<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
=====================================
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
COMMISSION FILE NUMBER 0-10161
AMENDMENT NO. 1
FIRST BANCORPORATION OF OHIO
(Exact name of registrant as specified in its charter)
OHIO 34-1339938
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
800 FIRST NATIONAL TOWER, AKRON, OHIO 44308 (216) 384-8000
Address of principal executive offices) (Zip code) (Telephone Number)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days. YES [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the approximate aggregate market value of the voting stock held
by non-affiliates of the registrant as of April 22, 1994: $571,982,201.
Indicate the number of shares outstanding of registrant's common
stock as of April 22, 1994: 27,131,606 Shares of Common Stock, No Par Value.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Proxy Statement of First Bancorporation of
Ohio, dated February 22, 1994, in Part III.
<PAGE> 2
The undersigned registrant hereby amends the following items of its
Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 on Form 10-K for the fiscal year ended December 31, 1993, for the purpose
of furnishing the financial statements for the First Bancorporation of Ohio
Employee Stock Purchase Plan:
PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
FIRST BANCORPORATION OF OHIO AND SUBSIDIARIES
<TABLE>
<CAPTION>
(IN THOUSANDS) December 31,
----------------------------
ASSETS 1993 1992
---------- ---------
<S> <C> <C>
Investment securities, market value $1,224,650
and $1,193,849, respectively $1,209,676 1,167,235
Federal funds sold 58,750 95,282
Loans 2,396,463 2,321,778
Less allowance for possible loan losses 31,221 29,193
---------- ---------
Net loans 2,365,242 2,292,585
---------- ---------
Total earning assets 3,633,668 3,555,102
---------- ---------
Cash and due from banks 222,260 210,890
Premises and equipment, net 69,804 67,451
Accrued interest receivable and other assets 70,996 82,755
---------- ---------
$3,996,728 3,916,198
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand -- non-interest bearing $ 687,672 638,985
Demand -- interest bearing 314,165 295,817
Savings 1,299,967 1,216,029
Certificates and other time deposits 1,125,409 1,233,282
---------- ---------
Total deposits 3,427,213 3,384,113
---------- ---------
Securities sold under agreements to repurchase
and other borrowings 148,889 135,533
Accrued taxes, expenses, and other liabilities 28,985 38,287
---------- ---------
Total liabilities 3,605,087 3,557,933
---------- ---------
Commitments and contingencies -- --
Shareholders' equity:
Preferred stock, without par value:
authorized and unissued 3,500,000 shares -- --
Common stock, without par value:
authorized 40,000,000 shares;
issued 25,249,166 and 12,597,784
shares, respectively 83,218 41,993
Surplus -- 40,371
Retained earnings 308,423 275,901
---------- ---------
Total shareholders' equity 391,641 358,265
---------- ---------
$3,996,728 3,916,198
========== =========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
FIRST BANCORPORATION OF OHIO AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------
(IN THOUSANDS EXCEPT PER SHARE DATA) 1993 1992 1991
<S> <C> <C> <C>
Interest income:
Interest and fees on loans $200,848 209,524 219,638
Interest and dividends on investment securities:
Taxable 66,475 73,856 78,294
Exempt from federal income taxes 7,801 8,392 9,731
-------- -------- --------
74,276 82,248 88,025
Interest on federal funds sold 2,596 3,112 7,910
-------- -------- --------
Total interest income 277,720 294,884 315,573
-------- -------- --------
Interest expense:
Interest on deposits:
Demand -- interest bearing 6,903 7,709 9,867
Savings 34,440 37,098 46,736
Certificates and other time deposits 47,983 65,849 99,892
Interest on securities sold under agreements
to repurchase and other borrowings 3,905 4,249 7,170
-------- -------- --------
Total interest expense 93,231 114,905 163,665
-------- -------- --------
Net interest income 184,489 179,979 151,908
Provision for possible loan losses 6,594 17,363 11,373
-------- -------- --------
Net interest income after provision
for possible loan losses 177,895 162,616 140,535
-------- -------- --------
Other income:
Trust department 9,907 9,103 8,515
Service charges on deposits 20,362 19,837 17,686
Credit card fees 7,987 7,317 7,286
Investment securities gains, net 29 1,368 469
Other operating income 16,062 13,167 10,619
-------- -------- --------
Total other income 54,347 50,792 44,575
-------- -------- --------
232,242 213,408 185,110
-------- -------- --------
Other expenses:
Salaries and wages 58,251 55,017 49,066
Pension and employee benefits 18,541 14,865 12,850
Net occupancy expense 11,239 10,341 10,350
Equipment expense 10,301 9,757 10,230
Other operating expenses 53,185 50,334 47,641
-------- -------- --------
Total other expenses 151,517 140,314 130,137
-------- -------- --------
Income before federal income taxes 80,725 73,094 54,973
Federal income taxes 25,520 22,394 15,415
-------- -------- --------
Net income $ 55,205 50,700 39,558
======== ======== ========
Weighted average number of common shares outstanding 25,219 25,158 25,110
======== ======== ========
Net income per share $ 2.19 2.02 1.58
======== ======== ========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 5
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FIRST BANCORPORATION OF OHIO AND SUBSIDIARIES
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE DATA)
Years ended December 31, 1993, 1992 and 1991
--------------------------------------------
Total
Common Retained shareholders'
stock Surplus earnings equity
------- -------- -------- -------------
<S> <C> <C> <C> <C>
Balance at December 31, 1990 $41,848 39,611 226,467 307,926
Net income -- -- 39,558 39,558
Cash dividends ($.80 per share) -- -- (20,137) (20,137)
Stock options exercised 23 63 -- 86
------- ------- ------- -------
Balance at December 31, 1991 41,871 39,674 245,888 327,433
Net income -- -- 50,700 50,700
Cash dividends ($.82 per share) -- -- (20,687) (20,687)
Stock options exercised 122 697 -- 819
------- ------- ------- -------
Balance at December 31, 1992 41,993 40,371 275,901 358,265
Net income -- -- 55,205 55,205
Cash dividends ($.90 per share) -- -- (22,683) (22,683)
Stock options exercised 854 -- -- 854
Elimination of par value 40,371 (40,371) -- --
------- ------- ------- -------
Balance at December 31, 1993 $83,218 -- 308,423 391,641
======= ======= ======= =======
<FN>
On April 14, 1993, the shareholders of the Corporation approved
amendments to its Articles of Incorporation to increase the authorized
common stock from 20 million to 40 million shares, to eliminate the
designation of par value from the common stock, and to increase the
authorized preferred stock from 1 million to 3.5 million shares.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 6
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FIRST BANCORPORATION OF OHIO AND SUBSIDIARIES
<CAPTION>
(IN THOUSANDS)
Years ended December 31,
---------------------------------
1993 1992 1991
-------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 55,205 50,700 39,558
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses 6,594 17,363 11,373
Depreciation and amortization 6,475 6,771 7,032
Amortization of investment securities premiums, net 5,174 4,985 3,433
Amortization of income for lease financing (2,620) (1,649) (1,473)
Investment securities gains, net (29) (1,368) (469)
Deferred federal income taxes 130 (3,819) (115)
Decrease in interest receivable 2,596 4,159 3,804
Decrease in interest payable (1,064) (7,019) (2,722)
Amortization of values ascribed to acquired intangibles 3,325 3,345 3,419
Other increases (decreases) (2,530) 5,952 159
-------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 73,256 79,420 63,999
-------- ------- -------
INVESTING ACTIVITIES
Proceeds from sales of investment securities 27,257 96,912 69,309
Proceeds from maturities of investment securities 540,932 362,938 278,453
Purchases of investment securities (615,775) (511,376) (424,496)
Net (increase) decrease in federal funds sold 36,532 (13,419) 92,369
Net increase in loans (41,570) (83,648) (101,411)
Purchases of assets to be leased (45,521) (9,276) (7,954)
Principal payments received under leases 10,460 8,173 6,842
Purchases of premises and equipment (10,406) (5,487) (10,550)
Sales of premises and equipment 1,578 1,070 2,548
-------- ------- -------
NET CASH USED BY INVESTING ACTIVITIES (96,513) (154,113) (94,890)
-------- ------- -------
FINANCING ACTIVITIES
Net increase in demand, NOW and
savings deposits 150,973 312,277 93,451
Net decrease in time deposits (107,873) (195,983) (54,809)
Net increase (decrease) in short-term borrowings 13,356 (1,525) (12,178)
Cash dividends (22,683) (20,687) (20,137)
Proceeds from exercise of stock options 854 819 86
-------- ------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 34,627 94,901 6,413
-------- ------- -------
Increase (decrease) in cash and cash equivalents 11,370 20,208 (24,478)
Cash and cash equivalents at beginning of year 210,890 190,682 215,160
-------- ------- -------
Cash and cash equivalents at end of year $222,260 210,890 190,682
======== ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest, net of amount capitalized $ 60,760 74,091 103,209
Income taxes 27,555 23,444 14,572
======== ======= =======
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FIRST BANCORPORATION OF OHIO AND SUBSIDIARIES
December 31, 1993, 1992 and 1991
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of First Bancorporation of Ohio and
its subsidiaries (the "Corporation") conform to generally accepted
accounting principles and to general practices within the banking industry.
