is c/o Provident Financial Group, Inc.,
One East Fourth Street, Cincinnati, Ohio 45202, Attention: General Counsel, and
its telephone number is (513) 579-2861.
USE OF PROCEEDS
Each Trust will invest all of the net proceeds from the sale of any
preferred securities in junior subordinated debentures.
Except as otherwise may be described in a prospectus supplement accompanying
this prospectus, we expect to use the proceeds from the sale of the junior
subordinated debentures for general corporate purposes, which may include the
repayment of debt, investments in or extensions of credit to our subsidiaries
and the financing of possible acquisitions. We currently have no agreements,
arrangements or understandings regarding possible material acquisitions.
5
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Our consolidated ratios of earnings to fixed charges and consolidated ratios
of earnings to combined fixed charges and preferred stock dividend requirements
for each of the periods indicated are set forth below:
<TABLE>
<CAPTION>
Three
Months
Ended March
31, Year Ended December 31,
----------- -----------------------------
1999 1998 1994 1995 1996 1997 1998
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits.... 2.71x 2.75x 2.37x 2.82x 2.33x 2.55x 3.13x
Including Interest on Deposits.... 1.61x 1.57x 1.50x 1.53x 1.42x 1.41x 1.53x
Earnings to Combined Fixed Charges
and Preferred Stock Dividend
Requirements:
Excluding Interest on Deposits.... 2.68x 2.72x 2.35x 2.78x 2.31x 2.42x 2.82x
Including Interest on Deposits.... 1.60x 1.57x 1.50x 1.52x 1.42x 1.39x 1.49x
</TABLE>
For purposes of computing the ratios of both earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividend requirements,
earnings represent net income plus applicable income taxes and fixed charges.
Fixed charges, excluding interest on deposits, represent interest expense
(except interest on deposits), capitalized interest, and the interest factor
included in rents. Fixed charges, including interest on deposits, represent all
interest expense, capitalized interest, and the interest factor included in
rents. Combined fixed charges and preferred stock dividend requirements,
excluding interest on deposits, represent interest expense (except interest
paid on deposits), capitalized interest, an amount equal to the pre-tax
earnings required to meet applicable preferred stock dividend requirements, and
the interest factor included in rents. Combined fixed charges and preferred
stock dividend requirements, including interest on deposits, represent all
interest expense, capitalized interest, an amount equal to the pre-tax earnings
required to meet applicable preferred stock dividend requirements, and the
interest factor included in rents.
6
<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
The following description of the terms and provisions of preferred
securities summarizes certain general terms that will apply to each series of
preferred securities. This description is not complete, and we refer you to the
certificate of trust and the declaration of trust for each Trust and the form
of the amended and restated declaration of trust, copies of which we filed as
exhibits to the registration statement of which this prospectus is a part.
Declaration of Trusts
When a Trust issues a series of preferred securities, the declaration of
trust relating to that Trust will contain, and the prospectus supplement
relating to that series will summarize, the terms and other provisions relating
to that series of preferred securities. Each Trust will issue only one series
of preferred securities.
The declaration of trust of each Trust will be qualified as an indenture
under the Trust Indenture Act of 1939. Unless the applicable prospectus
supplement states otherwise, The Chase Manhattan Bank will act as indenture
trustee under each relevant declaration of trust.
Each series of preferred securities will represent undivided beneficial
ownership interests in the assets of the applicable Trust. The holders of the
preferred securities will be entitled to a preference in certain circumstances
regarding distributions from the applicable Trust and amounts payable on
redemption or liquidation over the corresponding series of common securities,
as well as other benefits as described in the relevant declaration of trust.
Specific Terms of Each Series
Each time that a Trust issues a series of preferred securities, the
prospectus supplement relating to that new series will summarize the particular
amount, price and other terms and provisions of these preferred securities.
These terms may include the following:
. the distinctive designation of the preferred securities;
. the number of preferred securities issued by the applicable Trust and the
liquidation value of each such preferred security;
. the annual distribution rate (or method of determining such rate) for
preferred securities issued by the applicable Trust and the date or dates
upon which such distributions will be payable;
. whether distributions on preferred securities issued by the applicable
Trust may be deferred and, if so, what the maximum number of
distributions that may be deferred and the terms and conditions of such
deferrals will be;
. whether distributions on preferred securities issued by the applicable
Trust will be cumulative, and, in the case of preferred securities having
such cumulative distribution rights, the date or dates or method of
determining the date or dates from which distributions on preferred
securities issued by each Trust will be cumulative;
. the amount or amounts which will be paid out of the assets of the
applicable Trust to the holders of preferred securities of the Trust upon
voluntary or involuntary dissolution, winding up or termination of the
applicable Trust;
. the obligation, if any, of the applicable Trust to purchase or redeem
preferred securities issued by the applicable Trust and the price or
prices at which, the period or periods within which and the terms and
conditions upon which preferred securities issued by the applicable Trust
will be purchased or redeemed, in whole or in part, pursuant to such
obligation;
. the voting rights, if any, of preferred securities issued by the
applicable Trust in addition to those required by law, including the
number of votes per preferred security and any requirement for the
approval by
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the holders of preferred securities as a condition to specified action or
amendments to the relevant declaration of trust; and
. any other relevant rights, preferences, privileges, limitations or
restrictions of preferred securities issued by the applicable Trust,
consistent with the declaration of the trust and with applicable law.
All preferred securities that a Trust offers will be guaranteed by us to the
extent set forth below under the caption "Description of the Guarantees" in
this prospectus. The applicable prospectus supplement will also describe the
United States federal income tax considerations applicable to each offering of
preferred securities.
Issuance of Common Securities
In connection with the issuance of preferred securities, each Trust will
issue a new series of common securities to us. Except as described below under
the caption "--Subordination" in this prospectus, the terms of the common
securities issued by the applicable Trust will be substantially identical to
the terms of the preferred securities. These terms will be defined in the
relevant declaration of trust and will be summarized in the applicable
prospectus supplement. These terms will specify the following:
. the annual distribution rate (or method of determining that rate) and the
date or dates upon which the distributions will be payable;
. the rights of the applicable Trust to redeem the common securities and
related provisions;
. the voting rights of holders of the common securities;
. any liquidation rights or similar restrictions;
. and other specific terms of the common securities (not inconsistent with
the relevant declaration of trust).
Subordination
The common securities will rank on a par with, and payments will be made on
them on a proportionate basis with, the preferred securities issued by the
applicable Trust, except that upon a "Trust Enforcement Event" (as defined
below), the rights of the holders of the common securities to payments of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the preferred securities.
Holder of Common Securities
Except in certain limited circumstances, the holder of the common securities
of the applicable Trust will have sole power to appoint, remove or replace any
of the trustees of the applicable Trust. All of the common securities of the
applicable Trust will be directly or indirectly owned by us.
Trust Enforcement Events
An event of default under the indenture that has occurred and is continuing
constitutes a "Trust Enforcement Event" under the relevant declaration of
trust.
Remedies of Holders of Preferred Securities and the Property Trustee
If a Trust Enforcement Event occurs and is continuing, then the holders of
preferred securities of the applicable Trust would rely on the enforcement by
the property trustee of its rights as a holder of the junior subordinated
debentures against us. In addition, the holders of a majority in liquidation
amount of the preferred securities of the applicable Trust will have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the property trustee or to direct the exercise of any trust
or power conferred upon the property trustee under the relevant declaration of
trust, including the right to direct the property trustee to exercise the
remedies available to it as a holder of the junior subordinated debentures.
Upon the occurrence of a Trust Enforcement Event, the property trustee, as
the holder of the
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junior subordinated debentures, will have the right under the indenture to
declare the principal of and premium, if any, and interest on the junior
subordinated debentures held by the applicable Trust to be immediately due and
payable.
