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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the
Securities Exchange Act of 1934)
Amendment No. ____
United Oklahoma Bankshares, Inc.
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(Name of the Issuer)
United Oklahoma Bankshares, Inc.
Ameribank Corporation
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(Name of Persons Filing Statement)
Common Stock, par value $1.00 per share
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(Title of Class of Securities)
911266-10-4
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(CUSIP Number of Class of Securities)
George N. Cook, Jr. D. Wesley Schubert
United Oklahoma Bankshares, Inc. Ameribank Corporation
4600 S.E. 29th Street 201 N. Broadway
Del City, Oklahoma 73115 Shawnee, Oklahoma 74802
(405) 677-8711 (405) 273-5000
With a copy to:
N. Martin Stringer, Esq.
McKinney, Stringer & Webster, P.C.
101 N. Broadway, Suite 800
Oklahoma City, Oklahoma 73102
(405) 239-6444
(Name, Address and Telephone Number of Persons Authorized to
Receive Notice and Communications on Behalf of Person Filing Statement)
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This statement is filed in connection with (check the appropriate box):
a. [ X ] The filing of solicitation materials or an information
statement subject to Regulation 14A [17 CFR 240.14a-1 to
240.14(b)-1], Regulation 14C [17 CFR 240.14c-1 to 240.14c-101]
or Rule 13e-3(c) [Section 240.13e(c)] under the Securities
Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities
Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [ X ]
Calculation of Filing Fee
Transaction Valuation: $1,700,000.00* Amount of Filing Fee: $340.00**
*Based upon 972,739 shares of common stock, par value $1.00 per share, of
United Oklahoma Bankshares, Inc. (the "Common Stock"), to be converted into the
right to receive $0.776901 (rounded to the nearest $0.01) in cash per share and
16,183 shares of 9% cumulative non-voting preferred stock, par value $30.00 per
share, of United Oklahoma Bankshares, Inc. (the "Preferred Stock"), to be
converted into the right to receive $58.35 in cash per share. **The amount of
the filing fee, calculated in accordance with Regulation 240.0-11 of the
Securities Exchange Act of 1934, equals 1/50th of one percent of the
transaction value.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: $ .
-------------------------
Form or Registration No.: .
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Filing Party: .
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Date Filed: .
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ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) The Name of the Issuer of the class of equity security which
is the subject of the Rule 13e-3 transaction is United Oklahoma Bankshares,
Inc. (United" or the "Company") and the address of its principal executive
offices is 4600 S.E. 29th Street, Del City, Oklahoma 73115. All cross
references in this Rule 13e-3 Transaction Statement (the "Statement") refer to
captions in the Proxy Statement (the "Proxy Statement") filed concurrently
herewith with the Securities and Exchange Commission (the "Commission") in
anticipation of the completion of a merger pursuant to which the Company will
be merged into Ameribank Corporation ("Ameribank") and Ameribank will be the
surviving entity (the "Merger").
(b) The relevant information set forth on the Front and Cover Page
of the Proxy Statement and under the caption "DESCRIPTION OF CAPITAL STOCK OF
THE COMPANY" is incorporated herein by reference pursuant to Instruction D of
Schedule 13E-3.
(c) The relevant information set forth under the caption
"DESCRIPTION OF CAPITAL STOCK OF THE COMPANY -- Recent Market Prices" is
incorporated herein by reference pursuant to Instruction D of Schedule 13E-3.
(d) The relevant information set forth under the captions "SUMMARY
- -- Dividends" and "DESCRIPTION OF CAPITAL STOCK OF THE COMPANY -- Dividends" is
incorporated herein by reference pursuant to Instruction D of Schedule 13E-3.
(e) Not Applicable.
(f) The relevant information set forth under the caption
"BENEFICIAL OWNERSHIP OF SHARES -- Certain Transactions in Common Stock and
Preferred Stock" is incorporated herein by reference pursuant to Instruction D
of Schedule 13E-3.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d); (g) This Statement is being filed by Ameribank and United
(the last being the issuer of the subject security). The relevant information
set forth on the Cover Page of the Proxy Statement; the Notice of Special
Meeting of Shareholders; and set forth under the captions "INTRODUCTION --
Matters to be Considered at the Meeting;" "CERTAIN INFORMATION REGARDING
AMERIBANK;" and "BUSINESS OF THE COMPANY" is incorporated herein by reference
pursuant to Instruction D of Schedule 13E-3.
(e) and (f) Neither Ameribank nor United, nor to the best of
their knowledge, other persons with respect to whom information is provided in
response to this Item has been, during the past five years, (i) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors); or
(ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining further violations of, or
prohibiting activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
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ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a) (1) The relevant information set forth under the caption
"BUSINESS OF THE COMPANY -- Transactions with Affiliates" is incorporated
herein by reference pursuant to Instruction D of Schedule 13E-3.
(a) (2) and (b) The relevant information set forth under the captions
"SUMMARY -- The Merger, -- Recommendation of the Board of Directors and the
Special Committee, -- Opinion of Financial Advisor, and -- Fairness of the
Transaction;" "SPECIAL FACTORS -- Background of the Merger, -- Appointment of
and Deliberations by the Special Committee, -- Proceedings of the Board and
Recommendation of the Special Committee, -- Fairness of the Transaction, --
Opinion of Financial Advisor, -- Structure and Purpose of the Merger, --
Certain Effects of the Merger, -- Interests of Certain Persons in the Merger;
Conflicts of Interest, and -- Financing of the Merger;" "THE MERGER;" and
"ANNEX A" is incorporated herein by reference pursuant to Instruction D of
Schedule 13E-3.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The relevant information set forth under the captions "SUMMARY
- -- The Merger, -- Financing of the Merger, -- Conditions to the Merger;
"SPECIAL FACTORS -- Background of the Merger, -- Structure and Purpose of the
Merger; -- Financing of the Merger;" "THE MERGER" and "ANNEX A" is incorporated
herein by reference pursuant to Instruction D of Schedule 13E-3.
(b) The relevant information set forth under the captions "Notice
of Special Meeting of Shareholders;" "INTRODUCTION -- Matters to be Considered
at the Meeting;" "SUMMARY -- The Merger;" "THE MERGER" and "ANNEX A" is
incorporated herein by reference pursuant to Instruction D of Schedule 13E-3.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) - (e) The relevant information set forth under the captions
"INTRODUCTION -- Matters to be Considered at the Meeting;" "SUMMARY -- The
Merger;" "SPECIAL FACTORS -- Background of the Merger, -- Structure and Purpose
of the Merger, -- Certain Effects of the Merger;" "THE MERGER --General, --
Conditions to the Merger; Waiver;" and "CERTAIN INFORMATION REGARDING
AMERIBANK" is incorporated herein by reference pursuant to Instruction D of
Schedule 13E-3.
(f) - (g) The relevant information set forth under the captions
"SPECIAL FACTORS -- Structure and Purpose of the Merger, -- Certain Effects of
the Merger;" and "BENEFICIAL OWNERSHIP OF SHARES -- Current Information:
Delisting and Deregistration" is incorporated herein by reference pursuant to
Instruction D of Schedule 13E-3.
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ITEM 6. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a) The relevant information set forth under the captions "SUMMARY
- -- Financing of the Merger" and "SPECIAL FACTORS -- Financing of the Merger" is
incorporated herein by reference pursuant to Instruction D of Schedule 13E-3.
(b) The relevant information set forth under the captions "SUMMARY
- -- Financing of the Merger, -- Expenses of the Merger;" "SPECIAL FACTORS --
Financing of the Merger, -- Expenses of the Merger;" and "THE MERGER -- Certain
Covenants of the Company and Ameribank" is incorporated herein by reference
pursuant to Instruction D of Schedule 13E-3.
(c) The relevant information set forth under the caption "SUMMARY
- -- Financing of the Merger;" "SPECIAL FACTORS -- Financing of the Merger" is
incorporated herein by reference pursuant to Instruction D of Schedule 13E-3.
(d) Not Applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
(a) - (c) The relevant information set forth under the captions
"SUMMARY -- Background of the Merger, -- Recommendation of Board of Directors
and the Special Committee, -- Fairness of the Transaction;" "SPECIAL FACTORS --
Proceedings of the Board and Recommendation of the Special Committee, --
Fairness of the Transaction, -- Structure and Purpose of the Merger, --
Alternatives to the Merger, and -- Certain Effects of the Merger" is
incorporated herein by reference pursuant to Instruction D of Schedule 13E-3.
(d) The relevant information set forth under the captions "SUMMARY
- -- Federal Income Tax Consequences;" "SPECIAL FACTORS -- Background of the
Merger, -- Structure and Purpose of the Merger, -- Certain Effects of the
Merger, and -- Certain Federal Income Tax Consequences of the Merger;" and "THE
MERGER" is incorporated herein by reference pursuant to Instruction D of
Schedule 13E-3.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) The relevant information set forth under the captions "SUMMARY
- -- Recommendation of the Board of Directors and the Special Committee, --
Opinion of the Financial Advisor, -- Fairness of the Transaction; -- Interest
of Certain Persons in the Merger; Conflicts of Interest;" and "SPECIAL FACTORS
- -- Appointment of and Deliberations by the Special Committee, -- Proceedings of
the Board and Recommendation of the Special Committee, -- Fairness of the
Transaction, -- Opinion of Financial Advisor -- Structure and Purpose of the
Merger, and -- Interests of Certain Persons in the Merger; Conflicts of
Interest" is incorporated herein by reference pursuant to Instruction D of
Schedule 13E-3.
(b) The relevant information set forth under the captions "SPECIAL
FACTORS -- Appointment of and Deliberations by the Special Committee, --
Proceedings of the Board and Recommendation of the Special Committee, --
Fairness of the Transaction and -- Opinion of
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Financial Advisor" is incorporated herein by reference pursuant to Instruction
D of Schedule 13E-3.
(c) The relevant information set forth under the captions "SUMMARY
- -- Required Vote" and "THE MERGER -- Required Vote" is incorporated herein by
reference pursuant to Instruction D of Schedule 13E-3.
(d) The relevant information set forth under the captions "SPECIAL
FACTORS -- Appointment of and Deliberations by the Special Committee, --
Proceedings of the Board and Recommendation of the Special Committee, --
Fairness of the Transaction and -- Opinion of Financial Advisor" is
incorporated herein by reference pursuant to Instruction D of Schedule 13E-3.
(e) The relevant information set forth under the caption "SPECIAL
FACTORS -- Appointment of and Deliberations by the Special Committee, --
Proceedings of the Board and Recommendation of the Special Committee, --
Fairness of the Transaction" is incorporated herein by reference pursuant to
Instruction D of Schedule 13E-3.
(f) Not Applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) The relevant information set forth under the captions "SUMMARY
- -- Opinion of Financial Advisor;" "SPECIAL FACTORS -- Appointment of and
Deliberations by the Special Committee, -- Proceedings of the Board and
Recommendation of the Special Committee, -- Fairness of the Transaction, and --
Opinion of Financial Advisor" is incorporated herein by reference pursuant to
Instruction D of Schedule 13E-3.
(b) The relevant information set forth under the caption "SUMMARY
- -- Recommendation of Board of Directors and the Special Committee" is
incorporated herein by reference pursuant to Instruction D of Schedule 13E-3.
(c) The opinion of George K. Baum & Company, dated October 28,
1996, is attached as Annex C to the Proxy Statement and the Supplemental Letter
of George K. Baum 7 Company, dated January 23, 1997 attached as "ANNEX D" to
the Proxy Statement are incorporated herein by reference pursuant to
Instruction D of Schedule 13E-3.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) The relevant information set forth under the caption
"BENEFICIAL OWNERSHIP OF SHARES -- Beneficial Ownership" is incorporated herein
by reference pursuant to Instruction D of Schedule 13E-3.
(b) The relevant information set forth under the caption
"BENEFICIAL OWNERSHIP OF SHARES -- Certain Transactions in Common Stock and
Preferred Stock" is incorporated herein by reference pursuant to Instruction D
of Schedule 13E-3.
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ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE
ISSUER'S SECURITIES.
The relevant information set forth under the captions "SUMMARY -- The
Merger, -- Required Vote, -- Recommendation of Board of Directors and the
Special Committee, -- Fairness of the Transaction;" "SPECIAL FACTORS --
Appointment of and Deliberations by the Special Committee, -- Proceedings of
the Board and Recommendation of the Special Committee, -- Fairness of the
Transaction;" "THE MERGER -- General, -- Required Vote", -- Conditions to the
Merger; Waiver, -- Certain Covenants of the Company and Ameribank and "ANNEX A"
is incorporated herein by reference pursuant to Instruction D of Schedule
13E-3.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD
TO THE TRANSACTION.
(a) and (b) The relevant information set forth under the captions
"INTRODUCTION -- Voting at the Meeting -- Proxies;" "SUMMARY -- The Merger, --
Required Vote, -- Recommendation of the Board of Directors and the Special
Committee, -- Fairness of the Transaction;" "SPECIAL FACTORS -- Appointment of
and Deliberations by the Special Committee, -- Proceedings of the Board and
Recommendation of the Special Committee, -- Fairness of the Transaction, --
Structure and Purpose of the Merger;" and "THE MERGER -- Required Vote" is
incorporated herein by reference pursuant to Instruction D of Schedule 13E-3.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The relevant information set forth under the captions
"INTRODUCTION -- Appraisal Rights;" "SUMMARY -- Appraisal Rights;" "SPECIAL
FACTORS -- Appraisal Rights;" and "ANNEX B" is incorporated herein by reference
pursuant to Instruction D of Schedule 13E-3.
(b) Not Applicable.
(c) Not Applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) The relevant information set forth under the captions
"INFORMATION INCORPORATED BY REFERENCE;" "SUMMARY -- Selected Consolidated
Financial Data;" and "BUSINESS OF THE COMPANY -- Selected Consolidation
Financial Data" is incorporated herein by reference pursuant to Instruction D
of Schedule 13E-3.
(b) The relevant information set forth under the caption
"INFORMATION INCORPORATED BY REFERENCE" is incorporated herein by reference
pursuant to Instruction D of Schedule 13E-3.
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ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) The relevant information set forth under the caption "CERTAIN
INFORMATION REGARDING AMERIBANK" and "BENEFICIAL OWNERSHIP OF SHARES -- Proxy
Solicitation" is incorporated herein by reference pursuant to Instruction D of
Schedule 13E-3.
(b) Not applicable.
ITEM 16. ADDITIONAL INFORMATION
The information contained in the Proxy Statement, including the
Information Incorporated by Reference and the Annexes attached thereto, filed
concurrently herewith with the Commission in connection with this Statement is
incorporated herein by reference pursuant to Instruction D of Schedule 13E-3
in its entirety.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS
Ex - 99(a) Promissory Note and Agreement, dated as of May
15, 1996, between Ameribank Corporation,
Shawnee, American National Bank & Trust Company
of Shawnee and Boatmen's First National Bank of
Kansas City.
Ex - 19(b)(1) Opinion of George K. Baum & Company, dated
October 25, 1996.
Ex - 19(b)(2) Supplemental Letter of George K. Baum & Company,
dated January 23, 1997.
Ex - 2(c) Agreement and Plan of Merger, dated as of
December 3, 1996, between Ameribank Corporation
and United Oklahoma Bankshares, Inc., (the
"Merger Agreement"), is incorporated by
reference to Annex A to the Proxy Statement
attached as Exhibit (d) hereto.
Ex - 20(d)(1) Proxy Statement of the Company in connection
with the Special Meeting of Shareholders,
including Annexes thereto.
Ex - 13(d)(2) 10-K for year ended December 31, 1995.
Ex - 13(d)(3) 10-K for year ended December 31, 1994.
Ex - 13(d)(4) 10-K for year ended December 31, 1993.
Ex - 13(d)(5) 10-Q for quarter ended March 31, 1996.
Ex - 13(d)(6) 10-Q for quarter ended June 30, 1996.
Ex - 13(d)(7) 10-Q for quarter ended September 30, 1996.
Ex - 99(d)(8) 8-K filed with Commission on December 12, 1996.
Ex - 4(e) The appraisal rights and the procedure for
exercising such appraisal rights under Oklahoma
law are described in (1) "INTRODUCTION" --
Appraisal Rights;" "SUMMARY -- Appraisal
Rights;" and "SPECIAL FACTORS -- Appraisal
Rights;" and (2) Annex B, in each case of the
Proxy Statement attached as Exhibit (d) hereto.
Exhibit (f) Not Applicable
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CROSS REFERENCE SHEET
Schedule 13E-3 Caption in Proxy Statement or
Item Number Notice of Special Meeting
1. Issuer and Class of Security Subject
to the Transaction
(a) Notice of Special Meeting of
Shareholders; and Front Cover Page
of the Proxy Statement.
(b) Front and Cover Page of the Proxy
Statement; "DESCRIPTION OF CAPITAL
STOCK OF THE COMPANY."
(c) "DESCRIPTION OF CAPITAL STOCK OF
THE COMPANY -- Recent Market
Prices."
(d) "SUMMARY -- Dividends" and
"DESCRIPTION OF CAPITAL STOCK OF
THE COMPANY -- Dividends."
(e) Not Applicable.
(f) "BENEFICIAL OWNERSHIP OF SHARES --
Certain Transactions in Common
Stock and Preferred Stock."
2. Identity and Background This Statement is being filed by
United (the issuer of the subject
security) and Ameribank the holder
of approximately 61.58% of the
Common Stock and approximately
88.85% of the Preferred Stock of
United. Each of the above are
affiliated and none of the above
are natural persons.
(a) - (d); (g) Cover Page of Proxy Statement;
Notice of Special Meeting of
Shareholders; "INTRODUCTION --
Matters to be Considered at the
Meeting;" "CERTAIN INFORMATION
REGARDING AMERIBANK;" and "BUSINESS
OF THE COMPANY."
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(e) - (f) Neither United nor Ameribank, nor
to the best of their knowledge,
other persons with respect to whom
information is required to be
provided in response to this Item,
during the past five years, has
been (i) convicted in a criminal
proceeding (excluding traffic
violations or similar
misdemeanors); or (ii) a party to
a civil proceeding of a judicial or
administrative body of competent
jurisdiction and as a result of
such proceeding was or is subject
to a judgment, decree or final
order enjoining further violations
of, or prohibiting activities
subject to, federal or state
securities laws or finding any
violation with respect to such
laws.
3. Past Contacts,
Transactions or
Negotiations
(a) (1) "BUSINESS OF THE COMPANY --
Transactions with Affiliates."
(a) (2); (b) "SUMMARY -- The Merger, --
Recommendation of the Board of
Directors and the Special
Committee, -- Opinion of Financial
Advisor, and -- Fairness of the
Transaction;" "SPECIAL FACTORS --
Background of the Merger, --
Appointment of and Deliberations by
the Special Committee, --
Proceedings of the Board and
Recommendation of the Special
Committee, -- Fairness of the
Transaction, -- Opinion of
Financial Advisor, -- Structure and
Purpose of the Merger, -- Certain
Effects of the Merger, -- Interests
of Certain Persons in the Merger;
Conflicts of Interest, -- Financing
of the Merger;" "THE MERGER;" and
ANNEX A.
4. Terms of Transaction
(a) "SUMMARY -- The Merger, --
Financing of the Merger, --
Conditions to the Merger;" SPECIAL
FACTORS -- Background of the
Merger, -- Structure and Purpose of
the Merger, -- Financing of the
Merger;" "THE MERGER;" and ANNEX A.
(b) Notice of Special Meeting of
Shareholders; "INTRODUCTION --
Matters to be Considered at the
Meeting;" "SUMMARY -- The Merger;"
"THE MERGER;" and ANNEX A.
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5. Plans or Proposals of the Issuer or
Affiliate
(a) - (e) "INTRODUCTION -- Matters to be
Considered at the Meeting;"
"SUMMARY -- The Merger;" "SPECIAL
FACTORS -- Background of the
Merger, -- Structure and Purpose of
the Merger, -- Certain Effects of
the Merger;" "THE MERGER --
General, -- Conditions to the
Merger; Waiver;" and "CERTAIN
INFORMATION REGARDING AMERIBANK."
(f) - (g) "SPECIAL FACTORS -- Structure and
Purpose of the Merger, -- Certain
Effects of the Merger;" and
"BENEFICIAL OWNERSHIP OF SHARES --
Current Information: Delisting and
Deregistration."
6. Source and Amounts of
Funds or Other
Consideration
(a) "SUMMARY -- Financing of the
Merger" and "SPECIAL FACTORS --
Financing of the Merger."
(b) "SUMMARY -- Financing of the
Merger, -- Expenses of the Merger;"
"SPECIAL FACTORS -- Financing of
the Merger -- Expenses of the
Merger;" and "THE MERGER -- Certain
Covenants of the Company and
Ameribank."
(c) "SUMMARY -- Financing of the
Merger;" "SPECIAL FACTORS --
Financing of the Merger."
(d) Not Applicable.
7. Purpose(s), Alternatives,
Reasons and Effects
(a) - (c) "SUMMARY -- Background of the
Merger, -- Recommendation of Board
of Directors and the Special
Committee, -- Fairness of the
Transaction;" and "SPECIAL FACTORS
-- Proceedings of the Board and
Recommendation of the Special
Committee, -- "Fairness of the
Transaction -- Structure and
Purpose of the Merger, --
Alternatives to the Merger, --
Certain Effects of the Merger."
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(d) "SUMMARY -- Federal Income Tax
Consequences;" "SPECIAL FACTORS --
Background of the Merger, --
Structure and Purpose of the
Merger, - - Certain Effects of the
Merger, -- Certain Federal Income
Tax Consequences of the Merger;"
and "THE MERGER."
8. Fairness of the Transaction
(a) - (e) "SUMMARY -- Required Vote, --
Recommendation of the Board of
Directors and the Special
Committee, -- Opinion of Financial
Advisor, -- Fairness of the
Transaction, -- Interests of
Certain Persons in the Merger;
Conflicts of Interest;" "SPECIAL
FACTORS -- Appointment of and
Deliberations by the Special
Committee, -- Proceedings of the
Board and Recommendation of the
Special Committee, -- Fairness of
the Transaction, -- Opinion of
Financial Advisor, -- Structure and
Purpose of the Merger, -- Interests
of Certain Persons in the Merger;
Conflicts of Interest; and THE
MERGER -- Required Vote."
(f) Not Applicable.
9. Reports, Opinions,
Appraisals and Certain
Negotiations
(a) - (b) "SUMMARY -- Opinion of Financial
Advisor;" "SPECIAL FACTORS --
Appointment of and Deliberations by
the Special Committee, --
Proceedings of the Board and
Recommendation of the Special
Committee, -- Fairness of the
Transaction, -- Opinion of
Financial Advisor."
(c) The Opinion of George K. Baum &
Company attached as Annex C to the
Proxy Statement and the
Supplemental Letter of George K.
Baum & Company, dated January 23,
1997, attached as "ANNEX D" to the
Proxy Statement are incorporated
herein by reference pursuant to
Instruction D of Schedule 13E-3.
10. Interest in Securities of the Issuer
(a) "BENEFICIAL OWNERSHIP OF SHARES --
Beneficial Ownership."
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(b) "BENEFICIAL OWNERSHIP OF SHARES --
Certain Transactions in Common
Stock and Preferred Stock."
11. Contracts, Arrangements or "SUMMARY -- The Merger, -- Required
Understandings with Respect to the Vote, -- Recommendation of Board of
Issuer's Securities Directors and the Special
Committee, -- Fairness of the
Transaction;" "SPECIAL FACTORS --
Appointment of and Deliberations by
the Special Committee, --
Proceedings of the Board and
Recommendation of the Special
Committee, -- Fairness of the
Transaction;" "THE MERGER --
General, -- Required Vote; --
Conditions to the Merger; Waiver;
-- Certain Covenants of the Company
and Ameribank;" and ANNEX A.
12. Present Intention and Recommendation
of Certain Persons with Regard to the
Transaction
(a) - (b) "INTRODUCTION -- Voting at the
Meeting, -- Proxies;" "SUMMARY --
The Merger, -- Required Vote, --
Recommendation of Board of
Directors and the Special
Committee, -- Fairness of the
Transaction;" "SPECIAL FACTORS --
Appointment of and Deliberations by
the Special Committee, --
Proceedings of the Board and
Recommendation of the Special
Committee, -- Fairness of the
Transaction, -- Structure and
Purpose of the Merger;" and "THE
MERGER -- Required Vote."
13. Other Provisions of the Transaction
(a) "INTRODUCTION -- Appraisal Rights;"
"SUMMARY -- Appraisal Rights;"
"SPECIAL FACTORS -- Appraisal
Rights;" and ANNEX B.
(b) Not Applicable.
(c) Not Applicable.
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14. Financial Statements
(a) "INFORMATION INCORPORATED BY
REFERENCE;" "SUMMARY -- Selected
Consolidated Financial Data;" and
BUSINESS OF THE COMPANY -- Selected
Consolidated Financial Data".
(b) "INFORMATION INCORPORATED BY
REFERENCE."
15. Persons and Assets Employed, Retained
or Utilized
(a) "CERTAIN INFORMATION REGARDING
AMERIBANK;" and "BENEFICIAL
OWNERSHIP OF SHARES -- Proxy
Solicitation".
(b) Not Applicable.
ITEM 16. ADDITIONAL INFORMATION.
The Proxy Statement, including the Information Incorporated by
Reference in and the Annexes attached thereto, is hereby incorporated by
reference in its entirety.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 99(a) Promissory Note and Agreement, dated as of
May 15, 1996, between Ameribank Corporation,
Shawnee, American National Bank & Trust
Company of Shawnee and Boatmen's First
National Bank of Kansas City.
Exhibit 19(b)(1) Opinion of George K. Baum & Company, dated
October 25, 1996.
Exhibit 19(b)(2) Supplemental Letter of George K. Baum &
Company, dated January 23, 1997.
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Exhibit 2(c) Agreement and Plan of Merger, dated as of
December 3, 1996, between United and
Ameribank (the "Merger Agreement"), is
incorporated by reference to Annex A to the
Proxy Statement attached as Exhibit (d)
hereto.
Exhibit 20(d)(1) Proxy Statement of the Company in connection
with the Special Meeting of Shareholders,
including Annexes thereto.
Exhibit 13(d)(2) 10-K for year ended December 31, 1995.
Exhibit 13(d)(3) 10-K for year ended December 31, 1994.
Exhibit 13(d)(4) 10-K for year ended December 31, 1993.
Exhibit 13(d)(5) 10-Q for quarter ended March 31, 1996.
Exhibit 13(d)(6) 10-Q for quarter ended June 30, 1996.
Exhibit 13(d)(7) 10-Q for quarter ended September 30, 1996.
Exhibit 99(d)(8) 8-K filed with Commission on December 12,
1996.
Exhibit 4(e) The appraisal rights and the procedure for
exercising such appraisal rights under
Oklahoma law are described in (1)
"INTRODUCTION -- Appraisal Rights;" "SUMMARY
-- Appraisal Rights;" and "SPECIAL FACTORS --
Appraisal Rights;" and (2) ANNEX B, in each
case of the Proxy Statement attached as
Exhibit (d) hereto.
Exhibit (f) Not Applicable.
<PAGE> 16
-16-
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
<TABLE>
<S> <C>
March 3, 1997 March 3, 1997
- ------------------------------------------- ---------------------------------------------------
(Date) (Date)
/s/ D. WESLEY SCHUBERT /s/ GEORGE N. COOK, JR.
- ------------------------------------------- ---------------------------------------------------
(Signature) (Signature)
- ------------------------------------------- ---------------------------------------------------
Name: D. Wesley Schubert Name: George N. Cook, Jr.
Title: Vice President, Ameribank Corporation Title: Chairman, United Oklahoma Bankshares, Inc.
</TABLE>
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
Exhibit 99(a) Promissory Note and Agreement, dated as of
May 15, 1996, between Ameribank Corporation,
Shawnee, American National Bank & Trust
Company of Shawnee and Boatmen's First
National Bank of Kansas City.
Exhibit 19(b)(1) Opinion of George K. Baum & Company, dated
October 25, 1996.
Exhibit 19(b)(2) Supplemental Letter of George K. Baum &
Company, dated January 23, 1997.
Exhibit 2(c) Agreement and Plan of Merger, dated as of
December 3, 1996, between United and
Ameribank (the "Merger Agreement"), is
incorporated by reference to Annex A to the
Proxy Statement attached as Exhibit (d)
hereto.
Exhibit 20(d)(1) Proxy Statement of the Company in connection
with the Special Meeting of Shareholders,
including Annexes thereto.
Exhibit 13(d)(2) 10-K for year ended December 31, 1995.
Exhibit 13(d)(3) 10-K for year ended December 31, 1994.
Exhibit 13(d)(4) 10-K for year ended December 31, 1993.
Exhibit 13(d)(5) 10-Q for quarter ended March 31, 1996.
Exhibit 13(d)(6) 10-Q for quarter ended June 30, 1996.
Exhibit 13(d)(7) 10-Q for quarter ended September 30, 1996.
Exhibit 99(d)(8) 8-K filed with Commission on December 12,
1996.
Exhibit 4(e) The appraisal rights and the procedure for
exercising such appraisal rights under
Oklahoma law are described in (1)
"INTRODUCTION -- Appraisal Rights;" "SUMMARY
-- Appraisal Rights;" and "SPECIAL FACTORS --
Appraisal Rights;" and (2) ANNEX B, in each
case of the Proxy Statement attached as
Exhibit (d) hereto.
Exhibit (f) Not Applicable.
</TABLE>
<PAGE> 1
EXHIBIT 13(d)(2)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the Fiscal year ended December 31,1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [Fee Required]
For the transition period from ______________________ to _____________________
Commission file number 0-12047
UNITED OKLAHOMA BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 73-0969432
- -------------------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employe
incorporation or organization) Identification No.)
4600 S.E. 29th Street
Del City, Oklahoma 73115
- -------------------------------------- ------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (405) 677-8711
Securities registered pursuant to Section 12(b)of the Act: None
Securities registered pursuant to Section 12(g)of the Act: Common stock,
$1 par value
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 such filing requirements for the past 90 days.
[X]Yes 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. [ ]
As of February 1, 1996, based on the reported average bid and asked prices, the
aggregate market value of the common stock held by non-affiliates of
the registrant was approximately $1,266,000.
As of February 1, 1996, 2,532,237 shares of the registrant's common stock, par
value $1.00 per share, were outstanding.
NOTE: See pages 44-46 for Form 10-K Cross Reference Index
<PAGE> 2
BUSINESS
United Oklahoma Bankshares, Inc. (the "Company") is a one-bank holding company
registered under the Bank Holding Company Act of 1956, as amended. The
principal business of the Company is the ownership and supervision of United
Bank ("UB"), Del City, Oklahoma. As of December 31, 1995, the Company and its
subsidiaries had 53 full time equivalent employees. UB is a state chartered
banking association whose deposits are insured pursuant to the Federal Deposit
Insurance Act. UB, which operates primarily in Oklahoma, competes with other
financial institutions in its trade area in providing a full range of
traditional banking and related financial services to the commercial, consumer,
energy, real estate and financial sectors. UB operates two wholly owned
subsidiaries, United Del City Tower, Inc. ("UDCT") and 4600 Corporation.
UDCT owns and manages United Del City Tower of which the first and part of the
second floors are occupied by UB. The facility is approximately 100% occupied
at year end. 4600 Corporation was formed to sell assets on which UB
foreclosed.
In 1991, the Company borrowed the sum of $1,400,000 from John E. Kirkpatrick of
Oklahoma City, Oklahoma, a preferred stockholder of the Company. The note was
collateralized by 100% of the stock of UB. The note was paid in full as of
December 31, 1994.
PROPERTIES
The Company's corporate headquarters are located in United Del City Tower at
4600 S.E. 29th Street, Del City, Oklahoma. This facility is located on
approximately 8 acres and comprises approximately 77,000 square feet of usable
space. The Tower houses the main banking functions and the Company's executive
offices. UB occupies 27% of the building and approximately 73% is leased to
various tenants. In 1993, UB completed construction of a new drive-in facility
attached to the United Del City Tower. UB also sold its previous drive-in
facility during 1993.
LEGAL
The Company and its subsidiaries are not defendants in any legal proceedings.