The Corporation's activities are considered to be a single industry segment
for financial reporting purposes. The following is a description of the
more significant accounting policies:
(a) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of First
Bancorporation of Ohio (the "Parent Company") and its wholly owned
subsidiaries: First National Bank of Ohio, The Old Phoenix National
Bank of Medina, Elyria Savings & Trust National Bank, The First
National Bank in Massillon, Peoples Federal Savings Bank, Peoples
Savings Bank, FBOH Credit Life Insurance Company and Bancorp Trust Co.,
N.A. All significant intercompany balances and transactions have been
eliminated in consolidation.
(b) INVESTMENT SECURITIES
Investment securities are carried at cost adjusted for amortization of
premiums and accretion of discounts as the Corporation has the ability
to hold investment securities to maturity and it is Management's
intention to hold such securities to maturity. In 1994 this policy
will be reevaluated in connection with the required adoption of
Statement of Financial Accounting Standards No. 115 which will
probably result in a portion of the investment portfolio being
classified as available-for-sale and accounted for at fair value. The
Corporation does not maintain a trading account. Gains or losses on
the sales of investment securities are recognized upon realization and
are determined by the specific identification method.
(c) CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, balances on deposit
with correspondent banks and checks in the process of collection.
(d) PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation
and amortization. Depreciation is computed on the straight-line and
declining-balance methods over the estimated useful lives of the
assets. Amortization of leasehold improvements is computed on the
straight-line method based on lease terms or useful lives, whichever is
less.
(e) INTEREST AND FEES ON LOANS
Interest income on loans is generally accrued on the principal balances
of loans outstanding using the "simple-interest" method. Loan
origination fees and certain direct origination costs are deferred and
amortized, generally over the contractual life of the related loans
using a level yield method. Interest is not accrued on loans for which
circumstances indicate collection is questionable.
(f) PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses charged to operating expenses is
determined based on Management's evaluation of the loan portfolios and
the adequacy of the allowance for possible loan losses under current
economic conditions and such other factors which, in Management's
judgment, deserve current recognition.
(g) LEASE FINANCING
The Corporation leases equipment to customers on both a direct and
leveraged lease basis. The net investment in financing leases includes
the aggregate amount of lease payments to be received and the estimated
residual values of the equipment, less unearned income and non-recourse
debt pertaining to leveraged leases. Income from lease financing is
recognized over the lives of the leases on an approximate level rate of
return on the unrecovered investment. Residual values of leased assets
are reviewed on an annual basis for reasonableness. Declines in
residual values judged to be other than temporary are recognized in the
period such determinations are made.
35
<PAGE> 8
(h) FEDERAL INCOME TAXES
The Corporation follows the asset and liability method of accounting
for income taxes as prescribed by Statement of Financial Accounting
Standards No. 109. Deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory
tax rates applicable to future years to differences between the
financial statement carrying amounts and the tax bases of existing
assets and liabilities. The effect of a change in tax rates is
recognized in income in the period of the enactment date.
(i) VALUE ASCRIBED TO ACQUIRED INTANGIBLES
The value ascribed to acquired intangibles, including core deposit
premiums, results from the excess of cost over fair value of net assets
acquired in acquisitions of financial institutions. Such values are
being amortized over periods ranging from 10 to 25 years, which
represent the estimated remaining lives of the long-term interest
bearing assets acquired. Amortization is generally computed on an
accelerated basis based on the expected reduction in the carrying value
of such acquired assets. If no significant amount of long-term
interest bearing assets is acquired, such value is amortized over the
estimated life of the acquired deposit base, with amortization periods
ranging from 10 to 15 years.
(j) TRUST DEPARTMENT ASSETS AND INCOME
Property held by the Corporation in a fiduciary or other capacity for
trust customers is not included in the accompanying consolidated
financial statements, since such items are not assets of the
Corporation. Trust income is reported generally on a cash basis which
approximates the accrual basis of accounting.
(k) PER SHARE DATA
The per share data is based on the weighted average number of shares of
common stock and common stock equivalents outstanding during each year,
adjusted to reflect the two-for-one stock split of August 30, 1993.
(l) RECLASSIFICATIONS
Certain previously reported amounts have been reclassified to conform
to the current reporting presentation.
2. ACQUISITION
On September 28,1993 First Bancorporation of Ohio signed a definitive
agreement to acquire Great Northern Financial Corporation located in
Barberton, Ohio. The agreement provides that all outstanding shares and
stock options will be acquired in exchange for a maximum of 1,882,440
shares of First Bancorporation of Ohio common stock. The transaction is to
be accounted for as a pooling of interests. The acquisition is subject to
the approval of Great Northern Financial Corporation's shareholders and
regulatory and governmental authorities.