If the property trustee fails to enforce its rights regarding the junior
subordinated debentures held by the applicable Trust, any holder of preferred
securities may, to the extent permitted by applicable law, institute a legal
proceeding directly against us to enforce the property trustee's rights under
these junior subordinated debentures without first instituting any legal
proceeding against the property trustee or any other person or entity. In
addition, if a Trust Enforcement Event has occurred and is continuing and such
event is attributable to our failure to make any required payments on the
junior subordinated debentures when due, then a holder of preferred securities
may, on or after the date that such payment was due, institute a proceeding
directly against us for enforcement of payment on the junior subordinated
debentures having a principal amount equal to the total liquidation amount of
the preferred securities held by that holder (we refer to such proceeding as a
"Direct Action"). In connection with a Direct Action, we will have the right
under the indenture to set off any payment made to that holder by us. The
holders of preferred securities will not be able to exercise directly any other
remedy available to the holders of junior subordinated debentures.
Remedies of Holders of Common Securities
The holder of the common securities will be deemed to have waived any Trust
Enforcement Event regarding the common securities until all Trust Enforcement
Events regarding the preferred securities have been cured, waived or otherwise
eliminated. Until such a Trust Enforcement Event has been cured, waived or
otherwise eliminated, the property trustee will be deemed to be acting solely
on behalf of the holders of the preferred securities and only the holders of
the preferred securities will have the right to direct the property trustee
regarding remedies under the relevant declaration of trust, and, therefore, the
indenture.
Limitation on Consolidations, Mergers and Sale of Assets
Each of the Trusts may not consolidate, merge with or into, or sell or lease
substantially all of its properties and assets to any corporation or other
entity, unless:
. a majority of the regular trustees consent to such a transaction;
. the successor assumes all of the obligations of the Trust regarding the
preferred securities, or substitutes other securities for the preferred
securities with the same terms and other provisions as the preferred
securities (which we refer to as "Successor Securities"), and regarding
the Trustees;
. if Successor Securities are issued, these securities are listed on the
same national securities exchange on which the preferred securities were
listed;
. the transaction does not cause the preferred securities or the Successor
Securities to be downgraded by a national ratings organization;
. such transaction does not adversely affect the rights of the holders of
the preferred securities in any material respect;
. following the transaction, the Trust would not have to register as an
"investment company" under the Investment Company Act of 1940;
. we, or a successor which will own all of the common securities of the
Trust or its successor, will guarantee the preferred securities, or the
Successor Securities, to the same extent as the preferred securities are
guaranteed by the guarantee;
. the Trust would continue to be classified as a grantor trust for United
States federal income tax purposes, unless each holder of preferred
securities consents to such a change; and
. the holders of the preferred securities would continue to be treated as
owning an undivided beneficial interest in the assets of the Trust,
unless each holder of the preferred securities consents to such a change.
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Paying Agent
Unless the applicable prospectus supplement states otherwise, in the event
that any preferred securities are not in the form of global securities, as
described under "Book-Entry Issuance", each Trust will maintain in the Borough
of Manhattan, The City of New York, an office or agency where the preferred
securities may be presented for payment by a paying agent.
Each Trust may appoint a paying agent and may appoint one or more additional
paying agents in such other locations as it may determine and change any paying
agent without prior notice to the holders of preferred securities. Each Trust,
or any of its affiliates, may act as paying agent regarding any series of
preferred securities. Unless the applicable prospectus supplement states
otherwise, the property trustee will act as paying agent for each series of
preferred securities. In the event that the property trustee will no longer act
as the paying agent, the regular trustees may appoint a successor, which will
be a bank or trust company acceptable to us, to act as paying agent.
Transfer of Preferred Securities
For each issue of preferred securities, the property trustee will keep a
security register to provide for the transfer and registration of transfer of
preferred securities. The following provisions apply to the transfer of
preferred securities which are not issued in book-entry form:
. Holders of any issue of preferred securities may exchange their
securities for an equal principal amount of other preferred securities of
different authorized denominations of the same issue and with the same
terms.
. No service charge will be made for any registration of transfer or
exchange of securities, but the Trust may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
securities.
. If the preferred securities are to be redeemed in part, the Trust will
not be required:
-- to issue, register the transfer of or exchange any securities during
a period beginning at the opening of business 15 days before the day
of the mailing of a notice of redemption of any such securities
selected for redemption and ending at the close of business on the
day of such mailing; or
-- to register the transfer or exchange of any preferred security so
selected for redemption in whole or in part, except the unredeemed
portion of any security being redeemed in part.
Global Securities
The preferred securities of any issue may be issued in the form of one or
more global securities. Preferred securities of any issue will no longer be
eligible to be represented in the form of a global security and will be
registered in definitive form if one of the following events occurs:
. if at any time the depositary notifies the applicable Trust that it is
unwilling or unable under the Securities Exchange Act of 1934 and other
applicable law to continue as depositary or if at any time it will no
longer be eligible, in each case if a successor depositary is not
appointed within 90 days after the applicable Trust receives notice or
becomes aware of this ineligibility; or
. the applicable Trust, in its sole discretion, may determine that the
preferred securities issued in the form of one or more global securities
will no longer be represented by a global security.
For more information regarding the issuance of global securities and the
depositary arrangements for them, see below under the caption "Book-Entry
Issuance" in this prospectus.
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Registration of Global Securities
If the preferred securities are to be issued in the form of one or more
global securities, then a regular trustee on behalf of the applicable Trust
will execute and the property trustee will cause the global securities to be
registered in the name of the depositary for these global securities or its
nominee.
Registration of Preferred Securities in Definitive Form
Preferred securities not represented by a global security which are issued
in exchange for all or a part of a global security will be registered in such
names and in such authorized denominations as the depositary, pursuant to
instructions from its direct or indirect participants or otherwise, will
instruct the property trustee. Upon execution and authentication, the property
trustee will deliver the preferred securities not represented by a global
security to the persons in whose names such definitive preferred securities are
so registered. The preferred securities that are not initially represented by a
global security may be exchanged or transferred for part of a global security
pursuant to the instructions and procedures of the depositary.
Reliance on the Depositary by the Trusts and Property Trustee
In connection with each issue of preferred securities, the applicable Trust
and property trustee may for all purposes, including the making of payments due
on these preferred securities, deal with the depositary as the authorized
representative of the holders of these preferred securities for the purpose of
exercising the rights of these holders. The rights of the owner of any
beneficial interest in a global security will be limited to those established
by law and agreements between such owners and depository participants or
Euroclear and Cedel; provided that no such agreement will give any rights to
any person against the applicable Trust or property trustee without the written
consent of these parties.
Transfer of Beneficial Interests in Global Securities
Global securities may not be transferred as a whole except under the
following circumstances:
. by the depositary to a nominee of the depositary;
. by a nominee of the depositary to the depositary or another nominee of
the depositary; or
. by the depositary or any such nominee to a successor depositary or a
nominee of such successor depositary.
Interests of beneficial owners in a global security may be transferred or
exchanged for preferred securities not represented by a global security and
preferred securities not represented by a global security may be transferred or
exchanged for global securities in accordance with rules of the depositary.
Amendments
Amendments Without Consent of Holders of Preferred Securities
Each declaration of trust may be amended without the consent of the holders
of the preferred securities:
. to cure any ambiguity;
. to correct or supplement any provisions in the declaration of trust that
may be defective or inconsistent with any other provision in the relevant
declaration of trust;
. to add to our covenants, restrictions or obligations, as sponsor of the
Trusts;
. to conform to any change in Rule 3a-5 under the Investment Company Act of
1940 or written change in interpretation or application of Rule 3a-5
under the Investment Company Act of 1940 by any legislative body, court,
government agency or regulatory authority; or
. to modify, eliminate or add to any provisions as necessary to the
relevant declaration of trust to ensure that the Trust will be classified
for United States federal income tax purposes as a grantor trust at all
times that any preferred securities or common securities are outstanding
or to
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ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act of 1940;
provided that any action described in this sentence may be taken only if it
does not adversely affect in any material respect the rights of the holders of
preferred securities or common securities.