COMMON STOCK
On January 30, 1995, certain shareholders of the Company entered into a Stock
Purchase Agreement with Ameribank Corporation ("Ameribank"). The shareholders
collectively agreed to sell all their common stock in the Company and their 9%
cumulative, non-voting preferred stock in the Company. The shareholders
collectively owned approximately 25% of all the issued and outstanding shares
of common stock and 30% of the issued and outstanding preferred stock of the
Company. The Stock Purchase Agreement was closed and the shares transferred on
May 16, 1995. In July, Ameribank made an offer to purchase stock and acquired
an additional 5.69% of the preferred stock.
On November 3, 1995, Ameribank made a tender offer to the common stock
shareholders of the Company. After the purchase of shares through the tender
offer, Ameribank owned an additional 23.2% of the common stock of the Company.
On January 5, 1996, Ameribank filed its Final Amendment on Schedule 14D-1,
indicating that as of that date it had acquired 23,706 shares of common stock in
private transactions which represents a total of 1,514,118 or approximately
59.8% of the common stock of the Company. Since Ameribank's offer to the
preferred shareholders in July, 1995, Ameribank has purchased an additional
5,883 shares of preferred stock in private transactions for a total of 106,929
or approximately 73.6% of the preferred stock of the Company. As of March 15,
1996, Ameribank purchased an additional 1,100 shares of common stock and 2,510
shares of preferred stock of the Company.
DISCLAIMER
THIS ANNUAL REPORT HAS NOT BEEN REVIEWED, OR CONFIRMED FOR ACCURACY OR
RELEVANCE, BY THE FEDERAL DEPOSIT INSURANCE CORPORATION.
-2-
<PAGE> 3
SELECTED FINANCIAL DATA
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
The Selected Financial Data which follows should be read in conjunction with
the consolidated financial statements (including the notes thereto) of the
Company and its subsidiaries appearing elsewhere herein.
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------------------------------
1995 1994 1993 1992 1991
--------------------------------------------------------
(In thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
Summary of Income:
Interest income ........................................ $ 6,015 5,160 5,235 5,460 5,309
Interest expense ....................................... (2,569) (1,801) (1,847) (2,299) (2,646)
Provision for loan losses .............................. (279) (90) (236) (128) (165)
Non-interest income .................................... 1,016 1,030 837 795 1,114
Non-interest expense ................................... (3,155) (3,206) (3,068) (2,735) (4,215)
Income (loss) before income taxes and cumulative
effect of change in accounting principle ....... 1,028 1,093 921 1,093 (603)
Income tax benefit (expense) ........................... (253) (264) (266) (445) 245
Income (loss) before cumulative effect of change
in accounting principle ........................ 775 829 655 648 (358)
Cumulative effect of change in accounting .............. -- -- 116 0 0
principle
Net income (loss) ...................................... 775 829 771 648 (358)
Per share data:
Income (loss) before cumulative effect of change
in accounting principle ........................ 0.15 0.17 0.10 0.10 (0.28)
Cumulative effect of change in accounting .............. -- -- 0.04 0.00 0.00
principle
Net income (loss) ...................................... 0.15 0.17 0.14 0.10 (0.28)
Average outstanding common shares ...................... 2,532 2,616 2,644 2,644 2,644
Period end balances:
Cash and due from banks ................................ 2,584 2,440 1,907 3,270 2,695
Federal funds sold ..................................... 6,300 -- 460 1,560 2,085
Investment securities .................................. 28,800 30,588 29,794 33,352 30,722
Loans, net of unearned discount and allowance for
loan losses .................................... 43,604 41,401 36,509 33,804 30,185
Total assets ........................................... 86,071 79,720 74,564 78,556 72,689
Deposits ............................................... 76,270 69,647 66,094 70,302 64,825
Long-term debt ......................................... -- -- 450 900 1,400
Stockholders' equity ................................... 7,823 6,949 6,289 5,518 4,870
</TABLE>
-3-
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis is designed to provide a better
understanding of the significant factors related to the Company's results of
operations, financial condition, liquidity and capital resources (including its
subsidiary bank, UB, its non-bank subsidiary, UDCT and 4600 Corporation). Such
discussion and analysis should be read in conjunction with the Consolidated
Financial Statements (including the notes thereto) and Selected Financial Data
appearing elsewhere in this annual report.
RESULTS OF OPERATIONS
GENERAL. Net income totaled $ .8 million in 1995, compared to $.8 million in
1994 and in 1993. Earnings per share were $ .15 in 1995, compared to $.17 per
share in 1994 and $.14 per share in 1993. Net income in 1993 included $.1
million ($.04 per share) cumulative effect of change in accounting principle as
a result of adoption of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Management is unaware of any trends, events or
uncertainties that will have or that are reasonably likely to have a material
effect on the operations.
NET INTEREST INCOME. Net interest income, the difference between gross
interest and fees on earning assets (primarily loans and investments)
and interest paid on deposits and borrowed funds necessary to support such
assets, is a major component of a financial institution's earnings.
Net interest income aggregated $3,446,000 and $3,359,000 in 1995 and 1994,
respectively, an increase of $87,000. Net interest income increased $29,000
between 1994 and 1993.
From 1994 to 1995, the volume of average earning assets increased $4.4 million,
while average interest bearing liabilities increased $2.2 million. The yield on
average earning assets decreased 71 basis points from 1994 to 1995, while the
rate paid on average interest beating liabilities decreased 119 basis points
during the same time period resulting in an increase in the spread between the
yield on earning assets and rate paid on interest beating liabilities of 48
basis points. As a result of the increase in the rate earned on interest
earning assets and an even great increase in the rate paid on interest bearing
liabilities, net interest margin decreased 16 basis points from 4.75% from 1994
to 4.59% in 1995.
From 1993 to 1994, the volume of average earning assets increased $.1 million,
while average interest bearing liabilities decreased $2.1 million. The yield
on average earning assets decreased 11 basis points from 1993 to 1994, while
the rate paid on average interest beating liabilities decreased 4 basis points
during the same time period resulting in an increase in the spread between the
yield on earning assets and rate paid on interest beating liabilities of 15
basis points. As a result of the increase in the rate earned on interest
earning assets and an even great increase in the rate paid on interest bearing
liabilities, net interest margin decreased 5 basis points from 4.80% from 1993
to 4.75% in 1994.
As management deems necessary and to the extent it has the flexibility, it will
alter the volume and mix of earning assets and supporting liabilities so as to
obtain optimal interest margins while maintaining sufficient liquid resources.
-4-
<PAGE> 5
- --------------------------------------------------------------------------------
The following table illustrates volume and yield/rate variances on an actual
basis (versus a taxable equivalent basis) for the years indicated. The change
in interest due to both rate and volume has been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amount of the
change in each.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, Year Ended December 31,
1995 COMPARED TO 1994 1994 Compared to 1993
------------------------------------------------------
INCREASE/DECREASE Increase/Decrease
DUE TO CHANGE IN: Due to Change in:
------------------------------------------------------
YIELD/ Yield/
VOLUME RATE NET Volume Rate Net
------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Investment securities ............ (87) 96 9 (1810) (26) (207)
Federal funds sold ............... 72 44 116 (11) 15 4
Loans net of unearned discounts .. 398 332 730 157 (29) 128
Total interest income ............ 383 472 855 (35) (40) (75)
------------------------------------------------------
Interest bearing liabilities:
Interest bearing deposits ........ 75 698 773 (52) 39 (13)
Short-term borrowings ............ 1 -- 1 3 -- 3
Long-term debt ................... (3) (3) (6) (33) (3) (36)
------------------------------------------------------
Total interest expense ........... 73 695 768 (82) 36 (46)
------------------------------------------------------
Net interest income .................... $ 310 (223) 87 47 (76) (29)
======================================================
</TABLE>
-5-
<PAGE> 6
RISK ELEMENTS OF EARNING ASSETS. Risk elements of the Company's earning assets
are evidenced, in part, by non- performing loans consisting of loans
contractually past due 90 days or more, loans placed on non-accrual status and
other real estate which has been acquired in full or partial settlement of
defaulted loans. Non-performing assets are carried by the Company at estimated
net realizable value and known losses of principal have been charged off.
At December 31, 1995, non-performing loans totaled $184,000. Non-performing
loans as a percent of all loans outstanding were .42% at December 31, 1995.
The majority of non-performing loans is secured. The following table sets
forth such loans and other real estate at the dates indicated:
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------------
1994 1994 1993
--------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Non-accrual loans. . . . . . . . . . . . . $ 184 178 481
Other real estate. . . . . . . . . . . . . 63 180 552
--------------------------------------
Total non-performing assets . . . $ 247 358 1,033
======================================
Non-performing loans to total loans . . . .42% .43% 1.32%
</TABLE>
Under the Company's lending policies, all commercial loans are reviewed and
graded according to their perceived credit risk (borrower's financial strength;
value and type of collateral; borrower's performance, etc.). Based on this
grading system, credits requiring special attention are placed on special
monitoring for the attention of management and the Board of Directors.
Management, through this special monitoring system, in conjunction with past
loan loss experience, current and perceived future economic conditions and
other factors, determines the level at which the allowance for loan losses
should be maintained to adequately cover the loan portfolio risk.
Non-accrual status loans are identified through the special monitoring system
and periodic review of past due loans by officers and management. When doubt
exists as to the ultimate collectibility of interest or principal, such loans
are placed on non-accrual status. When a loan is placed on non-accrual status,
interest previously accrued but uncollected on such loans is reversed and
charged against current income. Subsequent payments collected on such loans
are credited to loan principal if, in the opinion of management, full
collectibility of principal is doubtful; otherwise, the payment is credited to
income and principal according to the loan terms.
Loans on which interest had ceased to be accrued approximated $184,000,
$178,000 and $481,000 at December 31, 1995, 1994 and 1993, respectively.
Approximately $6,000 was recognized on these loans in 1995 and in 1994,
and $17,000 was recognized in 1993. Had the accrual status of these loans
been normal, approximately $21,000, $47,000 and $42,000 of additional
interest would have been earned in 1995, 1994 and 1993, respectively.
None of these loans are restructured troubled debt.
Internally classified assets of UB, which approximate the same as
classifications by regulatory authorities and includes other real estate,
decreased from $769,000 at December 31, 1994 to $310,000 at December 31, 1995,
a decrease of 60%.
At December 31, 1995, the Company had approximately $67,000 of loans for which
payments were contractually past due less than 90 days, and the borrowers were
experiencing financial difficulties. These loans are included in the special
monitoring loans which are subject to management's attention and review.
-6-
<PAGE> 7
ALLOWANCE AND PROVISION FOR LOAN LOSSES. The allowance for loan losses totaled
$538,000, $559,000 and $437,000 at December 3l, 1995, 1994 and 1993,
respectively. The provision charged to expense amounted to $279,000 in 1995
compared to $90,000 and $236,000 in 1994 and 1993, respectively. Net losses
(recoveries) on loans were approximately $300,000 in 1995, compared to
$(32,000) in 1994 and $268,000 in 1993. The amount of provision charged to
expense is based on the current level of net loan losses, perceived economic
conditions, changes in the size and character of the loan portfolio, and
management's assessment of the loan portfolio's inherent risk in relation to
the allowance for loan losses (see Note 5 to Consolidated Financial
Statements).
The allowance for loan losses as a percentage of total loans was 1.22%, 1.33%
and 1.18% at December 31, 1995, 1994 and 1993, respectively.
Non-interest Income.
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------
1995 1994 1993
------------------------------
(In thousands)
<S> <C> <C> <C>
Service charges on deposits ............ $ 790 748 675
Other service charges and fees, net .... 226 178 162
Securities gains ....................... -- 104 --
------------------------------
Total ......................... $1,016 1,030 837
</TABLE>
NON-INTEREST EXPENSE. Non-interest expense amounted to $3.2 million in 1995 and
in 1994 and $3.1 million in 1993 representing no change in 1995 and a 3.2%
increase in 1994. Salaries and employee benefits continue to represent a large
portion of non-interest expense.
Net costs and write downs associated with other real estate owned approximated
$(15,000), $92,000 and $66,000 in 1995, 1994 and 1993, respectively, and
represent amounts provided for decreases in the market value of the properties,
net gains and losses on sales of the properties, and net expenses incurred for
the maintenance of the properties.
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------
1995 1994 1993
(In thousands)
---------------------------------
<S> <C> <C> <C>
Salaries and employee benefits ..... $ 1,911 1,739 1,567
Occupancy expense, net ............. 250 271 309
Other real estate owned, net ....... (15) 92 66
Other .............................. 1,009 1,104 1,126
---------------------------------
Total ..................... $ 3,155 3,206 3,068
=================================
</TABLE>
-7-
<PAGE> 8
LIQUIDITY
Liquidity is defined as a company's ability to meet maturing obligations and
existing commitments and withstand fluctuations in funding needs, while also
maintaining sufficient levels of highly liquid assets. Liquidity ultimately
depends on profitability, asset quality and mix, asset and liability maturities
and repriceability, and borrowing ability.
The asset side of the balance sheet provides liquidity through regular
amortization and maturities of loans, maturities of investment securities and
money market instruments, maturities of deposits in other banks, and other
assets available for sale. Deposit growth, diversification of liability
products and access to other funding sources provide liquidity from the
liability side. Management is unaware of any trends, events or uncertainties
that will have or that are reasonably likely to have a material effect on the
Company's liquidity.
INDEBTEDNESS
In 1991, the Company borrowed the sum of $1,400,000 from John E. Kirkpatrick of
Oklahoma City, Oklahoma, a preferred stockholder of the Company. The note was
collateralized by 100% of the stock of UB. The note was paid in full as of
December 31, 1994.
PREFERRED STOCK
The Company has $4.4 million of preferred stock outstanding with 9% cumulative
dividends in arrears since October 1, 1985. Cumulative unpaid dividends in
arrears at December 31, 1995 approximated $4,018,410.
RATE SENSITIVITY
Both liquidity and net interest margin are significantly affected by the
sensitivity that assets and liabilities have to changes in market interest
rates, levels of earning assets and funding mixes, the direction of interest
rate movements, the velocity at which changes occur and the absolute level of
interest rates. Interest rate risk can arise when an investment's interest
rate level changes, or its cash flows occur, in time periods that are different
from those of supporting funding sources.
The following table depicts the Company's rate sensitivity position at December
31, 1995:
<TABLE>
<CAPTION>
Sensitivity Period
-----------------------------------------------------------
0-30 31-90 91-180 181-365 Over
Days Days Days Days 1 Year
-----------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Rate sensitive assets:
Federal funds sold ...................... $ 6,300 -- -- -- --
Investment securities (1) ............... 7,652 -- 435 4,855 15,956
Loans ................................... 15,890 2,692 1,156 2,250 21,970
-----------------------------------------------------------
Total rate sensitive assets ............. 29,842 2,692 1,591 7,105 37,926
Rate sensitive liabilities: -----------------------------------------------------------
Savings and interest bearing deposits ... 15,166 -- -- -- 15,167
Time deposits ........................... 14,830 4,659 4,949 4,618 1,586
-----------------------------------------------------------
Total rate sensitive liabilities ........ 29,996 4,659 4,949 4,618 16,753
-----------------------------------------------------------
Period Sensitivity Gap ........................... (154) (1,967) (3,358) 2,487 21,173
===========================================================
Cumulative Sensitivity Gap ....................... (154) (2,121) (5,479) (2,992) 18,181
===========================================================
</TABLE>
(1) The amortized cost is used for investment securities.
The Company includes only rate sensitive assets and liabilities in its
sensitivity analysis.
-8-
<PAGE> 9
CAPITAL RESOURCES
Capital provides a base for expansion of the asset portion of the balance
sheet, which in turn provides the opportunity for increased profitability.
Capital adequacy depends on such factors as quality and diversification of
assets, current and historical earnings and liquidity. Primary capital of the
Company consists of funds which are permanently committed to the Company,
including: Common stock, Preferred stock, Additional paid-in capital, Retained
earnings, and Allowance for loan losses. For regulatory purposes primary
capital is reduced by amounts representing intangible assets. Management is
unaware of any trends, events or uncertainties that will have or that are
reasonably likely to have a material effect on the Company's capital resources.
Following are the Company's and UB's primary and equity capital to assets
ratios for December 31, 1995 and 1994, respectively:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Company's primary capital to assets ratio 10.13% 9.37%
Company's equity capital to assets ratio 9.54 8.89
UB's primary capital to assets ratio 10.07% 9.32%
UB's equity capital to assets ratio 9.48 8.84
</TABLE>
During 1989, regulatory agencies approved regulations to implement a risk-based
capital framework that makes capital requirements more sensitive to the risk
profiles of individual banking companies. These regulations define capital as
either core capital (Tier 1) or supplemental capital (Tier 2). Core capital
consists primarily of common stockholders' equity, while supplementary capital
is comprised of preferred stock, certain debt instruments, and a portion of the
allowance for loan losses.
The required core capital was 4.00% and total risk-based capital was 8.00%.
Because the Company has assets of less than $150 million, its capital
requirements are computed on a bank-only basis. UB's core and total risk-based
capital exceed regulatory guidelines at December 31, 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Tier I capital (core) 14.29% 13.25%
Tier 2 capital (total risk-based) 15.28 14.11
</TABLE>
EFFECT OF INFLATION
The financial statements and related data presented in this report have been
prepared in accordance with generally accepted accounting principles which
require the measurement of financial position and operating results in terms of
historical dollars without considering changes in the relative purchasing power
of money over time. Changing prices, particularly during periods of high
inflation rates, can have a significant impact on industries and business
enterprises taken as a whole. However, the impact of inflation on financial
institutions differs significantly from that of industrial or commercial
companies. This is due to the fact that a major portion of a bank's balance
sheet is comprised of monetary assets and liabilities versus a basically
non-monetary balance sheet associated with industrial concerns. Even though
inflation does not generally have a material impact on banks it can indirectly
affect the interest rates and the underlying value of assets collateralizing
certain earning assets, as well as non-interest income and expense categories.
How well a bank is positioned to respond to changing interest rates and
collateral values can only be assessed by an analysis of its asset and liability
structure. Therefore, attention is directed to the rate sensitivity schedule,
the maturity distribution of loans and securities, the loan concentrations data
and the rate and volume variances analysis found elsewhere in this report.
-9-
<PAGE> 10
REGULATORY MATTERS
The Company is operating under a written agreement with the Federal Reserve
Bank until March, 1994, at which time the agreement was terminated and the
Company was released from the restrictions under the agreement.
ACCOUNTING STANDARDS NOT YET ADOPTED
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121. "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of." The Company will be
required to comply with this statement beginning January 1, 1996. The impact of
this statement is not expected to have a material effect on the Company's
consolidated financial statements.
-10-
<PAGE> 11
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------
1995 1994 1993
---------------------------------------
(In thousands except per share amounts)
<S> <C> <C> <C>
Interest income:
Interest and fees on loans ....................................... $ 4,101 3,371 3,243
Interest on federal funds sold ................................... 176 60 56
Interest on investment securities
Taxable .......................................................... 1,309 1,331 1,767
Nontaxable ....................................................... 429 398 169
---------------------------------------
Total interest income ............................................ 6,015 5,160 5,235
Interest expense: ......................................................... --
Interest on deposits (Note 7) .................................... 2,564 1,791 1,804
Interest on short-term borrowings ................................ 5 4 1
Interest on long-term debt ....................................... -- 6 42
---------------------------------------
Total interest expense ........................................... 2,569 1,801 1,847
---------------------------------------
Net interest income .............................................. 3,446 3,359 3,388
Provision for loan losses (Note 5) ........................................ 279 90 236
---------------------------------------
Net interest income after provision for loan losses .............. 3,167 3,269 3,152
---------------------------------------
Non-interest income:
Service charges on deposits ...................................... 790 748 675
Other service charges and fees, net .............................. 226 178 162
Securities gains ................................................. -- 104 --
---------------------------------------
Total non-interest income ........................................ 1,016 1,030 837
---------------------------------------
Non-interest expense:
Salaries and employee benefits ................................... 1,911 1,739 1,567
Occupancy expense, net ........................................... 250 271 309
Other real estate owned, net ..................................... (15) 92 66
Other (Note 9) ................................................... 1,009 1,104 1,126
---------------------------------------
Total non-interest expense ....................................... 3,155 3,206 3,068
---------------------------------------
Income before income taxes and cumulative effect of change in
accounting principle .................................... 1,028 1,093 921
Income tax expense (Note 10) .............................................. 253 264 266
---------------------------------------
Income before cumulative effect of change in accounting principle 775 829 655
Cumulative effect of change in accounting principle (Note 10) ............. -- -- 116
---------------------------------------
Net income (loss) ................................................ $ 775 829 771
=======================================
Earnings (loss) per share:
Income before cumulative effect of change in accounting principle 0.15 0.17 0.10
Cumulative effect of change in accounting principle .............. -- -- 0.04
---------------------------------------
Net income (loss) ................................................ 0.15 0.17 0.14
=======================================
Average outstanding common shares ......................................... 2,532 2,644 2,644
=======================================
</TABLE>
See accompanying notes to consolidated financial statements.
-11-
<PAGE> 12
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
1995 1994
-------------------------
(In thousands)
<S> <C> <C>
ASSETS
Cash and due from banks .................................................... $ 2,584 2,440
Federal funds sold ......................................................... 6,300 --
Investment securities (Note 3) ............................................. 28,800 30,588
Loans (Notes 4 & 12) ....................................................... 44,144 41,974
Unearned discounts ................................................ (2) (14)
Allowance for loan losses (Note 5) ................................ (538) (559)
-------------------------
Loans, net ...................................................... 43,604 41,401
Property and equipment, net (Note 6) ....................................... 3,880 4,051
Other real estate owned .................................................... 63 180
Accrued interest receivable ................................................ 589 612
Accounts receivable ........................................................ 93 90
Other assets ............................................................... 158 358
-------------------------
$ 86,071 79,720
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest bearing (Note 7) ......................................... 60,975 56,178
Non-interest bearing .............................................. 15,295 13,469
-------------------------
Total deposits .................................................... 76,270 69,647
-------------------------
Securities sold under repurchase agreement --ot ................... 8) 1,500
Deferred income taxes (Note 10) ................................... 1,209 1,199
Other liabilities ................................................. 769 425
-------------------------
Total liabilities ................................................. 78,248 72,771
-------------------------
Commitments and contingencies (Notes 13, 14 & 15 )
Stockholders' equity (Note 15):
Preferred stock 9% cumulative, nonvoting $30 par value, redeemable
the Company's option at par plus cumulative unpaid
dividends. Cumulative unpaid preferred dividends amount to
$4,018,410 or $27.68 per share at December 31, 1995
Authorized 150,000 shares; issued and outstanding 145,200
shares in 1995 and 1994. Liquidation preference of
$8,374,410 and $7,982,370, respectively......................... 4,356 4,356
Class B preferred stock, $1 par value. Authorized 500,000 shares;
none issued or outstanding ..................................... -- --
Common stock, $1 par value. Authorized 10,000,000 shares; issued
2,805,385 shares in 1995 and 1994 .............................. 2,805 2,805
Additional paid-in capital ........................................ 7,358 7,358
Accumulated deficit ............................................... (5,540) (6,315)
-------------------------
Net unrealized holding loss on investment securities .............. (59 (158)
available-for-sale, net of deferred taxes
-------------------------
8,920 8,046
=========================
Less cost of common stock held in treasury (273,148 shares in 1995
and 1994) ...................................................... (1,097) (1,097)
-------------------------
Net stockholders' equity .......................................... 7,823 6,949
-------------------------
$86,071 79,720
=========================
</TABLE>
See accompanying notes to consolidated financial statements.
-12-
<PAGE> 13
UNITED OKLAHOMA BANKSHARE'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY .
<TABLE>
<CAPTION>
Years ended December 31,
1995 1994 1993
--------------------------------
(In thousands )
<S> <C> <C> <C>
Preferred stock:
Balance at beginning and end of year ................. 4,356 4,356 4,356
--------------------------------
Common stock:
Balance at beginning and end of year ......... 2,805 2,805 2,805
--------------------------------
Additional paid-in capital:
Balance at beginning and end of year ......... 7,358 7,358 7,358
--------------------------------
Accumulated deficit:
Balance at beginning of year (6,315) (7,144) (7,915)
Net income (loss) ............................ 775 829 771
--------------------------------
Balance at end of year ....................... (5,540) (6,315) (7,144)
--------------------------------
Treasury stock:
Balance at beginning and end of year ......... (1,097) (1,086) (1,086)
Purchase stock ............................... -- (11) --
--------------------------------
Balance at end of year ....................... (1,097) (1,097) (1,086)
--------------------------------
Net stockholders' equity ..................... $ 7,823 6,949 6,289
================================
</TABLE>
See accompanying notes to consolidated financial statements.
-13-
<PAGE> 14
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
1995 1994 1993
--------------------------------
(In thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) .................................................. $ 775 829 771
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation ....................................................... 416 378 368
Provision for loan losses .......................................... 279 90 236
Provision for market decline-other real estate ..................... 9 85 63
Amortization of intangibles included in other assets ............... 147 147 147
Amortization of premium, accretion of discounts, net ............... 83 113 175
Gain on sale of investment securities .............................. -- (104) --
Loss on sale of property and equipment ............................. -- -- 49
Increase (decrease) in interest payable ............................ 310 29 (89)
Decrease (increase) in interest receivable ......................... 23 (75) (66)
Decrease in other real estate owned, accounts receivable and other
assets ........................................................... 158 387 155
(Decrease) increase in deferred income taxes ....................... (55) (15) 40
Increase (decrease) in other liabilities ........................... 34 (17) (56)
--------------------------------
Total adjustments ................................................ 1,404 1,018 1,022
--------------------------------
Net cash provided by operating activities ............................ 2,179 1,847 1,793
--------------------------------
Cash flows from investing activities:
Proceeds from sales of investment securities ....................... 1,775 3,239 --
Proceeds from principal payments on mortgage backed securities ..... 1,789 3,192 9,861
Purchase of investment securities .................................. (1,695) (7,496) (6,478)
Net increase in loans .............................................. (2,482) (4,982) (2,941)
Capital expenditures ............................................... (245) (319) (336)
Proceeds from sale of property and equipment ....................... -- -- --
--------------------------------
Net cash provided by investment activities ........................... (858) (6,366) (402)
--------------------------------
Cash flows form financing activities:
Net increase (decrease) in interest bearing and non-interest
bearing demand deposits, savings and certificates of deposit ..... 6,623 3,553 (4,208)
(Decrease) increase in securities sold under repurchase agreement .. (1,500) 1,500 --
Repayment of long-term debt ........................................ -- (450) (450)
Purchase of treasury stock ........................................... -- (11) --
--------------------------------
Net cash provided by (used in) financing activities .................. 5,123 4,592 (4,658)
--------------------------------
Net increase (decrease) in cash equivalents .......................... 6,444 73 (2,463)
Cash and cash equivalents at beginning of year ....................... 2,440 2,367 4,830
--------------------------------
Cash and cash equivalents at end of year ............................. 8,884 2,440 2,367
--------------------------------
Supplemental disclosure of noncash investing activities:
--------------------------------
Change in unrealized holding loss on investment securities
available-for-sale, net of deferred taxes of $65,000 in 1995 and
$104,000 in 1994 ................................................... $ 99 158 --
================================
</TABLE>
See accompanying notes to consolidated financial statements.
-14-
<PAGE> 15
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
1. Summary of Significant Accounting Policies
United Oklahoma Bankshares, Inc. (the "Company") and its
subsidiaries provide a full range of banking services to individual and
corporate customers principally in eastern Oklahoma county. The Company
is subject to competition from other financial service companies and
financial institutions. The Company is subject to regulations of the
Federal Reserve Bank. United Bank ("UB") is subject to regulations of
the Federal Deposit Insurance Corporation and the Oklahoma State Banking
Department. The Company and UB undergo periodic examinations by those
regulatory authorities.
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles. In
preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the reported
amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates. Those
estimates and assumptions relate principally to the
determination of the allowance for possible loan losses and the
valuation of assets acquired in foreclosure. The accounting
policies for these items and other significant accounting
policies are presented below:
The consolidated financial statements include the accounts of
the Company and its subsidiaries, all wholly owned, after
elimination of all significant intercompany accounts and
transactions.
CASH AND SHORT TERM INVESTMENTS
UB is required to maintain average reserve balances with the
Federal Reserve Bank. The average amount of those reserve
balances for the year ended December 31, 1995, was
approximately $516,000.
In making short-term investment decisions, the Company
considers its board-approved policies, liquidity needs,
potential rate of rerun, and credit risk. For purposes of
evaluating credit risk, the stability of the financial
institutions and other entities conducting business with the
Company is periodically reviewed.
The Company had concentrations of credit risk with one
financial institution in the form of a correspondent bank
account and federal funds sold in the amount of $1,912,000 and
$1,483.000 at December 31, 1995 and 1994, respectively. If
the financial institution failed to completely perform under
the terms of the financial instruments, the exposure for
credit loss would be the amount of the financial instruments
less the amount covered by the Federal Deposit Insurance
Corporation ("FDIC") of $100,000.
For the purposes of the Statements of Cash Flows, the Company
considers overnight Federal funds sold to be cash equivalents.
Cash paid for interest was approximately $2,259,000,
$1,772,000, and $1,937,000 in 1995, 1994, and 1993,
respectively.
-15-
<PAGE> 16
INVESTMENT SECURITIES
The Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 115. "Accounting for Certain
Investments in Debt and Equity Securities," at January 1, 1994
Under SFAS No. 115, the Company has classified its debt and
marketable equity securities in one of three categories:
trading, available-for-sale, or held-to-maturity. Trading
securities are bought and held principally for the purpose of
selling them in the near term. No investment securities within
the portfolio are considered trading. Held-to-maturity
securities are those securities for which the Company has the
ability and intent to hold until maturity. All other
securities not included in held-to-maturity are classified as
available-for-sale.
Available-for-sale securities are recorded at fair value.
Held-to-maturity securities are recorded at cost, adjusted for
the amortization or accretion of premiums or discounts.
Unrealized holding gains and losses, net of related tax
effect, on available-for-sale securities are not included in
earnings and are reported as a separate component of
stockholders' equity until realized.
A decline in the market value of any available-for-sale or
held-to-maturity security below cost that is deemed other than
temporary results in a charge to earnings and the establishment
of a new cost basis for the security.
Premiums and discounts are amortized or accreted over the life
of the related security as an adjustment to yield using a
method that approximates the interest method. Dividend and
interest income are recognized when earned. Realized gains an
losses for securities classified as available-for-sale and
held-to-maturity are included in earnings and are derived using
the specific identification method for determining the cost of
securities sold.
LOANS AND ASSETS ACQUIRED IN FORECLOSURE
Loans are generally carried at amounts advanced less payments
received. Interest income is recorded on discounted loans by
use of a method which produces a reasonable approximation of
constant yield on the outstanding principal. Interest income
is accrued as earned on non-discounted loans except for loans
designated as non-accrual.
Loans on which the accrual of interest has been discontinued
are designated as non-accrual loans. Accrual of interest on
loans is discontinued either when reasonable doubt exists as to
the full, timely collection of interest or principal, or when
loan becomes contractually past due by ninety days or more wit
respect to principal or interest. When a loan is placed on
non-accrual status, all interest previously accrued but not
collected is reversed against current period income. Income of
such loans is then recognized only to the extent that cash is
received and where the future collection of principal is
probable. Accruals are resumed on loans only when they are
brought fully current with respect to interest and principal
and when, in the judgment of management, the loan is estimated
to be fully collectible as to both principal and interest.
The allowance for possible loan losses is maintained at levels
which management considers necessary to reflect the credit
risks of the loan portfolio. For financial reporting purposes
the provision to be charged as an operating expense is based on
an assessment of specific problem loans, local economic
conditions, past due loan loss experience and such other
factors which in management's judgment deserve current
recognition necessary to maintain the allowance at an adequate
level.
Effective January 1, 1995, the Company adopted the provisions
of Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan," and
Statement of Financial Accounting Standards No. 118,
"Accounting by Creditors for Impairment of a Loan-Income
Recognition and Disclosures." The Company's nonperforming
loan policies which address non-accrual loans, meet the
definition set forth for "impaired loans" in SFAS No. 114.
The Company had no significant impaired loans outstanding in
1995 under the guidelines of SFAS No. 114.