3. INVESTMENT SECURITIES
The book value and market value of investment securities are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------------------------------------
1993 1992
--------------------------------------------- -----------------------------------------
GROSS GROSS Gross Gross
BOOK UNREALIZED UNREALIZED MARKET Book Unrealized Unrealized Market
VALUE GAINS LOSSES VALUE Value Gains Losses Value
--------- ---------- ---------- ------ ----- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities
and U.S. Government agency
obligations $ 774,641 7,380 2,164 779,857 610,450 12,967 831 622,586
Obligations of state
and political subdivisions 147,673 2,768 250 150,191 133,687 5,907 121 139,473
Mortgage-backed securities 217,142 6,292 485 222,949 337,703 8,437 706 345,434
Other securities 70,220 1,542 109 71,653 85,395 1,199 238 86,356
---------- ------ ----- --------- --------- ------ ----- ---------
$1,209,676 17,982 3,008 1,224,650 1,167,235 28,510 1,896 1,193,849
========== ====== ===== ========= ========= ====== ===== =========
</TABLE>
The book value and market value of investment securities including
mortgage-backed securities and derivatives at December 31, 1993, by
contractual maturity, are shown below. Expected maturities will differ
from contractual maturities based on the issuers' right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
BOOK MARKET
VALUE VALUE
----------- ---------
<S> <C> <C>
Due in one year or less $ 188,063 190,424
Due after one year through five years 500,103 508,295
Due after five years through ten years 83,116 84,713
Due after ten years 438,394 441,218
----------- ---------
$ 1,209,676 1,224,650
=========== =========
</TABLE>
Proceeds from sales of investment securities during the years ended
December 31, 1993 and 1992 were $27,257 and $96,912, respectively.
Gross gains of $109 and $1,486, and gross losses of $80 and $118 were
realized on these sales, respectively.
The book value of investment securities pledged as collateral for
trust and public deposits and other purposes required or permitted
by law amounted to $602,694 and $549,918 at December 31, 1993
and 1992, respectively.
4. LOANS
Loans consist of the following:
<TABLE>
<CAPTION>
December 31,
--------------------
1993 1992
--------- ---------
<S> <C> <C>
Commercial, financial and agricultural $ 430,118 423,170
Loans to individuals, net of
unearned income of $590 and $1,401, respectively 597,875 520,318
Real estate 1,311,788 1,359,289
Lease financing 56,682 19,001
---------- ---------
$2,396,463 2,321,778
========== =========
</TABLE>
At December 31, 1993 and 1992, the Corporation serviced loans for others
aggregating $388,548 and $306,459, respectively.
The Corporation grants loans principally to customers located within the
state of Ohio.
The Corporation makes loans to officers and directors on substantially
the same terms and conditions as transactions with other parties. An
analysis of loan activity with related parties for the year ended
December 31, 1993 is summarized as follows:
<TABLE>
<S> <C>
Aggregate amount at beginning of year $ 43,735
Additions (deductions):
New loans 42,018
Repayments (40,577)
Changes in directors and their affiliations (3,606)
-------
Aggregate amount at end of year $ 41,570
=======
</TABLE>
5. ALLOWANCE FOR POSSIBLE LOAN LOSSES
Transactions in the allowance for possible loan losses are summarized
as follows:
<PAGE> 9
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Balance at beginning of year $29,193 24,829 23,563
Additions (deductions):
Provision for possible loan losses 6,594 17,363 11,373
Loans charged off (8,565) (17,138) (13,192)
Recoveries on loans
previously charged off 3,999 4,139 3,085
------- ------- -------
Balance at end of year $31,221 29,193 24,829
======= ======= =======
</TABLE>
6. RESTRICTIONS ON CASH AND DIVIDENDS
The average balance on deposit with the Federal Reserve Bank to satisfy
reserve requirements amounted to $17,920 during 1993. The level of
this balance is based upon amounts and types of customers' deposits
held by the banking subsidiaries of the Corporation. In addition,
deposits are maintained with other banks at levels determined by
Management based upon the volumes of activity and prevailing interest
rates to compensate for check-clearing, safekeeping, collection and
other bank services performed by these banks. At December 31, 1993,
cash and due from banks included $9,078 deposited with the Federal
Reserve Bank and other banks for these reasons.
Dividends paid by the subsidiaries are the principal source of funds
to enable the payment of dividends by the Corporation to its
shareholders. These payments by the subsidiaries in 1994 are
restricted by the regulatory agencies principally to the total of 1994
net income plus $14,460, representing the undistributed net income of
the past two calendar years. Regulatory approval must be
obtained for the payment of dividends of any greater amount.
7. PREMISES AND EQUIPMENT
The components of premises and equipment are as follows:
<TABLE>
<CAPTION>
December 31, Estimated
----------------- useful
1993 1992 lives
-------- ------- ---------
<S> <C> <C> <C>
Land $ 10,100 9,487 --
Buildings 69,770 66,428 10-50 yrs
Equipment 55,683 52,000 3-50 yrs
Leasehold improvements 10,809 9,915 1-40 yrs
-------- ------- ---------
146,362 137,830
Less accumulated depreciation
and amortization 76,558 70,379
-------- -------
$ 69,804 67,451
======== =======
</TABLE>
Amounts included in other expenses for depreciation and amortization
aggregated $6,475, $6,771 and $7,032 for the years ended
December 31, 1993, 1992 and 1991, respectively.
<PAGE> 10
At December 31, 1993, the Corporation was obligated for rental
commitments under noncancellable operating leases on branch
offices and equipment as follows:
<TABLE>
<CAPTION>
Years ending Lease
December 31, commitments
------------- ----------------
<S> <C>
1994 $5,062
1995 3,776
1996 2,972
1997 2,702
1998 2,252
1999-2013 9,597
--------- ------
$26,361
=======
</TABLE>
Rentals paid under noncancellable operating leases amounted to $4,631,
$3,632 and $3,054 in 1993, 1992 and 1991, respectively.
8. CERTIFICATES AND OTHER TIME DEPOSITS
The aggregate amount of certificates and other time deposits of
$100 and over at December 31, 1993 and 1992 was $117,137 and
$129,011, respectively. Interest expense on these certificates
and deposits amounted to $4,868 in 1993, $5,856 in 1992, and
$21,862 in 1991.
9. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER
BORROWINGS
The average balance of securities sold under agreements to
repurchase and other borrowings for the years ended December 31,
1993 and 1992, amounted to $148,822 and $144,054, respectively. In
1993 the weighted average annual interest rate amounted to 2.62%,
compared to 2.95% in 1992. The maximum amount of these borrowings at
any month end amounted to $176,768 in 1993 and $174,102 in 1992.