Amendment With Consent of Holders of Preferred Securities and Common
Securities
Without the consent of each holder of the preferred securities and the
common securities, the relevant declaration of trust may not be amended to:
. change the amount or timing of any distribution of the preferred
securities and the common securities or otherwise adversely affect the
amount of any distribution required to be made on the preferred
securities and the common securities;
. restrict the right of a holder of preferred securities to institute suit
for the enforcement of any payment owed on these securities; or
. change the voting requirements and other provisions relating to
amendments.
Without the consent of 66 2/3% of the holders of outstanding preferred
securities and common securities voting as a single class, the relevant
declaration of trust may not be amended to:
(1) adversely affect the powers, preferences or special rights of the
preferred securities and the common securities; or
(2) result in the dissolution, winding-up or termination of the applicable
Trust other than pursuant to the terms of the relevant declaration of
trust;
provided that, if any amendment or proposal referred to in clause (1) above
would adversely affect only the preferred securities or the common securities,
then only the affected class will be entitled to vote on such amendment or
proposal.
Amendments With Consent of Holders of Common Securities
Without the consent of the holders of a majority in liquidation amount of
the common securities, the relevant declaration of trust may not be amended to
change the rights of the holders of the common securities to increase or
decrease the number of, and appoint and remove trustees.
Provisions that May Not be Amended
Under no circumstances may the following provisions of the relevant
declaration of trust be amended:
. to cause the applicable Trust to be classified other than as a grantor
trust for United States federal income tax purposes;
. to reduce or otherwise adversely affect the powers of the property
trustee in contravention of the Trust Indenture Act of 1939; and
. to cause the applicable Trust to be deemed to be an "investment company"
required to be registered under the Investment Company Act of 1940.
Meetings of the Holders of Securities
Meetings
The regular trustees of any issue of preferred securities may call a meeting
of the holders of the securities on any matter on which these securities are
entitled to act under the relevant declaration of trust. In addition, the
holders of at least 10% in liquidation amount of issue of preferred securities
may direct the regular trustees to call such a meeting. The regular trustees
are required to give notice of any such meeting at least 7 days but not more
than 60 days before the date of that meeting. The regular trustees, in their
sole discretion, will establish all other provisions relating to meetings of
holders of preferred securities not stated below.
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Action by Written Consent
Whenever a vote, consent or approval of the holders of preferred securities
is permitted or required, that vote, consent or approval may be given at the
meeting. Any action that may be taken at a meeting of these holders may be
taken without a meeting and without prior notice if a consent in writing
setting forth the action so taken is signed by the holders owning not less than
the minimum amount of preferred securities in liquidation amount that would be
necessary to authorize or take such action at the meeting itself.
Proxies
Each holder of a preferred security may authorize any person to act for it
by proxy on all matters but proxies will not be valid after the expiration of
11 months from the date thereof unless otherwise provided in the proxy. Every
proxy will be revocable at the pleasure of the holder of preferred securities
executing the proxy. Except as otherwise provided herein, all matters relating
to the giving, voting or validity of proxies will be governed by the General
Corporation Law of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the applicable Trust were a Delaware
corporation and the holders of the preferred securities were stockholders of a
Delaware corporation.
Governing Law
Each declaration of trust and the related preferred securities will be
governed by and construed in accordance with the laws of the State of Delaware.
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DESCRIPTION OF THE GUARANTEES
The following description of the terms and provisions of the guarantees
summarizes certain general terms that will apply to each guarantee that we
deliver in connection with a series of preferred securities. This description
is not complete, and we refer you to the form of the guarantee agreement, a
copy of which we filed as an exhibit to the registration statement of which
this prospectus is a part.
When a Trust sells a series of its preferred securities, we will execute and
deliver a guarantee of that series of preferred securities under a guarantee
agreement for the benefit of the holders of these preferred securities. Only
one guarantee will be issued by us in connection with the issuance of preferred
securities by the applicable Trust. Each guarantee agreement will be qualified
as an indenture under the Trust Indenture Act of 1939. Unless the applicable
prospectus supplement states otherwise, The Chase Manhattan Bank will act as
indenture trustee under each guarantee agreement. The guarantee trustee will
hold each guarantee for the benefit of the holders of the preferred securities
of the applicable Trust.
Specific Terms of the Guarantees
Except as stated in the applicable prospectus supplement, we will
irrevocably and unconditionally agree to pay in full the following payments or
distributions on each corresponding series of preferred securities, to the
extent that they are not paid by, or on behalf of, the applicable Trust:
. any accumulated and unpaid distributions required to be paid on the
preferred securities, to the extent that the applicable Trust has
sufficient funds available for those payments at the time;
. the redemption price regarding any preferred securities called for
redemption, to the extent that the applicable Trust has sufficient funds
available for those redemption payments at such time; and
. upon a voluntary or involuntary dissolution, winding up or liquidation of
the applicable Trust, unless the corresponding series of junior
subordinated debentures are distributed to holders of the preferred
securities, the lesser of:
. the total liquidation amount of the preferred securities and all
accumulated and unpaid distributions on them to the date of payment; and
. the amount of assets of the applicable Trust remaining available for
distribution to holders of the preferred securities.
Our obligation to make the payments described above under the guarantee may
be satisfied by direct payment of the required amounts by us to the holders of
the applicable preferred securities or by causing the applicable Trust to pay
such amounts to these holders. In addition, our obligation to make the payments
described above will exist regardless of any defense, right of setoff or
counterclaim that the applicable Trust may have or assert.
Each guarantee will apply only to the extent that the applicable Trust has
sufficient funds available to make the required payments. If we do not make
interest payments on the junior subordinated debentures held by the applicable
Trust, then the Trust will not be able to pay distributions on the preferred
securities issued by the Trust and will not have funds legally available for
these payments.
Nature of the Guarantee
We will, through the relevant declaration of trust, the guarantee, the
junior subordinated debentures and the indenture, taken together, fully and
unconditionally guarantee the applicable Trust's obligations under the
preferred securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes this
guarantee. It is only the combined operation of these documents that has the
effect of providing a full and unconditional guarantee of the applicable
Trust's obligations under the preferred securities.
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Each guarantee will constitute a guarantee of payment and not of collection.
This means that the guaranteed party may institute a legal proceeding directly
against us to enforce its rights under a guarantee without first instituting a
legal proceeding against any other person or entity. In addition, each
guarantee will not be discharged except by payment of the amounts due under it
in full to the extent they have not been paid by the applicable Trust or upon
distribution of junior subordinated debentures to the holders of the preferred
securities in exchange for all of these preferred securities.
Subordination of Common Securities
We also will irrevocably and unconditionally guarantee the obligations of
the applicable Trust regarding that Trust's common securities to the same
extent as its guarantee of the applicable preferred securities, except that
upon the occurrence and the continuation of a Trust Enforcement Event regarding
the applicable Trust, holders of these preferred securities will have priority
over holders of the common securities regarding distributions and payments on
liquidation, redemption or otherwise.
Ranking
Each guarantee will constitute our unsecured obligation and will rank
subordinate and junior in right of payment to all of our other liabilities to
the same extent as the junior subordinated debentures.
The guarantees will not place a limitation on the amount of additional
senior debt that may be incurred by us.
Certain Covenants of Provident Financial Group, Inc.
In general, we will covenant in each guarantee that, so long as any
preferred securities issued by a Trust remain outstanding, if
. there shall have occurred any event of default under the indenture
regarding the applicable series of junior subordinated debentures;
. we shall be in default regarding its payment of any obligations under the
related guarantee; or
. we shall have given notice of our election to defer interest payments on
the junior subordinated debentures, as described below under the caption
"Description of the Junior Subordinated Debentures--Option to Defer
Interest" and we shall not have rescinded that notice or begun making
such payments,
then we will not, and will not permit any subsidiary to, do the following:
. to declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment regarding, any of our capital
stock; or
. make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of our debt securities that rank on a par with
or junior to the junior subordinated debentures or make any payments
regarding any guarantee by us of the debt securities of any of our
subsidiaries if such guarantee ranks on a par with or junior to these
junior subordinated debentures.