-16-
<PAGE> 17
Under these standards, the 1995 allowance for loan losses
related to loans that have been identified as impaired as based
on discounted cash flows using the loan's effective interest
rate, or the fair value of the collateral for
collateral-dependent loans, or observable market price of the
impaired loan. Loans are considered impaired when it is
probable that the Company will not collect all amounts due in
accordance with the contractual terms of the loan. The Company
recognizes interest income on impaired loans using the same
method as that used for non-accrual loans.
Real estate and other assets acquired through foreclosure are
recorded at fair value as of that date. Fair value is based on
independent appraisals and other relevant factors. This value
becomes the asset's new "cost". After foreclosure, these
assets are carried at the lower of "cost" or fair value minus
estimated costs to sell. Any subsequent write-downs are
charged against non-interest expense. Operating expenses of
such properties, net of related income, and gains and losses on
their disposition are included in non-interest expense.
While management uses all available information to recognize
losses on loans and other real estate owned, future losses may
become necessary based on changes in economic conditions,
particularly in the local economies in which the Company
operates. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review
the Company's allowance for possible loan losses and carrying
values of assets acquired in foreclosure. Such agencies may
require the Company to recognize additional losses based on
their judgments about information available to them at the time
of their examination.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated
depreciation. Depreciation is charged to operating expense and is
computed by use of the straight-line method over the estimated useful
lives of the depreciable assets. The estimated useful lives are 2 to
40 years for buildings and improvements, and 3 to 20 years for
furniture, fixtures and equipment. Maintenance and repairs are
charged directly to expense as incurred while improvements are
capitalized. When assets are retired or otherwise disposed of, the
cost and applicable accumulated depreciation are removed from the
respective accounts and the resulting gain or loss is reflected in
operations.
INCOME TAXES
The Company files a consolidated income tax return with its
subsidiaries. The Company's subsidiaries are charged for
income taxes attributable to their taxable income and
reimbursed for any tax benefit resulting from their tax losses
and tax credits utilized by the Company to reduce consolidated
taxable income.
Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes," and reported the cumulative effect of that change in
the method of accounting for income taxes in the 1993
consolidated statement of operations.
SFAS No. 109 requires a change from the deferred method of
accounting for income taxes to the asset and liability method.
Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. Under SFAS No. 109, the
effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes
the enactment date.
COMPUTATION OF EARNINGS PER SHARE
Earnings per share are based on the weighted average number of
shares of common stock outstanding during the year after
considering cumulative preferred stock dividends. Cumulative
preferred stock dividends accrue annually at approximately
$392,000.
-17-
<PAGE> 18
2. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107,
"Disclosures About Fair Value of Financial Statements" requires
the Company to disclose estimated fair values for its financial
instruments. Fair value estimates methods and assumptions are
set forth below for the Company's financial instruments.
<TABLE>
<CAPTION>
December 31, 1995
-----------------------------
(In thousands)
Carrying Estimated
value Fair Value
<S> <C> <C>
Financial Assets
Cash and due from banks ........... $ 2,584 2,584
Federal funds sold ................ 6,300 6,300
Investment securities ............. 28,800 28,830
Loans ............................. 43,604 43,520
Financial Liabilities
Non-interest-bearing deposits ..... 15,295 15,295
Interest-bearing deposits ......... 69,975 61,107
Off-Balance sheet Financial Instruments
Commitments to extend credit ...... -- --
Standby letters of credit ......... -- --
</TABLE>
CASH AND DUE FROM BANKS AND FEDERAL FUNDS SOLD
The carrying amounts of these financial instruments approximate fair value due
to the short maturity of these financial instruments.
INVESTMENT SECURITIES
The fair value of investment securities, except obligations of states and
municipalities, is estimated based on bid prices published in financial
newspapers or bid quotations received from securities dealers. The fair value
of certain obligations of state and municipalities are not readily available
through market sources other than dealer quotations, so fair value estimates
are based on quoted market prices of similar instruments, adjusted for
differences between the quoted instruments and the instruments being valued.
LOANS
Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type such as commercial, real estate,
installment and credit card loans. Each loan category is further segmented
into fixed and adjustable rate interest terms.
The fair value of loans, except credit card loans, is calculated by discounting
scheduled cash flows through the estimated maturity using rates of notes of
similar terms and type. The fair value of credit card loans are assumed to be
at carrying value.
-18-
<PAGE> 19
LIABILITIES
Under SFAS No. 107, the fair value of deposits with no stated maturity, such as
demand deposits, savings, and money market accounts is equal to the amount
payable on demand as of December 31, 1995. The fair value of certificates of
deposit is based on the discounted value of contractual cash flows. The
discount rate is estimated using the rates currently offered of similar
remaining maturities.
The fair value estimates above do not include the benefit that results from the
low-cost funding provided by the deposit liabilities compared to the cost of
borrowing funds in the market.
COMMITMENTS TO EXTEND CREDIT AND STANDBY LETTERS OF CREDIT
The fair value of commitments to extend credit and standby letters of credit is
considered to be equal to carrying value.
LIMITATIONS
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result form
offering for sale at one time the Company's entire holdings of particular
financial instruments. Because no market exists for the Company's financial
instruments, fair value estimates are based on judgments regarding future
expected loss experience, current economic conditions, risk characteristics of
various financial instruments, and other factors. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgment and therefore cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance sheet financial
instruments without attempting to estimate the value of anticipated future
business and the value of assets and liabilities that are not considered
financial instruments. In addition, the tax ramifications related to the
realization of the unrealized gains and losses can have a significant effect on
fair value estimates and have not been considered in any of the estimates.
3. INVESTMENT SECURITIES
As discussed in note 1, the Company adopted SFAS No. 115 as of January 1, 1994.
The net effect of this change in accounting principle of $170,063, net of
deferred taxes, was determined as of January 1, 1994, and is reported as a
separate component of stockholders' equity.
In December 1995, the Company transferred investments held-to-maturity with a
carrying value totaling $21,128,000 to available-for-sale. The securities were
transferred at fair value of approximately $21,037,000, resulting in an
unrealized loss of $91,000. The transfer occurred as allowed by the Financial
Accounting Standards Board's provision that allowed entities to reassess by
December 31, 1995, the appropriateness of the classifications of all investment
securities. Management believes there has been no permanent impairment in the
value of the Company's investment securities.
Investment securities at December 31, 1995 and 1994, consist of (in thousands):
<TABLE>
<CAPTION>
1995 1995
----------------------
<S> <C> <C>
Available-for-sale, at fair value. . . . . . . $28,009 7,137
Held-to-maturity, at amortized cost. . . . . . 791 23,451
----------------------
$28,800 30,588
======================
</TABLE>
-19-
<PAGE> 20
The amortized cost, gross unrealized holding gains, gross unrealized holding
losses, and fair value for available-for-sale and held-to-maturity securities
by major security type at December 31, 1995, were as follows (in thousands):
<TABLE>
<CAPTION>
----------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------------------------------------------------
<S> <C> <C> <C> <C>
Available-for-sale:
U.S. Treasury securities . . . . $ 2,094 20 -- 2,114
Securities of other U.S. . . . . 747 3 (7) 743
government agencies
State & Municipal . . . . . . . 9,074 43 (71) 9,046
----------------------------------------------------
11,915 66 (78) 11,903
----------------------------------------------------
Mortgage-backed securities . . . 16,192 106 (192) 16,106
----------------------------------------------------
$28,107 172 (270) 28,009
====================================================
Held-to-maturity:
States and municipals. . . . . . $ 791 30 -- 821
====================================================
</TABLE>
The amortized cost, gross unrealized holding gains, gross unrealized holding
losses, and fair value for available-for-sale and held-to-maturity securities
by major security type at December 31, 1994 were as follows (in thousands):
<TABLE>
<CAPTION>
----------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------------------------------------------------
<S> <C> <C> <C> <C>
Available-for-sale:
U.S. Treasury securities ........ $ 829 -- (11) 818
Mortgage-backed securities ...... 6,570 -- (251) 6,319
----------------------------------------------------
$ 7,399 -- (262) 7,137
====================================================
Held-to-maturity:
U.S. Treasury securities ........ $ 1,264 -- (78) 1,186
Securities of other U.S. ........ 747 -- (62) 685
government agencies
States and municipals ........... 9,972 3 (545) 9,430
----------------------------------------------------
11,983 3 (685) 11,301
Mortgage-backed securities ...... 11,468 6 (490) 10,984
----------------------------------------------------
$23,451 9 (1,175) 22,285
====================================================
</TABLE>
-20-
<PAGE> 21
The amortized cost and fair value of investment securities at December 31,
1995, by contractual maturity, in thousands, are shown below. Expected
maturities will differ from contractual maturities because issuers of
investment securities may have the right to call or prepay obligations.
<TABLE>
<CAPTION>
Amortized
Cost Fair Value
----------------------
<S> <C> <C>
Available-for-sale:
Due in one year or less ....................... $ 1,495 1,503
Due after one year through five year .......... 7,588 7,594
Due after five years through ten yea .......... 2,612 2,585
Due after ten years ........................... 220 221
------------------------
11,915 11,903
Mortgage-backed securities .................... 16,192 16,106
------------------------
$28,107 28,009
------------------------
Held-to-maturity:
Due after one year through five year$ ......... 78 82
Due after five years through ten yea .......... 713 739
------------------------
791 821
------------------------
$28,898 28,830
========================
</TABLE>
There were no sales of investment securities in 1995 or 1993. Proceeds from
sales of available-for-sale securities during 1994 were approximately
$3,239,000 and the gross realized gains were approximately $104,000. None of
the investment securities were sold for losses.
Investment securities having a carrying value of approximately $12,104,000 and
$14,656,000 at December 31, 1995 and 1994, respectively, were pledged to secure
public funds on deposit and for other purposes required by law.
4. LOANS
A summary of the Company's loans is as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------
(In thousands)
<S> <C> <C>
Commercial, financial and agricultural $ 11,450 11,917
Real estate - construction 2,785 1,556
Real estate - mortgage 19,662 19,708
Credit card receivables 522 625
Installment 9,725 8,168
------------------------
Total loans $ 44,144 41,974
</TABLE>
At December 31, 1995 and 1994, loans on which interest had ceased to be accrued
approximated $184,000 and $178,000, respectively. Had the accrual status of
these been normal, approximately $21,000 and $47,000 of additional interest
would have been earned in 1995 and 1994, respectively. At December 31, 1995
and 1994, there were no commitments to lend additional funds to borrowers with
loans on which the accrual of interest has been discontinued.
At December 31, 1995 and 1994, loans to executive officers, directors, their
immediate families and companies in which they own a significant interest
aggregated approximately $80,000 and $151,000, respectively. During 1995
approximately $31,000 of loan advances were made, and repayments totaled
$102,000. In management's opinion, such transactions were made on the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and did not involve more than
normal risk.
-21-
<PAGE> 22
The Company grants commercial, real estate, and consumer loans to customers
principally in the state of Oklahoma. Although the Company has a diversified
loan portfolio, the majority of its customers consist of individual and
corporate borrowers in eastern Oklahoma county.
Contractual maturity and rate sensitivity distribution of loans at December 31,
1995 is as follows:
<TABLE>
<CAPTION>
One Year One to Over Five
or Less Five Years Years Total
------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Commercial, financial and agricultural ..... $ 8,533 2,570 347 11,450
Real estate-construction ................... 2,139 141 505 2,785
Real estate-mortgage ....................... 2,795 13,519 3,348 19,662
Credit card receivables .................... 522 -- -- 522
Installment ................................ 1,263 8,036 426 9,725
------------------------------------------------------
Total ..................... $15,252 24,266 4,626 44,144
======================================================
Interest sensitivity of loans by contractual
maturity:
Predetermined rate ........ 7,134 19,611 1,565 28,310
Variable rate ............. 8,118 4,655 3,061 15,834
------------------------------------------------------
Total ..................... $15,252 24,266 4,626 44,144
======================================================
</TABLE>
5. ALLOWANCE FOR LOAN LOSSES
A summary of transactions in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
Years ended December 31,
1995 1994 1993
-------------------------------------------
(In thousands)
<S> <C> <C> <C>
Balance $t beginning of period $ 559 437 469
Provisions charged to expense 279 90 236
Recoveries 50 123 19
Loans charged off (350) (91) (287)
-------------------------------------------
Balance at end of year $ 538 559 437
===========================================
</TABLE>
6. PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
<TABLE>
1995 1994
-----------------------------
(In thousands)
<S> <C> <C>
Land .................................................... $ 751 751
Bank buildings and equipment ............................ 5,681 5,601
Furniture and equipment ................................ 861 713
-----------------------------
7,293 7,065
Less accumulated depreciation ........................... 3,413 3,014
-----------------------------
$ 3,880 4,051
=============================
</TABLE>
-22-
<PAGE> 23
7. DEPOSITS
Included in interest bearing deposits are certificates of deposit in amounts of
$100,000 or more. These certificates and their remaining maturities at
December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
------------------
<S> <C> <C>
(In thousands)
3 months or less................ $5,418 8,555
Over 3 months through 6 months.. 1,294 1,446
Over 6 months through 12 months. 750 1,314
Over 12 months.................. 100 198
------------------
$7,562 11,513
==================
</TABLE>
The interest expense on these deposits approximated $530,000 and $375,000 for
the years ended December 31, 1995 and 1994, respectively.
8. SECURITIES SOLD UNDER REPURCHASE AGREEMENT
In 1994, the Company sold a mortgage-backed security under a repurchase
agreement. The agreement was for less than 1 month. In 1995, the security was
repurchased for the same amount as it was sold for plus interest of 6.1%.
9. OTHER NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------
1995 1994 1993
-----------------------------
(In thousands)
<S> <C> <C> <C>
Outside service expense............. $ 157 181 161
Advertising and business development 153 156 94
Postage............................. 73 65 57
Stationery, printing and supplies... 96 83 71
Collection expense.................. 30 56 107
Data processing expense............. 113 112 124
Other............................... 387 451 512
-----------------------------
$1,009 1,140 1,126
=============================
</TABLE>
-23-
<PAGE> 24
10. INCOME TAXES
As discussed in note 1, the Company adopted SFAS 109 as of January 1, 1993.
The cumulative effect of this change in accounting for income taxes of $116,000
was determined as of January 1, 1993 and is reported separately in the
consolidated statement of operations for the year ended December 31, 1993.
The components of income taxes are as follows:
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------------
1995 1994 1993
----------------------------------
(In thousands)
<S> <C> <C> <C>
Current:
Federal...................... $225 228 208
State........................ 54 - -
----------------------------------
279 228 208
----------------------------------
Deferred:
Federal...................... (22) (14) 16
State........................ (4) 50 42
----------------------------------
(26) 36 58
----------------------------------
Income tax expense (benefit). $253 264 266
==================================
</TABLE>
The Company's tax provision on income before provision for income taxes differs
from a normal 34% tax rate as shown be low:
<TABLE>
<CAPTION>
Years ended December 31,
1994 1994 1993
----------------------------------
(In thousands)
<S> <C> <C> <C>
Income before income taxes multiplied by 34%
in 1995, 1994 and 1993...................... $ 350 372 313
Tax exempt interest......................... (132) (158) (83)
State income taxes.......................... 33 33 28
Other, net.................................. 2 17 8
----------------------------------
$ 253 264 266
==================================
</TABLE>
Cash paid for income taxes was approximately $212,000, $291,000 and $95,000 in
1995, 1994 and 193, respectively.
-24-
<PAGE> 25
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1995
and 1994, are presented below:
<TABLE>
<CAPTION>
1995 1994
-----------------
<S> <C> <C>
Deferred tax assets:
Other real estate, principally due to charge offs............ $ 6 30
Alternative minimum tax credit carryforward.................. 100 97
Other........................................................ 22
-----------------
Total gross deferred tax assets before net unrealized holding
loss on investment securities available-for-sale............ 128 127
Deferred tax asset on net unrealized holding loss on
investment securities available-for-sale..................... 39 104
-----------------
Total gross deferred tax assets............................ 167 231
-----------------
Deferred tax liabilities
Property and equipment, principally due to difference
in depreciation.............................................. 540 549
Loans, principally due to allowance for loan losses.......... 836 828
Purchased core deposit intangible, principally due to
difference in amortization................................... - 53
-----------------
Total gross deferred tax liabilities......................... 1,376 1,430
-----------------
Net deferred tax liability................................... $1,209 1,199
=================
</TABLE>
A valuation allowance for deferred tax assets was not required as of December
31, 1995, 1994, or 1993 due to management's expectation of the future reversal
of deferred tax liabilities.
At December 31, 1995, the Company has an alternative minimum tax credit
carryforward of approximately $100,000 which is available to reduce future
federal regular income taxes, if any, over an indefinite period.
11. EMPLOYEE BENEFIT PLANS
The company sponsors a defined contribution 401(k) plan covering substantially
all employees under which employees' contributions may be partially matched by
the Company. The Company's contributions in 1995, 1994, and 1993 were $53,000,
$50,000, and $41,000, respectively.
12. RELATIONSHIPS WITH CERTAIN STOCKHOLDERS AND AFFILIATES
The Company and its subsidiaries, through common owners and/or directors, are
considered to be related parties for financial reporting purposes with one
other bank holding company and its bank.
UB sold loan participations to this bank totaling $97,000 and $169,000 at
December 31, 1995 and 1994, respectively.
-25-
<PAGE> 26
13. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET CREDIT RISK
The Company is a party to financial instruments with off-balance sheet credit
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit
and standby letters of credit. These instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the consolidated
balance sheets. The contract amounts of those instruments reflect the extent
of involvement the Company has in particular classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by one of
the other parties to the financial instruments for commitments to extend credit
and standby letters of credit is represented by the contractual amounts of
those instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet
instruments. Financial instruments whose contract amounts represent credit risk
at December 31 are as follows:
<TABLE>
<CAPTION>
1995 1994
---------------------
<S> <C> <C>
Commitments to extend credit $6,496,000 5,341,000
Standby letters of credit... 588,000 948,000
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments have fixed expiration dates or other termination clauses and may
require payment of a fee. Since some of the commitments may expire without
being drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of the collateral
obtained if deemed necessary by the Company upon extension of credit is based
on management's credit evaluation of the customer. Collateral held varies but
may include certificates of deposit, accounts receivable, inventory, property
and equipment, real estate, livestock, and income producing properties.
Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support private borrowing arrangements. All of the standby
letters of credit at December 31, 1995, are short-term guarantees; they expire
prior to December 31, 1996. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities to
customers. When deemed necessary, the Company may hold a variety of collateral
to support these commitments similar to the types of collateral held for
commitments to extend credit.
14. COMMITMENTS AND CONTINGENCIES
The Company, through its United Del City Tower subsidiary, leases excess office
space. Future minimum rentals for non-cancelable office leases, with initial
or remaining terms of one year or more consisted of the following at December
31, 1995:
<TABLE>
<S> <C>
1996.......... $378,000
1997.......... 285,000
1998.......... 85,000
1999.......... 14,000
</TABLE>
-26-
<PAGE> 27
15. REGULATORY CAPITAL REQUIREMENTS
United Bank is subject to certain regulatory capital regulations which require
the maintenance of certain levels of capital as a percentage of risks-adjusted
assets. These regulations define capital as either core capital (Tier 1) or
supplementary capital (Tier 2). Core capital consists primarily of common
shareholders' equity, while supplementary capital is comprised of preferred
stock, certain debt instruments, and a portion or, the allowance for loan
losses. At December 31, 1995, the required core capital is 4.00% and total
risk-based capital is 8.00%. UB's core and total risk-based capital exceed
regulatory guidelines at December 31, 1995 and 1994, respectively, and are as
follows:
<TABLE>
<CAPTION>
1995 1992
--------------
<S> <C> <C>
Tier 1 capital (core) 13.27% 13.05%
Tier 2 capital (total risk-based) 15.28 14.11
</TABLE>
The payment of dividends by the subsidiaries is restricted by regulatory
capital requirements. At December 31, 1995, approximately $1,328,000 is
available from United Bank's retained earnings for distribution as a dividend
to the Company in 1996 without regulatory approval.
-27-
<PAGE> 28
16. PARENT COMPANY FINANCIAL STATEMENTS
Following are the condensed financial statements for United Oklahoma
Bankshares, Inc. (Parent Company Only):
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------
1995 1994 1993
----------------------------
(In thousands)
<S> <C> <C> <C>
Income:
Dividend from UB.................................. - 275 450
Interest.......................................... 40 8 8
----------------------------
Total......................................... 40 283 458
----------------------------
Expenses:
Interest.......................................... - 6 42
Other............................................. 20 20 72
----------------------------
Total......................................... 20 26 114
----------------------------
Income before income taxes, undistributed income
of subsidiaries and cumulative effect of change in
accounting principle.............................. 20 257 344
Income tax (expense) benefit....................... (8) 7 40
----------------------------
Income before undistributed income of subsidiaries
and cumulative effect of change in accounting
principle......................................... 12 264 384
Equity in undistributed income of subsidiaries..... 763 565 271
----------------------------
Income before cumulative effect of change in
accounting principle.............................. 755 829 655
Cumulative effect of change in accounting principle - - 116
----------------------------
Net income (loss)............................. $775 829 771
============================
</TABLE>
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------
1995 1994
-------------------
<S> <C> <C>
ASSETS (In thousands)
Cash and cash equivalents................................................. $ 163 68
Investment in UB at equity................................................ 7,770 6,908
Other assets.............................................................. 61 60
-------------------
$ 7,994 7,036
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and other liabilities, principally deferred income taxes. $ 171 87
-------------------
Total liabilities.................................................... 171 87
-------------------
Preferred stock........................................................... 4,356 4,356
Common stock.............................................................. 2,805 2,805
Additional paid-in capital................................................ 7,358 7,358
-------------------
Accumulated deficit....................................................... (5,540) (6,315)
Net unrealized holding loss on investment securities available-for-sale
held by UB, net of deferred taxes........................................ (59) (158)
-------------------
8,920 8,046
Less cost of common stock held in treasury................................ (1,097) (1,097)
-------------------
Net stockholders' equity 7,823 6,949
------------------
$ 7,994 7,036
===================
</TABLE>
-28-
<PAGE> 29
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
1995 1994 1993
---------------------------
(In thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................................. 775 829 771
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Equity in undistributed income of subsidiaries....... (763) (565) (271)
Loss on sale of land................................. - - (49
Cumulative effect of change in accounting principle - - (116)
Increase (decrease) in other liabilities............. 84 (94) 151
---------------------------
Total adjustments.................................. (680) (659) (187)
---------------------------
Net cash provided by operating activities............... - - 93
---------------------------
Cash flows from investing activities:
Proceeds from sale of land............................. - - 93
Cash flows from financing activities:
Purchase of treasury stock............................. - (11) -
Repayment of long-term debt............................ - (450) (450)
---------------------------
Net cash provided by financing activities............... - (461) (450)
---------------------------
Net increase (decrease) in cash and cash equivalents.... 95 (291) 227
---------------------------
Cash and cash equivalents at beginning of year.......... 68 359 132
---------------------------
Cash and cash equivalent at end of year................. 163 68 359
===========================
</TABLE>
-29-
<PAGE> 30
INDEPENDENT AUDITORS' REPORT
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
The Board of Directors and Stockholders
United Oklahoma Bankshares, Inc.:
We have audited the accompanying consolidated balance sheets of United Oklahoma
Bankshares, Inc. (the Company) and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1995. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated 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 mounts 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of United Oklahoma
Bankshares, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in note 1 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan," as amended by No. 118,
"Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosures," in 1995, No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," in 1994 and No. 109, "Accounting for Income Taxes," in
1993.
KPMG PEAT MARWICK
Oklahoma City, Oklahoma
February 16, 1996
-30-
<PAGE> 31
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONDENSED AVERAGE BALANCE SHEETS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------------------------------------
1995 1994
-----------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
AVERAGE ASSETS:
Cash and due from banks............................ $2,630 321 % 2,605 3.33 %
Federal funds sold................................. 3,022 3.68 1,599 2.04
Investment securities.............................. 30,437 37.11 31,869 40.76
Loans.............................................. 41,444 50.53 37,263 47.66
Less: Allowance for loan losses................... (568) (0.69) (534) (0.68)
Property and equipment, net........................ 3,966 4.84 4,047 5.18
Accrued interest and other assets.................. 1,093 1.32 1,334 1.71
------------- ------ ------ ------
$82,024 100.00 % 78,183 100.00 %
============ ====== ====== ======
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand:
Individuals, partnerships and corporations........ 14,287 17.42 % 13,422 17.17 %
Money market checking.............................. 9,129 11.13 9,772 12.50
Savings and money market savings................... 17,424 21.24 18,962 24.25
Time............................................... 31,864 38.85 27,425 35.08
------------- ------ ------ ------
Total deposits................................... 71,704 88.64 69,581 89.00
Short-term borrowings............................... 89 0.11 79 0.10
Long-term debt...................................... - 0.00 97 97 0.12
Accrued interest and other liabilities.............. 1,846 2.25 1,771 2.27
------------- ------ ------ ------
Total liabilities................................ 74,639 91.00 71,528 91.49
------------ ------ ------ ------
Stockholders' equity:
Preferred stock.................................... 4,356 5.31 4.356 5.57
Common stock....................................... 2,805 3.42 2,805 3.59
Additional paid-in capital......................... 7,358 8.97 7,358 9.41
Accumulated deficit................................ (5,926) (7.22) (6,779 (8.67)
Net unrealized holding gain (loss) on
investment securities available-for-sale,
net of deferred taxes.............................. (111) (0.14) 3 0.00
------------- ------ ------ ------
8,482 10.34 7.743 9.90
Less cost of common stock held in treasury......... (1,097) (1.34) (1.088 (1.39)
------------ ------
Net stockholders' equity.......................... 7,385 9.00 6.655 8.51
------------- ------ ------ ------
82,024 100.00 % 78,183 100.00 %
============ ====== ====== ======
</TABLE>
-31-
<PAGE> 32
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF NET INTEREST INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1995 1994
------------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earning Assets:
Investment securities (1).........................
Taxable.......................................... $20,587 1,309 6.36 % 22,387 1.331 5.95 %
Non-taxable...................................... 10,036 429 4.27 9.477 398 4.20
--------- ------- ---- ---------- ------- ----
30,623 1,738 5.68 31,864 1,729 5.43
Federal funds sold................................ 3,022 1.76 5.82 1,599 60 3.75
Loans, net of unearned discount (1)............... 41,444 4,101 9.90 37,263 3,371 9.05
--------- ------- ---- ---------- ------- ----
Total earning assets/total interest income.......... $75,089 6,015 8.01 % 70,726 5,160 7.30 %
========= ======= ==== ========== ======= ====
Interest Bearing Liabilities:
Interest bearing deposits......................... 58,417 2,564 4.39 56,159 1,791 3.19
Short-term borrowings............................. 89 5 5.62 79 4 5.06
Long-term debt.................................... 0 0 0.00 97 6 6.19
--------- ------- ---- ---------- ------- ----
Total interest bearing liabilities/total
interest expense................................. 58,506 2,569 4.39 % 56,335 1,801 3.20
========= ======= ==== ========== ======= ====
Differentials/net interest income................... 16,583 3,446 3.62 % 14,391 3,359 4.10 %
========= ======= ==== ========== ======= ====
Net interest income as reported/interest
earning assets................................... 4.59 % 4.75 %
==== ====
</TABLE>
(1) The amortized cost is used in the average balance calculation.
(2) Loans, classified as non-accruing are included in the average balance
calculation.
-32-
<PAGE> 33
SELECTED STATISTICAL, INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
LOAN CONCENTRATIONS
<TABLE>
<CAPTION>
December 31, 1995
----------------------
Percent
Amount of Total
----------------------
(In thousands)
<S> <C> <C> <C>
Commercial, financial and agricultural. $11,450 25.94 %
Real estate-construction............... 2,785 6.31
Real estate-mortgage................... 19,662 44.54
Credit card receivables................ 522 1.18
Installment............................ 9,725 22.03
----------------------
Total loans............................ $44,144 100.00 %
======================
</TABLE>
- ---------------
Participations purchased amounting to $163,000 at December 31, 1995 are
included in commercial. In addition, it should be noted that certain
commercial loans may be secured by real estate.
-33-
<PAGE> 34
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Years ended December 31,
------------------------
1995 1994
------------------------
(In thousands)
<S> <C> <C>
Balance at beginning of period.................... $ 559 437
Charge-offs:
Commercial, financial and agricultural.......... (176) (82)
Credit card receivables, installment............ (174) (9)
------------------------
Total charge-offs............................. (350) (91)
------------------------
Recoveries:
Commercial, financial and agricultural.......... 42 109
Installment..................................... 8 14
------------------------
Total recoveries.............................. 50 123
------------------------
Net charge-offs................................... (300) 32
Additions charged to operating expense............ 279 90
------------------------
Balance at end of period.......................... $ 538 559
=======================
Total average loans, net of unearned discount..... $ 41,444 37,263
=======================
Ratio of net charge-offs to total average loans,
net of unearned discount........................ 0.72% (0.09)%
=======================
Total loans, net of unearned discount............. $ 44,142 41,960
=======================
Ratio of allowance for loan losses to total loans,
net of unearned discount........................ 1.22% 1.33%
=======================
</TABLE>
-34-
<PAGE> 35
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-----------------------------------------------------------------------------
1995 1994
-----------------------------------------------------------------------------
% OF LOANS % of Loans
IN EACH in each
AMOUNT CATEGORY Amount Category
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and agricultural.. $187 37.44 % 146 38.88 %
Real estate-construction................ - 6.31 1 3.71
Real estate-mortgage.................... 5 44.54 13 46.95
Credit card receivables and installment. - 23.21 - 20.94
--------------------------- ----------------------------
Total................................. 192 100.00 % 136 100.00 %
================== ==================
Unallocated............................. 346 423
----- ------
Total allowance....................... $538 559
===== ======
</TABLE>
The basis allocation of the allowance for loan losses is a review of individual
loans, based on the bank's credit review and grading system, for possible
exposure to loss, except for credit card and installment loans whose allocation
is based primarily on historical net charge-off experience. The unallocated
portion of the allowance provides for unforeseen credit risk exposure. The
specific allocation of the allowance, therefore, represents only a numerical
evaluation of identified risks in the portfolio at a point in time and does not
necessarily represent anticipated charge-offs.
-35-
<PAGE> 36
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
MATURITY DISTRIBUTION OF INVESTMENT SECURITIES
<TABLE>
<CAPTION>
Within One Year After One Year But After Five Years Average
Amount Yield Within But Within After Maturity
Five Years Ten Years Ten Years Total (In Years)*
Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1995(1)
U.S. Treasury securities $1,003 6.70% 1,091 5.50% - - - - 2,094 6.08%
Securities of other U.S.
government agencies - - 747 5.75% - - - - 747 5.75%
Mortgage-backed securities - - - - - - - - 16,192 6.50%
State & municipals 492 3.46% 5,828 4.23% 3,324 4.58% 221 4.13% 9,865 4.31%
---------------------------------------------------------------------------------------------
Total amount/yield $1,495 5.63% 7,666 4.56% 3,324 4.58% 221 4.13% 28,898 5.70% 14.70
============================================================================================
December 31, 1994
U.S. Treasury securities $ - - $2,093 6.09% - - - - 2,093 6.09
Securities of other U.S.
government agencies - - 747 5.75% - - - - 747 5.75
Mortgage-backed securities - - - - 18,038 6.40
State & municipals 527 2.91 4,774 4.07% 4,335 4.50% 336 4.37% 9,972 4.21
---------------------------------------------------------------------------------------------
Total amount/yield 527 2.91 7,614 4.81% 4,335 4.50% 336 4.37% 30,850 5.65 15.58
---------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------
*Includes contractual maturities of mortgage-backed securities which may vary
significantly from actual cash flows due to prepayments.
(1) The amortized cost of investment securities are represented in this table.
DISTRIBUTION OF AVERAGE DEPOSITS
<TABLE>
<CAPTION>
---------------------------------------------
Years ended December 31,
-------------------- --------------------
1995 1994
-------------------- --------------------
Average Average
-------------------- --------------------
Amount Rate Amount Rate
-------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Demand:
Individuals, partnerships and corporations. $14,287 - % $13,422 - %
NOW and money market checking................ 9,129 2.57 9,772 2.49
Savings and money market savings............. 17,424 3.03 18,962 2.83
Time of less than $100',000.................. 22,213 5.72 16,853 3.75
Tune of $100,000 or more..................... 9,651 5.49 10,572 3.55
------------------- ------------------
Total $72,704 3.53 % $69,581 2.57 %
=================== ==================
</TABLE>
-36-
<PAGE> 37
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
The following table summarizes information with respect to certain short-term
borrowings for the years indicated.