10. FEDERAL INCOME TAXES
Federal income taxes are comprised of the following:
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Taxes currently payable $25,390 26,213 15,530
Deferred expense (benefit) 345 (3,819) (115)
Adjustment to deferred taxes as a
result of the 1993 rate increase (215) -- --
------- ------- -------
$25,520 22,394 15,415
======= ====== ======
</TABLE>
The effective federal income tax rate differs from the statutory
federal income tax rate as shown below:
<PAGE> 11
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
Statutory rate 35% 34% 34%
Decrease (increase) in rate
due to:
Interest income on tax-exempt
securities and tax-free
loans, net 4 5 8
Other (1) (2) (2)
---- ---- -----
Effective tax rate 32% 31% 28%
==== ==== =====
</TABLE>
For 1993, 1992 and 1991 the deferred federal income tax provision
(benefit) results from temporary differences in the
recognition of income and expense for federal income tax and financial
reporting purposes. The sources and tax effects of
these temporary differences are presented below:
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Loan loss provision $ (672) (1,474) (648)
Deferred loan fees, net (7) (421) (450)
Leasing 1,172 136 (100)
SFAS No. 87 pension expense 686 (635) 412
SFAS No. 106 postretirement
benefits (834) (20) --
Other, net -- (1,405) 671
------- ------- -------
$ 345 (3,819) (115)
======= ======= =======
</TABLE>
Principal components of the Corporation's net deferred tax asset are
summarized as follows:
<TABLE>
<CAPTION>
December 31,
---------------
1993 1992
------- -------
<S> <C> <C>
Excess of book loan provision over tax loan provision $9,398 8,477
Excess of tax depreciation over book depreciation (3,002) (2,944)
Leasing book basis income over tax basis (3,226) (1,995)
Deferred loan fees tax basis income over book basis 2,329 2,256
Postretirement book basis expense over tax basis 854 20
Other (143) 526
------ ------
$6,210 6,340
====== ======
</TABLE>
<PAGE> 12
11. BENEFIT PLANS
The Corporation has a defined benefit pension plan covering
substantially all of its employees. In general, benefits are based on
years of service and the employee's compensation. The Corporation's
funding policy is to contribute annually the maximum amount that can
be deducted for federal income tax reporting purposes. Contributions
are intended to provide not only for benefits attributed to service
to date but also for those expected to be earned in the future.
A supplemental non-qualified, non-funded pension plan for
certain officers is also maintained and is being provided for by
charges to earnings sufficient to meet the projected benefit
obligation. The pension cost for this plan is based on substantially
the same actuarial methods and economic assumptions as those used for
the defined benefit pension plan.
The following table sets forth the plans' funded status and amounts
recognized in the Corporation's consolidated financial statements:
<TABLE>
<CAPTION>
December 31,
-----------------------------
1993 1992 1991
------- ------ ------
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $40,586, $33,980 and
$30,118, respectively $(43,988) (35,663) (31,422)
======== ====== =======
Projected benefit obligation $(59,541) (52,048) (45,684)
Plan assets at fair value, primarily U.S.
government obligations, corporate bonds
and investments in equity funds 61,919 54,424 51,912
-------- ------ -------
Plan assets in excess of projected
benefit obligation 2,378 2,376 6,228
Unrecognized net gains (3,288) (3,837) (7,528)
Unrecognized prior service cost 3,399 1,858 1,953
Remaining unrecognized net asset
being amortized over employees'
average remaining service life (2,226) (2,892) (2,604)
-------- ------ -------
Prepaid (accrued) pension cost $ 263 (2,495) (1,951)
======== ====== =======
Expected long-term rate of return on assets 9.0% 8.5% 8.5%
Weighted-average discount rate 7.5% 8.5% 8.5%
Rate of increase in future compensation levels 5.0% 6.5% 6.5%
======== ====== =======
</TABLE>
Net pension cost consists of the following components:
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Service cost $2,536 2,199 2,101
Interest cost on projected benefit
obligation 4,088 3,975 3,483
Actual return on plan assets (6,750) (4,324) (8,215)
Net total of other components 2,196 (41) 4,163
------ ------ ------
Net periodic pension cost $2,070 1,809 1,532
====== ====== ======
</TABLE>
The Corporation maintains a savings plan under Section 401(k) of the Internal
Revenue Code, covering substantially all full-time employees after one year of
continuous employment. Under the plan, employee contributions are partially
matched by the Corporation. Such matching becomes vested when the employee
reaches three years of credited service. Total savings plan expense was
$1,684, $1,900 and $790 for 1993, 1992 and 1991, respectively.
<PAGE> 13
12. POSTRETIREMENT MEDICAL AND LIFE INSURANCE PLAN
The Corporation has a benefit plan which presently provides
postretirement medical and life insurance for retired employees.
Effective January 1,1993 the plan was changed to limit the
Corporation's medical contribution to 200% of the 1993 level for
employees who retire after January 1,1993. The Corporation reserves
the right to terminate or amend the plan at any time.
On January 1,1993, the Corporation implemented Statement of Financial
Accounting Standards (SFAS) No. 106 "Employers Accounting for
Postretirement Benefits Other Than Pensions". This statement requires
that the cost of postretirement benefits expected to be provided to
current and future retirees be accrued over those employees' service
periods. In addition to recognizing the cost of benefits for the
current period, SFAS No. 106 requires recognition of the cost of
benefits earned in prior service periods (the transition obligation).
Prior to 1993, postretirement benefits were accounted for on a cash
basis. As of January 1,1993, the Corporation's accumulated
postretirement benefit obligation (also its transition obligation)
totalled approximately $19 million. The Corporation, as permitted by
SFAS No. 106, has elected to amortize the transition obligation by
charges to income over a twenty year period on a straight line basis.
The following table sets forth the plan's status and amounts recognized
in the Corporation's consolidated financial statements.
<TABLE>
<CAPTION>
December 31,
------------
1993
<S> <C>
Accumulated postretirement benefit obligation: --------
Retirees $(13,484)
Fully eligible actives (3,275)
Other actives (5,778)
---------
Total accumulated postretirement benefit obligation (22,537)
Unrecognized prior net loss 2,473
Unrecognized prior service costs --
Unrecognized transition obligation 18,057
---------
Accrued postretirement benefit cost $ (2,007)
=========
Year ended December 31,
-----------------------
1993
---------
Service cost $ 494
Interest cost 1,573
Actual return on plan assets --
Amortization of transition obligation 950
Net of other amortization and deferrals --
------
Net periodic postretirement cost $3,017
======
</TABLE>
<PAGE> 14
The following actuarial assumptions affect the determination of these
amounts:
<TABLE>
<CAPTION>
Plan year January 1,
-------------------------------
1993 1994
----------- ---------
<S> <C> <C>
Expected long-term rate of return on assets N/A N/A
Weighted-average discount rate 8.50% 7.50%
Medical trend rates:
Pre-65 14.3%-6.0% 14.3%-6.0%
Post-65 13.5%-6.1% 13.5%-6.1%
========= =========
</TABLE>
Shown below is the impact of a 1% increase in the medical trend rates
(i.e., pre-65, 15.3% for 1993 grading down to 7.0% in 2002; post-65
grading down to 7.1% in 2007). This information is required
disclosure under SFAS 106.
<TABLE>
<CAPTION>
Current Trend %
Trend +1% Change
------- ------- -------
<S> <C> <C> <C>
Aggregate of the service and interest
components of net periodic postretirement
health care benefit cost $ 1,937 2,027 +4.6%
Accumulated postretirement benefit obligation
for health care benefits $20,309 21,568 +6.2%
</TABLE>
13. STOCK OPTIONS
The 1992 Stock Option Program provides incentive and non-qualified
options to certain key employees for up to 1,000,000 common shares of
the Corporation. In addition, the 1992 Directors Stock Option Program
provides for the granting of non-qualified stock options to certain
non-employee directors of the Corporation for which 100,000 common
shares of the Corporation have been reserved. Options under these 1992
Programs are not exercisable for at least six months from date of grant.