At any time, however, we may do the following:
. pay dividends or make distributions in our common stock;
. make payments under the applicable guarantee made by us regarding
preferred securities of the applicable Trust;
. declare a dividend in connection with the implementation of a
shareholders' rights plan, or issue stock under any such plan in the
future, or redeem or repurchase any rights issued pursuant to such a
plan; and
. purchase common stock related to the issuance of common stock or rights
under any of our benefit plans.
Amendments
Unless otherwise specified in the applicable prospectus supplement, each
guarantee may be amended under the following two circumstances:
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. regarding changes to the guarantee that do not materially adversely
affect the rights of holders of the applicable preferred securities, no
consent of such holders will be required; and
. all other amendments to the guarantee may not be made without the prior
approval of the holders of not less than a majority of the total
liquidation amount of the outstanding preferred securities to which the
guarantee relates.
The manner of obtaining the necessary approvals to amend a guarantee are the
same as for holders of the preferred securities, which are described above
under "Description of the Preferred Securities--Meetings of the Holders of
Securities".
Assignment
All guarantees and agreements contained in a guarantee will bind our
successors, assigns, receivers, trustees and representatives and will inure to
the benefit of the holders of the related preferred securities then
outstanding.
Events of Default and Remedies
An event of default under a guarantee will occur upon our failure to make
any of our payments or perform any of our other obligations under it.
The holders of not less than a majority in total liquidation amount of the
preferred securities to which a guarantee relates have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the guarantee trustee regarding the guarantee or to direct the exercise of any
trust or power conferred upon the guarantee trustee under such guarantee.
If the guarantee trustee fails to enforce a guarantee, then any holder of
the corresponding series of preferred securities may institute a legal
proceeding directly against us to enforce the guarantee trustee's rights under
that guarantee, without first instituting a legal proceeding against the
applicable Trust that issued the preferred securities, the guarantee trustee or
any other person or entity.
Information Concerning the Guarantee Trustee
The guarantee trustee, other than during the occurrence and continuance of a
default by us in performance of a guarantee, undertakes to perform only such
duties as are specifically set forth in the guarantee. After a default under
the guarantee, which has not been cured or waived, that is actually known to a
responsible officer of the guarantee trustee, the guarantee trustee must
exercise the same degree of care and skill as a prudent person would exercise
or use under the circumstances in the conduct of his own affairs. Subject to
this provision, the guarantee trustee is under no obligation to exercise any of
the powers vested in it by a guarantee at the request of any holder of
preferred securities to which the guarantee relates unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred by such action.
Termination of the Guarantees
Each guarantee will terminate upon any of the following events:
. the full payment of the redemption price of all preferred securities of
the applicable Trust;
. the full payment of the amounts payable upon liquidation of the
applicable Trust; or
. the distribution of the junior subordinated debentures held by the
applicable Trust to the holders of the preferred securities of the Trust
in exchange for all of the preferred securities of the Trust.
Each guarantee will continue to be effective or will be reinstated, if at any
time any holder of related preferred securities issued by the applicable Trust
is required to restore payment of any sums paid under the applicable preferred
securities or the guarantee.
Governing Law
The guarantees will be governed by the laws of the State of New York,
including any matters of interpretation under them.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
The following summary of the terms and provisions of our junior subordinated
debentures that will be issued and sold by us and purchased by the applicable
Trust that issues a series of preferred securities. It is not complete, and we
refer you to the indenture and the form of the junior subordinated debentures,
which we filed as exhibits to the registration statement of which this
prospectus is a part.
Unless otherwise specified in the applicable prospectus supplement, each
time that we issue a new series of junior subordinated debentures that series
will be issued under an indenture between us and The Chase Manhattan Bank, as
indenture trustee. The indenture provides for the issuance from time to time of
junior subordinated debentures in an unlimited dollar amount and an unlimited
number of series. Only one series of the junior subordinated debentures will be
issued by each Trust in connection with the issuance of preferred securities by
that Trust.
Unless the applicable prospectus supplement states otherwise, we will issue
each new series of junior subordinated debentures in a total principal amount
equal to the total liquidation amount of the preferred securities that the
applicable Trust sells to the public plus the total amount of common securities
that the applicable Trust sells to us. Concurrently with the issuance of the
preferred securities, the applicable Trust will invest the proceeds from that
issuance and the consideration paid by us for the common securities in the
corresponding series of junior subordinated debentures issued by us. Unless the
applicable prospectus supplement states otherwise, the interest payment
provisions for the junior subordinated debentures will correspond to the
distribution provisions of the corresponding series of preferred securities.
Specific Terms of Each Series
Each time that we issue and sell a new series of junior subordinated
debentures to the applicable Trust, the prospectus supplement relating to that
new series will specify the particular amount, price and other terms of these
securities. These terms will include:
. the title of the junior subordinated debentures of the series, which will
distinguish the junior subordinated debentures of the series from all
other junior subordinated debentures;
. the limit, if any, upon the total principal amount of the junior
subordinated debentures of the series which may be issued;
. the maturity or the method of determining the maturity;
. the rate or rates, if any, at which the junior subordinated debentures of
the series will bear interest, if any, the rate or rates and extent to
which interest on overdue amounts, if any, will be payable in respect of
any junior subordinated debentures of the series;
. the interest payment dates and the record dates for the interest payable
on any interest payment date or the method by which any of the foregoing
will be determined;
. the place or places where the principal of and premium, if any, and
interest on the junior subordinated debentures of the series will be
payable, the place or places where the junior subordinated debentures of
the series may be presented for registration of transfer or exchange and
the place or places where notices and demands to or upon us regarding the
junior subordinated debentures of the series may be made;
. the period or periods within which, or the date or dates on which, if
any, the price or prices at which and the terms and conditions upon which
the junior subordinated debentures of the series may be redeemed, in
whole or in part, at our option;
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. our obligation or our right, if any, to redeem, repay or purchase the
junior subordinated debentures of the series pursuant to any sinking
fund, amortization or analogous provisions or upon the happening of a
specified event, or at the option of a holder of that security, and the
period or periods within which, the price or prices at which, the
currency or currencies (including currency unit or units) in which and
the other terms and conditions upon which junior subordinated debentures
of the series will be redeemed, repaid or purchased, in whole or in part,
pursuant to that obligation;
. the denominations in which any junior subordinated debentures of the
series will be issuable, if other than denominations of $25 and any
integral multiple thereof;
. if other than U.S. dollars, the currency or currencies (including
currency unit or units) in which the principal of (and premium, if any)
and interest, if any, on the junior subordinated debentures of the series
will be payable, or in which the junior subordinated debentures of the
series will be denominated;
. the additions, modifications or deletions, if any, in the events of
default described under the caption "--Events of Default" below or our
covenants described in this prospectus or the applicable prospectus
supplement regarding the junior subordinated debentures of the series;
. if other than the principal amount thereof, the portion of the principal
amount of junior subordinated debentures of the series that will be
payable upon declaration of acceleration of the maturity of the junior
subordinated debentures;
. the additions or changes, if any, to the indenture regarding the junior
subordinated debentures of the series as will be necessary to permit or
facilitate the issuance of the junior subordinated debentures of the
series in bearer form, registrable or not registrable as to principal,
and with or without interest coupons;
. any index or indices used to determine the amount of payments of
principal of and premium, if any, on the junior subordinated debentures
of the series or the manner in which the amounts will be determined;
. whether the junior subordinated debentures of the series, or any portion
thereof, will initially be issuable in the form of a temporary global
security representing all or the portion of the junior subordinated
debentures of the series and provisions for the exchange of the temporary
global security for definitive junior subordinated debentures of the
series;
. whether any junior subordinated debentures of the series will be issuable
in whole or in part in the form of one or more global securities and, in
the case, the respective depositaries for the global securities, the form
of any legend or legends which will be borne by any global security, if
applicable;
. the appointment of any paying agent or agents for the junior subordinated
debentures of the series;
. the terms of any right to convert or exchange junior subordinated
debentures of the series into any other junior subordinated debentures or
other securities or property of ours, and the additions or changes, if
any, to the indenture regarding the junior subordinated debentures of the
series to permit or facilitate the conversion or exchange;
. the relative degree, if any, to which the junior subordinated debentures
of the series will be senior to or be subordinated to other series of
junior subordinated debentures in right of payment, whether the other
series of junior subordinated debentures are outstanding or not; and
. any other terms of the junior subordinated debentures of the series
(which terms will not be inconsistent with the provisions of the
indenture).