<TABLE>
<CAPTION>
Amount Outstanding Average Amount
End of Year Maximum Outstanding
-------------------------------- Amount --------------------------
Average Outstanding Average
Interest at any Interest
Amount Rate Month End Amount Rate
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Federal funds purchased and securities sold - - % $ - $ 89 5.58%
==================================================================================
1994
Federal funds purchased and securities sold $1,500 6.13% 1,500 779 4.26%
==================================================================================
1993
Federal funds purchased and securities sold - - - 18 2.93%
==================================================================================
</TABLE>
- ---------------
RETURN ON EQUITY AND ASSETS
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------
1995 1994 1993
---------------------------
<S> <C> <C> <C>
Ratio of net income (loss) to:
Average ending assets................... 1.03% 1.18 1.09%
Average total assets.................... 0.94 1.06 0.98
Average stockholders' equity............ 10.49 12.46 13.09
Ratio of average stockholders' equity to:
Average total assets.................... 9.00 8.51 7.47
Average total loans..................... 17.82 17.86 16.58
Dividend payment ratio................... N/A N/A N/A
</TABLE>
-37-
<PAGE> 38
DIRECTORS AND EXECUTIVE OFFICERS
UNITED OKLAHOMA BANKSHARES, INC.
GEORGE N. COOK, 50. Chairman of the Board. Mr. Cook also serves as President
and Chief Executive Officer of American National Bank and Director of
Ameribank Corporation. Mr. Cook is also a director of United Bank and its
subsidiaries and the First National Bank of Medicine Lodge, Kansas.
D. WESLEY SCHUBERT, 43. President of the Company. Mr. Schubert is a
Certified Public Accountant. Mr. Schubert has been the Vice Chairman of
American National Bank and Vice President of Ameribank Corporation since
1991. Mr. Schubert also serves as a director of United Bank and director
of First National Bank of Medicine Lodge, Kansas.
J. MICHAEL ADCOCK, 47. Secretary of the Company. Mr. Adcock also serves as
a member of the Board of Directors of Grant Geophysical Inc., Ameribank
Corporation, American National Bank, First National Bank of Medicine
Lodge, Kansas, and United Bank and its subsidiaries. Mr. Adcock is in the
private practice of law.
JUNE A. O'STEEN, 59. Executive Vice President of UB, and Principal Accountant
for the Company since June, 1989. Prior to that time Ms. O'Steen was
Senior Vice President and General Auditor of UB, since 1984, and the
Company, since 1980.
-38-
<PAGE> 39
EXECUTIVE COMPENSATION
The executive compensation disclosures required by Regulation S-K will be
included in the annual meeting proxy statement to be filed not later than
120 days after the end of the fiscal year and are hereby incorporated by
reference.
-39-
<PAGE> 40
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership by management of the
Company's common and 9% preferred stock, which are the only classes of
capital stock of the Company outstanding, as of December 31, 1995, together
with the percentage of the outstanding shares of each class so owned by each
director, and by all officers and directors of the Company and its
subsidiaries as a group. Unless otherwise indicated, each person has sole
voting and investment power with respect to the indicated shares. The
preferred stock does not carry voting rights.
<TABLE>
<CAPTION>
Name of Beneficial Ownership Percent of Class
Beneficial Owner Common 9% Preferred Common 9% Preferred
- --------------------------
<S> <C> <C> <C> <C> <C> <C>
George N. Cook, Jr.(1) 247,435 17,309 9.36% 11.92%
D. Wesley Schubert(1) 247,435 17,309 9.36% 11.92%
J. Michael Adcock(1) 247,435 17,309 9.36% 11.92%
All officers and directors
as a group 792,521 51,927 29.97% 35.76%
</TABLE>
- ------------------
(1) Ameribank Corporation and Messrs. George N. Cook, D. Wesley Schubert
and J. Michael Adcock have entered into a Stock Purchase Agreement, dated
November 3, 1995, which provides that Ameribank will sell to each of Messrs.
Cook, Schubert and Adcock 16.33% of the total number of shares of Common
Stock and 9% Cumulative Non-Voting Preferred Stock which Ameribank owns or
acquires in future purchases. The terms provide that the purchase price for
such stock shall be the price at which Ameribank acquired the shares plus
interest, accrued from the date of acquisition of such stock to the closing
of the purchase contemplated by the agreement, at a rate equal to the base
rate of interest of Chase Manhattan Bank N.A. from time to time. The
consummation of the transactions are subject to (1) approval from the Board
of Governors of the Federal Reserve System; (2) the entering into by the
parties of a Shareholders' Agreement restricting the future transfer of the
stock by Messrs. Adcock, Schubert and Cook; and (3) the entering into by
the parties of a Voting Trust Agreement appointing Ameribank as trustee to
vote the shares of Common Stock.
-40-
<PAGE> 41
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the name and address of each shareholder who
beneficially owns more than 5% of the Company's common stock, the number of
shares beneficially owned be each, and the percentage of outstanding common
stock so owned as of December 31, 1995. Unless otherwise indicated, each
person has sole voting and investment power with respect to the shares
beneficially owned.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Title of Class Name and Address Ownership Percent of Class(2)
<S> <C> <C> <C>
Common Ameribank Corporation 1,490,412(3) 58.86%
201 N Broadway
Shawnee, OK 74801
Common Sooner Southwest Bankshares, Inc. 106,796(4) 4.22%
P.O. Box 1020
Bristow, OK 74010
Common Illinois Refining Company 58,096(4) 2.29%
P.O. Box 1020
Bristow, OK 74010
Common Robert B. Krumme 5,000(4) 0.02%
P.O. Box 1020
Bristow, OK 74010
</TABLE>
- -----------------
- -----------------
(2) All percentages were calculated after excluding shares held in treasury
stock.
(3) All of Ameribank Corporation's shares are pledged on a Security Agreement as
collateral for the repayment of note held by a financial institution.
(4) On July 6, 1995, the Company was notified that Sooner Southwest Bankshares,
Inc., Illinois Refining Company and Robert B. Krumme filed a Schedule 13D
reporting the ownership as a group of the shares listed above.
-41-
<PAGE> 42
CERTAIN TRANSACTIONS
In the ordinary course of business, the Bank has had banking transactions
with some of the directors, executive officers and controlling shareholders
of the Company. All such loans are and have been made in compliance with
applicable laws, in the ordinary course of business and on substantially the
same terms (including interest rates and collateral) as those prevailing at
the time for comparable transactions with unaffiliated persons. In the
opinion of management, none of such loans involved more than the normal risk
of collectibility or present any other unfavorable features, interest in the
transaction or loan.
All transactions entered into between the Company or the Bank and any
officer, director or controlling shareholder of the Company are made on
terms no less favorable to the Company or the Bank than could be obtained
from unaffiliated parties. It is the policy of the Company that
transactions with and loans to officers and directors be approved by a
majority of the directors of the Company other than those with an interest
in the transaction or loan.
Messrs. Cook, Schubert, Adcock and Bodard are members of Enterprise
Technology Group, L.L.C. ("ETG") which provides computer hardware and
software technology solutions and consulting services to banks as well as
other private and governmental entities. ETG has provided services to the
banking subsidiary of the Company relating to processing technology. The
subsidiary banks of Ameribank and the Company have decided to implement a
plan to upgrade their processing techniques, and ETG will advise both
subsidiary banks and consult with them regarding such implementation. The
fees payable by the subsidiary banks of Ameribank and the Company to ETG
will be approximately $75,000 each. Such fees will not exceed the prices
charged other customers of ETG and are competitive with those charged by
other companies in the business of providing such services.
-42-
<PAGE> 43
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.
UNITED OKLAHOMA BANKSHARES, INC.
By:
------------------------------------
George N. Cook, Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Chairman of the Board
- ----------------------
George N. Cook
Principal Accountant March 18, 1996
- ----------------------
June A. O'Steen
President
- ----------------------
D. Wesley Schubert
Secretary
- ----------------------
J. Michael Adcock
* By:
-----------------
George N. Cook
</TABLE>
* As Attorney in fact pursuant to Power
of Attorney filed as Exhibit 25
-43-
<PAGE> 44
FORM 10-K CROSS REFERENCE SECTION
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C>
Part I Item 1 Business.............................................. 2
Item 2 Properties............................................ 2
Item 3 Legal Proceedings..................................... 2
Submission of Matters to a Vote of Security Holders
Item 4 (during the fourth quarter of 1995)................... *
Market for the Company's Common Stock and Related
Part II Item 5 Stockholder Matters................................... 2
Item 6 Selected Financial Data............................... 3
Management's Discussion and Analysis of Financial
Item 7 Condition and Results of Operations................... 4-10
Item 8 Financial Statements and Supplementary Data........... 11-37
Item 9 Disagreements on Accounting and Financial Disclosure.. *
Part III Item 10 Directors and Executive Officers and Corporations..... 38
Item 11 Executive Compensation................................ 39
Security Ownership of Certain Beneficial Owners and
Item 12 Management............................................ 40,41
Item 13 Certain Relationships and Related Transactions........ 42
Part IV Item 14 Exhibits, Financial Statement Schedules, and Reports
on Form 8-K...........................................
(a) (1)Financial Statements:......................................
o Independent Auditors' Report........................ 30
o Consolidated Statements of Operations - years ended
December 31, 1995, 1994, and 1993................... 11
o Consolidated Balance Sheets
December 31, 1995 and 1994.......................... 12
o Consolidated Statements of Changes in Stockholders'
Equity - years ended December 31, 1995, 1994, and
1993................................................ 13
o Consolidated Statements of Cash Flows - years ended
December 31, 1995, 1994, and 1993................... 14
o Notes to Consolidated Financial Statements - years
ended December 31, 1995, 1994, and 1993............. 15-29
(2)Financial Statement Schedules:.............................
o All schedules normally required by Form 10-K are
omitted since they are either not applicable or the
required information is shown in the consolidated
financial statements or the notes thereto...........
</TABLE>
-44-
<PAGE> 45
Part IV Item 14 Exhibits: (continued)
(a) (3) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. PAGE
----------- ----
<S> <C> <C>
3 Articles of incorporation and bylaws (filed as **
Exhibit 3(a) and 3(b) to Company's Registration
Statement No. 2-85935, "Registration Statement")
4 Instruments defining the rights of security holders, **
including indentures (filed as Exhibit 3(a) to
Company's Registration Statement)
10 Material Contracts: **
(a) United Oklahoma Bankshares, Inc. Incentive Stock **
Option Plan of 1982 (filed as Exhibit 10(a) to
Company's Registration Statement)
(b) Forms of United Oklahoma Bankshares, Inc. Incentive **
Stock Option Agreements (filed as Exhibit 10(b) to
Company's Registration Statement)
(c) United Oklahoma Bankshares, Inc. Employee Stock **
Ownership Plan and Trust of 1982 (filed as Exhibit
10(c) to Company's Registration Statement)
(d) Stockholders' resolutions establishing United **
Oklahoma Bankshares Employees' Stock Purchase Plan of
1983 (filed as Exhibit 10(d) to Company's Registration
Statement)
(e) Form of agreements relating to stock purchased **
under the United Oklahoma Bankshares Employees' Stock
Purchase Plan of 1983 (filed as Exhibit 10(e) to
Company's Registration Statement)
(f) Letter Agreement, dated April 26, 1982, between **
United Oklahoma Bankshares, Inc. and Fort Worth
National Bank, as amended (filed as Exhibit 10(1) to
Company's Registration Statement)
(g) Promissory Note and Security Agreement, dated April **
29, 1982, between United Oklahoma Bankshares, Inc.
Employee Stock Ownership Plan and Trust of 1982 and The
Fort Worth National Bank (filed as Exhibit 10(m) to
Company's Registration Statement)
</TABLE>
-45-
<PAGE> 46
Part IV Item 14 Exhibits: (continued)
(a) (3) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. PAGE
----------- -----
<S> <C> <C>
10 Material Contracts: **
(h) Deposit Insurance Transfers and Asset Purchase **
Agreement, dated May 11, 1984, between United Oklahoma
Bankshares, Inc., as agent for United Del City Bank,
and the Federal Deposit Insurance Corporation (filed
as Exhibit to Form 8-K dated May 25, 1984)
(i) Stock Purchase Agreement between United Del City **
Bank and United Oklahoma Bank (filed as Exhibit 10 to
Form 10-K dated December 31, 1986)
(j) Accounts Receivable Purchase Agreement between **
United Del City Bank and United Oklahoma Bank (filed
as Exhibit 10 to Form 10-K dated December 31, 1986)
22 Subsidiaries of the Company 47
25 Power of Attorney 48,49
(b) Reports on Form 8-K 50
</TABLE>
* Not Applicable
** Included in previous filings
-46-
<PAGE> 47
SUBSIDIARIES
The Company has two wholly owned subsidiaries, United Bank and United Loan and
Thrift Company, Inc. The following corporation is a wholly Owned subsidiary of
United Bank:
United Del City Tower, Inc.
4600 Corporation
-47-
<PAGE> 48
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That each of the undersigned do hereby constitute and appoint George N. Cook
his true and lawful attorney-in-fact and agent with full power of substitution,
for him and in his name, place and stead, and in any and all capacities to
execute and sign Annual Report on Form 10-K for the 1995 fiscal year of United
Oklahoma Bankshares, Inc. and to file the same, with all exhibits thereto, and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent may lawfully do or cause to be done by
virtue hereof.
DATED THIS 18th day of March, 1996
--------------------------------------
George N. Cook, Director
--------------------------------------
D. Wesley Schubert, Director
--------------------------------------
J. Michael Adcock, Director
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 18th day of Mach,
1996, by George N. Cook:
--------------------------------------
Notary Public
My commission expires:
June 6. 1998
- ----------------------
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 18th day of May, 1996,
by D. Wesley Schubert.
------------------------------------
Notary Public
My commission expires:
June 6, 1998
- ----------------------
-48-
<PAGE> 49
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 18th:day of March,
1996, by J. Michael Adcock.
--------------------------------
Notary Public
My commission expires:
June 6. 1998
- ----------------------
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA )
-49-
<PAGE> 50
REPORT'S ON FORM 8-K
The Company did not file any reports on Form 8-K during the fourth
quarter of 1995.
-50-
<PAGE> 1
EXHIBIT 13(d)(3)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [Fee Required]
For the Fiscal year ended December 31,1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [Fee Required]
For the transition period from ______________________ to _____________________
Commission file number 0-12047
UNITED OKLAHOMA BANKSHARES, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
Oklahoma 73-0969432
------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
73115
-------------------------------
Zip Code
Registrant's telephone number, including area code (405) 677-8711
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common stock,
$1 par value
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
such filing requirements for the past 90 days.
[X]Yes 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. [ ]
As of February 1, 1995, based on the reported average bid and asked prices, the
aggregate market value of the common stock held by non-affiliates of the
registrant was approximately $127,000.
As of February 1, 1995, 2,532,237 shares of the registrant's common stock, par
value $1.00 per share, were outstanding.
NOTE: See pages 43-45 for Form 10-K Cross Reference Index
<PAGE> 2
BUSINESS
United Oklahoma Bankshares, Inc. (the "Company") is a one-bank holding company
registered under the Bank Holding Company Act of 1956, as amended. The
principal business of the Company is the ownership and supervision of United
Bank ("UB"), Del City, Oklahoma. As of December 31, 1994, the Company and its
subsidiaries had 54 full time equivalent employees. UB is a state chartered
banking association whose deposits are insured pursuant to the Federal Deposit
Insurance Act. UB, which operates primarily in Oklahoma, competes with other
financial institutions in its trade area in providing a full range of
traditional banking and related financial services to the commercial, consumer,
energy, real estate and financial sectors. UB operates one wholly owned
subsidiary, United Del City Tower, Inc. ("UDCT") and 4600 Corporation.
UDCT owns and manages United Del City Tower of which the first and part of the
second floors are occupied by UB. The facility is approximately 97% occupied
at year end. 4600 Corporation was formed to sell assets on which UB
foreclosed.
In 1991, the Company borrowed the sum of $1,400,000 from John E. Kirkpatrick of
Oklahoma City, Oklahoma, a preferred stockholder of the Company. The note was
collateralized by 100% of the stock of UB. The note was paid in full as of
December 31, 1994.
PROPERTIES
The Company's corporate headquarters are located in United Del City Tower at
4600 S.E. 29th Street, Del City, Oklahoma. This facility is located on
approximately 8 acres and comprises approximately 77,000 square feet of usable
space. The Tower houses the main banking functions and the Company's executive
offices. UB occupies 27% of the building and approximately 70% is leased to
various tenants. In 1993, UB completed construction of a new drive-in facility
attached to the United Del City Tower. UB also sold its previous drive-in
facility during 1993.
LEGAL
The Company and its subsidiaries are not defendants in any material legal
proceedings.
COMMON STOCK
During 1994, limited transactions occurred which the Company is aware of, and
has reported the average of the bid and ask price of $0.01 and $0.10,
respectively, at February 1, 1995. The prices have no depth because there is
currently no established public trading market for the Company's common stock.
DISCLAIMER
THIS ANNUAL REPORT HAS NOT BEEN REVIEWED, OR CONFIRMED FOR ACCURACY OR
RELEVANCE, BY THE FEDERAL DEPOSIT INSURANCE CORPORATION.
-2-
<PAGE> 3
SELECTED FINANCIAL DATA
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
The Selected Financial Data which follows should be read in conjunction with
the consolidated financial statements (including the notes thereto) of the
Company and its subsidiaries appearing elsewhere herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1994 1993 1992 1991 1990
-------------------------------------------------------------
(In thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
Summary of Income:
Interest income . . . . . . . . . . . . . . . . . . . . . . 5,160 5,235 5,460 5,309 4,906
Interest expense . . . . . . . . . . . . . . . . . . . . . . (1,801) (1,847) (2,299) (2,646) (2,589)
Provision for loan losses . . . . . . . . . . . . . . . . . (90) (236) (128) (165) (120)
Non-interest income . . . . . . . . . . . . . . . . . . . . 1,030 837 795 1,114 646
Non-interest expense . . . . . . . . . . . . . . . . . . . . (3,206) (3,068) (2,735) (4,215) (2,436)
Income (loss) before income taxes and cumulative effect of
change in accounting principle . . . . . . . . . . . . . . 1,093 921 1,093 (603) 407
Income tax benefit (expense) . . . . . . . . . . . . . . . . (264) (266) (445) 245 (131)
Income (loss) before cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . . . 829 655 648 (358) 276
Cumulative effect of change in accounting principle - 116 - - -
Net income (loss) . . . . . . . . . . . . . . . . . . . . . 829 771 648 (358) 276
Per share data:
Earnings (loss) per average common share before cumulative
effect of change in accounting principle 0.17 0.10 0.10 (0.28) (0.04)
Cumulative effect of change in accounting principle - 0.04 - - -
Net earnings (loss) per average common share . . . . . . . . 0.17 0.14 0.10 (0.28) (0.04)
Average outstanding common shares . . . . . . . . . . . . . 2,616 2,644 2,644 2,644 2,644
Period end balances:
Cash and due from banks . . . . . . . . . . . . . . . . . . 2,440 1,907 3,270 2,695 2,950
Interest bearing deposits in other banks . . . . . . . . . . - - - - 768
Federal funds sold . . . . . . . . . . . . . . . . . . . . . - 460 1,560 2,085 -
Investment securities . . . . . . . . . . . . . . . . . . . 30,588 29,794 33,352 30,722 23,688
Loans, net of unearned discount and allowance for loan. . . .
losses . . . . . . . . . . . . . . . . . . . . . . . . . . 41,401 36,509 33,804 30,185 26,234
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 79,720 74,564 78,556 72,689 61,016
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . 69,647 66,094 70,302 64,825 53,405
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . - 450 900 1,400 -
Stockholders' equity . . . . . . . . . . . . . . . . . . . . 6,949 6,289 5,518 4,870 5,228
</TABLE>
-3-
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis is designed to provide a better
understanding of the significant factors related to the Company's results of
operations, financial condition, liquidity and capital resources (including its
subsidiary bank, UB, and its non-bank subsidiary, UDCT and 4600 Corporation).
Such discussion and analysis should be read in conjunction with the
Consolidated Financial Statements (including the notes thereto) and Selected
Financial Data appearing elsewhere in this annual report.
RESULTS OF OPERATIONS
GENERAL. Net income totaled $ .8 million in 1994, compared to $.8 million in
1993 and $.6 million in 1992. Earnings per share were $ .17 in 1994, compared
to $.14 per share in 1993 and $.10 per share in 1992. Net income in 1993
included $.1 million ($.04 per share) cumulative effect of change in accounting
principle as a result of adoption of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Management is unaware of any
trends, events or uncertainties that will have or that are reasonably likely to
have a material effect on the operations.
NET INTEREST INCOME. Net interest income, the difference between gross
interest and fees on earning assets (primarily loans and investments) and
interest paid on deposits and borrowed funds necessary to support such assets,
is a major component of a financial institution's earnings.
Net interest income aggregated $3,359,000 and $3,388,000 in 1994 and 1993,
respectively, a decrease of $29,000. Net interest income increased $227,000
between 1993 and 1992.
From 1993 to 1994, the volume of average earning assets increased $1 million,
while average interest bearing liabilities decreased $2.1 million. The yield
on average earning assets decreased 11 basis points from 1993 to 1994, while
the rate paid on average interest bearing liabilities increased 4 basis points
during the same time period resulting in a decrease in the spread between the
yield on earning assets and rate paid on interest bearing liabilities of 15
basis points. As a result of the decrease in the rate earned on interest
earning assets and the increase in the rate paid on interest bearing
liabilities, net interest margin decreased 5 basis points from 4.80% in 1993 to
4.75% in 1994.
From 1992 to 1993, the volume of average earning assets increased $4.8 million,
while average interest bearing liabilities increased $2.4 million. The yield
on average earning assets decreased 88 basis points from 1992 to 1993, while
the rate paid on average interest bearing liabilities decreased 94 basis points
during the same time period resulting in an increase in the spread between the
yield on earning assets and rate paid on interest bearing liabilities of 6
basis points. As a result of the decrease in the rate earned on interest
bearing assets and the decrease in interest bearing liabilities, net interest
margin remained unchanged at 4.80% from 1992 to 1993.
As management deems necessary and to the extent it has the flexibility, it will
alter the volume and mix of earning assets and supporting liabilities so as to
obtain optimal interest margins while maintaining sufficient liquid resources.
- ---------------
-4-
<PAGE> 5
The following table illustrates volume and yield/rate variances on an actual
basis (versus a taxable equivalent basis) for the years indicated. The change
in interest due to both rate and volume has been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amount of the
change in each.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, Year Ended December 31,
1994 COMPARED TO 1993 1993 Compared to 1992
----------------------------------------------------------------------
INCREASE/DECREASE Increase/Decrease
DUE TO CHANGE IN: Due to Change in:
----------------------------------------------------------------------
YIELD/ Yield/
VOLUME RATE NET Volume Rate Net
----------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS:
Investment securities . . . . . . . (181) (26) (207) 59 (334) (275)
Federal funds sold . . . . . . . . . (11) 15 4 7 (10) (3)
Loans net of unearned discounts . . 157 (29) 128 244 (191) 53
---------------------------------------------------------------------
Total interest income . . (35) (40) (75) 310 (535) (225)
---------------------------------------------------------------------
INTEREST BEARING LIABILITIES:
Interest bearing deposits . . . . . (52) 39 (13) 113 (541) (428)
Short-term borrowings . . . . . . . 3 - 3 - - -
Long-term debt . . . . . . . . . . . (33) (3) (36) (32) 8 (24)
---------------------------------------------------------------------
Total interest expense . . (82) 36 (46) 81 (553) (452)
---------------------------------------------------------------------
Net interest income . . . . . . . . . . 47 (76) (29) 229 (2) 227
=====================================================================
</TABLE>
-5-
<PAGE> 6
RISK ELEMENTS OF EARNING ASSETS. Risk elements of the Company's earning assets
are evidenced, in part, by non- performing loans consisting of loans
contractually past due 90 days or more, loans placed on non-accrual status and
other real estate which has been acquired in full or partial settlement of
defaulted loans. Non-performing assets are carried by the Company at estimated
net realizable value and known losses of principal have been charged off.
At December 31, 1994, non-performing loans totaled $178,000. Non-performing
loans as a percent of all loans outstanding were .43% at December 31, 1994.
The majority of non-performing loans is secured. The following table sets forth
such loans and other real estate at the dates indicated:
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------
1994 1993 1992
--------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Non-accrual loans . . . . . . . . . . . . . . . . . . . . . . . $ 178 481 561
Other real estate . . . . . . . . . . . . . . . . . . . . . . . 180 552 686
--------------------------------
Total non-performing assets . . . . . . . . . . . . . . . 358 1,033 1,247
================================
Non-performing loans to total loans . . . . . . . . . . . . . . .43% 1.32% 1.66%
</TABLE>
Under the Company's lending policies, all commercial loans are reviewed and
graded according to their perceived credit risk (borrower's financial strength;
value and type of collateral; borrower's performance, etc.). Based on this
grading system, credits requiring special attention are placed on special
monitoring for the attention of management and the Board of Directors.
Management, through this special monitoring system, in conjunction with past
loan loss experience, current and perceived future economic conditions and
other factors, determines the level at which the allowance for loan losses
should be maintained to adequately cover the loan portfolio risk.
Non-accrual status loans are identified through the special monitoring system
and periodic review of past due loans by officers and management. When doubt
exists as to the ultimate collectibility of interest or principal, such loans
are placed on non-accrual status. When a loan is placed on non-accrual status,
interest previously accrued but uncollected on such loans is reversed and
charged against current income. Subsequent payments collected on such loans
are credited to loan principal if, in the opinion of management, full
collectibility of principal is doubtful; otherwise, the payment is credited to
income and principal according to the loan terms.
Loans on which interest had ceased to be accrued approximated $178,000,
$481,000 and $561,000 at December 31, 1994, 1993 and 1992, respectively.
Approximately $6000 was recognized on these loans in 1994, $17,000 was
recognized in 1993, and no interest was recognized on these loans in 1992. Had
the accrual status of these loans been normal, approximately $47,000, $42,000
and $59,000 of additional interest would have been earned in 1994, 1993 and
1992, respectively. None of these loans are restructured troubled debt.
Internally classified assets of UB, which approximate the same as
classifications by regulatory authorities and includes other real estate,
decreased from $ 1,347,000 at December 31, 1993 to $769,000 at December 31,
1994, a decrease of 43%.
At December 31, 1994, the Company had approximately $80,000 of loans for which
payments were contractually past due less than 90 days, and the borrowers were
experiencing financial difficulties. These loans are included in the special
monitoring loans which are subject to management's attention and review.
-6-
<PAGE> 7
ALLOWANCE AND PROVISION FOR LOAN LOSSES. The allowance for loan losses totaled
$559,000, $437,000 and $469,000 at December 3l, 1994, 1993 and 1992,
respectively. The provision charged to expense amounted to $90,000 in 1994
compared to $236,000 and $128,000 in 1993 and 1992, respectively. Net
(recoveries) losses on loans were approximately ($32,000) in 1994, compared to
$268,000 in 1993 and $154,000 in 1992. The amount of provision charged to
expense is based on the current level of net loan losses, perceived economic
conditions, changes in the size and character of the loan portfolio, and
management's assessment of the loan portfolio's inherent risk in relation to
the allowance for loan losses (see Note 4 to Consolidated Financial
Statements).
The allowance for loan losses as a percentage of total loans was 1.33%, 1.18%
and 1.37% at December 31, 1994, 1993 and 1992, respectively.
NON-INTEREST INCOME.
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------
1994 1993 1992
-----------------------------------
(In thousands)
<S> <C> <C> <C>
Service charges on deposits . . . . . . . . . . . . . . . . . . $ 748 675 602
Other service charges and fees, net . . . . . . . . . . . . . . 178 162 97
Securities gains . . . . . . . . . . . . . . . . . . . . . . . 104 - 96
-----------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,030 837 795
===================================
</TABLE>
NON-INTEREST EXPENSE. Non-interest expense amounted to $3.2 million in 1994
compared to $3.1 million in 1993 and $2.7 million in 1992 representing an
increase of 4.5% in 1994 and a 12% increase in 1993. Salaries and employee
benefits continue to represent a large portion of non-interest expense.
Net costs and write downs associated with other real estate owned approximated
$92,000, $66,000 and ($64,000) in 1994, 1993 and 1992, respectively, and
represent amounts provided for decreases in the market value of the properties,
net gains and losses on sales of the properties, and net expenses incurred for
the maintenance of the properties.
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------
NON-INTEREST EXPENSE 1994 1993 1992
-----------------------------------
(In thousands)
<S> <C> <C> <C>
Salaries and employee benefits . . . . . . . . . . . . . . . . $ 1,739 1,567 1,488
Occupancy expense, net . . . . . . . . . . . . . . . . . . . . 271 309 290
Other real estate owned, net . . . . . . . . . . . . . . . . . 92 66 (64)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,104 1,126 1,021
-----------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,206 3,068 2,735
===================================
</TABLE>
-7-
<PAGE> 8
LIQUIDITY
Liquidity is defined as a company's ability to meet maturing obligations and
existing commitments and withstand fluctuations in funding needs, while also
maintaining sufficient levels of highly liquid assets. Liquidity ultimately
depends on profitability, asset quality and mix, asset and liability maturities
and repriceability, and borrowing ability.
The asset side of the balance sheet provides liquidity through regular
amortization and maturities of loans, maturities of investment securities and
money market instruments, maturities of deposits in other banks, and other
assets available for sale. Deposit growth, diversification of liability
products and access to other funding sources provide liquidity from the
liability side. Management is unaware of any trends, events or uncertainties
that will have or that are reasonably likely to have a material effect on the
Company's liquidity.
INDEBTEDNESS
In 1991, the Company borrowed the sum of $1,400,000 from John E. Kirkpatrick of
Oklahoma City, Oklahoma, a preferred stockholder of the Company. The note was
collateralized by 100% of the stock of UB. The note was paid in full as of
December 31, 1994.
PREFERRED STOCK
The Company has $4.4 million of preferred stock outstanding with 9% cumulative
dividends in arrears since October 1, 1985. Cumulative unpaid dividends in
arrears at December 31, 1994 approximated $3,626,370.
RATE SENSITIVITY
Both liquidity and net interest margin are significantly affected by the
sensitivity that assets and liabilities have to changes in market interest
rates, levels of earning assets and funding mixes, the direction of interest
rate movements, the velocity at which changes occur and the absolute level of
interest rates. Interest rate risk can arise when an investment's interest
rate level changes, or its cash flows occur, in time periods that are different
from those of supporting funding sources.
The following table depicts the Company's rate sensitivity position at December
31, 1994:
<TABLE>
<CAPTION>
Sensitivity Period
-------------------------------------------------------------
0-30 31-90 91-180 181-365 Over
Days Days Days Days 1 Year
-------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Rate sensitive assets:
Investment securities . . . . . . . . . . . . 8,137 - 727 5,297 16,427
Loans . . . . . . . . . . . . . . . . . . . . 14,861 2,066 1,194 2,160 21,501
---------------------------------------------------------
Total rate sensitive assets . . . . . . . . 22,998 2,066 1,921 7,457 37,928
---------------------------------------------------------
Rate sensitive liabilities:
Savings and interest bearing deposits . . . . 13,701 - - - 13,698
Time deposits 8,860 6,112 6,393 6,004 1,410
Securities sold under repurchase agreement .
1,500 - - -
---------------------------------------------------------
Total rate sensitive liabilities . . . . . . 24,061 6,112 6,393 6,004 15,108
---------------------------------------------------------
Period Sensitivity Gap . . . . . . . . . . . . . (1,063) (4,046) (4,472) 1,453 22,820
=========================================================
Cumulative Sensitivity Gap . . . . . . . . . . . (1,063) (5,109) (9,581) (8,128) 14,692
=========================================================
</TABLE>
The Company includes only rate sensitive assets and liabilities in its
sensitivity analysis.