Options continue to be outstanding under the 1982 Incentive Stock
Options Plan as amended in 1986; and these options are all fully
exercisable.
Options under these plans are granted at 100% of the fair market value.
Options granted as incentive stock options must be exercised within ten
years, options granted as non-qualified stock options shall have terms
established by a committee of the Board. Options are cancellable within
defined periods of time based upon the reason for termination of
employment.
A summary of stock option activity for the years ended December 31,
1993, 1992 and 1991 follows:
<TABLE>
<CAPTION>
Shares
-------------------------------------
Available Out- Range of Option
for Grant standing Price per Share
--------- --------- ---------------
<S> <C> <C> <C>
Balance
December 31, 1990 85,150 319,320 $ 7.42-16.54
Cancelled -- (14,800) 12.63-16.54
Exercised -- (9,300) 7.42-13.32
Granted (6,000) 6,000 13.32
--------- ------- ------------
Balance
December 31, 1991 79,150 301,220 8.59-16.54
Add'l shares reserved 1,100,000 --
Cancelled -- (5,480) 10.82-16.54
Exercised -- (78,060) 8.59-19.13
Granted (88,700) 88,700 18.50-19.13
--------- ------- ------------
Balance
December 31, 1992 1,090,450 306,380 8.59-19.13
Cancelled -- (1,400)
Exercised -- (53,600) 8.59-24.13
Granted (80,080) 80,080 24.13-24.19
--------- ------- ------------
Balance
December 31, 1993 1,010,370 331,460 $10.82-24.19
========= ======= ============
</TABLE>
The Employee Stock Purchase Plan provides full-time employees of the
Corporation the opportunity to acquire common shares on a payroll
deduction basis. Of the 200,000 shares available under the Plan, there
were 10,946 shares issued in 1993.
<PAGE> 15
14. PARENT COMPANY
Condensed financial information of First Bancorporation of Ohio
(Parent Company only) is as follows:
<TABLE>
<CAPTION>
December 31,
--------------
CONDENSED BALANCE SHEETS 1993 1992
-------- -------
<S> <C> <C>
ASSETS
Cash and due from banks $ 8,391 1,144
Investment securities 1,390 1,818
Loans to subsidiaries 49,566 28,214
Investment in subsidiaries, at equity in
underlying value of their net assets 330,990 326,912
Goodwill 974 1,386
Other assets 5,117 2,490
-------- -------
$396,428 361,964
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued and other liabilities $ 4,787 3,699
Shareholders' equity 391,641 358,265
-------- -------
$396,428 361,964
======== =======
</TABLE>
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF INCOME Years ended December 31,
--------------------------
1993 1992 1991
------- ------- -------
<S> <C> <C> <C>
Income:
Cash dividends from subsidiaries $55,200 50,775 21,150
Other income 17,314 13,788 653
------- ------ ------
72,514 64,563 21,803
Interest and other expenses 23,466 19,296 2,345
------- ------ ------
Income before federal income tax benefit
and equity in undistributed income
of subsidiaries 49,048 45,267 19,458
Federal income tax benefit (2,079) (1,780) (518)
------- ------ ------
51,127 47,047 19,976
Equity in undistributed income of
subsidiaries 4,078 3,653 19,582
------- ------ ------
Net income $55,205 50,700 39,558
======= ====== ======
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF CASH FLOWS Years ended December 31,
-------------------------------------------------------------------------------------------
1993 1992 1991
------- ------ ------
<S> <C> <C> <C>
Operating activities:
Net income $55,205 50,700 39,558
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in undistributed income
of subsidiaries (4,078) (3,653) (19,582)
Other (1,127) 2,387 (28)
------- ------ ------
Net cash provided by operating
activities 50,000 49,434 19,948
------- ------ ------
Investing activities:
Proceeds from maturities of investment securities 428 -- --
Loans to subsidiaries (21,352) (28,214) --
Purchases of investment securities -- (568) --
------- ------ ------
Net cash used by investing
activities (20,924) (28,782) --
------- ------ ------
Financing activities:
Cash dividends (22,683) (20,687) (20,137)
Proceeds from exercise of stock options 854 819 86
------- ------ ------
Net cash used by financing
activities (21,829) (19,868) (20,051)
------- ------ ------
Net increase (decrease) in cash and cash equivalents 7,247 784 (103)
Cash and cash eqivalents at beginning of year 1,144 360 463
------- ------ ------
Cash and cash equivalents at end of year $ 8,391 1,144 360
======= ====== ======
</TABLE>
15. FAIR VALUE DISCLOSURE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments," requires disclosures of fair value
information about certain financial instruments, whether or not
recognized in the consolidated balance sheets. Instruments for which
quoted market prices are not available are valued based on estimates
using present value or other valuation techniques whose results are
significantly affected by the assumptions used, including discount rates
and future cash flows. Accordingly, the values so derived, in many
cases, may not be indicative of amounts that could be realized in
immediate settlement of the instrument. Also, certain financial
instruments and all nonfinancial instruments are excluded from these
disclosure requirements. For these and other reasons, the aggregate
fair value amounts presented below are not intended to represent the
underlying value of the Corporation.
<PAGE> 17
The following methods and assumptions were used to estimate the fair
values of each class of financial instrument presented:
Investment securities -- Fair values are based on quoted market
prices, or for certain fixed maturity securities not actively traded
estimated values are obtained from independent pricing services.
Federal funds sold -- The carrying amount is considered a
reasonable estimate of fair value.
Net loans -- Fair value for loans with interest rates that fluctuate as
current rates change are generally valued at carrying amounts with an
appropriate discount for any credit risk. Fair values of other types
of loans are estimated by discounting the future cash flows using the
current rates for which similar loans would be made to borrowers with
similar credit ratings and for the same remaining maturities.
Cash and due from banks -- The carrying amount is considered a
reasonable estimate of fair value.
Accrued interest receivable -- The carrying amount is considered a
reasonable estimate of fair value.
Deposits -- The carrying amount is considered a reasonable estimate of
fair value for demand and savings deposits and other variable rate
deposit accounts. The fair values for fixed maturity certificates of
deposit and other time deposits are estimated using the rates currently
offered for deposits of similar remaining maturities.
Securities sold under agreements to repurchase and other
borrowings -- Fair values are estimated using rates currently available
to the Corporation for similar types of borrowing transactions.
Accrued interest payable -- The carrying amount is considered a
reasonable estimate of fair value.
Commitments to extend credit -- The fair value of commitments to
extend credit is estimated using the fees currently charged to enter
into similar arrangements, taking into account the remaining terms of
the agreements, the creditworthiness of the counterparties, and the
difference, if any, between current interest rates and the committed
rates.
Standby letters of credit and financial guarantees written -- Fair
values are based on fees currently charged for similar agreements or on
the estimated cost to terminate or otherwise settle the obligations.
Loans sold with recourse -- Fair value is estimated based on
the present value of the estimated future liability in the event of
default.