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Ranking
Unless otherwise stated in the applicable prospectus supplement, each series
of junior subordinated debentures will be unsecured and will rank junior and be
subordinate in right of payment to all our senior debt.
Subordination
Our obligations under the junior subordinated debentures will be subordinate
to all our existing and future senior debt. In addition, the junior
subordinated debentures will be effectively subordinated to all existing and
future obligations of our subsidiaries. Our obligations under the guarantees
are subordinated to the same extent as the junior subordinated securities. This
means that we cannot make any payments on the junior subordinated debentures or
the guarantees if we are in default on any of its senior debt.
In addition, in the event of our bankruptcy, liquidation or dissolution, its
assets must be used to pay off its senior obligations in full before any
payments may be made on the junior subordinated debentures or the guarantees.
The indenture, the guarantees and the declaration of trusts do not limit our
ability to incur additional senior debt. For more information, see above under
the caption "--Ranking" in this section and below under the caption
"Description of the Guarantees--Ranking" in this prospectus.
As a holding company, our assets primarily consist of the equity securities
of our subsidiaries. As a result, our cash flow and consequent ability to
service our debt, including the junior subordinated debentures, are dependent
upon the earnings of our subsidiaries and the distribution of those earnings to
us, or upon loans or other payments of funds by those subsidiaries to us. Our
subsidiaries are separate and distinct legal entities and will have no
obligation, contingent or otherwise, to pay any interest or principal on the
junior subordinated debentures or to make any funds available therefor, whether
by dividends, loans or other payments. The payment of dividends by our
subsidiaries is contingent upon the earnings of those subsidiaries and is
subject to various business considerations in addition to the requirements of
federal bank and other regulators and contractual restrictions.
In addition, since the junior subordinated debentures will be obligations of
a holding company, the ability of holders of the junior subordinated debentures
to benefit from any distribution of assets of any subsidiary upon the
liquidation or reorganization of such subsidiary is subordinate to the prior
claims of present and future creditors of that subsidiary.
Distribution of Junior Subordinated Debentures
Unless stated otherwise in the applicable prospectus supplement, we may
dissolve and liquidate a Trust and, thereafter, the property trustee would
distribute to holders of the corresponding preferred securities and common
securities the junior subordinated debentures of the series that such Trust had
held as its sole asset. If the property trustee distributes the junior
subordinated debentures to the holders of the preferred securities and the
common securities upon the dissolution and liquidation of such Trust, then the
junior subordinated debentures will be issued in denominations of $25 principal
amount and integral multiples thereof unless otherwise specified in the
applicable prospectus supplement. We anticipate that the junior subordinated
debentures would be distributed in the form of one or more global securities
and that DTC, or any successor depositary for the preferred securities, would
act as depositary for the junior subordinated debentures. The depositary
arrangements for the junior subordinated debentures would be substantially the
same as those in effect for the preferred securities. For a description of DTC
and the terms of the depositary arrangements relating to payments, transfers,
voting rights, redemption and other notices and other matters for the preferred
securities, see the caption below under "Book-Entry Issuance" in this
prospectus.
Option to Defer Interest Payments
Option to Defer Interest Payments
Unless otherwise stated in the applicable prospectus supplement, we will
have the right to
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defer interest payments on the junior subordinated debentures for up to five
years of consecutive interest payment periods if the junior subordinated
debentures are not in default, but the deferral of interest payments cannot
extend beyond the maturity date of the series of junior subordinated
debentures. During the deferral period, interest will continue to accrue on the
junior subordinated debentures, compounded on the same periodic basis upon
which interest otherwise accrues and deferred interest payments will accrue
additional interest. No interest will be due and payable on the junior
subordinated debentures until the end of the deferral period except upon a
redemption of the junior subordinated debentures during a deferral period.
We may pay at any time all or any portion of the interest accrued to that
point during a deferral period. At the end of the deferral period, or on any
redemption date, we will be obligated to pay all accrued and unpaid interest.
Once we pay accrued and unpaid interest on the junior subordinated debentures,
we will again be able to defer interest payments on the junior subordinated
debentures as described above.
Certain Limitations During a Deferral Period
During any deferral period, we will not and our subsidiaries will not be
permitted to:
. pay a cash dividend or make any other payment or distribution on our
capital stock;
. redeem, purchase or make a liquidation payment on any of our capital
stock;
. make an interest, principal or premium payment, or repay, repurchase or
redeem, any of our junior subordinated debentures that rank equal with or
junior to the junior subordinated debentures; or
. make any guarantee payment regarding any guarantee by us of junior
subordinated debentures of any of our subsidiaries, if the guarantee
ranks equal with or junior to the junior subordinated debentures.
However, at any time, including during a deferral period, we will be
permitted to:
. pay dividends or distributions in additional shares of its capital stock;
. make payments under the guarantee of the series of the preferred
securities and the common securities;
. declare or pay a dividend in connection with the implementation of a
shareholders' rights plan, or issue stock under such a plan or repurchase
such rights; and
. purchase common stock for reissuance pursuant to an employee benefit,
dividend reinvestment or stock repurchase plan, or for issuance in an
acquisition transaction that was entered into prior to the commencement
of that deferral period.
Notice Provisions
If the property trustee is the sole holder of the junior subordinated
debentures, we will give the applicable Trust, the applicable regular trustees
and property trustee notice if we decide to defer interest payments on the
junior subordinated debentures. We will give that notice one business day
before the earlier of:
. the next date distributions on the preferred securities are payable; or
. the date the applicable Trust is required to give notice to the New York
Stock Exchange (or any other applicable self-regulatory organization) or
to holders of the corresponding series of preferred securities of the
record date or the date any distribution is payable, but in any event at
least one business day before the record date.
The regular trustees will give notice to the holders of preferred securities
if we decide to defer interest payments on the junior subordinated debentures.
If the property trustee is not the sole holder of the junior subordinated
debentures, we will give the holders notice of any deferral period ten business
days prior to the earlier of:
. the next interest payment date; or
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. the date we are required to give notice to the New York Stock Exchange
(or any other applicable self-regulatory organization) or to holders of
the junior subordinated debentures of the record date or payment, date of
any related interest payment, but in any event at least two business days
prior to the record date.
Covenants
Limitation on Certain Payments
We will covenant that, so long as any preferred securities issued by a Trust
remain outstanding, if
. there will have occurred any event of default under the indenture;
. we will be in default regarding our payment of any obligations under our
guarantee regarding the Trust; or
. we will have given notice of our election to defer interest payments, as
described above under "--Option to Defer Interest and Notices", or such
deferral period or any extension of it will be continuing;
then we will not, and will not permit any of our subsidiaries to:
. declare or pay any cash dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment regarding, any of our
capital stock; or
. make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of our junior subordinated debentures that rank
on a par with or junior in interest to such junior subordinated
debentures;
. or make any guarantee payments regarding any guarantee by us of the
junior subordinated debentures of any of our subsidiaries if such
guarantee ranks on a par with or junior in interest to such junior
subordinated debentures.