-8-
<PAGE> 9
CAPITAL RESOURCES
Capital provides a base for expansion of the asset portion of the balance
sheet, which in turn provides the opportunity for increased profitability.
Capital adequacy depends on such factors as quality and diversification of
assets, current and historical earnings and liquidity. Primary capital of the
Company consists of funds which are permanently committed to the Company,
including: Common stock, Preferred stock, Additional paid-in capital, Retained
earnings, and Allowance for loan losses. For regulatory purposes primary
capital is reduced by amounts representing intangible assets. Management is
unaware of any trends, events or uncertainties that will have or that are
reasonably likely to have a material effect on the Company's capital resources.
Following are the Company's and UB's primary and equity capital to assets
ratios for December 31, 1994 and 1993, respectively:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Company's primary capital to assets ratio 9.37% 8.05%
Company's equity capital to assets ratio 8.89 7.98
UB's primary capital to assets ratio 9.32% 8.34%
UB's equity capital to assets ratio 8.84 8.27
</TABLE>
During 1989, regulatory agencies approved regulations to implement a risk-based
capital framework that makes capital requirements more sensitive to the risk
profiles of individual banking companies. These regulations define capital as
either core capital (Tier 1) or supplemental capital (Tier 2). Core capital
consists primarily of common stockholders' equity, while supplementary capital
is comprised of preferred stock, certain debt instruments, and a portion of the
allowance for loan losses.
At December 31, 1994, the required core capital was 4.00% and total risk-based
capital was 8.00%. Because the Company has assets of less than $150 million,
its capital requirements are computed on a bank-only basis. UB's core and
total risk-based capital exceed regulatory guidelines at December 31, 1994 and
1993.
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Tier I capital (core) 13.05% 13.27%
Tier 2 capital (total risk-based) 14.11 14.21
</TABLE>
EFFECT OF INFLATION
The financial statements and related data presented in this report have been
prepared in accordance with generally accepted accounting principles which
require the measurement of financial position and operating results in terms of
historical dollars without considering changes in the relative purchasing power
of money over time. Changing prices, particularly during periods of high
inflation rates, can have a significant impact on industries and business
enterprises taken as a whole. However, the impact of inflation on financial
institutions differs significantly from that of industrial or commercial
companies. This is due to the fact that a major portion of a bank's balance
sheet is comprised of monetary assets and liabilities versus a basically
non-monetary balance sheet associated with industrial concerns. Even though
inflation does not generally have a material impact on banks it can indirectly
affect the interest rates and the underlying value of assets collateralizing
certain earning assets, as well as non-interest income and expense categories.
How well a bank is positioned to respond to changing interest rates and
collateral values can only be assessed by an analysis of its asset and
liability structure. Therefore, attention is directed to the rate sensitivity
schedule, the maturity distribution of loans and securities, the loan
concentrations data and the rate and volume variances analysis found elsewhere
in this report.
-9-
<PAGE> 10
REGULATORY MATTERS
The Company is operating under a written agreement with the Federal Reserve
Bank until March, 1994, at which time the agreement was terminated and the
Company was released from the restrictions under the agreement.
ACCOUNTING STANDARDS NOT YET ADOPTED
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 107, "Disclosures About Fair Value of Financial
Instruments." The Company will be required to comply with this statement for
the year ending December 31, 1995.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a
Loan." The Company will be required to comply with this statement beginning
January 1, 1995. The impact of this statement is not expected to have a
material effect on the Company's consolidated financial statements.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 118, "Accounting by Creditors for Impairment of
Loan-Income Recognition and Disclosures." The Company will be required to
comply with this statement beginning January 1, 1995. The impact of this
statement is not expected to have a material effect on the Company's
consolidated financial statements.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 119, "Disclosure About Derivative Financial
Instruments and Fair Value of Financial Instruments." The Company will be
required to comply with this statement for the year ending December 31, 1995.
-10-
<PAGE> 11
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1994 1993 1992
-----------------------------------
(In thousands except per share
amounts)
<S> <C> <C> <C>
Interest income:
Interest and fees on loans . . . . . . . . . . . . . . . . . . . . . $3,371 3,243 3,190
Interest Federal funds sold . . . . . . . . . . . . . . . . . . . . 60 56 59
Interest on investment securities
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,331 1,767 2,182
Nontaxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398 169 29
--------------------------------
Total interest income . . . . . . . . . . . . . . . . . . . . . 5,160 5,235 5,460
--------------------------------
Interest expense:
Interest on deposits (Note 6) . . . . . . . . . . . . . . . . . . . 1,791 1,804 2,232
Interest on short-term borrowings . . . . . . . . . . . . . . . . . 4 1 1
Interest on long-term debt . . . . . . . . . . . . . . . . . . . . . 6 42 66
--------------------------------
Total interest expense . . . . . . . . . . . . . . . . . . . . . 1,801 1,847 2,299
--------------------------------
Net interest income . . . . . . . . . . . . . . . . . . . . . . 3,359 3,388 3,161
Provision for loan losses (Note 4) . . . . . . . . . . . . . . . . . . 90 236 128
--------------------------------
Net interest income after provision for loan losses . . . . . . 3,269 3,152 3,033
--------------------------------
Non-interest income:
Service charges on deposits . . . . . . . . . . . . . . . . . . . . 748 675 602
Other service charges and fees, net . . . . . . . . . . . . . . . . 178 162 97
Securities gains . . . . . . . . . . . . . . . . . . . . . . . . . 104 - 96
--------------------------------
Total non-interest income . . . . . . . . . . . . . . . . . . . 1,030 837 795
--------------------------------
Non-interest expense:
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . 1,739 1,567 1,488
Occupancy expense, net . . . . . . . . . . . . . . . . . . . . . . . 271 309 290
Other real estate owned, net . . . . . . . . . . . . . . . . . . . . 92 66 (64)
Other (Notes 7 & 8) . . . . . . . . . . . . . . . . . . . . . . . . 1,104 1,126 1,021
--------------------------------
Total non-interest expense . . . . . . . . . . . . . . . . . . . 3,206 3,068 2,735
--------------------------------
Income before income taxes and cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . . . . 1,093 921 1,093
Income tax expense (Note 10) . . . . . . . . . . . . . . . . . . . . . 264 266 445
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . --------------------------------
Income before cumulative effect of change in accounting principle 829 655 648
Cumulative effect of change in accounting principle (Note 10) . . . . . - 116 -
--------------------------------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . $ 829 771 648
================================
Earnings per share:
Income before cumulative effect of change in accounting principle . 0.17 0.10 0.10
Cumulative effect of change in accounting principle . . . . . . . . - 0.04 0
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.17 0.14 0.10
================================
Average outstanding common shares . . . . . . . . . . . . . . . . . . . 2,616 2,644 2,644
================================
</TABLE>
See accompanying notes to consolidated financial statements.
-11-
<PAGE> 12
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1994 1993
------------------------
(In thousands)
<S> <C> <C>
ASSETS
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,440 1,907
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . - 460
Investment securities (Note 2) . . . . . . . . . . . . . . . . . . . . . 30,588 29,794
Loans (Notes 3 & 12) . . . . . . . . . . . . . . . . . . . . . . . . . . 41,974 37,007
Unearned discounts . . . . . . . . . . . . . . . . . . . . . . . . . . (14) (61)
Allowance for loan losses (Note 4) . . . . . . . . . . . . . . . . . . (559) (437)
------------------------
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,401 36,509
Property and equipment, net (Note 5) . . . . . . . . . . . . . . . . . . 4,051 4,110
Other real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 542
Accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . . 6/2 537
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 248
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 358 457
------------------------
$79,720 74,564
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest bearing (Note 6) . . . . . . . . . . . . . . . . . . . . . . $56,178 55,084
Non-interest bearing . . . . . . . . . . . . . . . . . . . . . . . . . 13,469 11,010
------------------------
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,647 66,094
------------------------
Securities sold under repurchase agreement (Note 7) 1,500 -
Long-term debt (Note 8) . . . . . . . . . . . . . . . . . . . . . . . - 450
Deferred income taxes (Note 10) . . . . . . . . . . . . . . . . . . . 1,199 1,366
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 425 365
------------------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 72,771 68,275
------------------------
Commitments and contingencies (Notes 12, 14 & 16 ) . . . . . . . . . . .
Stockholders' equity (Notes 15 & 16):
Preferred stock, 9% cumulative, nonvoting $30 par value, redeemable at the
Company's option at par plus cumulative unpaid dividends. Cumulative
unpaid preferred dividends amount to $3,626,370 or $24.98 per share at
December 31, 1994. Authorized 150,000 shares; issued and outstanding
145,200 shares in 1994 and 1993 Liquidation preference of $7,982,370 and
$7,590,330 respectively . . . . . . . . . . . . . . . . . . . . . . . 4,356 4,356
Class B preferred stock, $1 par value. Authorized 500,000 shares; none
issued or outstanding . . . . . . . . . . . . . . . . . . . . . . . - -
Common stock, $1 par value. Authorized 10,000,000 shares; issued 2,805,385
shares in 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . 2,805 2,805
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 7,358 7,358
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . (6,315) (7,144)
------------------------
Net unrealized holding loss on investment securities available for sale,
net of deferred taxes
(158) -
------------------------
8,046 7,375
========================
Less cost of common stock held in treasury (273,148 shares in 1994 and
1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,097) (1,086)
------------------------
Net stockholders' equity 6,949 6,289
------------------------
$79,720 74,564
========================
</TABLE>
See accompanying notes to consolidated financial statements.
-12-
<PAGE> 13
UNITED OKLAHOMA BANKSHARE'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1994 1993 1992
--------------------------------
(In thousands )
<S> <C> <C> <C>
Preferred stock:
Balance at beginning and end of year . . . . . . . . . . . . 4,356 4,356 4,356
-------------------------------
Common stock:
Balance at beginning and end of year . . . . . . . . . . . 2,805 2,805 2,805
-------------------------------
Additional paid-in capital:
Balance at beginning and end of year . . . . . . . . . . . . 7,358 7,358 7,358
-------------------------------
Accumulated deficit:
Balance at beginning of year . . . . . . . . . . . . . . . . (7,144) (7,915 (8,563)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . 829 771 648
-------------------------------
Balance at end of year . . . . . . . . . . . . . . . . . . . (6,315) (7,144) (7,915)
-------------------------------
Net unrealized holding gain (loss) on investment securities
available for sale: (Note 2)
Balance at beginning of year - - -
Implementation of change in accounting for investment securities, 170 - -
net of deferred taxes
Change in net unrealized holding gain (loss) on investment (328) - -
securities available for sale, net of deferred taxes
Balance at end of year (158)
Treasury stock:
Balance at beginning and end of year . . . . . . . . . . . . (1,086) (1,086) (1,086)
-------------------------------
Purchase stock (11) - -
===============================
Balance at end of year (1,097 (1,086) (1,086)
===============================
Net stockholders' equity . . . . . . . . . . . . . . . . . $6,949 6,289 5,518
===============================
</TABLE>
See accompanying notes to consolidated financial statements.
-13-
<PAGE> 14
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1994 1993 1992
-----------------------------------------
(In thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . $ 829 771 648
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . 378 368 327
Provision for loan losses . . . . . . . . . . . . . . . 90 236 128
Provision for market decline-other real estate . . . . . 85 63 38
Amortization of intangibles . . . . . . . . . . . . . . 147 147 147
Amortization of premium, accretion of discounts, net . . 113 175 116
Gain on sale of investment securities . . . . . . . . . (104) - (96)
Loss on sale of property and equipment . . . . . . . . . - 49 -
Increase (decrease) in interest payable . . . . . . . . 29 (89) (220)
Decrease (decrease) in interest receivable . . . . . . . (75) (66) 15
Decrease in other real estate, accounts receivable and other
assets . . . . . . . . . . . . . . . . . . . . . . . . 387 155 581
(Decrease) increase in deferred income taxes . . . . . . (15) 40 430
(Decrease) increase in other liabilities . . . . . . . . (17) (56) 32
------------------------------------
Total adjustments . . . . . . . . . . . . . . . . . . 1,018 1,022 1,498
------------------------------------
Net cash provided by operating activities . . . . . . . . . . . 1,847 1,793 2,146
------------------------------------
Cash flows from investing activities:
Proceeds from sales of investment securities . . . . . . . . - - 1,830
Proceeds from sales of investment securities available for sale 3,239 - -
Proceeds from principal payments on mortgage backed securities
3,192 9,861 6,220
Purchase of investment securities . . . . . . . . . . . . . (7,496) (6,478) (10,700)
Net increase in loans . . . . . . . . . . . . . . . . . . . (4,982) (2,941) (3,747)
Capital expenditures . . . . . . . . . . . . . . . . . . . . (319) (336) (701)
Proceeds from sale of property and equipment . . . . . . . . - 296 25
------------------------------------
Net cash provided by (used in) investment activities . . . . . (6,366 402 (7,073)
------------------------------------
Cash flows form financing activities:
Net (decrease) increase in interest bearing and non-interest
bearing deposits, savings and certificates of deposit . . 3,553 (4,208) 5,477
Increase in securities sold under repurchase agreement 1,500 - -
Repayment of long-term debt . . . . . . . . . . . . . . . . (450) (450) (500)
------------------------------------
Purchase of treasury stock (11) - -
------------------------------------
Net cash (used in) provided by financing activities . . . . . . 4,592 (4,658) 4,977
------------------------------------
Net (decrease) increase in cash and cash equivalents . . . . . 73 (2,463) 50
------------------------------------
Cash and cash equivalents at beginning of year . . . . . . . . 2,367 4,830 4,780
------------------------------------
Cash and cash equivalents at end of year . . . . . . . . . . . $2,440 2,367 4,830
====================================
Supplemental disclosure of noncash investing activities:
------------------------------------
Net unrealized holding loss on investment securities available for
sale, net of deferred taxes of $104,000 . . . . . . . . . . . . 158 - --
------------------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
-14-
<PAGE> 15
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS DECEMBER 31, 1994, 1993 AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
United Oklahoma Bankshares, Inc. (the "Company") and its subsidiaries
provide a full range of banking services to individual and corporate
customers principally in eastern Oklahoma county. The Company is
subject to competition from other financial service companies and
financial institutions. The Company is subject to regulations of the
Federal Reserve Bank. United Bank ("UB") is subject to regulations of
the Federal Deposit Insurance Corporation and the Oklahoma State
Banking Department. The Company and UB undergo periodic examinations
by those regulatory authorities.
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles. In preparing the
consolidated financial statements, management is required to make
estimates and assumptions. Those estimates and assumptions relate
principally to the determination of the allowance for possible loan
losses and the valuation of assets acquired in foreclosure. The
accounting policies for these items and other significant accounting
policies are presented below.
The consolidated financial statements include the accounts of the
Company and its subsidiaries, all wholly owned, after elimination of
all significant intercompany accounts and transactions.
CASH AND SHORT TERM INVESTMENTS
UB is required to maintain average reserve balances with the Federal
Reserve Bank. The average amount of those reserve balances for the
year ended December 31, 1994, was approximately $614,000.
In making short-term investment decisions, the Company considers its
board-approved policies, liquidity needs, potential rate of rerun, and
credit risk.o For purposes of evaluating credit risk, the stability of
the financial institutions and other entities conducting business with
the Company is periodically reviewed.
The Company had concentrations of credit risk with one financial
institution in the form of a correspondent bank account and federal
funds sold in the amount of $1,483,000 and $1,608,000 at December 31,
1994 and 1993, respectively. If the financial institution failed to
completely perform under the terms of the financial instruments, the
exposure for credit loss would be the amount of the financial
instruments less the amount covered by the Federal Deposit Insurance
Corporation ("FDIC") of $100,000.
For the purposes of the Statements of Cash Flows, the Company
considers overnight Federal funds sold to be cash equivalents.
Cash paid for interest was approximately $1,772,000, $1,937,000, and
$2,518,000 in 1994, 1993, and 1992, respectively.
-15-
<PAGE> 16
INVESTMENT SECURITIES
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (Statement 115), at January 1, 1994.
Under Statement 115, the Company has classified its debt and
marketable equity securities in one of three categories: trading,
available for sale, or held to maturity. Trading securities are
bought and held principally for the purpose of selling them in the
near term. No investment securities within the portfolio are
considered trading. Held to maturity securities are those securities
for which the Company has the ability and intent to hold until
maturity. All other securities not included in held to maturity are
classified as available for sale.
Available for sale securities are recorded at fair value. Held to
maturity securities are recorded at cost, adjusted for the
amortization or accretion of premiums or discounts. Unrealized
holding gains and losses, net of the related tax effect, on available
for sale securities are not included in earnings and are reported as a
separate component of stockholders' equity until realized.
A decline in the market value of any available for sale or held to
maturity security below cost that is deemed other than temporary
results in a charge to earnings and the establishment of a new cost
basis for the security.
Premiums and discounts are amortized or accreted over the life of the
related security as an adjustment to yield using a method that
approximates the interest method. Dividend and interest income are
recognized when earned. Realized gains and losses for securities
classified as available for sale and held to maturity are included in
earnings and are derived using the specific identification method for
determining the cost of securities sold.
Investment securities at December 31, 1993, are stated at cost
adjusted for amortization of premium and accretion of discount, which
are calculated using a method that approximates the interest method.
These investment securities include all debt and marketable equity
securities for which the Company has both the intent and ability to
hold maturity.
LOANS AND ASSETS ACQUIRED IN FORECLOSURE
Loans are generally carried at amounts advanced less payments
received. Interest income is recorded on discounted loans by use of a
method which produces a reasonable approximation of constant yield on
the outstanding principal. Interest income is accrued as earned on
non-discounted loans except where substantial doubt exists as to the
ultimate collectibility of the accrued interest, in which case no
accrual of interest is made.
Loans on which the accrual of interest has been discontinued are
designated as non-accrual loans. Accrual of interest on loans is
discontinued either when reasonable doubt exists as to the full,
timely collection of interest or principal, or when a loan becomes
contractually past due by ninety days or more with respect to
principal or interest. When a loan is placed on non-accrual status,
all interest previously accrued but not collected is reversed against
current period income. Income on such loans is then recognized only
to the extent that cash is received and where the future collection of
principal is probable. Accruals are resumed on loans only when they
are brought fully current with respect to interest and principal and
when, in the judgment of management, the loan is estimated to be fully
collectible as to both principal and interest.
The allowance for possible loan losses is maintained at levels which
management considers necessary to reflect the credit risks of the loan
portfolio. For financial reporting purposes, the provision to be
charged as an operating expense is based on an assessment of specific
problem loans, local economic conditions, past due loan loss
experience and such other factors which in management's judgment
deserve current recognition necessary to maintain the allowance at an
adequate level.
-16-
<PAGE> 17
Real estate and other assets acquired through foreclosure are recorded
at fair value as of that date. Fair value is based on independent
appraisals and other relevant factors. This value becomes the asset's
new "cost". After foreclosure, these assets are carried at the lower
of "cost" or fair value minus estimated costs to sell. Any subsequent
write-downs are charged against noninterest expense. Operating
expenses of such properties, net of related income, and gains and
losses on their disposition are included in noninterest expense.
While management uses all available information to recognize losses on
loans and assets acquired in foreclosure, future losses may become
necessary based on changes in economic conditions, particularly in the
local economies in which the Company operates. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Company's allowance for possible loan losses
and carrying values of assets acquired in foreclosure. Such agencies
may require the Company to recognize additional losses based on their
judgments about information available to them at the time of their
examination.
The Financial Accounting Standards Board ("FASB") has issued Statement
of Financial Accounting Standards No. 114 (SFAS 114), "Accounting by
Creditors for Impairment of a Loan" and Statement of Financial
Accounting Standards No. 118 (Statement 118), "Accounting by Creditors
for Impairment of a Loan - Income Recognition and Disclosures."
Statement 114 requires that impaired loans within its scope be
measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate, the loan's
observable market price, or the fair value of the collateral if the
loan is collateral dependent. If the resulting measurement is less
than the recorded investment in the loan, the creditor recognizes
impairment through a valuation allowance. Statement 118 amends
Statement 114 by eliminating specified accounting for interest income
on impair loans and by clarifying the disclosure requirements about
impaired loans. The Company will prospectively adopt the provisions
of Statement 114 and Statement 118, in preparing its 1995 financial
statements. The impact of the statement is not expected to have a
material effect on the Company's consolidated financial statements.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated
depreciation. Depreciation is charged to operating expense and is
computed by use of the straight-line method over the estimated useful
lives of the depreciable assets. The estimated useful lives are 2 to
40 years for buildings and improvements, and 3 to 20 years for
furniture, fixtures and equipment. Maintenance and repairs are
charged directly to expense as incurred while improvements are
capitalized. When assets are retired or otherwise disposed of, the
cost and applicable accumulated depreciation are removed from the
respective accounts and the resulting gain or loss is reflected in
operations.
INCOME TAXES
The Company files a consolidated income tax return with its
subsidiaries. The Company's subsidiaries are charged for income taxes
attributable to their taxable income and reimbursed for any tax
benefit resulting from their tax losses and tax credits utilized by
the Company to reduce consolidated taxable income.
Effective January 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109 (Statement 109),
"Accounting for Income Taxes" and reported the cumulative effect of
that change in the method of accounting for income taxes in the 1993
consolidated statement of operations. Under Statement 109 deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
-17-
<PAGE> 18
COMPUTATION OF EARNINGS PER SHARE
Earnings per share are based on the weighted average number of shares
of common stock outstanding (after reduction for treasury shares)
during the year after considering cumulative preferred stock
dividends. Cumulative preferred stock dividends accrue annually at
approximately $392,000.
EXCESS OF COST OVER ASSETS ACQUIRED
Included in other assets is a purchased core deposit intangible asset
(premium) related to the purchase of UB in 1984. The UB core deposit
asset is being amortized over 11.6 years, the estimated life of the
asset based on a study of the benefit expected to be received from the
acquisition of UB's core deposits. At December 31, 1994, the
unamortized balance included in other assets approximated $147,000.
2. INVESTMENT SECURITIES
As discussed in note 1, the Company adopted Statement 115 as of January 1,
1994. The net effect of this change in accounting principle of $170,063, net
of deferred taxes, was determined as of January 1, 1994, and is reported as a
separate component of stockholders' equity.
Management believes there has been no permanent impairment in the value of the
Company's investment securities.
Investment securities at December 31, 1994, consist of (in thousands):
<TABLE>
<S> <C>
Available for sale, at fair value .......................... $ 7,137
Held to maturity, at amortized cost......................... 23,451
------
$30,588
=======
</TABLE>
The amortized cost, gross unrealized holding gains, gross unrealized holding
losses, and fair value for available for sale and held to maturity securities
by major security type at December 31, 1994 were as follows (in thousands):
<TABLE>
<CAPTION>
--------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED COST UNREALIZED UNREALIZED MARKET
GAINS LOSSES VALUE
--------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
U.S. Treasury securities . . . . . . . . . . . $ 829 - (11) 818
Mortgage-backed securities 6,570 - (251) 6,319
-------------------------------------------------------
. . . . . . . . . . . . . . . . . . . . . . $ 7,399 - (262) 7,137
=======================================================
Held to maturity: $ 1,264 - (78) $1,186
U.S. Treasury securities . . . . . . . . . . .
Securities of other U.S. government agencies . 747 - (62) 685
State & Municipals . . . . . . . . . . . . . . 9,972 3 (545) 9,430
-------------------------------------------------------
11,983 3 (685) 11,301
Mortgage-backed securities 11,468 6 (490) 10,984
=======================================================
$ 23,451 9 (1,175) 22,285
=======================================================
</TABLE>
-18-
<PAGE> 19
The amortized cost, gross unrealized gains, gross unrealized losses and fair
value of investment securities at December 31, 1993, were as follows:
<TABLE>
<CAPTION> -------------------------------------------------------------
GROSS GROSS FAIR VALUE
AMORTIZED COST UNREALIZED UNREALIZED
GAINS LOSSES
-------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury securities . . . . . . . . . . . $3,383 259 - 3,642
States and municipals 5,811 121 (42) 5,890
-----------------------------------------------------
9,194 380 (42) 9,532
Mortgage-backed securities 20,600 198 (119) 20,679
-----------------------------------------------------
29,794 578 (161) 30,211
=====================================================
</TABLE>
The amortized cost and fair value of investment securities at December 31,
1994, by contractual maturity, in thousands, are shown below. Expected
maturities will differ from contractual maturities because issuers of
investment securities may have the right to call or prepay obligations.
<TABLE>
<CAPTION>
Amortized Fair Value
Cost
-----------------------------
<S> <C> <C>
Available for sale:
Due after one year through five years . . . . . . . . . . . . . . . . . . . . $ 829 818
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . 6,570 6,319
-------------------------
$ 7,399 7,137
=========================
Available for sale:
Due in one year of less . . . . . . . . . . . . . . . . . . . . . . . . . . . $527 523
Due after one year through five years 6,785 6,455
Due after five years through ten years 4,335 4,013
Due after ten years 336 310
-------------------------
11,983 11,301
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . 11,468 10,984
-------------------------
$ 23,451 22,285
=========================
</TABLE>
Proceeds from sales of investment securities and gross realized gains and
losses form such sales are stated below, in thousands. There were no gross
losses realized. All 1994 sales were investments classified as available for
sale.
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------
1994 1993 1992
------------------------------------------
<S> <C> <C> <C>
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . $ 3,329 - 1,830
==========================================
Gross realized gains . . . . . . . . . . . . . . . . . . . . . . 104 -
==========================================
</TABLE>
Investment securities have a carrying value of approximately $14,656,000 and
$16,310,000 at December 31, 1994 and 1993, respectively, were pledged to secure
public funds on deposit and for other purposes required by law.
-19-
<PAGE> 20
3. LOANS
A summary of the Company's loans is as follows:
<TABLE>
<CAPTION>
December 31
---------------------------
1994 1993
---------------------------
(In thousands)
<S> <C> <C>
Commercial, financial and agricultural . . . . . . . . . . . . . . . . . . . $ 11,917 13,953
Real estate - construction . . . . . . . . . . . . . . . . . . . . . . . . . 1,556 1,860
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,708 13,236
Credit card receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 625 719
Installment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,168 7,239
--------------------------
Total loans $ 41,974 37,007
==========================
</TABLE>
At December 31, 1994 and 1993, loans on which interest had ceased to be accrued
approximated $178,000 and $481,000, respectively. Had the accrual status of
these been normal, approximately $47,000 and $42,000 of additional interest
would have been earned in 1994 and 1993, respectively. At December 31, 1994
and 1993, there were no commitments to lend additional funds to borrowers with
loans on which the accrual of interest has been discontinued.
At December 31, 1994 and 1993, loans to officers, directors, their immediate
families and companies in which they own a significant interest aggregated
approximately $151,000 and $148,000, respectively. During 1994 approximately
$78,000 of loan advances were made, and repayments totaled $75,000. In
management's opinion, such transactions were made on the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than normal risk.
The Company grants commercial, real estate, and consumer loans to customers
principally in the state of Oklahoma. Although the Company has a diversified
loan portfolio, the majority of its customers consist of individual and
corporate borrowers in eastern Oklahoma county.
Maturity and rate sensitivity distribution of loans at December 31, 1994 is as
follows:
<TABLE>
<CAPTION>
One Year One to Over Five
or Less Five Years Years Total
---------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Commercial, financial and agricultural . . . . $ 8,301 3,385 231 11,917
Real estate-construction . . . . . . . . . . . 1,502 54 - 1,556
Real estate-mortgage . . . . . . . . . . . . . 1,790 13,908 4,010 19,708
Credit card receivables . . . . . . . . . . . . 625 - - 625
Installment . . . . . . . . . . . . . . . . . . 1,178 6,518 472 8,l68
---------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . $ 13,396 23,865 4,713 41,794
=========================================================
Interest sensitivity of loans by maturity:
Predetermined rate . . . . . . . . . . . . . 5,220 19,423 1,872 26,515
Variable rate . . . . . . . . . . . . . . . 8,176 4,442 2,841 15,459
---------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . $ 13,396 23,865 4,713 41,974
=========================================================
</TABLE>
-20-
<PAGE> 21
4. ALLOWANCE FOR LOAN LOSSES
A summary of transactions in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
Years ended December 31,
1994 1993 1992
---------------------------------------
(In thousands)
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . . . . . . . . . . . $437 469 495
Provisions charged to expense . . . . . . . . . . . . . . . . . . 90 236 128
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 19 33
Loans charged off (91) (287) (187)
---------------------------------------
Balance at end of period $559 437 469
=======================================
</TABLE>
5. PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------
1994 1993
--------------------------
(In thousands)
<S> <C> <C>
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 751 751
Bank buildings and equipment . . . . . . . . . . . . . . . . . . . . . . . . 5,601 5,370
Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 713 626
--------------------------
7,065 6,747
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . 3,014 2,637
--------------------------
$ 4,051 4,110
==========================
</TABLE>
6. DEPOSITS
Included in interest bearing deposits are certificates of deposit in amounts of
$100,000 or more. These certificates and their remaining maturities at
December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------
1994 1993
--------------------------
(In thousands)
<S> <C> <C>
3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,555 6,975
Over 3 months through 6 months . . . . . . . . . . . . . . . . . . . . . . . 1,446 1,690
Over 6 months through 12 months . . . . . . . . . . . . . . . . . . . . . . . 1,314 1,582
Over 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 100
---------------------------
$ 11,513 10,347
===========================
</TABLE>
The interest expense on these deposits approximated $375,000 and $386,000 for
the years ended December 31, 1994 and 1993, respectively.
-21-
<PAGE> 22
7. SECURITIES SOLD UNDER REPURCHASE AGREEMENT
Securities sold under repurchase agreement during 1994 consisted of a
mortgage-backed security. Under this agreement, the Company sold and will
repurchase the same security upon maturity of the agreement. The agreement
matures in less than one month. This was the only agreement entered into
during 1994. The mortgage-backed security has a book value, including accrued
interest, of approximately $2,000,000 and a market value of approximately
$1,927,000 at December 31, 1994. The transaction is accounted for as a
collateralized borrowing with an effective interest rate of 6.1%.
8. LONG-TERM DEBT
In 1991, the Company borrowed the sum of $1,400,000 from John E. Kirkpatrick of
Oklahoma City, Oklahoma, a preferred stockholder of the Company. The note was
collateralized by 100% of the stock of UB. The note was paid in full as of
December 31, 1994.
9. OTHER NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------
1994 1993 1992
------------------------------------------
(In thousands)
<S> <C> <C> <C>
Outside service expense . . . . . . . . . . . . . . . . . . . . . $ 181 161 166
Advertising and business development . . . . . . . . . . . . . . 156 94 78
Postage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 57 61
Stationery, printing and supplies . . . . . . . . . . . . . . . . 83 71 82
Collection expense 56 107 76
Data processing expense . . . . . . . . . . . . . . . . . . . . . 112 124 142
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451 512 416
-----------------------------------------
$ 1,104 1,126 1,021
=========================================
</TABLE>
10. INCOME TAXES
As discussed in note 1, the Company adopted Statement 109 as of January 1,
1993. The cumulative effect of this change in accounting for income taxes of
$116,000 was determined as of January 1, 1993 and is reported separately in the
consolidated statement of operations for the year ended December 31, 1993.
The components of income taxes are as follows:
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------------
1994 1993 1992
--------------------------------------
(In thousands)
<S> <C> <C> <C>
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 208 12
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 3
---------------------------------------
228 208 15
---------------------------------------
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . (14) 16 234
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 42 196
---------------------------------------
36 58 430
---------------------------------------
Income tax expense (benefit) . . . . . . . . . . . . . . . . $ 264 266 445
=======================================
</TABLE>
-22-
<PAGE> 23
The Company's tax provision on income before provision for income taxes differs
from a normal 34% tax rate as shown be low:
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------------------
1994 1993 1992
-------------------------------------------
(In thousands)
<S> <C> <C> <C>
Income before income taxes multiplied by 34% in 1994, 1993, and $ 372 313 372
1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax exempt interest . . . . . . . . . . . . . . . . . . . . . (158) (83) (29)
State income taxes, net of federal income tax benefit . . . . 33 28 35
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . 17 8 67
----------------------------------------
$ 264 266 445
========================================
</TABLE>
Cash paid for income taxes was approximately $291,000, $95,000 and $45,000 in
1994, 1993 and 1992, respectively. The tax effects of temporary differences
that give rise to significant portions of the deferred tax assets and deferred
tax liabilities at December 31, 1994 and 1993, are presented below (in
thousands):
<TABLE>
<CAPTION>
Deferred tax assets: 1994 1993
<S> <C> <C>
Other real estate, principally due to charge offs $30 74
Net operating loss carryforward - 33
Alternative minimum tax credit carryforward 97 81
------------------------
Total gross deferred tax assets before net unrealized holding loss on 127 188
investment securities available for sale
Deferred tax asset on net unrealized loss on investment
securities available for sale 104
------------------------
TOTAL gross deferred tax assets 231 188
------------------------
Deferred tax liabilities:
Property and equipment, principally due to difference in depreciation 549 527
Loans receivable, principally due to allowance for loan losses 828 823
Purchased core deposit intangible, principally due to difference in 53 106
amortization
Other - 98
Total gross deferred tax liabilities 1,430 1,554
------------------------
Net deferred tax liability 1,199 1,366
=========================
</TABLE>
A valuation allowance for deferred tax assets was not required as of the date
of the adoption of SFAS 109 or December 31, 1993, due to management's
expectation of the future reversal of deferred tax liabilities.