<PAGE> 18
The estimated fair values of the Corporation's financial instruments
based on the assumptions described above are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------
1993 1992
-------------------- ---------------------
CARRYING FAIR Carrying Fair
AMOUNT VALUE Amount Value
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Financial assets:
Investment securities $1,209,676 1,224,650 1,167,235 1,193,849
Federal funds sold 58,750 58,750 95,282 95,282
Net loans 2,365,242 2,418,452 2,292,585 2,345,891
Cash and due from banks 222,260 222,260 210,890 210,890
Accrued interest receivable 24,822 24,822 27,198 27,198
Financial liabilities:
Deposits 3,427,213 3,440,157 3,384,113 3,398,715
Securities sold under agreements to
repurchase and other borrowings 148,889 148,889 135,533 135,533
Accrued interest payable 5,830 5,830 6,914 6,914
Unrecognized financial instruments:
Commitments to extend credit -- -- -- --
Standby letters of credit and
financial guarantees written -- -- -- --
Loans sold with recourse -- -- -- --
</TABLE>
16. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Corporation is a party to financial instruments with
off-balance-sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments include
commitments to extend credit, standby letters of credit, financial
guarantees, and loans sold with recourse.
These instruments involve, to varying degrees, elements recognized in
the consolidated balance sheets. The contract or notional amount of
these instruments reflect the extent of involvement the Corporation
has in particular classes of financial instruments.
The Corporation's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for
commitments to extend credit and standby letters of credit and
financial guarantees written is represented by the contractual
notional amount of those instruments. The Corporation uses the same
credit policies in making commitments and conditional obligations as
it does for on-balance-sheet instruments.
Unless noted otherwise, the Corporation does not require collateral or
other security to support financial instruments with credit risk. The
following table sets forth financial instruments whose contract
amounts represent credit risk:
<TABLE>
<CAPTION>
December 31,
-----------------------------
1993 1992
--------- -----------
<S> <C> <C>
Commitments to extend credit $799,717 729,961
========= ===========
Standby letters of credit and financial guarantees written $ 51,784 58,043
======== ==========
Loans sold with recourse $ 2,434 3,721
========= ===========
</TABLE>
<PAGE> 19
Commitments to extend credit are agreements to lend to a customer
provided there is no violation of any condition established in the
contract. Commitments generally are extended at the then prevailing
interest rates, have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash
requirements. The Corporation evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral
obtained if deemed necessary by the Corporation upon extension of
credit is based on Management's credit evaluation of the
counterparty. Collateral held varies but may include accounts
receivable, inventory, property, plant and equipment, and
income-producing commercial properties. Standby letters of credit and
financial guarantees written are conditional commitments issued by the
Corporation to guarantee the performance of a customer to a third
party. Those guarantees are primarily issued to support public and
private borrowing arrangements, including commercial paper, bond
financing and similar transactions. Except for short-term guarantees
of $22,635 and $27,290 at December 31, 1993 and 1992, respectively,
the remaining guarantees extend in varying amounts through 2008. The
credit risk involved in issuing letters of credit is essentially the
same as that involved in extending loan facilities to customers.
Collateral held varies, but may include marketable securities,
equipment and real estate. In recourse arrangements, the Corporation
accepts 100% recourse. By accepting 100% recourse, the Corporation is
assuming the entire risk of loss due to borrower default. The
Corporation's exposure to credit loss, if the borrower completely
failed to perform and if the collateral or other forms of credit
enhancement all prove to be of no value, is represented by the
notional amount less any allowance for possible loan losses. The
Corporation uses the same credit policies originating loans which
will be sold with recourse as it does for any other type of loan.
17. CONTINGENCIES
The nature of the Corporation's business results in a certain amount of
litigation. Accordingly, the Corporation and its subsidiaries are
subject to various pending and threatened lawsuits in which claims for
monetary damages are asserted. Management, after consultation with
legal counsel, is of the opinion that the ultimate liability of such
pending matters would not have a material effect on the Corporation's
financial condition.
During 1991, a federal suit was filed against First National Bank of
Ohio (Bank), a subsidiary of the Parent Company, alleging conversion
and negligence in the deposit of funds. The suit sought actual
damages against the Bank plus punitive damages, interest, costs,
attorneys' fees and other relief. State lawsuits brought by other
claimants based on the same deposits have been stayed. Management,
after consultation with legal counsel, believes that the possibility
of a multiple recovery by both the federal court and state court
plaintiffs is unlikely and the maximum exposure for damages
approximates $7.3 million.
During 1993, the court granted the Bank's motion for summary judgment
in the federal lawsuit. As a result, that suit was dismissed. The
plaintiff in that suit subsequently filed a notice of appeal. The
Bank is vigorously seeking to have the favorable federal judgment
affirmed on appeal. The Corporation continues to believe the Bank has
meritorious defenses to all claims.
<PAGE> 20
18. QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly financial and per share data for the years ended December 31,
1993 and 1992 are summarized as follows:
<TABLE>
<CAPTION>
In thousands (except per share data)
-----------------------------------------
Quarters
-----------------------------------------
First Second Third Fourth
---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Total interest income 1993 $70,319 70,459 68,859 68,083
==== ======= ====== ====== ======
1992 $75,043 74,013 73,406 72,422
==== ======= ====== ====== ======
Net interest income 1993 $45,686 46,799 45,793 46,211
==== ======= ====== ====== ======
1992 $43,123 44,461 45,879 46,516
==== ======= ====== ====== ======
Provision for possible
loan losses 1993 $ 1,920 1,869 1,641 1,164
==== ======= ====== ====== ======
1992 $ 4,164 4,097 3,358 5,744
==== ======= ====== ====== ======
Income before federal
income taxes 1993 $19,168 20,588 21,113 19,856
==== ======= ====== ====== ======
1992 $17,579 17,284 18,528 19,703
==== ======= ====== ====== ======
Net income 1993 $13,179 14,266 14,132 13,628
==== ======= ====== ====== ======
1992 $12,228 12,122 12,692 13,658
==== ======= ====== ====== ======
Net income per share 1993 $ .52 .57 .56 .54
==== ======= ====== ====== ======
1992 $ .49 .48 .51 .54
==== ======= ====== ====== ======
</TABLE>
19. SHAREHOLDER RIGHTS PLAN
On October 21, 1993 the Board of Directors of the Corporation adopted
a shareholder rights plan ("Plan"). To implement the Plan, the Board
declared a dividend of one purchase right ("Right") per share of
Common Stock which dividend was distributed on November 5, 1993. The
Plan provides that each share of Common Stock issued after November 1,
1993, shall also have one Right attached.
Under the Plan, the Rights would be distributed on the 10th business
day after either of the following events would occur: (1) a person
acquires 15% or more of the outstanding shares of common stock of the
Corporation, except if pursuant to a tender offer for all shares on
terms determined by a majority of the "Continuing Directors" to be
fair; or (2) the commencement of a tender or exchange offer that would
result in a change in the ownership of 15% or more of the outstanding
shares of Common Stock. After such an event, each Right would entitle
the holder to purchase shares of Series A Preferred Stock of the
Corporation. Any Rights held by an "acquiring person," however, would
be void. If the Corporation is acquired in a merger, or there is a
transfer of 50% or more of the Corporation's assets or earning power,
each Right holder would be entitled to receive common shares of the
acquiring company worth two times the exercise price of the Right.