However, at any time, including during a deferral period, we may do the
following:
. pay dividends or distributions in our common stock;
. make payments under the applicable guarantee made by us in respect of the
preferred securities of the applicable Trust;
. make any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of stock under any such
plan in the future, or the redemption or repurchase of any such rights
pursuant thereto; and
. purchase common stock related to the issuance of common stock or rights
under any of our benefit plans.
Certain Affirmative Covenants
We will covenant to:
. maintain directly or indirectly 100% ownership of the common securities
of the applicable Trust;
. cause the applicable Trust to remain a Delaware business trust and not to
voluntarily dissolve, windup, liquidate or be terminated, except as
permitted by the relevant declaration of trust;
. use its commercially reasonable efforts to ensure that the trust will not
be an "investment company" for purposes of the Investment Company Act of
1940; and
. take no action that would be reasonably likely to cause the trust to be
classified as an association or a publicly traded partnership taxable as
a corporation for United States federal income tax purposes.
Limitation on Consolidation, Merger and Certain Sales
We may not consolidate with or merge into any other entity or sell or lease
our properties and assets substantially as an entirety to any entity, unless:
. the resulting entity shall be a corporation, partnership or trust
organized under U.S. law;
. the resulting entity assumes our obligations under the junior
subordinated debentures and the indenture;
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. there would be no event of default under the indenture immediately after
giving effect to the transaction; and
. in the case of the junior subordinated debentures of a series held by a
Trust, the consolidation, merger, conveyance, transfer or lease is
permitted under the relevant declaration of trust and the guarantee and
does not give rise to any breach or violation of these documents.
No Event Risk Covenant
In addition, the indenture does not contain any covenants that provide
holders of junior subordinated debentures protection in the event of a highly
leveraged transaction, reorganization, restructuring, merger or other similar
transaction involving us, which may adversely affect holders of junior
subordinated debentures.
Denominations
The junior subordinated debentures will be issuable only in registered
form, without coupons, and only in denominations of $25 and any integral
multiples thereof, unless the applicable prospectus supplement states
otherwise.
Events of Default, Acceleration, Rescission of Acceleration and Waivers
Events of Default
An event of default regarding any series of junior subordinated debentures
under the indenture is any one of the following events:
. default in the payment of interest, including interest on overdue
amounts, for a period of 30 days, subject to our right to defer interest
payments as described above under the caption "--Option to Defer Interest
Payments" in this section;
. default in the payment of the principal of or premium, if any;
. default in the performance, or breach, in any material respect, of any of
our covenants or warranties for a period of 90 days after notice to us by
the indenture trustee or to us and the indenture trustee by holders of at
least 25% in principal amount of the outstanding junior subordinated
debentures of that series;
. certain events of bankruptcy, insolvency and reorganization involving us;
or
. any other event of default pertaining to the particular series of junior
subordinated debentures.
Acceleration
If an event of default of the junior subordinated debentures occurs and is
continuing, then the indenture trustee or the holders of at least 25% in total
principal amount of the outstanding junior subordinated debentures will have
the right to declare the principal and the interest due on these securities to
be due and payable immediately. If, upon such an event of default, the
indenture trustee or holders of at least 25% of the total principal amount of
the outstanding junior subordinated debentures fail to declare the payment of
all amounts on these securities to be due and payable immediately, then the
holders of at least 25% in total liquidation amount of the preferred
securities then outstanding will have the right to declare these amounts due
and payable immediately.
Rescission of Acceleration
At any time after a declaration of acceleration, as described in the
preceding paragraph, has been made and before a judgment or decree for payment
of the money due has been obtained by the indenture trustee, then the holders
of a majority in total principal amount of the outstanding junior subordinated
debentures may rescind the declaration of acceleration if both of the
following events have occurred:
. we have paid or deposited with the indenture trustee amounts sufficient
to pay the sum of:
(1) all overdue interest;
(2) the principal that has become due, other than by acceleration, and
interest on it at the rate borne by the junior subordinated
debentures;
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(3) interest on overdue interest at the rate borne by the junior
subordinated debentures, to the extent that that rate of interest is
lawful; and
(4) all amounts paid or advanced by the indenture trustee and its and
its counsel's reasonable fees and expenses; and
. all events of default regarding that series of junior subordinated
debentures have been cured or waived as described below under the caption
"--Waiver".
If the holders of the junior subordinated debentures fail to rescind the
declaration of acceleration, then the holders of a majority in total
liquidation amount of the preferred securities will have that right.
Waivers
In certain cases, the holders of a majority in principal amount of the
outstanding series of junior subordinated debentures may, on behalf of the
holders of all junior subordinated debentures of that series, waive any past
default or event of default regarding that series or compliance with certain
provisions of the indenture. The following defaults may not, however, be
waived:
. default in the payment of the principal of and premium or interest on any
of that series which has not been cured until that time; or
. a default regarding a covenant or provision of the indenture which cannot
be modified or amended,
without the consent of the holder of each outstanding junior subordinated
debenture of the series affected.
Notwithstanding the rights of the holders the junior subordinated debentures
to waive certain events of default, covenants and other provisions, as
described above, the holders of at least a majority of the total liquidation
amount of the outstanding preferred securities will be required to waive any
event of default or compliance with any covenant under the indenture.
Agreement by Purchasers of Certain Tax Treatment
Each junior subordinated debenture will provide that we and, by our
acceptance of the junior subordinated debenture, or a beneficial interest
therein, the other holders of that junior subordinated debenture intend that
the security constitutes debt and agrees to treat it as debt for United States
federal, local and state tax purposes.
Satisfaction and Discharge
At our request, the indenture will terminate as to the junior subordinated
debentures of any series (except as to any surviving rights of registration of
transfer or exchange of junior subordinated debentures) when either:
. all the junior subordinated debentures of that series have been delivered
to the indenture trustee for cancellation; or
. all the junior subordinated debentures of that series have become due and
payable, will become due and payable at their maturity within one year or
are to be called for redemption within one year and we have deposited
with the indenture trustee funds sufficient to make all remaining
interest and principal payments on the junior subordinated debentures of
that series.
Amendments
Amendments Without Consent of Holders
Without the consent of each holder of the junior subordinated debentures, we
may enter, together with the indenture trustee, into one or more supplemental
indentures to do the following:
. to evidence the succession of another party to us and the assumption by
that party of our covenants under the indenture;
. to add to our covenants for the benefit of the holders of the junior
subordinated debentures;
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. to cure any ambiguity, to correct or supplement any provision of the
indenture which may be inconsistent with any other or to make any other
provision which regarding matters or questions under the indenture;
provided that any such supplemental indenture may not materially
adversely affect the interests of the holders of the junior subordinated
debentures or the related preferred securities; or
. to comply with the requirements of the SEC to effect or maintain the
qualification of the Indenture under the Trust Indenture Act of 1939.
Amendments With Consent of Holders
Without the consent of each holder of an outstanding junior subordinated
debenture, we may not and the indenture trustee may not amend the indenture to
effect the following changes to the terms and provisions of the junior
subordinated debentures:
. to change their maturity;
. to change or reduce the principal amount due;
. to change the interest rate on or any installment of interest due;
. to change the place of payment or the currency in which payment is due;
. to impair the right to sue for enforcement of any such payment on or
after the maturity or redemption date of the junior subordinated
debentures;
. to modify the subordination provisions in a manner adverse to the holders
of the junior subordinated debentures;
. to reduce the outstanding principal amount of junior subordinated
debentures that is required for any supplemental indenture or the waiver
of defaults or Events of Default as defined in the indenture; or
. to modify this section regarding amendments or the provisions regarding
the waiver of past defaults;
provided that no such modifications may be made that adversely affects the
holders of the preferred securities.
Amendments Without Consent of Holders of Preferred Securities
Without the consent of each of the holders of preferred securities, no
amendment may be made to the indenture that adversely affects the rights of
these holders to directly institute a proceeding against us for the enforcement
of the payment of interest of or principal on the junior subordinated
debentures in the amount of such holders' total liquidation amount of preferred
securities.