-23-
<PAGE> 24
The deferred income tax effects of timing differences between financial income
and taxable income for the years ended December 31, 1992, is as follows (in
thousands):
<TABLE>
<CAPTION>
1992
---------
<S> <C>
Tax depreciation less than financial depreciation . . . . . . . . . . . . . . $ (8)
Tax loan loss and other real estate provision in excess of (less than) financial
provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Utilization of tax net operating loss carryforward . . . . . . . . . . . . . 148
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27)
---------
$ 430
=========
</TABLE>
At December 31, 1994, the Company has alternative minimum tax credit
carryforward of approximately $97,000 which is available to reduce future
federal income taxes, if any, over an indefinite period.
11. EMPLOYEE BENEFIT PLANS
The company sponsors a defined contribution 401(k) plan covering substantially
all employees under which employees' contributions may be partially matched by
the Company. The Company's contributions in 1994, 1993, and 1992 were $50,000,
$41,000, and $27,000, respectively.
12. RELATIONSHIPS WITH CERTAIN STOCKHOLDERS AND AFFILIATES
The Company and its subsidiaries, through common owners and/or directors, are
considered to be related parties for financial reporting purposes with one
other bank.
UB has sold loan loan participations to this bank totaling $169,000 and
$118,000 at December 31, 1994 and 1993, respectively.
-24-
<PAGE> 25
13. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET CREDIT RISK
The Company is a party to financial instruments with off-balance sheet credit
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit
and standby letters of credit. These instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the consolidated
balance sheets. The contract amounts of those instruments reflect the extent
of involvement the Company has in particular classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by one of
the other parties to the financial instruments for commitments to extend credit
and standby letters of credit is represented by the contractual amounts of
those instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet
instruments. Financial instruments whose contract amounts represent credit risk
at December 31 are as follows:
<TABLE>
<CAPTION>
Contract Amount
---------------
--------------------------
1994 1993
--------------------------
<S> <C> <C>
Commitments to extend credit $5,341,000 6,160,000
Standby letters of credit 948,000 916,000
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments have fixed expiration dates or other termination clauses and may
require payment of a fee. Since some of the commitments may expire without
being drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by- case basis. The amount of the collateral
obtained if deemed necessary by the Company upon extension of credit is based
on management's credit evaluation of the customer. Collateral held varies but
may include certificates of deposit, accounts receivable, inventory, property
and equipment, real estate, livestock, and income producing properties.
Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support private borrowing arrangements. All of the standby
letters of credit at December 31, 1994, are short-term guarantees; they expire
prior to December 31, 1995. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities to
customers. When deemed necessary, the Company may hold a variety of collateral
to support these commitments similar to the types of collateral held for
commitments to extend credit.
-25-
<PAGE> 26
14. COMMITMENTS AND CONTINGENCIES
The Company, through its United Del City Tower subsidiary, leases excess office
space. Future minimum rentals for non- cancelable office leases, with initial
or remaining terms of one year or more consisted of the following at December
31, 1994:
<TABLE>
<CAPTION>
<S> <C>
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 407,000
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328,000
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229,000
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,000
</TABLE>
15. AGREEMENTS WITH BANK REGULATORS
The Company was operating under a written agreement with the Federal Reserve
Bank until March 1994, at which time the agreement was terminated and the
Company was released from the restrictions of the agreement.
16. REGULATORY CAPITAL REQUIREMENTS
United Bank is subject to certain regulatory capital regulations which require
the maintenance of certain levels of capital as a percentage of risk-adjusted
assets. These regulations define capital as either core capital (Tier 1) or
supplementary capital (Tier 2). Core capital consists primarily of common
shareholders' equity, while supplementary capital is comprised of preferred
stock, certain debt instruments, and a portion or, the allowance for loan
losses. At December 31, 1994, the required core capital is 4.00% and total
risk-based capital is 8.00%. UB's core and total risk- based capital exceed
regulatory guidelines at December 31, 1994 and 1993, respectively, and are as
follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Tier 1 capital (core) 13.05% 13.27%
Tier 2 capital (total risk-based) 14.11 14.21
</TABLE>
The payment of dividends by the subsidiaries is restricted by regulatory
capital requirements. At December 31, 1994, approximately $836,000 is
available from United Bank's retained earnings for distribution as a dividend
to the Company in 1995 without regulatory approval.
17. SUBSEQUENT EVENT
In January 1995, certain shareholders entered into a Stock Purchase Agreement
to sell their common and non-voting preferred stock in the Company to Ameribank
Corporation (Ameribank). The actual transfer of stock is scheduled to take
place subsequent to obtaining all requisite approval from regulatory agencies.
This purchase will transfer control to the Company to Ameribank.
-26-
<PAGE> 27
18. PARENT COMPANY FINANCIAL STATEMENTS
Following are the condensed financial statements for United Oklahoma
Bankshares, Inc. (Parent Company Only):
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
Years ended December 31,
------------------------------------------
1994 1993 1992
------------------------------------------
(In thousands)
<S> <C> <C> <C>
Income:
Dividend from UB . . . . . . . . . . . . . . . . . . . . . . . . 275 450 -
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 8 12
-----------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 458 12
-----------------------------------------
Expenses:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 42 66
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 72 14
-----------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 26 114 80
-----------------------------------------
Income (loss) before income taxes, undistributed income of
subsidiaries and cumulative effect of change in accounting 257 344 (68)
principle . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit (expense) . . . . . . . . . . . . . . . . . . 7 40 (19)
-----------------------------------------
Income (loss) before undistributed income of subsidiaries and
cumulative effect of change in accounting principle . . . . .
264 384 (87)
Equity in undistributed income of subsidiaries . . . . . . . . . 565 271 735
-----------------------------------------
Income (loss ) before cumulative effect of change in accounting
principle . . . . . . . . . . . . . . . . . . . . . . . . . . 829 655 648
Cumulative effect of change in accounting principle . . . . . . . - 116 -
-----------------------------------------
Net income (loss) . . . . . . . . . . . . . . . . . . . . $ 829 771 648
=========================================
</TABLE>
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------
1994 1993
-------------------------
ASSETS (In thousands)
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 68 359
Investment in UB at equity . . . . . . . . . . . . . . . . . . . . . . . . . 6,908 6,501
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 60
-------------------------
$ 7,036 6,920
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued expenses and other liabilities, principally deferred income taxes . . $ 87 181
Long term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 450
-------------------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 87 631
-------------------------
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,356 4,356
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,805 2,805
Additional paid-in capital 7,358 7,358
-------------------------
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,315) (7,144)
-------------------------
Net unrealized holding loss on investment securities available for sale
held by UB, net of deferred taxes (158) -
8,046 7,375
Less cost of common stock held in treasury (1,097) (1,086)
Net stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . 6,949 6,289
-------------------------
$ 7,036 6,920
=========================
</TABLE>
-27-
<PAGE> 28
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------------
1994 1993 1992
-------------------------------------
(In thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . 829 655 648
Adjustments to reconcile net income to net cash provided by
operating activities:
Equity in undistributed income of subsidiaries . . . . . . (565) (271) (735)
Loss on sale of land . . . . . . . . . . . . . . . . . . . - 49 -
(Decrease) increase in other liabilities . . . . . . . . . (94) 151 349
--------------------------------------
Total adjustments . . . . . . . . . . . . . . . . . . . (659) (71) (386)
--------------------------------------
Net cash provided by (used in) operating activities . . . . . . . 170 584 262
--------------------------------------
Cash flows from investing activities:
Proceeds from sale of land . . . . . . . . . . . . . . . . . . - 93 -
Cash flows from financing activities:
Purchase of treasury stock (11) - -
Repayment of long-term debt . . . . . . . . . . . . . . . . . (450) (450) (500)
--------------------------------------
Net cash (used in) provided by financing activities . . . . . . . (461) (450) (500)
--------------------------------------
Net (decrease) increase in cash and cash equivalents . . . . . . (291) 227 (238)
--------------------------------------
Cash and cash equivalents at beginning of year . . . . . . . . . 359 132 370
--------------------------------------
Cash and cash equivalent at end of year . . . . . . . . . . . . . 68 359 132
======================================
</TABLE>
-28-
<PAGE> 29
INDEPENDENT AUDITORS' REPORT
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
The Board of Directors and Stockholders
United Oklahoma Bankshares, Inc.:
We have audited the accompanying consolidated balance sheets of United Oklahoma
Bankshares, Inc. (the Company) and subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1994. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated 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 mounts 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of United Oklahoma
Bankshares, Inc. and subsidiaries as of December 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in note 1 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," in 1993 and No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," in 1994.
KPMG PEAT MARWICK
Oklahoma City, Oklahoma
February 17, 1995
-29-
<PAGE> 30
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONDENSED AVERAGE BALANCE SHEETS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
--------------------------------------------------------------
1994 1993
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AVERAGE ASSETS:
Cash and due from banks . . . . . . . . . . $ 2,605 3.33 % 2,543 3.23 %
Federal funds sold . . . . . . . . . . . . . 1,599 2.04 1,933 2.45
Investment securities . . . . . . . . . . . 31,869 40.76 33,197 42.14
Loans . . . . . . . . . . . . . . . . . . . 37,263 47.66 35,519 45.08
Less: Allowance for loan losses . . . . . . (534) (0.68) (468) (0.59)
Property and equipment, net . . . . . . . . 4,047 5.18 4,244 5.39
Accrued interest and other assets . . . . . 1,334 1.71 1,817 2.30
----------------------- -------------------
$ 78,183 100.00 % 78,785 100.00 %
======================= ===================
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand:
Individuals, partnerships and corporations 13,422 17.17 % 12,592 15.99
. . . . . . . . . . . . . . . . . . . . .
Money market checking . . . . . . . . . . 9,772 12.50 9,009 11.43
Savings and money market savings . . . . . 18,962 24.25 19,328 24.53
Time . . . . . . . . . . . . . . . . . . . 27,425 35.08 29,464 37.40
----------------------- -------------------
Total deposits . . . . . . . . . . . . . 69,581 89.00 70,393 89.35
Short-term borrowings . . . . . . . . . . . 79 0.10 18 0.03
Long-term debt . . . . . . . . . . . . . . . 97 0.12 635 0.80
Accrued interest and other liabilities . . . 1,771 2.27 1,851 2.35
----------------------- -------------------
Total liabilities . . . . . . . . . . . 71,528 91.49 72,897 92.53
----------------------- -------------------
Stockholders' equity:
Preferred stock . . . . . . . . . . . . . 4,356 5.57 4,356 5.53
Common stock . . . . . . . . . . . . . . . 2,805 3.59 2,805 3.56
Additional paid-in capital . . . . . . . . 7,358 9.41 7,358 9.34
Accumulated deficit . . . . . . . . . . . (6,779) (8.67) (7,545) (9.58)
Net unrealized holding gain on investment
securities available for sale, net of deferred
taxes 3 0.00 - -
----------------------- -------------------
7,743 9.90 6,974 8.85
Less cost of common stock held in treasury
(1,088) (1.39) (1,086) (1.38)
----------------------- -------------------
Net stockholders' equity . . . . . . . . 6,655 8.51 5,888 7.47
----------------------- -------------------
78,183 100.00 % 78,785 100.00 %
======================= ===================
</TABLE>
-30-
<PAGE> 31
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF NET INTEREST INCOME
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------------------------------------------
1994 1993
--------------------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning Assets:
Investment securities . . . . . . . .
Taxable 22,387 1,331 5.59 % 29,412 1,767 6.00 %
Non-taxable 9,477 398 4.20 3,785 169 4.49
--------------------------------------------------------------------
31,864 1,729 5.43 33,197 1,936 5.83
Federal funds sold . . . . . . . . . . 1,599 60 3.75 1,933 56 2.90
Loans, net of unearned discount (2) . 37,263 3,371 9.05 35,519 3,243 9.13
--------------------------------------------------------------------
Total earning assets/total interest income $70,726 5,160 7.30 % 70,649 5,235 7.41 %
====================================================================
Interest Bearing Liabilities:
Interest bearing deposits . . . . . 56,159 1,791 3.19 % 57,801 1,804 3.12 %
Short-term borrowings . . . . . . . 79 4 5.06 18 1 5.56
Long-term debt . . . . . . . . . . . 97 6 6.19 635 42 6.61
--------------------------------------------------------------------
Total interest bearing liabilities/total
interest expense . . . . . . . . . 56,335 1,801 3.20 % 58,454 1,847 3.16 %
====================================================================
Differentials/net interest income . . . . . 14,391 3,359 4.10 % 12,195 3,388 4.25 %
====================================================================
Net interest income as reported/net interest
yield on interest earning assets . . 4.75 % 4.80 %
====================================================================
</TABLE>
(1) The amortized cost is used in the average balance calculation.
(2) Loans, classified as non-accruing at included in the average balance
calculation.
-31-
<PAGE> 32
SELECTED STATISTICAL, INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
LOAN CONCENTRATIONS
<TABLE>
<CAPTION>
December 31, 1994
-----------------------------
Percent
Amount of Total
-----------------------------
<S> <C> <C> <C>
Commercial, financial and agricultural . . . . . . . . . . . $ 11,917 28.40 %
Real estate-construction . . . . . . . . . . . . . . . . . . 1,556 3.71
Real estate-mortgage . . . . . . . . . . . . . . . . . . . . 19,708 46.95
Credit card receivables . . . . . . . . . . . . . . . . . . . 625 1.49
Installment . . . . . . . . . . . . . . . . . . . . . . . . . 8,168 19.45
-----------------------------
Total loans . . . . . . . . . . . . . . . . . . . . . . $ 41,974 100.00 %
===============================
</TABLE>
- ----------------
Participations purchased amounting to $165,000 at December 31, 1994 are
included in commercial. In addition, it should be noted that certain
commercial loans may be secured by real estate.
-32-
<PAGE> 33
SELECTED STATISTICAL INFORMATION
UNITED 0KLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Years ended December 31
--------------------------
1994 1993
--------------------------
(In thousands)
<S> <C> <C>
Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . $ 437 469
Charge-offs:
Commercial, financial and agricultural . . . . . . . . . . . . . . . (82) (264)
Installment . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9) (23)
--------------------------
Total charge-offs . . . . . . . . . . . . . . . . . . . . . . . (91) (287)
--------------------------
Recoveries:
Commercial, financial and agricultural . . . . . . . . . . . . . . . 109 19
--------------------------
Installment 14 -
--------------------------
Total recoveries . . . . . . . . . . . . . . . . . . . . . . . . 123 19
--------------------------
Net charge-offs (charge-offs) . . . . . . . . . . . . . . . . . . . . . . 32 (268)
Additions charged to operating expense . . . . . . . . . . . . . . . . . 90 236
--------------------------
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . $ 559 437
==========================
Total average loans, net of unearned discount . . . . . . . . . . . . . . $ 37,263 35,519
==========================
Ratio of net charge-offs to total average loans,
net of unearned discount . . . . . . . . . . . . . . . . . . . . . . . (0.09)% 0.75%
==========================
Total loans, net of unearned discount . . . . . . . . . . . . . . . . . . $ 41,960 36,946
==========================
Ratio of allowance for loan losses to total loans,
net of unearned discount . . . . . . . . . . . . . . . . . . . . . . 1.33% 1.18%
==========================
</TABLE>
-33-
<PAGE> 34
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Years ended December 31
----------------------------------------------------------------
1994 1993
----------------------------------------------------------------
% OF LOANS IN % OF LOANS IN
EACH CATEGORY EACH CATEGORY
AMOUNT Amount
(In thousands)
<S> <C> <C> <C> <C> <C>
Commercial, financial and agricultural $ 122 28.40 % 73 37.44 %
Real estate-construction 1 3.71 4 5.29
Real estate-mortgage 13 46.95 99 35.51
Credit card receivables and installment - 20.94 - 21.76
----------------------------- -------------------------
Total 136 100.00 % 176 100.00 %
======= =============
Unallocated 423 261
--------------
Total allowance $559 437
============== =====
</TABLE>
- ------------------------
The basis allocation of the allowance for loan losses is a review of individual
loans, based on the bank's credit review and grading system, for possible
exposure to loss, except for credit card and installment loans whose allocation
is based primarily on historical net charge-off experience. The unallocated
portion of the allowance provides for unforeseen credit risk exposure. The
specific allocation of the allowance, therefore, represents only a numerical
evaluation of identified risks in the portfolio at a point in time and does not
necessarily represent anticipated charge-offs.
-34-
<PAGE> 35
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
MATURITY DISTRIBUTION OF INVESTMENT SECURITIES
<TABLE>
<CAPTION>
Within One Year After One Year After Five Years
But Within But Within
Five Years Ten Years
Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C>
December 31, 1994
U.S. Treasury securities $ - - % 2,093 6.09 % - - %
Securities of other U.S.
government agencies 747 5.75
Mortgage-backed securities - - - - - -
State & municipals 527 2.91 4,774 4.07 4,335 4.50
--------------------------------------------------------------
Total amount/yield 527 2.91 % 7,614 4.81 % $4,335 4.50 %
==============================================================
December 31, 1993
U.S. Treasury securities $ - - % 3,383 7.39 % - -
Mortgage-backed securities - - - - - -
--------------------------------------------------------------
State & municipals - - 2,325 3.71 3,050 4.64
--------------------------------------------------------------
Total amount/yield $ 5,708 7.17 % 3,050 4.64 %
--------------------------------------------------------------
==============================================================
<CAPTION>
Average
After Maturity
Ten Years Total (In Years)
Amount Yield Amount Yield %
<S> <C> <C> <C> <C> <C>
December 31, 1994
U.S. Treasury securities - - % 2,093 6.09 %
Securities of other U.S.
government agencies 747 5.75
Mortgage-backed securities - - 18,038 6.40
State & municipals 336 4.37 9,972 4.21
------------------------------------------------------
Total amount/yield $ 336 4.37 % $30,850 5.65 % 15.58
======================================================
December 31, 1993
U.S. Treasury securities - - $ 3,383 7.39 %
Mortgage-backed securities - - 20,600 5.56
State & municipals 436 6.20 5,811 4.39
------------------------------------------------------
Total amount/yield 436 6.20 % $29,794 5.54 % 18.51
------------------------------------------------------
======================================================
</TABLE>
*Includes contractual maturities of mortgage-backed securities which may vary
significantly from actual cash flows due to prepayments.
(1) The amortized cost of investment securities are represented in this table.
DISTRIBUTION OF AVERAGE DEPOSITS
<TABLE>
<CAPTION> -----------------------------------------------------------------------
Years ended December 31,
----------------------- --------------------------------
1994 1993
----------------------- ----------------------
Average Average
----------------------- ----------------------
Amount Rate Amount Rate
----------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Demand:
Individuals, parties hips and corporations. . $ 13,422 - % $ 12,592 - %
Money market checking . . . . . . . . . . . . . 9,772 2.49 9,009 2.55
Savings and money market savings . . . . . . . 18,962 2.83 19,328 2.90
Time of less than $100',000 16,853 3.75 17,089 3.67
Tune of $100,000 or more 10,572 3.55 12,375 3.12
------------------------- ----------------------------
$ 69,581 2.57 % $ 70,393 2.56 %
------------------------- ----------------------------
</TABLE>
-35-
<PAGE> 36
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
The following table summarizes information with respect to certain short-term
borrowings for the years indicated.
<TABLE>
<CAPTION>
Amount Outstanding End Maximum Average Amount
of Year Amount Outstanding
---------------------- ----------------------
Average Outstanding Average
Interest at any Interest
Amount Rate Month End Amount Rate
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994
Federal funds purchased and securities sold under $1,500
repurchase agreement 6.13% $1,500 $79 4.26%
===============================================================
1993
Federal funds purchased and securities sold - - - 18 2.93%
===============================================================
1992
Federal funds purchased and securities sold - - 1,000 17 5.88%
===============================================================
</TABLE>
____________________________________
RETURN ON EQUITY AND ASSETS
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------
1994 1993 1992
------------------------------
<S> <C> <C> <C>
Ratio of net income to:
Average earning assets . . . . . . . . . . . . . . . . . . . . . . 1.18% 1.09 1.00%
Average total assets . . . . . . . . . . . . . . . . . . . . . . . . 1.06 0.98 0.87
Average stockholders' equity . . . . . . . . . . . . . . . . . . . . 12.46 13.09 3
Ratio of average stockholders' equity to:
Average total assets 8.51 7.47 7.04
Average total loans . . . . . . . . . . . . . . . . . . . . . . . . 17.86 16.58 15.96
Dividend payment ratio . . . . . . . . . . . . . . . . . . . . . . . . N/A N/A N/A
</TABLE>
-36-
<PAGE> 37
DIRECTORS AND EXECUTIVE OFFICERS
UNITED OKLAHOMA BANKSHARES, INC.
JOHN N. AINSWORTH, 86. Director of the Company since 1982 - term expiring in
1995. Mr. Ainsworth, formerly a senior bank executive, is retired.
WILLIS WHEAT, 69. Director of the Company since 1989 - term expiring in 1997.
Mr. Wheat is past Dean of The Meinders School of Business Education at
Oklahoma City University. Prior to that time, Mr. Wheat was Executive Vice
President at Liberty National Bank, N.A., in Oklahoma City from 1964 to
1987.
WILLIAM P. DOWLING, 60. President and Director of UB since February 1989.
Prior to that time Mr. Dowling served as Executive Vice President of
Liberty National Bank. N.A. in Oklahoma City, since 1959.
JUNE A. O'STEEN, 58. Senior Vice President of UB, and Principal Accountant for
the Company since June, 1989. Prior to that time Ms. O'Steen was Senior
Vice President and General Auditor of UB, since 1984, and the Company,
since 1980.
GLADYS TUCKER, 83, newly elected Director during 1994. Ms. Tucker is the
principal common stockholder. Ms. Tucker served as a Director on the Board
of Will Rogers Bank in Oklahoma City from 1979 to 1992.
-37-
<PAGE> 38
EXECUTIVE COMPENSATION
DIRECTORS. Directors of the Company received $200 for every Board meeting
attended in 1994 with the exception of the Chairman of the Board who did not
receive compensation for attendance at the Board meetings until June of 1994.
In 1994, non management UB directors each received $200 for every Board meeting
attended and nonmanagement UB directors received $150 for Executive Committee
meetings and all other committee meetings attended. In 1994, management UB
directors received $200 for every Board meeting after June 1994.
EXECUTIVE OFFICERS. The total cash compensation paid to the Company's Chairman
of the Board and Chief Executive Officer and to each of the Company's and its
subsidiaries' most highly compensated executive officers whose cash
compensation exceeded $100,000 for services rendered in all capacities to the
Company and its subsidiaries during the three years ended December 31, 1994,
1993 and 1992 is as follows:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
NAME AND PRINCIPAL POSITION YEAR SALARY $(1) BONUS $
- --------------------------- ---- -------- -------
<S> <C> <C> <C>
Morrison G. Tucker 1994 12,500(2) 0
Chairman of the Board of the Company 1993 30,000(2) 0
and UB through April, 1994 1992 30,000(2) 0
William P. Dowling 1994 106,600 300
President and Chief Executive Officer 1993 103,500 300
of UB 1992 100,000 250
Willis J. Wheat 1994 12,650 0
Chairman of the Board of the Company and
UB April 1994 through December 1994
</TABLE>
CERTAIN TRANSACTIONS
In the ordinary course of business, UB has had banking transactions with some
of the directors, executive officers and controlling shareholders of the
Company. All such loans are and have been made in compliance with applicable
laws, in the ordinary course of business and on substantially the same terms
(including interest rates and collateral) as those prevailing at the time for
comparable transactions with unaffiliated persons. In the opinion of
management, none of such loans involved more than the normal risk of
collectibility or presented any other unfavorable features.
All transactions entered into between the Company or UB and any officer,
director or controlling shareholder of the Company are made on terms no less
favorable to the Company or UB than could be obtained from unaffiliated
parties. It is the policy of the Company that transactions with and loans to
officers and directors be approved by a majority of the directors of the
Company other than those with an interest in the transaction or loan.
- ---------------------------------------
(1)Excludes the cost to the Company of other compensation which, with respect to
any named individual, does not exceed the lesser of $50,000 or 10% of the
annual salary and bonus.
(2)Mr. Tucker's compensation consisted of a consulting fee paid to him monthly
in the amount of $2,500 through May 1994.
-38-
<PAGE> 39
SECURITY OWNERSHIP BY MANAGEMENT
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF CLASS
COMMON 9% COMMON 9%
PREFERRED PREFERRED
------ --------- ------ ---------
<S> <C> <C> <C> <C>
John N. Ainsworth 30,000(1) 1,924(1) 1.18% 1.33%
Morrison G. Tucker Estate 261,251 36,998(2) 10.32% 25.48%
All officers and directors as a group 291,251 38,922 11.50% 26.85%
- --------------
</TABLE>
(1) Includes 1,200 shares of common stock and 34 shares of 9% preferred stock
held of record and beneficially owned by Mr. Ainsworth's wife.
(2) Includes 36,998 shares of 9% preferred stock held of record and
beneficially owned by Mr. Tucker's wife.
-39-
<PAGE> 40
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the name and address of each shareholder who
beneficially owns more than 5% of the Company's common stock, the number of
shares beneficially owned by each, and the percent of outstanding common stock
so owned as of December 31, 1994. Unless otherwise indicated, each person has
sole voting and investment power with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
Number of Percent
Name and Address Shares of Class
- ---------------- ------ --------
<S> <C> <C>
John G. Tucker 260,000 10.27%
524 East 84th Street
New York, New York
Morrison G. Tucker
2403 Northwest Grand Blvd. 261,142 10.32%
Oklahoma City, Oklahoma
Suzanne Tucker-Fong 150,716 5.95%
P O Box 82958
Oklahoma City, Oklahoma
</TABLE>
-40-
<PAGE> 41
CERTAIN TRANSACTIONS
In the ordinary course of business, United Bank ("UB") has had banking
transactions with some of the directors, executive officers and controlling
shareholders of the Company. UB expects to have such banking transactions in
the future. All such loans are and have been made in compliance with
applicable laws, in the ordinary course of business and on substantially the
same terms (including interest rates and collateral) as those prevailing at the
time for comparable transactions with unaffilliated persons. In the opinion of
management, no such loan did involve more than the normal risk of
collectibility or present any other unfavorable features.
-41-
<PAGE> 42
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.
UNITED OKLAHOMA BANKSHARES, INC.
By: /s/Willis J. Wheat Willis J.
------------------------------
Wheat, Chairman, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has linen signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE
/s/Willis J. Wheat Chairman of the Board and President
- ----------------------------------
Morrison G. Tucker
/s/June A. O'Steen Principal Accountant March 27, 1995
- ----------------------------------
June A. O'Steen
/s/John N. Ainsworth Director
- ----------------------------------
John N. Ainsworth
/s/Willis Wheat Director
- ----------------------------------
Willis Wheat
* By: Willis J. Wheat
------------------------
Willis J. Wheat
</TABLE>
* As Attorney in fact pursuant to Power
of Attorney filed as Exhibit 25
-42-
<PAGE> 43
FORM 10-K CROSS REFERENCE SECTION
<TABLE>
<S> <C> <C> <C>
Part I Item 1 Business 2
Item 2 Properties 2
Item 3 Legal Proceedings 2
Item 4 Submission of Matters to a Vote of Security Holders (during the *
fourth quarter of 1993)
Part II Item 5 Market for the Company's Common Stock and Related Stockholder 3
Matters
Item 6 Selected Financial Data 4
Item 7 Management's Discussion and Analysis of Financial Condition and 5-11
Results of Operations
Item 8 Financial Statements and Supplementary Data 12-36
Item 9 Disagreements on Accounting and Financial Disclosure *
Part III Item 10 Directors and Executive Officers and Corporations 37
Item 11 Executive Compensation 38
Item 12 Security Ownership of Certain Beneficial Owners and Management 39,40
Item 13 Certain Relationships and Related Transactions 41
Part IV Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1) Financial Statements: 29
o Independent Auditors' Report 12
o Consolidated Statements of Operations - years ended 13
December 3, 1993, 1992, and 1991
o Consolidated Balance Sheets 14
December 31, 1993 and 1992
o Consolidated Statements of Changes in Stockholders' 15
Equity - years ended December 31, 1993, 1992, and 1991
o Consolidated Statements of Cash Flows - years ended 15
December 31, 1993, 1992, and 1991
o Notes to Consolidated Financial Statements - years 16-28
ended December 31, 1993, 1992, and 1991
(2) Financial Statement Schedules:
o All schedules normally required by Form 10-K are
omitted since they are either not applicable or the
required information is shown in the consolidated
financial statements or the notes thereto.
</TABLE>
-43-
<PAGE> 44
<TABLE>
<S> <C> <C>
(a) (3) Exhibits:
(3) Exhibits:
3 Articles of incorporation and bylaws (filed as **
Exhibit 3(a) and 3(b) to Company's Registration
Statement No. 2-85935, "Registration Statement")
4 Instruments defining the rights of security holders, **
including indentures (filed as Exhibit 3(a) to
Company's Registration Statement
10 Material Contracts: **
(a) United Oklahoma Bankshares, Inc. Incentive Stock **
Option Plan of 1982 (filed as Exhibit 10(a) to
Company's Registration Statement)
(b) Forms of United Oklahoma Bankshares, Inc. **
Incentive Stock Option Agreements (filed as
Exhibit 10(b) to Company's Registration Statement
(c) United Oklahoma Bankshares, Inc. Employee Stock **
Ownership Plan and Trust of 1982 (filed as
Exhibit 10(c) to Company's Registration Statement
(d) Stockholders' resolutions establishing United **
Oklahoma Bankshares Employees' Stock Purchase
Plan of 1983 (filed as Exhibit 10(d) to Company's
Registration Statement
(e) Form of agreements relating to stock purchased **
under the United Oklahoma Bankshares Employees'
Stock Purchase Plan of 1983 (filed as Exhibit
10(e) to Company's Registration Statement)
(f) Letter Agreement, dated April 26, 1982, between **
United Oklahoma Bankshares, Inc. and Fort Worth
National Bank, as amended (filed as Exhibit 10(1)
to Company's Registration Statement)
(g) Promissory Note and Security Agreement, dated **
April 29, 1982, between United Oklahoma
Bankshares, Inc. Employee Stock Ownership Plan
and Trust of 1982 and The Fort Worth National
Bank (filed as Exhibit 10(m) to Company's
Registration Statement)
</TABLE>
-44-
<PAGE> 45
<TABLE>
<S> <C> <C>
(a) (3) Exhibits:
10 Material Contracts: **
(h) Deposit Insurance Transfers and Asset Purchase **
Agreement, dated May 11, 1984, between United
Oklahoma Bankshares, Inc., as agent for United
Del City Bank, and the Federal Deposit Insurance
Corporation (filed as Exhibit to Form 8-K dated
May 25, 1984
(i) Stock Purchase Agreement between United Del City **
Bank and United Oklahoma Bank (filed as
Exhibit 10 to Form 10-K dated December 31, 1986)
(j) Accounts Receivable Purchase Agreement between **
United Del City Bank and United Oklahoma Bank
(filed as Exhibit 10 to Form 10-K dated
December 31, 1986)
22 Subsidiaries of the Company 46
25 Power of Attorney 47,48
(b) Reports on Form 8-K 49
* Not Applicable
** Included in previous filings
</TABLE>
-45-
<PAGE> 46
SUBSIDIARIES
The Company has two wholly owned subsidiaries, United Bank and United Loan and
Thrift Company, Inc. The following corporation is a wholly Owned subsidiary of
United Bank:
United Del City Tower, Inc.