The Corporation may redeem the Rights for $0.01 per Right at any time
prior to the 10th business day (subject to extension) following the
date when a person acquires 15% of the outstanding shares of common
stock.
<PAGE> 21
MANAGEMENT'S REPORT
The management of First Bancorporation of Ohio is responsible for the
preparation and accuracy of the financial information presented in this annual
report. These consolidated financial statements were prepared in accordance
with generally accepted accounting principles, based on the best estimates and
judgment of management.
The Corporation maintains a system of internal controls designed to
provide reasonable assurance that assets are safeguarded, that transactions are
executed in accordance with the Corporation's authorization and policies, and
that transactions are properly recorded so as to permit preparation of
financial statements that fairly present the financial position and results of
operations in conformity with generally accepted accounting principles. These
systems and controls are reviewed by our internal auditors and independent
auditors.
The Audit Committee of the Board of Directors is composed of only
outside directors and has the responsibility for the recommendation of the
independent auditors for the Corporation. The Audit Committee meets regularly
with management, internal auditors and our independent auditors to review
accounting, auditing and financial matters. The independent auditors and the
internal auditors have free access to the Audit Committee.
<TABLE>
<S> <C>
/s/ Howard L. Flood /s/ Gary J. Elek
HOWARD L. FLOOD GARY J. ELEK
President and Chief Senior Vice President
Executive Officer and Treasurer
</TABLE>
<PAGE> 22
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
First Bancorporation of Ohio:
We have audited the accompanying consolidated balance sheets of First
Bancorporation of Ohio and subsidiaries as of December 31, 1993 and 1992, and
the related consolidated statements of income, changes in shareholders' equity
and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. The consolidated statements of income, changes
in shareholders' equity and cash flows of First Bancorporation of Ohio and
subsidiaries for the year ended December 31, 1991 were audited by other
auditors whose report dated January 19, 1992, except as to Note 16 which was
as of February 13, 1992, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the 1993 and 1992 consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of First Bancorporation of Ohio and subsidiaries as of December 31,
1993 and 1992, and the results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand
Akron, Ohio
January 18, 1994
<PAGE> 23
<TABLE>
AVERAGE CONSOLIDATED BALANCE SHEETS,
Fully-tax Equivalent Interest Rates and Interest Differential
FIRST BANCORPORATION OF OHIO AND SUBSIDIARIES
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1993 1992 1991
(DOLLARS IN THOUSANDS) ----------------------------- ------------------------- --------------------------
AVERAGE AVERAGE Average Average Average Average
BALANCE INTEREST RATE Balance Interest Rate Balance Interest Rate
---------- ------ ---- --------- ------- ---- --------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investment securities:
U.S. Treasury securities and U.S.
Government agency obligations (taxable) $ 931,837 60,301 6.47% 835,300 63,024 7.55% 791,123 65,977 8.34%
Obligations of states and political
subdivisions (tax-exempt) 140,550 11,691 8.32 140,682 12,337 8.77 150,418 14,129 9.39
Other securities 99,656 6,174 6.20 144,870 10,833 7.48 142,896 12,317 8.62
---------- ------ ---- --------- ------- ---- --------- ------- ----
Total investment securities 1,172,043 78,166 6.67 1,120,852 86,194 7.69 1,084,437 92,423 8.52
Federal funds sold 84,077 2,596 3.09 88,135 3,112 3.53 133,701 7,910 5.92
Loans 2,369,361 202,203 8.53 2,275,063 211,216 9.28 2,179,130 222,174 10.20
Less allowance for possible loan losses 30,690 -- -- 26,979 -- -- 24,799 -- --
---------- ------ ---- --------- ------- ---- --------- ------- ----
Net loans 2,338,671 202,203 8.65 2,248,084 211,216 9.40 2,154,331 222,174 10.31
---------- ------ ---- --------- ------- ---- --------- ------- ----
Total earning assets 3,594,791 282,965 7.87 3,457,071 300,522 8.69 3,372,469 322,507 9.56
------ ------- -------
Cash and due from banks 214,963 180,256 172,776
Other assets 148,479 146,947 150,777
---------- ------ ---- --------- ------- ---- --------- ------- ----
Total assets $3,958,233 3,784,274 3,696,022
========== ====== ==== ========= ======= ==== ========= ======= ====
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand--
non-interest bearing $ 639,265 -- -- 538,722 -- -- 479,977 -- --
Demand--interest bearing 293,153 6,903 2.35 268,549 7,709 2.87 236,589 9,867 4.17
Savings 1,265,424 34,440 2.72 1,132,599 37,098 3.28 997,661 46,736 4.68
Certificates and other time deposits 1,197,040 47,983 4.01 1,316,879 65,849 5.00 1,477,992 99,892 6.76
---------- ------ ---- --------- ------- ---- --------- ------- ----
Total deposits 3,394,882 89,326 2.63 3,256,749 110,656 3.40 3,192,219 156,495 4.90
Federal funds purchased, securities sold
under agreements to repurchase and
other borrowings 148,822 3,905 2.62 144,054 4,249 2.95 147,349 7,170 4.87
---------- ------ ---- --------- ------- ---- --------- ------- ----
Total interest bearing liabilities 2,904,439 93,231 3.21 2,862,081 114,905 4.01 2,859,591 163,665 5.72
------ ------- -------
Other liabilities 38,814 40,816 40,100
Shareholders' equity 375,715 342,655 316,354
---------- ------ ---- --------- ------- ---- --------- ------- ----
Total liabilities and shareholders'
equity $3,958,233 3,784,274 3,696,022
========== ====== ==== ========= ======= ==== ========= ======= ====
Net yield on earning assets 189,734 5.28 185,617 5.37 158,842 4.71
========== ====== ==== ========= ======= ==== ========= ======= ====
Interest rate spread 4.66 4.68 3.84
========== ====== ==== ========= ======= ==== ========= ======= ====
Income on tax-exempt securities
and loans 10,454 12,061 15,372
========== ====== ==== ========= ======= ==== ========= ======= ====
<FN>
Notes: Interest income on tax-exempt securities and loans have been adjusted to a fully-taxable equivalent basis.
Non-accrual loans have been included in the average balances.
</TABLE>
<PAGE> 24
FIRST BANCORPORATION OF OHIO
EMPLOYEE STOCK PURCHASE PLAN
--------
for the year ended December 31, 1993 and
for the period July 2, 1992 (inception)
through December 31, 1992
C O N T E N T S
--------
Pages
<TABLE>
<S> <C>
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Plan
Benefits at December 31, 1993 and 1992 2
Statements of Changes in Net Assets Available
for Plan Benefits for the year ended
December 31, 1993 and for the period
July 2, 1992 (inception) through
December 31, 1992 3
Notes to Financial Statements 4-5
</TABLE>
<PAGE> 25
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees of the
First Bancorporation of Ohio
Employee Stock Purchase Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the First Bancorporation of Ohio Employee Stock Purchase Plan (the
"Plan") as of December 31, 1993 and 1992 and the related statements of changes
in net assets available for plan benefits for the year ended December 31, 1993
and for the period July 2, 1992 (inception) through December 31, 1992. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1993 and 1992 and the changes in net assets available for Plan
benefits for the year ended December 31, 1993 and for the period July 2, 1992
(inception) through December 31, 1992 in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand
Akron, Ohio
April 22, 1994
1
<PAGE> 26
FIRST BANCORPORATION OF OHIO
EMPLOYEE STOCK PURCHASE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1993 and 1992
---------
<TABLE>
<CAPTION>
ASSETS 1993 1992
---- ----
<S> <C> <C>
Cash $132,120 $102,358
Investment in First Bancorporation
of Ohio common shares, at fair value 267,150 -
-------- --------
Net assets available for plan
benefits $399,270 $102,358
======== ========
</TABLE>
The accompanying notes are an integral
part of the financial statements.