Payments and Paying Agents
At our option, interest on any series of junior subordinated debentures may
be paid:
. by check mailed to the address of the person entitled thereto as it will
appear on the junior subordinated debentures register of the series; or
. by wire transfer in immediately available funds at the place and to the
account as designated by the person entitled to such payment.
Initially, the paying agent will be The Chase Manhattan Bank. We may change
the paying agent and may perform that role or have one of our subsidiaries act
as paying agent.
Registration, Transfer and Exchange
The indenture trustee will keep a security register to register the junior
subordinated debentures and to register the transfer and exchanges of junior
subordinated debentures for each Trust. Holders of junior subordinated
debentures may register the transfer of a security upon surrender of the
security thus exchanged or transferred. Holders of junior subordinated
debentures of any series may exchange their securities for an equal principal
amount of other junior subordinated debentures of different authorized
denominations of the same series and with the same terms. We will not charge a
fee to holders of junior subordinated debentures for any transfer or exchange
of these securities, but we may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
transfer or exchange of securities.
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Mutilated, Destroyed, Lost and Stolen Securities
We will replace any mutilated, destroyed, lost or stolen junior subordinated
debenture in exchange for a new junior subordinated debenture of the same
series of like tenor and principal amount and other terms. Upon the issuance of
any new security, we may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses, including the fees and expenses of the trustee, connected
with it.
Information Regarding the Indenture Trustee
The indenture trustee, other than during the occurrence and continuance of a
default by us under the indenture, undertakes to perform only such duties as
are specifically set forth in the
indenture. After a default under the indenture, which has not been cured or
waived, that is actually known to a responsible officer of the indenture
trustee, the indenture trustee must exercise the same degree of care and skill
as a prudent person would exercise or use under the circumstances in the
conduct of his own affairs. Subject to this provision, the indenture trustee is
under no obligation to exercise any of the powers vested in it by an indenture
at the request of any holder of junior subordinated debentures unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred by such action.
Governing Law
The indenture will be governed by the laws of the State of New York,
including any matters of interpretation under them.
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BOOK-ENTRY ISSUANCE
We have summarized below certain terms relating to the book-entry facilities
of the depositary for the preferred securities. To the extent that this summary
is inconsistent with the book-entry provisions and description of the preferred
securities in the accompanying prospectus supplement, you should rely on the
description in the accompanying prospectus supplement.
The preferred securities of each series will be represented by one or more
global securities that will be deposited with and registered in the name of DTC
or its nominee. This means that each time a Trust issues a new series of
preferred securities, it will not issue physical certificates that represent
ownership of the preferred securities to the purchasers of these securities.
Rather, the preferred securities will be represented by one or more global
securities. Each global security will be issued to DTC, or its nominee, and
held by or on behalf of DTC, or its nominee. DTC will keep a computerized
record of its participants (for example, a broker) whose clients have purchased
the preferred securities. Each participant will then keep a record of its
clients. Unless it is exchanged in whole or in part for a certificated
security, a global security may not be transferred. However, DTC, its nominees
and their successors may transfer a global security as a whole to one another.
In the event that junior subordinated debentures are distributed to holders
of the corresponding series of preferred securities and common securities, as
described under "Description of the Junior Subordinated Debentures--
Distribution of Junior Subordinated Debentures" in this prospectus, those
junior subordinated debentures would be represented by one or more global
securities. The book-entry and depositary arrangements for these securities
would be substantially similar to those described below for the preferred
securities.
Records of Beneficial Interests
Beneficial interests in a global security will be shown on, and transfers of
the global security will be made only through, records maintained by DTC and
its participants. DTC has provided the Trusts and us with the information that
follows. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the United States Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its participants
(which it terms its "direct participants") deposit with DTC. DTC also records
the settlements among direct participants of securities transactions, such as
transfers and pledges, in deposited securities through computerized records for
direct participants' accounts. This eliminates the need to exchange
certificates in definitive form. Direct participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain other
organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
direct participant. The rules that apply to DTC and its participants are on
file with the SEC.
DTC is owned by a number of its direct participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc.
When you purchase preferred securities through the DTC system, the purchases
must be made by or through a direct participant, who will receive credit for
the preferred securities on DTC's records. When you purchase the preferred
securities, you will be the beneficial owner. Your ownership interest will only
be recorded on the direct (or indirect) participants' records. DTC will have no
knowledge of your individual ownership of the preferred securities. DTC's
records only show the identity of the direct participants and the amount of the
preferred securities held by or
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through them. You will not receive a written confirmation of your purchase or
sale or any periodic account statement directly from DTC. Instead you will
receive these from your direct (or indirect) participant. As a result, the
direct (or indirect) participants are responsible for keeping accurate account
of the securities holdings of their customers like you.
Wiring of Payments
Each time that a Trust issues a new series of preferred securities, the
property trustee will wire payments on the preferred securities to DTC's
nominee. We, the Trust and the property trustee will treat DTC's nominee as the
owner of each global security for all purposes. As a result, we, the Trust, the
property trustee and any paying agent will have no direct responsibility or
liability to pay amounts due on the global security to you or any other
beneficial owners in the global security.
Redemption
Any redemption notices will be sent by us and the Trust directly to DTC, who
will, in turn, inform the direct participants (or the indirect participants),
who will then contact you as a beneficial holder. If less than all of the
preferred securities are being redeemed, DTC will proportionally allot the
amount of the interest of each direct participant to be redeemed.
It is DTC's current practice, upon receipt of any payment of distributions
or liquidation amount, to credit direct participants' accounts on the payment
date based on their holding of beneficial interests in the global securities as
shown on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to direct participants whose accounts are credited
with preferred securities on a record date, by using an omnibus proxy. Payments
by participants to owners of beneficial interests in the global securities, and
voting by participants, will be based on the customary practices between the
participants and owners of beneficial interests. However, payments will be the
responsibility of the participants and not of DTC, the property trustee, us or
the Trust.
Exchanges
Preferred securities represented by a global security will be exchangeable
for certificated securities with the same terms in authorized denominations
only if:
. DTC is unwilling or unable to continue as depositary or if DTC ceases to
be a clearing agency registered under applicable law and a successor
depositary is not appointed by the Trust within 90 days; or
. the Trust decides to discontinue use of the system of book-entry transfer
through DTC (or any successor depositary).
If the book-entry only system is discontinued, the property trustee will
keep the registration books for the preferred securities of each Trust at its
corporate office.
Euroclear and Cedel
Links have been established among DTC, Cedel and Euroclear, to facilitate
the initial issuance of the preferred securities and cross-market transfers of
the preferred securities associated with secondary market trading.
Although DTC, Cedel and Euroclear have agreed to the procedures provided
below in order to facilitate transfers of the preferred securities among their
participants, they are under no obligation to perform or continue to perform
such procedures and such procedures may be modified or discontinued at any
time. Cedel and Euroclear will hold interests on behalf of their participants
through customers' securities accounts in Cedel's and Euroclear's names on the
books of their respective depositaries (which we refer to as the "U.S.
depositaries"), which in turn will hold such interests in customers' securities
accounts in the depositaries' names on the books of DTC.
When preferred securities are to be transferred from the account of a DTC
participant to the account of a Cedel participant or a Euroclear participant,
the purchaser must send instructions to Cedel or Euroclear through a
participant at least one business day prior to settlement. Cedel or Euroclear,
as the case may be, will instruct the relevant U.S. depositary to
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receive the preferred securities against payment. Payment will then be made by
such U.S. depositary to the DTC participant's account against delivery of the
preferred securities. After settlement has been completed, the preferred
securities will be credited to the respective clearing system and by the
clearing system, in accordance with its usual procedures, to the Cedel
participant's or Euroclear participant's account. Credit for the preferred
securities will appear on the next day (in European time).
Because the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending preferred securities
to the relevant U.S. depositary for the benefit of Cedel participants or
Euroclear participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC participant, a cross-market
transaction will settle no differently than a trade between two DTC
participants.