4600 Corporation
-46-
<PAGE> 47
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That each of the undersigned do hereby constitute and appoint Willis J. Wheat
his true and lawful attorney-in-fact and agent with full power of substitution,
for him and in his name, place and stead, and in any and all capacities to
execute and sign Annual Report on Form 10-K for the 1994 fiscal year of United
Oklahoma Bankshares, Inc. and to file the same, with all exhibits thereto, and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and age fit may lawfully do or cause to be done by
virtue hereof.
DATED THIS 27th day of March, 1995.
----------------------------------------
JOHN N. AINSWORTH, Director
----------------------------------------
WILLIS WHEAT, Director
----------------------------------------
GLADYS TUCKER, Director
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 27th day of March,
1995, by J.N. Ainsworth:
---------------------------
Notary Public
My commission expires:
- --------------------------
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 27th day of March,
1995, by Willis Wheat.
---------------------------
Notary Public
My commission expires:
- --------------------------
-47-
<PAGE> 48
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 27th day of March,
1995, by Gladys Tucker.
---------------------------
Notary Public
My commission expires:
- --------------------------
-48-
<PAGE> 49
REPORT'S ON FORM 8-K
The Company did not file any reports on Form 8-K during the fourth
quarter of 1994.
-49-
<PAGE> 1
EXHIBIT 13(d)(4)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[Fee Required]
For the Fiscal year ended December 31,1993
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[Fee Required]
For the transition period from to
----------- -------------
Commission file number 0-12047
UNITED OKLAHOMA BANKSHARES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Oklahoma 73-0969432
- --------------------------- --------------------------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 S.E. 29th Street
Del City, Oklahoma 73115
- ----------------------------------------- --------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (405) 677-8711
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common stock, $1
par value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) ofthe 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
such filing requirements for the past 90 days. [X]Yes 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. [ ]
As of February 1, 1994, based on the reported average bid and asked prices, the
aggregate market value of the common stock held by non-affiliates of the
registrant was approximately $132,000.
As of February 1, 1994, 2,644,129 shares of the registrant's common stock, par
value $1.00 per share, were outstanding.
NOTE: See pages 43-45 for Form 10-K Cross Reference Index
<PAGE> 2
BUSINESS
United Oklahoma Bankshares, Inc. (the "Company") is a one-bank holding company
registered under the Bank Holding Company Act of 1956, as amended. The
principal business of the Company is the ownership and supervision of United
Bank ("UB"), Del City, Oklahoma. As of December 31, 1993, the Company and its
subsidiaries had 49 full time equivalent employees. UB is a state chartered
banking association whose deposits are insured pursuant to the Federal Deposit
Insurance Act. UB, which operates primarily in Oklahoma, competes with other
financial institutions in its trade area in providing a full range of
traditional banking and related financial services to the commercial, consumer,
energy, real estate and financial sectors. UB operates one wholly owned
subsidiary, United Del City Tower, Inc. ("UDCT").
UDCT owns and manages United Del City Tower of which the first and part of the
second floors are occupied by UB. The facility is approximately 86% occupied
at year end.
UB, with regulatory approval, entered into a stock purchase agreement with
Equity Financial Service Corp. on June 14, 1989 to sell all of the issued and
outstanding stock of United Bankcard Company ("UBC"), a wholly owned subsidiary
of UB. The sale was completed on August 9, 1989 with the Company receiving
proceeds of $10,326,000, of which $530,000 was reimbursement by the purchaser
of a prepayment penalty due to the Company's lender. The net gain on the sale
of UBC was $3,022,000. The stock purchase agreement was included in the June
30, 1989 10-Q as an 8-K Exhibit. The UB Board of Directors, with regulatory
approval, approved a dividend to the Company to retire the debt of the Company
in full.
UB sold approximately $4,600,000 of outstanding credit card loans in October,
1989 for a net gain of $233,000.
As reported in the December 31, 1990 10-K and the July 2, 1991 8-K, several
directors and officers of a former subsidiary were made parties to a lawsuit
filed by the FDIC. Although all of the defendants denied the FDIC's
allegations, certain former directors and officers of the former subsidiary
sought indemnification from the Company under Article 7 of its bylaws.
Pursuant to its bylaws, the Company contributed $1,380,000 during 1991 towards
the settlement of the lawsuit which resulted in a dismissal of those defendants
and a release by all of the defendants in that suit of their indemnification
claims.
The Company borrowed the sum of $1,400,000, together with interest thereon,
from July 1, 1991 to July 1, 2001 from John E. Kirkpatrick of Oklahoma City,
Oklahoma, a preferred stockholder of the Company, for the purpose of paying
expenses of the Company described above. The note is collateralized by 100% of
the stock of UB. At December 31, 1993, the outstanding principal balance was
$450,000.
PROPERTIES
The Company's corporate headquarters are located in United Del City Tower at
4600 S.E. 29th Street, Del City, Oklahoma. This facility is located on
approximately 8 acres and comprises approximately 77,000 square feet of usable
space. The Tower houses the main banking functions and the Company's executive
offices. UB occupies 27% of the building and approximately 59% is leased to
various tenants. In 1993, UB completed construction of a new drive-in facility
attached to the United Del City Tower. UB also sold its previous drive-in
facility during 1993.
LEGAL
The Company and its subsidiaries are not defendants in any legal proceedings.
-2-
<PAGE> 3
COMMON STOCK
During 1993, limited transactions occurred which the Company is aware of, and
has reported the average of the bid and ask price of $0.01 and $0.10,
respectively, at January 24, 1994. The prices have no depth because there is
currently no established public trading market for the Company's common stock.
DISCLAIMER
THIS ANNUAL REPORT HAS NOT BEEN REVIEWED, OR CONFIRMED FOR ACCURACY OR
RELEVANCE, BY THE FEDERAL INSURANCE CORPORATION.
-3-
<PAGE> 4
SELECTED FINANCIAL DATA
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
The Selected Financial Data which follows should be read in conjunction with
the consolidated financial statements (including the notes thereto) of the
Company and its subsidiaries appearing elsewhere herein.
<TABLE>
<CAPTION> YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1993 1992 1991 1990 1989
--------------------------------------------------------------
(In thousands except per share amounts)
<S> <C> <C> <C> <C> <C>
Summary of Income:
Interest income............................ $5,235 5,460 5,309 4,906 5,169
Interest expense........................... (1,847) (2,299) (2,646) (2,589) (3,378)
Provision for loan losses.................. (236) (128) (165) (120) (142)
Non-interest income........................ 837 795 1,114 646 6,225
Non-interest expense....................... (3,068) (2,735) (4,215) (2,436) (4,679)
Income (loss) before income taxes
and cumulative effect of change
in accounting principle.................. 921 1,093 (603) 407 3,195
Income tax benefit (expense)............... (266) (445) 245 (131) (1,097)
Income (loss) before cumulative effect
of change in accounting principle........ 655 648 (358) 276 2,098
Cumulative effect of change in accounting
principle................................ 116 - - - -
Net income (loss).......................... 771 648 (358) 276 2,098
Per share data:
Earnings (loss) per average common share be
cumulative effect of change in accounting
principle 0.10 0.10 (0.28) (0.04) 0.65
Cumulative effect of change in accounting
principle 0.04 - - - -
Net earnings (loss) per average common
share................................... 0.14 0.10 (0.28) (0.04) 0.65
Average outstanding common shares.......... 2,644 2,644 2,644 2,644 2,644
Cash dividends declared per common share... - - - - -
Period end balances:
Cash and due from banks 1,907 3,270 2,695 2,920 2,686
Interest bearing deposits in other banks... - - - 768 -
Federal funds sold......................... 460 1,560 2,085 - 6,240
Investment securities...................... 29.794 33,352 30,722 23,688 16,349
Loans, net of unearned discount and allowance
for losses................................. 36,509 33,804 30,185 26,234 23,710
Total assets............................... 74,564 78,556 72,689 61,016 57,131
Deposits................................... 66,094 70,302 64,825 53,405 50,227
Long-term debt............................. 450 900 1,400 - -
Stockholders' equity....................... 6,289 5,518 4,870 5,228 4,952
</TABLE>
-4-
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis is designed to provide a better
understanding of the significant factors related to the Company's results of
operations, financial condition, liquidity and capital resources (including its
subsidiary bank, UB, and its non-bank subsidiary, UDCT). Such discussion and
analysis should be read in conjunction with the Consolidated Financial
Statements (including the notes thereto) and Selected Financial Data appearing
elsewhere in this annual report.
RESULTS OF OPERATIONS
GENERAL. Net income (loss) totaled $ .8 million in 1993, compared to $.6
million in 1992 and $(.4) million in 1991. Earnings (loss) per share were $
.14 in 1993, compared to $.10 per share in 1992 and ($.28) per share in 1991.
Net income in 1993 included $.1 million ($.04 per share) cumulative effect of
change in accounting principle as a result of adoption of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Management is unaware of any trends, events or uncertainties that will have or
that are reasonably likely to have a material effect on the operations.
NET INTEREST INCOME. Net interest income, the difference between gross
interest and fees on earning assets (primarily loans and investments) and
interest paid on deposits and borrowed funds necessary to support such assets,
is a major component of a financial institution's earnings.
Net interest income aggregated $3,388,000 and $3,161,000 in 1993 and 1992,
respectively, an increase of $227,000. Net interest income increased $498,000
between 1992 and 1991.
From 1992 to 1993, the volume of average earning assets increased $4.8 million,
while average interest bearing liabilities increased $2.4 million. The yield
on average earning assets decreased 88 basis points from 1992 to 1993, while
the rate paid on average interest beating liabilities decreased 94 basis points
during the same time period resulting in an increase in the spread between the
yield on earning assets and rate paid on interest beating liabilities of 6
basis points. As a result of the decrease in the rate earned on interest
earning assets and the decrease in the rate paid on interest bearing
liabilities, net interest margin remained unchanged at 4.80% from 1992 to 1993.
From 1991 to 1992, the volume of average earning assets increased $9.8 million,
while average interest bearing liabilities increased $8.1 million. The yield
on average earning assets decreased 118 basis points from 1991 to 1992, while
the rate paid on average interest bearing liabilities decreased 142 basis
points during the same time period resulting in an increase in the spread
between the yield on earning assets and rate paid on interest bearing
liabilities of 24 basis points. As a result of the increase in the rate earned
on interest bearing assets and the decrease in interest bearing liabilities,
net interest margin increased 5 basis points from 4.75% in 1991 to 4.80% in
1992.
As management deems necessary and to the extent it has the flexibility, it will
alter the volume and mix of earning assets and supporting liabilities so as to
obtain optimal interest margins while maintaining sufficient liquid resources.
Current loan demand in the Company's primary market remains modest, limiting
management somewhat in its ability to increase net interest margin and maintain
a conservative risk profile.
-5-
<PAGE> 6
- -------------------------------------------------------------------------------
The following table illustrates volume and yield/rate variances on an actual
basis (versus a taxable equivalent basis) for the years indicated. The change
in interest due to both rate and volume has been allocated to volume and rate
changes in proportion to the relationship of the absolute dollar amount of the
change in each.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, Year Ended December 31,
1993 COMPARED TO 1992 1992 Compared to 1991
-----------------------------------------------------------------------
INCREASE/DECREASE Increase/Decrease
DUE TO CHANGE IN: Due to Change in:
-----------------------------------------------------------------------
YIELD/ Yield/
VOLUME RATE NET Volume Rate Net
------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
EARNING ASSETS:
Interest bearing deposits in other
banks . . . . . . . . . . . . . . . $ - - - (2) (3) (5)
Investment securities . . . . . . . 59 (334) (275) 402 (425) (23)
Federal funds sold . . . . . . . . . 7 (10) (3) (10) (38) (48)
Loans net of unearned discounts . . 244 (191) 53 445 (218) 227
---------------------------------------------------------------------------
Total interest income . . 310 (535) (225) 835 (684) 151
---------------------------------------------------------------------------
INTEREST BEARING LIABILITIES:
Interest bearing deposits . . . . . 113 (541) (428) 382 (752) (370)
Short-term borrowings . . . . . . . - - - (1) - (1)
Long-term debt . . . . . . . . . . . (32) 8 (24) 24 - 24
---------------------------------------------------------------------------
Total interest expense . . 81 (533) (452) 405 (752) (347)
--------------------------------------------------------------------------
Net interest income . . . . . . . . . . $ 229 (2) 227 430 68 498
============================================================================
</TABLE>
-6-
<PAGE> 7
RISK ELEMENTS OF EARNING ASSETS. Risk elements of the Company's earning assets
are evidenced, in part, by non- performing loans consisting of loans
contractually past due 90 days or more, loans placed on non-accrual status and
other real estate which has been acquired in full or partial settlement of
defaulted loans. Non-performing assets are carried by the Company at estimated
net realizable value and known losses of principal have been charged off.
At December 31, 1993, non-performing loans totaled $481,000. Non-performing
loans as a percent of all loans outstanding were 1.32% at December 31, 1993.
The majority of non-performing loans is secured. The following table sets forth
such loans and other real estate at the dates indicated:
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------------
1993 1992 1991
----------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Non-accrual loans..................... $ 481 561 1,334
Other real estate..................... 552 686 1,660
----------------------------------
Total non-performing assets........... $ 1,033 1,247 2,994
==================================
Non-performing loans to total loans... 1.32% 1.66% 4.35%
</TABLE>
Under the Company's lending policies, all commercial loans are reviewed and
graded according to their perceived credit risk (borrower's financial strength;
value and type of collateral; borrower's performance, etc.). Based on this
grading system, credits requiring special attention are placed on special
monitoring for the attention of management and the Board of Directors.
Management, through this special monitoring system, in conjunction with past
loan loss experience, current and perceived future economic conditions and
other factors, determines the level at which the allowance for loan losses
should be maintained to adequately cover the loan portfolio risk.
Non-accrual status loans are identified through the special monitoring system
and periodic review of past due loans by officers and management. When doubt
exists as to the ultimate collectibility of interest or principal, such loans
are placed on non-accrual status. To the extent management does not consider
it collectible, interest previously accrued but uncollected on such loans is
reversed and charged against current income. Subsequent payments collected on
such loans are credited to loan principal if, in the opinion of management,
full collectibility of principal is doubtful; otherwise, the payment is
credited to income and principal according to the loan terms.
Loans on which interest had ceased to be accrued approximated $481,000,
$561,000 and $1,334,000 at December 31, 1993, 1992 and 1991, respectively.
Approximately $17,000 was recognized on these loans in 1993, but no interest
was recognized in 1992 and $35,000 of interest income was recognized on these
loans in 1991, respectively; had the accrual status of these loans been normal,
approximately $42,000, $59,000 and $131,000 of additional interest would have
been earned in 1993, 1992 and 1991, respectively. None of these loans are
restructured troubled debt.
Internally classified assets of UB, which approximate the same as
classifications by regulatory authorities and includes other real estate,
decreased from $ 3,320,000 at December 31, 1992 to $1,347,000 at December 31,
1993, a decrease of 59%.
At December 31, 1993, the Company had approximately $177,000 of loans for which
payments were contractually past due less than 90 days, and the borrowers were
experiencing financial difficulties. These loans are included in the special
monitoring loans which are subject to management's attention and review.
-7-
<PAGE> 8
ALLOWANCE AND PROVISION FOR LOAN LOSSES. The allowance for loan losses totaled
$437,000, $469,000 and $495,000 at December 3l, 1993, 1992 and 1991,
respectively. The provision charged to expense amounted to $236,000 in 1993
compared to $128,000 and $165,000 in 1992 and 1991, respectively. Net losses
on loans were approximately $268,000 in 1993, compared to $154,000 in 1992 and
none in 1991. The amount of provision charged to expense is based on the
current level of net loan losses, perceived economic conditions, changes in the
size and character of the loan portfolio, and management's assessment of the
loan portfolio's inherent risk in relation to the allowance for loan losses
(see Note 4 to Consolidated Financial Statements).
The allowance for loan losses as a percentage of total loans was 1.18%, 1.37%
and 1.61% at December 31, 1993, 1992 and 1991, respectively.
NON-INTEREST INCOME. Non-interest income was $.8 million in 1993 and 1992 and
$1.1 million in 1991. The increase in 1991 was: attributable to other service
charges and fees which included a reclass of an overaccrual in GNMA loss
reserves. In addition, an increase in securities gains was a result of
management's decision to change the mix of securities in the investment
portfolio. While it has been management's intent to hold securities for
investment purposes, new deposits and market conditions created an opportunity
to sell some investments during 1991 and shorten the average maturity in the
investment portfolio. At December 31, 1993, management's intent is to evaluate
the investment securities and classify them as "Held to Maturity" or "Available
for Sale" in accordance with Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities,"
(Statement 115) during the first quarter of 1994.
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------
1993 1992 1991
---------------------------------
(In thousands)
<S> <C> <C> <C>
Service charges on deposits $ 675 602 589
Other service charges and fees, net 162 97 160
Securities gains - 96 365
----------------------------------
Total $ 837 795 1,114
==================================
</TABLE>
NON-INTEREST EXPENSE. Non-interest expense amounted to $3.1 million in 1993
compared to $2.7 million in 1992 and $4.2 million in 1991 representing an
increase of 12% in 1993 and a 35% decrease in 1992. The contribution towards
the settlement of the lawsuit brought by the FDIC against several directors and
officers of the Company's former subsidiary, a write down of ORE property; and
the loss from the operation of the UDCT were the principal reasons for the
increase in non-interest amounts during 1991. Salaries and employee benefits
continue to represent a large portion of non-interest expense.
Net costs and write downs associated with other real estate owned approximated
$66,000, ($64,000) and $187,000 in 1993, 1992 and 1991, respectively, and
represent amounts provided for decreases in the market value of the properties,
net gains and losses on sales of the properties, and net expenses incurred for
the maintenance of the properties.
Years ended December 31,
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------
NON-INTEREST EXPENSE 1993 1992 1991
---------------------------------
(In thousands)
<S> <C> <C> <C>
Salaries and employee benefits............ $ 1,567 1,488 1,370
Occupancy expense, net.................... 309 290 297
Other real estate owned, net.............. 66 (64) 187
Other..................................... 1,126 1,021 2,361
---------------------------------
Total $ 3,068 2,735 4,215
=================================
</TABLE>
-8-
<PAGE> 9
LIQUIDITY
Liquidity is defined as a company's ability to meet maturing obligations and
existing commitments and withstand fluctuations in funding needs, while also
maintaining sufficient levels of highly liquid assets. Liquidity ultimately
depends on profitability, asset quality and mix, asset and liability maturities
and repriceability, and borrowing ability.
The asset side of the balance sheet provides liquidity through regular
amortization and maturities of loans, maturities of investment securities and
money market instruments, maturities of deposits in other banks, and other
assets available for sale. Deposit growth, diversification of liability
products and access to other funding sources provide liquidity from the
liability side. Management is unaware of any trends, events or uncertainties
that will have or that are reasonably likely to have a material effect on the
Company's liquidity.
INDEBTEDNESS
As reported earlier, the Company contributed $1,380,000 towards the settlement
of the lawsuit brought by the FDIC against several directors and officers of
the Company's former subsidiary. The Company borrowed the sum of $1,400,000,
together with interest thereon, from July 1, 1991 to July 1, 2001 from John E.
Kirkpatrick of Oklahoma City, Oklahoma, a preferred stockholder of the Company,
for the purpose of paying expenses of the Company described above. The note is
collateralized by 100% of the stock of UB. The outstanding principal balance
at December 31, 1993 was $450,000. Annual payments vary based on the Company's
net income, with minimum payments of $130,000 per year through 1996 and
$230,000 per year thereafter.
PREFERRED STOCK
The Company has $4.4 million of preferred stock outstanding with 9% cumulative
dividends in arrears since October 1, 1985. Cumulative unpaid dividends in
arrears at December 31, 1993 approximated $3,234,330.
RATE SENSITIVITY
Both liquidity and net interest margin are significantly affected by the
sensitivity that assets and liabilities have to changes in market interest
rates, levels of earning assets and funding mixes, the direction of interest
rate movements, the velocity at which changes occur and the absolute level of
interest rates. Interest rate risk can arise when an investment's interest
rate level changes, or its cash flows occur, in time periods that are different
from those of supporting funding sources.
The following table depicts the Company's rate sensitivity position at December
31, 1993:
<TABLE>
<CAPTION> Sensitivity Period
--------------------------------------------------------
0-30 31-90 91-180 181-365 Over
Days Days Days Days 1 Year
--------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Rate sensitive assets:
Money market instruments . . . . . . . . . . . $ 460 - - - -
Investment securities . . . . . . . . . . . . 8,452 - 545 5,709 15,088
Loans . . . . . . . . . . . . . . . . . . . . 15,943 2,327 3,078 1,691 13,392
----------------------------------------------------------
Total rate sensitive assets . . . . . . . . 24,855 2,327 3,623 7,400 28,480
----------------------------------------------------------
Rate sensitive liabilities:
Savings and interest bearing deposits . . . . 14,058 - - - 13,698
Time deposits . . . . . . . . . . . . . . . . 8,654 4,648 7,455 4,501 2,070
----------------------------------------------------------
Total rate sensitive liabilities . . . . . . 22,712 4,648 7,455 4,501 15,768
----------------------------------------------------------
Period Sensitivity Gap . . . . . . . . . . . . . 2,143 (2,321) (3,832) 2,899 12,712
==========================================================
Cumulative Sensitivity Gap . . . . . . . . . . . 2,143 (178) (4,010) (1,111) 11,601
==========================================================
</TABLE>
The Company includes only rate sensitive assets and liabilities in its
sensitivity analysis.
-9-
<PAGE> 10
CAPITAL RESOURCES
Capital provides a base for expansion of the asset portion of the balance
sheet, which in turn provides the opportunity for increased profitability.
Capital adequacy depends on such factors as quality and diversification of
assets, current and historical earnings and liquidity. Primary capital of the
Company consists of funds which are permanently committed to the Company,
including: Common stock, Preferred stock, Additional paid-in capital, Retained
earnings, and Allowance for loan losses. For regulatory purposes primary
capital is reduced by amounts representing intangible assets. Management is
unaware of any trends, events or uncertainties that will have or that are
reasonably likely to have a material effect on the Company's capital resources.
Following are the Company's and UB's primary and equity capital to assets
ratios for December 31, 1993 and 1992, respectively:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Company's primary capital to assets ratio 8.05% 7.26%
Company's equity capital to assets ratio 7.98 7.40
UB's primary capital to assets ratio 8.34% 8.43%
UB's equity capital to assets ratio 8.27 8.58
</TABLE>
During 1989, regulatory agencies approved regulations to implement a risk-based
capital framework that makes capital requirements more sensitive to the risk
profiles of individual banking companies. These regulations define capital as
either core capital (Tier 1) or supplemental capital (Tier 2). Core capital
consists primarily of common stockholders' equity, while supplementary capital
is comprised of preferred stock, certain debt instruments, and a portion of the
allowance for loan losses.
At December 31, 1993, the required core capital was 4.00% and total risk-based
capital was 8.00%. Because the Company has assets of less than $150 million,
its capital requirements are computed on a bank-only basis. UB's core and
total risk-based capital exceed regulatory guidelines at December 31, 1993 and
1992.
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Tier I capital (core) 13.27% 13.25%
Tier 2 capital (total risk-based) 14.21 14.33
</TABLE>
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
became law on December 19, 1991. FDICIA contains prescribed actions which have
a significant impact on the operation of banks and their relationship with
federal regulatory agencies. The major provisions of FDICIA became effective
January 1, 1993.
EFFECT OF INFLATION
The financial statements and related data presented in this report have been
prepared in accordance with generally accepted accounting principles which
require the measurement of financial position and operating results in terms of
historical dollars without considering changes in the relative purchasing power
of money over time. Changing prices, particularly during periods of high
inflation rates, can have a significant impact on industries and business
enterprises taken as a whole. However, the impact of inflation on financial
institutions differs significantly from that of industrial or commercial
companies. This is due to the fact that a major portion of a bank's balance
sheet is comprised of monetary assets and liabilities versus a basically
non-monetary balance sheet associated with industrial concerns. Even though
inflation does not generally have a material impact on banks it can indirectly
affect the interest rates and the underlying value of assets collateralizing
certain earning assets, as well as non-interest income and expense categories.
How well a bank is positioned to respond to changing interest rates and
collateral values can only be assessed by an analysis of its asset and
liability structure. Therefore, attention is directed to the rate sensitivity
schedule, the maturity distribution of loans and securities, the loan
concentrations data and the rate and volume variances analysis found elsewhere
in this report.
-10-
<PAGE> 11
REGULATORY MATTERS
The Company is operating under a written agreement with its primary bank
regulatory authority, the Federal Reserve Bank, as a result of an examination
performed as of September 30, 1985 and subsequent examinations. Under the terms
of the agreement, the Company cannot pay or receive dividends without prior
regulatory approval.
Federal legislation in recent years, in particular the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), has significantly
expanded the responsibilities and powers of federal banking regulatory
agencies. FIRREA makes certain persons affiliated with a financial institution
newly subject to civil enforcement remedies, increases civil money penalties
and the circumstances in which they may be imposed, clarifies and expands the
power of federal banking regulators to require affirmative actions to be taken
to correct violations or practices and to limit the activities or functions of
financial institutions and affiliated parties, reduces the burden of proof for
the issuance of cease and desist orders, and increases the power of regulatory
agencies to approve in advance the appointment of directors and senior
executive officers and to suspend, remove, or prohibit the employment of
certain persons.
ACCOUNTING STANDARDS NOT YET ADOPTED
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 107, "Disclosures About Fair Value of Financial
Instruments." The Company will be required to comply with this statement for
the year ending December 31, 1995.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a
Loan." The Company will be required to comply with this statement beginning
January 1, 1995. The impact of this statement is not expected to have a
material effect on the Company's consolidated financial statements.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 115 on accounting for investments. As previously
stated, the Company will be required to comply with this statement as of
January 1, 1994. Implementation of this statement is not expected to have a
material effect on the Company's consolidated financial statements.
-11-
<PAGE> 12
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1993 1992 1991
-----------------------------------------
(In thousands except per share amounts)
<S> <C> <C> <C>
Interest income:
Interest and fees on loans . . . . . . . . . . . . . . . . . . . . . $ 3,243 3,190 2,963
Interest on deposits in other banks . . . . . . . . . . . . . . . . - - 5
Interest on federal funds sold . . . . . . . . . . . . . . . . . . . 56 59 107
Interest on investment securities
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,767 2,182 2,234
Nontaxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 29 -
---------------------------------------
Total interest income . . . . . . . . . . . . . . . . . . . . . 5,235 5,460 5,309
---------------------------------------
Interest expense:
Interest on deposits (Note 6) . . . . . . . . . . . . . . . . . . . 1,804 2,232 2,602
Interest on short-term borrowings . . . . . . . . . . . . . . . . . 1 1 2
Interest on long-term debt . . . . . . . . . . . . . . . . . . . . . 42 66 42
-------------------------------------
Total interest expense . . . . . . . . . . . . . . . . . . . . . 1,847 2,299 2,646
--------------------------------------
Net interest income . . . . . . . . . . . . . . . . . . . . . . 3,388 3,161 2,663
Provision for loan losses (Note 4) . . . . . . . . . . . . . . . . . . 236 128 165
--------------------------------------
Net interest income after provision for loan losses . . . . . . 3,152 3,033 2,498
--------------------------------------
Non-interest income:
Service charges on deposits . . . . . . . . . . . . . . . . . . . . 675 602 589
Other service charges and fees, net . . . . . . . . . . . . . . . . 162 97 160
Securities gains (note 2) . . . . . . . . . . . . . . . . . . . . . - 96 365
-------------------------------------
Total non-interest income . . . . . . . . . . . . . . . . . . . 837 795 1,114
-------------------------------------
Non-interest expense:
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . 1,567 1,488 1,370
Occupancy expense, net . . . . . . . . . . . . . . . . . . . . . . . 309 290 297
Other real estate owned, net . . . . . . . . . . . . . . . . . . . . 66 (64) 187
Other (Notes 7 & 8) . . . . . . . . . . . . . . . . . . . . . . . . 1,126 1,021 2,361
--------------------------------------
Total non-interest expense . . . . . . . . . . . . . . . . . . . 3,068 2,735 4,215
--------------------------------------
Income (loss) before income taxes and cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . . . . 921 2,093 (603)
Income tax expense (benefit) (Note 9) . . . . . . . . . . . . . . . . . 266 445 (245)
---------------------------------------
Income (loss) before cumulative effect of change in accounting 655 648 (358)
principle . . . . . . . . . . . . . . . . . . . . . . . . . .
Cumulative effect of change in accounting principle (Note 9) . . . . . 116 - -
--------------------------------------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . $ 771 648 (358)
=======================================
Earnings (loss) per share:
Income (loss) before cumulative effect of change in accounting principle 0.10 0.10 (0.28)
Cumulative effect of change in accounting principle . . . . . . . . 0.04 - -
---------------------------------------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . 0.14 0.10 (0.28)
=======================================
Average outstanding common shares . . . . . . . . . . . . . . . . . . . 2,644 2,644 2,644
=======================================
</TABLE>
See accompanying notes to consolidated financial statements.
-12-
<PAGE> 13
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1993 1992
----------------------------
(In thousands)
<S> <C> <C>
ASSETS
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,907 3,270
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . 460 1,560
Investment securities (market value: $30,211,000-1993;
$33,726,000-1992) (Note 2) . . . . . . . . . . . . . . . . . . . . . . 29,794 33,352
Loans (Notes 3 & 11) . . . . . . . . . . . . . . . . . . . . . . . . . . 37,007 34,472
Unearned discounts . . . . . . . . . . . . . . . . . . . . . . . . . . (61) (199)
Allowance for loan losses (Note 4) . . . . . . . . . . . . . . . . . . (437) (469)
----------------------------
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,509 33,804
Property and equipment, net (Note 5) . . . . . . . . . . . . . . . . . . 4,110 4,487
Other real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542 686
Accrued interest receivable . . . . . . . . . . . . . . . . . . . . . . . 537 471
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 248 351
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457 575
----------------------------
$ 74,564 78,556
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest bearing (Note 6) . . . . . . . . . . . . . . . . . . . . . . $ 55,084 57,595
Non-interest bearing . . . . . . . . . . . . . . . . . . . . . . . . . 11,010 12,707
--------------------------
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,094 70,302
--------------------------
Long-term debt (Note 7) . . . . . . . . . . . . . . . . . . . . . . . 450 900
Deferred income taxes (Note 9) . . . . . . . . . . . . . . . . . . . . 1,366 1,326
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 365 510
--------------------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 68,275 73,038
---------------------------
Commitments and contingencies (Notes 12, 13 & 15 ) . . . . . . . . . . .
Stockholders' equity (Notes 14, 15 & 16):
Preferred stock, 9% cumulative, nonvoting $30 par value, redeemable the
Company's option at par plus cumulative unpaid dividends. Cumulative
unpaid preferred dividends amount to $3,234,330 or $22.28 per share at
December 31, 1993. Authorized 150,000 shares; issued and
outstanding 145,200 shares in 1993 and 1992. Liquidation preference of
$7,590,330 and $7,198,290, respectively . . . . . . . . . . . . . . 4,356 4,356
Class B preferred~ stock, $1 par value. Authorized 500,000 shares; none
issued or outstanding . . . . . . . . . . . . . . . . . . . . . . . - -
Common stock, $1 par value. Authorized 10,000,000 shares; issued
2,805,385 shares in 1993 and 1992 . . . . . . . . . . . . . . . . . 2,805 2,805
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 7,358 7,358
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . (7,144) (7,915)
--------------------------
7,375 6,604
==========================
Less cost of common stock held in treasury (161.256 shares in 1993 and
1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,086) (1,086)
--------------------------
Net stockholders' equity 6,289 5,518
--------------------------
$ 74,564 78,556
==========================
</TABLE>
See accompanying notes to consolidated financial statements.