2
<PAGE> 27
FIRST BANCORPORATION OF OHIO
EMPLOYEE STOCK PURCHASE PLAN
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1993 and for the period
July 2, 1992 (inception) through December 31, 1992
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Additions to plan assets attributable to:
Employee contributions $253,702 $105,180
Dividend income 7,074 -
Net appreciation in fair value of First
Bancorporation of Ohio common shares 74,198 -
-------- --------
Total additions 334,974 105,180
-------- --------
Deductions to plan assets attributable to:
Benefits paid to participants 30,988 2,822
Dividends paid to participants 7,074 -
-------- --------
Total deductions 38,062 2,822
-------- --------
Net increase 296,912 102,358
Net assets available for plan benefits,
beginning of period 102,358 -
-------- --------
Net assets available for plan benefits,
end of period $399,270 $102,358
======== ========
</TABLE>
The accompanying notes are an integral
part of the financial statements.
3
<PAGE> 28
FIRST BANCORPORATION OF OHIO
EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
-------
1. Plan Description and Basis of Presentation:
-------------------------------------------
The following brief description of the First Bancorporation of Ohio (the
"Corporation") Employee Stock Purchase Plan (the "Plan") is provided for
general information purposes only. Participants should refer to the
Prospectus for more complete information.
GENERAL - The Board of Directors of the Corporation established the Plan
on February 13, 1992 which was approved by the shareholders at the annual
meeting on April 8, 1992. The first contributions to the Plan were
received on July 2, 1992. The Plan provides eligible full- time employees
of the Corporation with the opportunity to acquire the Corporation's
Common Shares on a payroll deduction basis.
CONTRIBUTIONS - Contributions to the Plan consist of participant payroll
deductions, post tax, of a specific dollar amount up to five percent of
the participant's compensation. The election to participate in the Plan
must be completed on or before 15 business days prior to the commencement
of a semiannual grant period. The semiannual grant dates are July 2 and
January 2.
All contributions to the Plan are maintained by the Trust and Financial
Services Division of a subsidiary of the Corporation, the trustee of the
Plan.
VESTING - Participants are 100% vested in their account balances at all
times.
PURCHASES OF COMMON SHARES - Under the Plan, up to 200,000 of the
Corporation's Common Shares may be issued, subject to adjustment in the
event of certain transactions affecting the Corporation's capital
structure. Each participant in the Plan on a semiannual grant date is
granted the option to purchase, from such funds as contributed by the
participant, whole Common Shares of the Corporation at the option price of
85% of the fair market value of such shares valued as of the business day
immediately preceding the semiannual grant date. All such Common Shares
acquired on behalf of a participant under the Plan are maintained on a
book entry basis on the records of the Corporation in an account for the
participant.
ELIGIBILITY - Any person who has been employed by the Corporation or any
of its subsidiaries for at least six months and who currently is employed
on a regular full-time basis (any person customarily employed at least 20
hours per week) is eligible to participate in the Plan. Executive
officers of the Corporation are not considered eligible employees.
4
<PAGE> 29
FIRST BANCORPORATION OF OHIO
EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS, Continued
TRANSFERABILITY - Rights to purchase Common Shares under the Plan are not
transferable, except by will or the laws of descent of distribution, and
they may not be subjected to any lien or liability. Options expire on
termination of employment for any reason other than disability or leave of
absence. No participant may purchase shares under the Plan if, after the
purchase, the participant would own more than 5% of the outstanding Common
Shares of the Corporation. In addition, no participant may purchase
shares exceeding $25,000 in fair market value in any one calendar year.
EXPENSES - Administrative expenses and other Plan expenses are paid by the
Corporation.
2. Summary of significant Accounting Policies:
-------------------------------------------
BASIS OF PRESENTATION - The accompanying financial statements have been
prepared on an accrual basis in accordance with generally accepted
accounting principles.
INVESTMENTS - The investment in the Corporation's common shares is valued
at fair market value using readily available published market values.
ADMINISTRATIVE EXPENSES - Administrative expenses of the plan are paid by
the Company.
3. Right to Terminate:
-------------------
Although it has not expressed any interest to do so, the Company has the
right to terminate the Plan at any time. In the event of Plan termination
all assets in the Plan must be used solely for distributions to Plan
participants.
4. Income Tax Status:
------------------
The Plan is a non-qualified plan under the Internal Revenue Code. As
such, the Plan is exempt from federal income taxes and distribution in
excess of basis are taxable to the participants of the Plan.
5
<PAGE> 30
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) The following Financial Statements appear in Part II of this Report:
Independent Auditors' Report
Management's Report
Consolidated Balance Sheets
December 31, 1993 and 1992
Consolidated Statements of Income
Years ended December 31, 1993, 1992 and 1991
Consolidated Statements of Changes in Shareholders' Equity
Years ended December 31, 1993, 1992 and 1991
Consolidated Statements of Cash Flow
Years ended December 31, 1993, 1992 and 1991
Notes to Consolidated Financial Statements
Years ended December 31, 1993, 1992 and 1991
Statements of Net Assets Available for First Bancorporation of Ohio
Employee Stock Purchase Plan Benefits at December 31, 1993 and 1992
Statements of Changes in Net Assets Available for First
Bancorporation of Ohio Employee Stock Purchase Plan Benefits for the
year ended December 31, 1993 and for the period July 2, 1992
(inception) through December 31, 1992
<PAGE> 31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Akron, State of Ohio, on the 29th day of April, 1994.
FIRST BANCORPORATION OF OHIO
By: /s/ Gary J. Elek
----------------------------------------
Gary J. Elek, Senior Vice President
and Treasurer (Principal Financial
Officer and Principal Accounting Officer)
<PAGE> 32
EXHIBIT INDEX
Exhibit
No. ITEM
---------------------------------
23 Consent of Coopers & Lybrand
<PAGE> 1
EXHIBIT 23
The Board of Directors
First Bancorporation of Ohio
We consent to the incorporation by reference in the Registration
Statement No. 33-47074 of First Bancorporation of Ohio of our report dated
April 22, 1994, relating to the Statements of Net Assets Available for Plan
Benefits at December 31, 1993 and 1992 and the Statements of Changes in Net
Assets Available for Plan Benefits for the year ended December 31, 1993 and for
the period July 2, 1992 (inception) through December 31, 1992, which report
appears in Amendment No. 1 to the annual report on Form 10-K of First
Bancorporation of Ohio.
/s/ Coopers & Lybrand
Akron, Ohio
April 29, 1994