Due to time zone differences in their favor, Cedel participants or Euroclear
participants may employ their customary procedures for transactions in which
preferred securities are to be transferred by the respective clearing system
through the relevant U.S. depositary to another DTC participant. The seller
must send instructions to Cedel or Euroclear through a participant at least one
business day prior to settlement. In these cases, Cedel or Euroclear will
instruct its U.S. depositary to credit the preferred securities to the DTC
participant's account against payment. The payment will then be reflected in
the account of the Cedel participant or Euroclear participant the following
day, and receipt of the cash proceeds in the Cedel participant's or Euroclear
participant's account will be back-valued to the value date (which would be the
preceding day, when settlement occurs in New York). If the Cedel participant or
Euroclear participant has a line of credit with its respective clearing system
and elects to draw on such line of credit in anticipation of receipt of the
sale proceeds in its account, the back-valuation may substantially reduce or
offset any overdraft charges incurred over the one-day period. If settlement is
not completed on the intended value date (i.e., the trade fails), receipt of
the cash proceeds in the Cedel participant's or Euroclear participant's account
would instead be valued as of the actual settlement date.
Year 2000 Problem
DTC's management is aware that some computer applications, systems and the
like for processing data that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "Year 2000
problems". DTC has informed its participants and other members of the financial
community that it has developed and is implementing a program so that its
systems, as the same relate to the timely payment of distributions (including
principal and interest payments) to security holders, book-entry deliveries and
settlement of trades within DTC, continue to function appropriately. This
program includes a technical assessment and a remediation plan, each of which
is complete. Additionally, DTC's plan includes a testing phase, which is
expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third-party vendors from whom DTC licenses software and hardware, and
third-party vendors on whom DTC relies for information of the provision of
services, including telecommunications and electrical utility service
providers, among others. DTC has informed its participants and other members of
the financial community that it is contacting (and will continue to contact)
third-party vendors from whom DTC acquires services to impress upon them the
importance of such service being Year 2000 compliant and determine the extent
of their efforts for Year 2000 remediation (and, as appropriate, testing) of
their services. In addition, DTC is in the process of developing such
contingency plans as it deems appropriate.
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ERISA MATTERS
We may be considered a "party in interest" within the meaning of the
Employee Retirement Income Security Act of 1974, as amended (which we refer to
as "ERISA"), and a "disqualified person" under corresponding provisions of the
Code, regarding certain employee benefit plans. Certain transactions between an
employee benefit plan and a party in interest or disqualified person may result
in "prohibited transactions" within the meaning of ERISA and the Code. Any
employee benefit plan proposing to invest in the preferred securities should
consult with its legal counsel.
PLAN OF DISTRIBUTION
The Trusts may sell their preferred securities in any of three ways:
. through underwriters;
. through agents; or
. directly to a limited number of institutional purchasers or to a single
purchaser.
The prospectus supplement for each series of preferred securities will
describe that offering, including:
. the name or names of any underwriters;
. the purchase price and the proceeds to us from that sale;
. any underwriting discounts and other items constituting underwriters'
compensation;
. any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers; and
. any securities exchanges on which the Securities of that series may be
listed.
Underwriters
If underwriters are used in the sale, we will execute an underwriting
agreement with those underwriters. Unless otherwise set forth in the prospectus
supplement, the obligations of the underwriters to purchase preferred
securities will be subject to certain conditions. The underwriters will be
obligated to purchase all of the preferred securities of a series if any are
purchased.
The preferred securities will be acquired by the underwriters for their own
account and may be resold by them from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. Underwriters may be
deemed to have received compensation from us in the form of underwriting
discounts or commissions and may also receive commissions from the purchasers
of preferred securities for whom they may act as agent. Underwriters may sell
preferred securities to or through dealers. These dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
We may authorize underwriters to solicit offers by certain types of
institutions to purchase preferred securities from us at the public offering
price stated in the prospectus supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
If we sell preferred securities pursuant to these delayed delivery contracts,
the prospectus supplement will state that as well as the conditions to which
these delayed delivery contracts will be subject and the commissions payable
for that solicitation.
Agents
We may also sell preferred securities through agents designated by us from
time to time. We will name any agent involved in the offer or sale of the
preferred securities and will list commissions payable by us to these agents in
the applicable prospectus supplement. These agents will be acting on a best
efforts basis to solicit purchases for the period of its appointment, unless we
state otherwise in the prospectus supplement.
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Direct Sales
We may sell preferred securities directly to purchasers. In this case, we
will not engage underwriters or agents in the offer and sale of preferred
securities.
Indemnification
We may indemnify underwriters, dealers or agents who participate in the
distribution of preferred securities against certain liabilities, including
liabilities under the Securities Act of 1933, and agree to contribute to
payments which these underwriters, dealers or agents may be required to make.
No Assurance of Liquidity
Each series of preferred securities will be a new issue of securities with
no established trading market. Any underwriters that purchase preferred
securities from us may make a market in these preferred securities. The
underwriters will not be obligated, however, to make such a market and may
discontinue market-making at any time without notice to holders of the
preferred securities. As a result, we cannot assure you that there will be
liquidity in the trading market for any preferred securities of any series.
NASD Requirements
The underwriting and agency arrangements for any offering of the capital
securities will comply with the requirements of Rule 2720 of the National
Association of Securities Dealers, Inc. (which we refer to as the "NASD")
regarding an NASD member firm's participating in distributing its affiliate's
securities.
LEGAL OPINIONS
Certain matters of Delaware law relating to each Trust will be passed upon
for the Trusts and Provident Financial Group, Inc. by Richards, Layton &
Finger, P.A., Wilmington, Delaware. The due authorization, execution and
delivery of the junior subordinated debentures and the guarantees will be
passed upon for Provident Financial Group, Inc. and the Trusts by Mark Magee,
Esq., General Counsel to Provident Financial Group, Inc., Cincinnati, Ohio. The
validity of the junior subordinated debentures and the guarantees will be
passed upon for Provident Financial Group, Inc. and the Trusts by Simpson
Thacher & Bartlett, New York City, New York. Unless otherwise specified in the
applicable prospectus supplement, the validity of the junior subordinated
debentures and the guarantees will be passed upon for any underwriters or
agents by Simpson Thacher & Bartlett. Simpson Thacher & Bartlett will rely as
to matters of Ohio law on the opinion of Mark Magee, Esq., General Counsel to
Provident Financial Group, Inc., and Mark Magee, Esq., General Counsel to
Provident Financial Group, Inc. will rely as to matters of New York law on the
opinion of Simpson Thacher & Bartlett. Certain United States federal income
taxation matters also will be passed upon for Provident Financial Group, Inc.
and the Trusts by Simpson Thacher & Bartlett.
At March 31, 1999, attorneys at Richards, Layton & Finger, P.A. and Simpson
Thacher & Bartlett, together with their immediate families, beneficially owned
less than 5% of the outstanding shares of Provident Financial Group, Inc.'s
common stock.
EXPERTS
The consolidated financial statements as of December 31, 1998 and 1997, and
for each of the three years in the period ended December 31, 1998 incorporated
in this prospectus by reference from our Annual Report on Form 10-K for the
year ended December 31, 1998 have been audited by Ernst & Young LLP,
independent auditors, as stated in their reports, which are incorporated herein
by reference, and have been so incorporated in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing.
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$125,000,000
PROVIDENT CAPITAL TRUST II
SKIS SM*
8 3/4% Subordinated Capital Income Securities
fully and unconditionally guaranteed by
PROVIDENT FINANCIAL GROUP, INC.
--------------------------------
PROSPECTUS SUPPLEMENT
June 23, 1999
--------------------------------
(Joint book-running managers)
Lehman Brothers
Prudential Securities
Salomon Smith Barney
(Co-managers)
Paine Webber Incorporated
J.P. Morgan & Co.
* "SKIS" is a service mark of Lehman Brothers Inc.