-13-
<PAGE> 14
UNITED OKLAHOMA BANKSHARE'S, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1993 1992 1991
---------------------------------
(In thousands )
<S> <C> <C> <C>
Preferred stock:
Balance at beginning and end of year . . . . . . . . . . . . 4,356 4,356 4,356
----------------------------------
Common stock:
Balance at beginning and end of year . . . . . . . . . . . 2,805 2,805 2,805
---------------------------------
Additional paid-in capital:
Balance at beginning and end of year . . . . . . . . . . . . 7,358 7,358 7,358
--------------------------------
Accumulated deficit:
Balance at beginning of year . . . . . . . . . . . . . . . . (7,915) (8,563) (8,205)
Net income (loss) . . . . . . . . . . . . . . . . . . . . . 771 648 (358)
---------------------------------
Balance at end of year . . . . . . . . . . . . . . . . . . . (7,144) (7,915) (8,563)
----------------------------------
Treasury stock:
Balance at beginning and end of year . . . . . . . . . . . . (1,086) (1,086) (1,086)
----------------------------------
Net stockholders' equity . . . . . . . . . . . . . . . . . $ 6,289 5,518 4,870
=================================
</TABLE>
See accompanying notes to consolidated financial statements.
-14-
<PAGE> 15
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1993 1992 1991
-------------------------------------
(In thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . $ 771 648 (358)
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . 368 327 313
Provision for loan losses . . . . . . . . . . . . . . . 236 128 165
Provision for market decline-other real estate . . . . . 63 38 209
Amortization of intangibles . . . . . . . . . . . . . . 147 147 147
Amortization of premium, accretion of discounts, net . . 175 116 36
Gain on sale of investment securities . . . . . . . . . - (96) (365)
Loss on sale of property and equipment . . . . . . . . . 49 - -
(Decrease) increase in interest payable . . . . . . . . (89) (220) 22
(Increase) decrease in interest receivable . . . . . . . (66) 15 76
Decrease (increase) in other real estate, accounts
receivable and other assets . . . . . . . . . . . . . 155 581 (177)
Increase (decrease) in deferred income taxes . . . . . . 40 430 (245)
(Decrease) increase in other liabilities . . . . . . . . (56) 32 (106)
---------------------------------------
Total adjustments . . . . . . . . . . . . . . . . . . 1,022 1,498 75
---------------------------------------
Net cash provided by (used in) operating activities . . . . . . 1,793 2,146 (283)
---------------------------------------
Cash flows from investing activities:
Proceeds from sales of investment securities . . . . . . . . - 1,830 14,694
Proceeds from principal payments on mortgage backed securities
9,861 6,220 2,711
Purchase of investment securities . . . . . . . . . . . . . (6,478) (10,700) (24,110)
Net increase in loans . . . . . . . . . . . . . . . . . . . (2,941) (3,747) (4,115)
Capital expenditures . . . . . . . . . . . . . . . . . . . . (336) (701) (165)
Proceeds from sale of property and equipment . . . . . . . . 296 25 -
--------------------------------------
Net cash provided by (used in) investment activities . . . . . 402 (7,073) (10,985)
---------------------------------------
Cash flows form financing activities:
Net (decrease) increase in interest bearing and non-interest
bearing deposits, savings and certificates of deposit . . (4,208) 5,477 11,420
Net decrease in short-term borrowings . . . . . . . . . . . - - (460)
Proceeds from issuance of long-term debt . . . . . . . . . . - - 1,400
Repayment of long-term debt . . . . . . . . . . . . . . . . (450) (500) -
--------------------------------------
Net cash (used in) provided by financing activities . . . . . . (4,658) 4,977 12,360
--------------------------------------
Net (decrease) increase in cash and cash equivalents . . . . . (2,463) 50 1,092
--------------------------------------
Cash and cash equivalents at beginning of year . . . . . . . . 4,830 4,780 3,688
--------------------------------------
Cash and cash equivalents at end of year . . . . . . . . . . . $ 2,367 4,830 4,780
======================================
</TABLE>
See accompanying notes to consolidated financial statements.
-15-
<PAGE> 16
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS DECEMBER 31, 1993, 1992 AND 1991
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
United Oklahoma Bankshares, Inc. (the "Company") and its subsidiaries provide
a full range of banking services to individual and corporate customers
principally in eastern Oklahoma county. The Company is subject to
competition from other financial service companies and financial
institutions. The Company is subject to regulations of the Federal Reserve
Bank. United Bank ("UB") is subject to regulations of the Federal Deposit
Insurance Corporation and the Oklahoma State Banking Department. The Company
and UB undergo periodic examinations by those regulatory authorities.
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and
assumptions. Those estimates and assumptions relate principally to the
determination of the allowance for possible loan losses and the valuation of
assets acquired in foreclosure. The accounting policies for these items and
other significant accounting policies are presented below. The consolidated
financial statements include the accounts of the Company and its
subsidiaries, all wholly owned, after elimination of all significant
intercompany accounts and transactions.
CASH AND SHORT TERM INVESTMENTS
UB is required to maintain average reserve balances with the Federal Reserve
Bank. The average amount of those reserve balances for the year ended
December 31, 1993, was approximately $520,000.
In making short-term investment decisions, the Company considers its
board-approved policies, liquidity needs, potential rate of rerun, and credit
risk.o For purposes of evaluating credit risk, the stability of the financial
institutions and other entities conducting business with the Company is
periodically reviewed.
At December 31, 1993, the Company had concentrations of credit risk with one
financial institution in the form of a correspondent bank account and federal
funds sold in the amount of $1,608,000. If the financial institution failed
to completely perform under the terms of the financial instruments, the
exposure for credit loss would be the amount of the financial instruments
less the amount covered by the Federal Deposit Insurance Corporation ("FDIC")
of $100,000.
For the purposes of the Statements of Cash Flows, the Company considers
overnight Federal funds sold to be cash equivalents.
Cash paid for interest was approximately $1,937,000, $2,518,000, and
$2,624,000 in 1993, 1992, and 1991, respectively.
INVESTMENT SECURITIES
Investment securities are carried at cost, adjusted for amortization of
premiums and accretion of discounts on a constant yield basis. The adjusted
cost of the specific securities sold is used to compute gains or losses. The
Company's intent is to evaluate the investment securities and classify them
as "Held to Maturity" or "Available for Sale" in accordance with Statement of
Financial Accounting Standards No. 115 (SFAS 115), "Accounting for Certain
Investments in Debt and Equity Securities," during the first quarter of 1994.
SFAS 115 requires debt and equity securities be classified into one of three
categories, each with a different accounting treatment:
o Debt securities that the institution has a positive intent and ability to
hold to maturity are classified as held- to-maturity and reported at
amortized cost.
-16-
<PAGE> 17
o Debt and equity securities that are bought and held principally for the
purpose of selling them in the near term are classified as trading
securities and reported at fair value with unrealized gains and losses
included in earnings.
o Debt and equity securities not classified as either held-to-maturity
securities or trading securities are classified as available for sale and
reported at fair value with unrealized gains and losses excluded from
earnings and reported as a separate component of shareholders' equity net
of tax effects.
The Company will perspectively adopt the provisions of SFAS 115, which are
mandatory for fiscal years beginning after December 15, 1993, in preparing
its 1994 financial statements. The Company expects to classify all
investment securities as available for sale, with the exception of state and
municipal securities which they intend to classify as held to maturity.
LOANS AND ASSETS ACQUIRED IN FORECLOSURE
Loans are generally carried at amounts advanced less payments received.
Interest income is recorded on discounted loans by use of a method which
produces a reasonable approximation of constant yield on the outstanding
principal. Interest income is accrued as earned on non-discounted loans
except where substantial doubt exists as to the ultimate collectibility of
the accrued interest, in which case no accrual of interest is made.
Loans on which the accrual of interest has been discontinued are designated
as non-accrual loans. Accrual of interest on loans is discontinued either
when reasonable doubt exists as to the full, timely collection of interest or
principal, or when a loan becomes contractually past due by ninety days or
more with respect to principal or interest. When a loan is placed on
non-accrual status, all interest previously accrued but not collected is
reversed against current period income. Income on such loans is then
recognized only to the extent that cash is received and where the future
collection of principal is probable. Accruals are resumed on loans only when
they are brought fully current with respect to interest and principal and
when, in the judgment of management, the loan is estimated to be fully
collectible as to both principal and interest.
The allowance for possible loan losses is maintained at levels which
management considers necessary to reflect the credit risks of the loan
portfolio. For financial reporting purposes, the provision to be charged as
an operating expense is based on an assessment of specific problem loans,
local economic conditions, past due loan loss experience and such other
factors which in management's judgment deserve current recognition necessary
to maintain the allowance at an adequate level.
Real estate and other assets acquired through foreclosure are recorded at
fair value as of that date. Fair value is based on independent appraisals
and other relevant factors. This value becomes the asset's new "cost".
After foreclosure, these assets are carried at the lower of "cost" or fair
value minus estimated costs to sell. Any subsequent write-downs are charged
against noninterest expense. Operating expenses of such properties, net of
related income, and gains and losses on their disposition are included in
noninterest expense.
While management uses all available information to recognize losses on loans
and assets acquired in foreclosure, future losses may become necessary based
on changes in economic conditions, particularly in the local economies in
which the Company operates. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the Company's
allowance for possible loan losses and carrying values of assets acquired in
foreclosure. Such agencies may require the Company to recognize additional
losses based on their judgments about information available to them at the
time of their examination.
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards No. 114 (SFAS 114), "Accounting by Creditors
for Impairment of a Loan." SFAS 114 requires that impaired loans within its
scope be measured based on the present value of expected future cash flows
discounted at the loan's effective interest rate, the loan's observable
market price, or the fair value of the collateral if the loan is collateral
dependent. If the resulting measurement is less than the recorded investment
in the loan, the creditor recognizes impairment through a valuation
allowance.
-17-
<PAGE> 18
The Company will perspectively adopt the provisions of SFAS 114, which are
mandatory for fiscal years beginning after December 15, 1994, in preparing
its 1995 financial statements. The impact of this statement is not expected
to have a material effect on the Company's consolidated financial statements.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is charged to operating expense and is computed by use of the
straight-line method over the estimated useful lives of the depreciable
assets. The estimated useful lives are 2 to 40 years for buildings and
improvements, and 3 to 20 years for furniture, fixtures and equipment.
Maintenance and repairs are charged directly to expense as incurred while
improvements are capitalized. When assets are retired or otherwise disposed
of, the cost and applicable accumulated depreciation are removed from the
respective accounts and the resulting gain or loss is reflected in
operations.
INCOME TAXES
The Company files a consolidated income tax return with its subsidiaries.
The Company's subsidiaries are charged for income taxes attributable to their
taxable income and reimbursed for any tax benefit resulting from their tax
losses and tax credits utilized by the Company to reduce consolidated taxable
income.
In February 1992, the FASB issued Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes," (SFAS 109). SFAS 109 requires a
change from the deferred method of accounting for income taxes to the asset
and liability method. Under the asset and liability method, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Under SFAS 109, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
Effective January 1, 1993, the Company adopted SFAS 109 and has reported the
cumulative effect of that change in the method of accounting for income taxes
in the 1993 consolidated statement of operations.
Pursuant to the deferred method, which was applied in 1992 and prior years,
deferred income taxes were recognized for income and expense items that were
reported in different years for financial reporting purposes and income tax
purposes using the tax rate applicable for the year of the calculation.
Under the deferred method, deferred taxes were not adjusted for subsequent
changes in tax rates.
COMPUTATION OF EARNINGS PER SHARE
Earnings per share are based on the weighted average number of shares of
common stock outstanding during the year after considering cumulative
preferred stock dividends. Cumulative preferred stock dividends accrue
annually at approximately $392,000.
EXCESS OF COST OVER ASSETS ACQUIRED
Included in other assets is a purchased core deposit intangible asset
(premium) related to the purchase of UB in 1984. The UB core deposit asset
is being amortized over 11.6 years, the estimated life of the asset based on
a study of the benefit expected to be received from the acquisition of UB's
core deposits. At December 31, 1993, the unamortized balance included in
other assets approximated $295,000.
RECLASSIFICATIONS
Certain 1991 and 1992 amounts have been reclassified to conform with the
current year presentation.
-18-
<PAGE> 19
2. Investment Securities
Management believes there has been no permanent impairment in the value of the
Company's investment securities and intends to evaluate the investment
securities and classify them as "Held-to-maturity" or "Available for sale"
during the first quarter of 1994. A comparison or recorded value and market
value of investment securities is as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1993
----------------------------------------------------------
<S> <C> <C> <C> <C>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
----------------------------------------------------------
U.S. Treasury securities . . . . . . . . . . . $ 3,383 259 - 3,642
Securities of other U.S. government agencies . 20,600 198 (119) 20,679
State & Municipals . . . . . . . . . . . . . . 5,811 121 (42) 5,890
----------------------------------------------------------
Total investment securities . . . . . . . . $ 29,794 578 (161) 30,211
==========================================================
DECEMBER 31, 1992
---------------------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------------------------------------------------------
U.S. Treasury securities . . . . . . . . . . . $ 3,377 200 - 3,577
Securities of other U.S. government agencies . 28,474 313 (143) 28,644
State & Municipals . . . . . . . . . . . . . . 1,501 7 (3) 1,505
--------------------------------------------------------
Total investment securities . . . . . . . . $ 33,352 520 (146) 33,726
========================================================
</TABLE>
The amortized cost and estimated market value of investment securities, by
contractual maturity, in thousands, are shown below as of December 31, 1993.
Expected maturities will differ from contractual maturities because borrowers
may have the fight to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
Cost Market Value
-------------------------------
<S> <C> <C>
Due in one year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -
-
Due after one year through five years . . . . . . . . . . . . . . . . . . . . 5,708 5.935
Due after five years through ten years . . . . . . . . . . . . . . . . . . . 3,050 3,145
Due after ten years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436 452
-------------------------------
9,194 9,532
Mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . 20,600 20,679
-------------------------------
$ 29,749 30,211
===============================
Proceeds from sales of investment securities and gross realized gains and losses form such sales are as follows (in
thousands):
Years ended December 31,
1993 1992 1991
---------------------------------------
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . $ - 1,830 14,694
========================================
Gross realized gains . . . . . . . . . . . . . . . . . . . . - 96 373
Gross realized losses . . . . . . . . . . . . . . . . . . . . - - (8)
--------------------------------------
Net realized gains . . . . . . . . . . . . . . . . . . . . . - 96 365
======================================
</TABLE>
-19-
<PAGE> 20
3. Loans
A summary of the Company's loans is as follows:
<TABLE>
<CAPTION>
December 31
---------------------------
1993 1992
---------------------------
(In thousands)
<S> <C> <C>
Commercial, financial and agricultural . . . . . . . . . . . . . . . . . . . $ 13,953 13,398
Real estate - construction . . . . . . . . . . . . . . . . . . . . . . . . . 1,860 1,168
Real estate - mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,236 11,545
Credit card receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . 719 741
Installment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,239 7,620
--------------------------
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,007 34,472
==========================
</TABLE>
At December 31, 1993 and 1992, loans on which interest had ceased to be accrued
approximated $481,000 and $561,000, respectively. Had the accrual status of
these been normal, approximately $42,000 and $59,000 of additional interest
would have been earned in 1993 and 1992, respectively. At December 31, 1993
and 1992, there were no commitments to lend additional funds to borrowers with
loans on which the accrual of interest has been discontinued.
At December 31, 1993 and 1992, loans to officers, directors, their immediate
families and companies in which they own a significant interest aggregated
approximately $148,000 and $176,000, respectively. During 1993 approximately
$222,000 of loan advances were made, and repayments totaled $250,000. In
management's opinion, such transactions were made on the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than normal risk.
The Company grants commercial, real estate, and consumer loans to customers
principally in the state of Oklahoma. Although the Company has a diversified
loan portfolio, the majority of its customers consist of individual and
corporate borrowers in eastern Oklahoma county.
Maturity and rate sensitivity distribution of loans at December 31, 1993 is as
follows:
<TABLE>
<CAPTION>
One Year One to Over Five
or Less Five Years Years Total
---------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C>
Commercial, financial and agricultural . . . . $ 10,385 2,837 731 13,953
Real estate-construction . . . . . . . . . . . 1,860 - - 1,860
Real estate-mortgage . . . . . . . . . . . . . 1,549 8,247 3,440 13,236
Credit card receivables . . . . . . . . . . . . 719 - - 719
Installment . . . . . . . . . . . . . . . . . . 1,110 5,637 492 7,239
--------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . $ 15,623 16,721 4,663 37,007
========================================================
Interest sensitivity of loans by maturity:
Predetermined rate . . . . . . . . . . . . . 7,498 11,771 2,027 21,296
Variable rate . . . . . . . . . . . . . . . 8,125 4,950 2,636 15,711
--------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . $ 15,623 16,721 4,663 37,007
========================================================
</TABLE>
-20-
<PAGE> 21
4. Allowance for Loan Losses
A summary of transactions in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
Years ended December 31,
1993 1992 1991
--------------------------------------------
(In thousands)
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . . . . . . . . . $ 495 330
469
Provisions charged to expense . . . . . . . . . . . . . . . . 236 128 165
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . 19 33 37
Loans charged off . . . . . . . . . . . . . . . . . . . . . . (287) (187) (37)
---------------------------------------------
$ 437 469 495
=============================================
</TABLE>
5. Property and Equipment
Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------
1993 1992
----------------------------
(In thousands)
<S> <C> <C>
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 751 1,013
Bank buildings and equipment . . . . . . . . . . . . . . . . . . . . . . . . 5,370 5,213
Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 626 586
----------------------------
6,747 6,812
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . 2,637 2,325
---------------------------
$ 4,110 4,487
===========================
</TABLE>
6. DEPOSITS
Included in interest bearing deposits are certificates of deposit in amounts of
$100,000 or more. These certificates and their remaining maturities at
December 31, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------
1993 1992
==========================
(In thousands)
<S> <C> <C>
3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,975 10,410
Over 3 months through 6 months . . . . . . . . . . . . . . . . . . . . . . . 1,690 1,357
Over 6 months through 12 months . . . . . . . . . . . . . . . . . . . . . . . 1,582 350
Over 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 800
--------------------------
$ 10,347 12,917
==========================
</TABLE>
The interest expense on these deposits approximated $386,000 and $501,000 for
the years ended December 31, 1993 and 1992, respectively.
-21-
<PAGE> 22
7. Long-term Debt
The Company contributed $1,380,000 towards the settlement of the lawsuit
brought by the FDIC against several directors and officers of the Company's
former subsidiary. The amount is included in other non-interest expense in
1991. The Company borrowed the sum of $1,400,000 from John E. Kirkpatrick of
Oklahoma City, Oklahoma, a preferred stockholder of the Company, for the
purpose of paying litigation expenses of the Company. The note is
collateralized by 100% of the stock of UB. The note requires an annual payment
on May 31 of the greater of interest plus 45% of the Company's net income from
the preceding year (with certain restrictions as to capital maintenance) or
$130,000 through 1996. At that time, the minimum cash payment increases to
$230,000 through the maturity date of July 1, 2001. Interest is calculated at
the Chase Manhattan Bank, N.A., New York City, N.Y. Prime Rate, redetermined
each payment date for the subsequent year. The Company paid $450,000 in
principal during 1993. The remaining principal balance at December 31, 1993,
of $450,000 is expected to be repaid in 1994.
8. Other Non-interest Expense
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------------------------
1993 1992 1991
--------------------------------------------
(In thousands)
<S> <C> <C> <C>
Outside service expense . . . . . . . . . . . . . . . . . . . $ 161 166 266
Advertising and business development . . . . . . . . . . . . 94 78 77
Postage . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 61 54
Stationery, printing and supplies . . . . . . . . . . . . . . 71 82 72
Collection expense including credit cards . . . . . . . . . . 107 76 (9)
Data processing expense . . . . . . . . . . . . . . . . . . . 124 142 128
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512 416 1,773
----------------------------------------------
$ 1,126 1,021 2,361
==============================================
</TABLE>
9. Income taxes
As discussed in note 1, the Company adopted SFAS 109 as of January 1, 1993.
The cumulative effect of this change in accounting for income taxes of $116,000
was determined as of January 1, 1993 and is reported separately in the
consolidated statement of operations for the year ended December 31, 1993.
The components of income taxes are as follows:
<TABLE>
<CAPTION> Years ended December 31,
------------------------------------------
1993 1992 1991
------------------------------------------
(In thousands)
<S> <C> <C> <C>
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . 208 12 -
State . . . . . . . . . . . . . . . . . . . . . . . . . . - 3 -
------------------------------------------
208 15 -
------------------------------------------
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . 16 234 (201)
State . . . . . . . . . . . . . . . . . . . . . . . . . . 42 196 (44)
------------------------------------------
58 430 (245)
------------------------------------------
Income tax expense (benefit) . . . . . . . . . . . . . . $ 266 445 (245)
==========================================
</TABLE>
-22-
<PAGE> 23
The Company's tax provision on income before provision for income taxes differs
from a normal 34% tax rate as shown be low:
<TABLE>
<CAPTION> Years ended December 31,
------------------------------------
1993 1992 1991
------------------------------------
(In thousands)
<S> <C> <C> <C>
Income before income taxes multiplied by 34% in 1993, 1992 and
1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 313 372 (205)
Increases (decreases) in taxes resulting from:
Tax exempt interest . . . . . . . . . . . . . . . . . . . (83) (29) (11)
State income taxes, net of federal income tax benefit . . 28 35 (29)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . 8 67 -
--------------------------------------
$ 266 445 (245)
=====================================
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31, 1993,
are presented below:
<TABLE>
<S> <C>
Deferred tax assets:
Other real estate, principally due to charge offs . . . . . . . . . . . . . . $ 74
Net operating loss carryforward . . . . . . . . . . . . . . . . . . . . . . . 33
Alternative minimum tax credit carryforward . . . . . . . . . . . . . . . . . 81
----------
Total gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . 188
==========
</TABLE>
<TABLE>
<S> <C>
Deferred tax liabilities:
Property and equipment, principally due to difference in depreciation . . . . $ 527
Loans receivable, principally due to allowance for loan losses . . . . . . . . 823
Purchased core deposit intangible, principally due to difference in amortization 106
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
----------
Total gross deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . 1,554
----------
Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . 1,366
==========
</TABLE>
A valuation allowance for deferred tax assets was not required as of the date
of the adoption of SFAS 109 or December 31, 1993, due to management's
expectation of the future reversal of deferred tax liabilities.
-23-
<PAGE> 24
The deferred income tax effects of timing differences between financial income
and taxable income for the years ended December 31, 1992, and 1991, are as
follows (in thousands):
<TABLE>
<S> <C> <C>
1992 1991
--------------------------
Tax depreciation less than financial depreciation . . . . . . . . . . . . . . $ (8) (2)
Tax loan loss and other real estate provision in excess of (less than)
financial provision . . . . . . . . . . . . . . . . . . . . . . . . . . . 317 (55)
Utilization of tax net operating loss carryforward . . . . . . . . . . . . . 148 -
Recognition of financial net operating loss . . . . . . . . . . . . . . . . . - (145)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27) (43)
---------------------------
$ 430 (245)
===========================
</TABLE>
At December 31, 1993, the Company has a net operating loss carryforward for
state income tax purposes of approximately $884,000 which is available to offset
future state taxable income, if any, through 2001. The Company also has
alternative minimum tax credit carryforward of approximately $81,000 which is
available to reduce future federal regular income taxes, if any, over an
indefinite period.
10. Employee Benefit Plans
The company sponsors a defined contribution 401(k) plan covering substantially
all employees under which employees' contributions may be partially matched by
the Company. The Company's contributions in 1993, 1992, and 1991 were $41,000,
$27,000, and $17,000, respectively.
11. Relationships with Certain Stockholders and Affiliates
The Company and its subsidiaries, through common owners and/or directors, are
considered to be related parties for financial reporting purposes with one
other bank holding company and its bank.
UB purchased loan participations from this bank totaling $49,000 at December
31, 1993 and sold loan participations to this bank totaling $118,000 and
$191,000 at December 31, 1993 and 1992, respectively.
-24-
<PAGE> 25
12. Financial Instruments With Off-Balance Sheet Credit Risk
The Company is a party to financial instruments with off-balance sheet credit
risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit
and standby letters of credit. These instruments involve, to varying degrees,
elements of credit risk in excess of the amount recognized in the consolidated
balance sheets. The contract amounts of those instruments reflect the extent
of involvement the Company has in particular classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by one of
the other parties to the financial instruments for commitments to extend credit
and standby letters of credit is represented by the contractual amounts of
those instruments. The Company uses the same credit policies in making
commitments and conditional obligations as it does for on-balance sheet
instruments. Financial instruments whose contract amounts represent credit risk
at December 31, 1993, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1993 1992
----------------------------
Commitments to extend credit . . . . . . . . . . . . . . . . . . . . $6,160,000 4,175,000
Standby letters of credit . . . . . . . . . . . . . . . . . . . . . 916,000 460,000
</TABLE>
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.
Commitments have fixed expiration dates or other termination clauses and may
require payment of a fee. Since some of the commitments may expire without
being drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by- case basis. The amount of the collateral
obtained if deemed necessary by the Company upon extension of credit is based
on management's credit evaluation of the customer. Collateral held varies but
may include certificates of deposit, accounts receivable, inventory, property
and equipment, real estate, livestock, and income producing properties.
Standby letters of credit are conditional commitments issued by the Company to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support private borrowing arrangements. All of the standby
letters of credit at December 31, 1993, are short-term guarantees; they expire
prior to December 31, 1994. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities to
customers. When deemed necessary, the Company may hold a variety of collateral
to support these commitments similar to the types of collateral held for
commitments to extend credit.
13. Commitments and Contingencies
The Company, through its United Del City Tower subsidiary, leases excess office
space. Future minimum rentals for non- cancelable office leases, with initial
or remaining terms of one year or more consisted of the following at December
31, 1993:
<TABLE>
<S> <C>
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 276,000
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221,000
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,000
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141,000
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,000
</TABLE>
14. Employee Stock Plans
The United Oklahoma Bankshares, Inc. Incentive Stock Option Plan ("ISO Plan")
authorizes the Board of Directors to grant stock options up to a maximum of
360,000 shares of the Company's common stock which are reserved for issuance
pursuant to both the ISO Plan and the United Oklahoma Bankshares, Inc.
Employees' Stock Purchase Plan of 1983. The ISO Plan expired in 1992. Options
are exercisable during a period of not greater than ten years from the date of
grant. At December 31, 1993, no stock options were outstanding.
-25-
<PAGE> 26
15. Agreements with Bank Regulators
The Company is operating under a written agreement with its primary bank
regulatory authority, the Federal Reserve Bank, as a result of an examination
performed as of September 30, 1985 and subsequent examinations. Under the
terms of the agreement, the Company cannot pay or receive dividends without
prior regulatory approval. During 1993 the Company obtained approval to receive
dividends of $450,000 from UB.
16. Regulatory Capital Requirements
During 1989, regulatory agencies approved regulations to implement a risk-based
capital framework that makes capital requirements more sensitive to the risk
profiles of individual banking companies. These regulations define capital as
either core capital (Tier 1) or supplementary capital (Tier 2). Core capital
consists primarily of common shareholders' equity, while supplementary capital
is comprised of preferred stock, certain debt instruments, and a portion or,
the allowance for loan losses. At December 31, 1993, the required core capital
is 4.00% and total risk-based capital is 8.00%. UB's core and total risk-based
capital exceed regulatory guidelines at December 31, 1993 and 1992,
respectively, and are as follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Tier 1 capital (core) 13.27% 13.25%
Tier 2 capital (total risk-based) 14.21 14.33
</TABLE>
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA")
became law on December 19, 1991. FDICIA contains prescribed actions which have
a significant impact on the operation of banks and their relationship with
federal regulatory agencies. The major provisions of FDICIA became effective
January 1, 1993.
-26-
<PAGE> 27
17. Parent Company Financial Statements
Following are the condensed financial statements for United Oklahoma
Bankshares, Inc. (Parent Company Only):
Statements of Operations
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------------
1993 1992 1991
-----------------------------------------
(In thousands)
<S> <C>
Income:
Dividend from UB . . . . . . . . . . . . . . . . . . . . . . 450 - -
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 8 12 8
-----------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458 12 8
-----------------------------------------
Expenses:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 42 66 42
Other . . . . . . . . . . . . . . . . . . . . . . . . . . 72 14 1,502
-----------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . 114 80 1,555
-----------------------------------------
Income (loss) before income taxes, undistributed income of
subsidiaries and cumulative effect of change in accounting
principle . . . . . . . . . . . . . . . . . . . . . . . . 344 (68) (1,536)
Income tax benefit (expense) . . . . . . . . . . . . . . . . 40 (19) 580
Income (loss) before undistributed income of subsidiaries and
cumulative effect of change in accounting principle . . . 384 (87) (956)
Equity in undistributed income of subsidiaries . . . . . . . 271 735 598
-----------------------------------------
Income (loss ) before cumulative effect of change in
accounting principle . . . . . . . . . . . . . . . . . . . 655 648 (358)
Cumulative effect of change in accounting principle . . . . . 116 - -
-----------------------------------------
Net income (loss) . . . . . . . . . . . . . . . . . . $ 771 648 (358)
=========================================
BALANCE SHEETS
December 31,
-------------------------
1993 1992
-------------------------
Assets (In thousands)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 359 132
Investment in UB at equity . . . . . . . . . . . . . . . . . . . . . . . . . 6,501 6,230
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 142
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 60
$ 6,920 6,564
=========================
Liabilities and Stockholders' Equity
Accrued expenses and other liabilities, principally deferred income taxes . . $ 181 146
Long term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 900
-------------------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 631 1,046
-------------------------
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,356 4,356
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,805 2,805
Accumulated deficit and other . . . . . . . . . . . . . . . . . . . . . . . . (872) (1,643)
-------------------------
Net stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . 6,289 5,518
-------------------------
$ 6,920 6,564
=========================
</TABLE>
-27-
<PAGE> 28
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------
1993 1992 1991
---------------------------------------
(In thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . 655 648 (358)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Equity in undistributed income of subsidiaries . . . . (271) (735) (598)
Loss on sale of land . . . . . . . . . . . . . . . . . 49 - -
Increase (decrease) in other liabilities . . . . . . . 151 349 (168)
------------------------------------------
Total adjustments . . . . . . . . . . . . . . . . . (71) (386) (1,124)
------------------------------------------
Net cash provided by (used in) operating activities . . . . . 584 262 (1,124)
------------------------------------------
Cash flows from investing activities:
Proceeds from sale of land . . . . . . . . . . . . . . . . 93 - -
-------------------------------------------
Net cash provided by investing activities . . . . . . . . . . 93 - -
-------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt . . . . . . . . . - - 1,400
Repayment of long-term debt . . . . . . . . . . . . . . . (450) (500) -
-------------------------------------------
Net cash (used in) provided by financing activities . . . . . (450) (500) 1,400
-------------------------------------------
Net increase (decrease) in cash and cash equivalents . . . . 227 (238) 276
-------------------------------------------
Cash and cash equivalents at beginning of year . . . . . . . 132 370 94
-------------------------------------------
Cash and cash equivalent at end of year . . . . . . . . . . . 359 132 370
===========================================
</TABLE>
-28-
<PAGE> 29
INDEPENDENT AUDITORS' REPORT
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
The Board of Directors and Stockholders
United Oklahoma Bankshares, Inc.:
We have audited the accompanying consolidated balance sheets of United Oklahoma
Bankshares, Inc. (the Company) and subsidiaries as of December 31, 1993 and
1992, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1993. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated 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 mounts 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of United Oklahoma
Bankshares, Inc. and subsidiaries as of December 31, 1993 and 1992, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1993, in conformity with generally
accepted accounting principles.
As discussed in note 1 to the consolidated financial statements, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," in 1993.
KPMG PEAT MARWICK
Oklahoma City, Oklahoma
February 25, 1994
-29-
<PAGE> 30
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONDENSED AVERAGE BALANCE SHEETS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
------------------------------------------------
1993 1992
------------------------------------------------
<S> <C> <C> <C> <C>
AVERAGE ASSETS:
Cash and due from banks . . . . . . . . . . $ 2,543 3.23 % 2,438 3.27 %
Federal funds sold . . . . . . . . . . . . . 1,933 2.45 1,720 2.31
Investment securities . . . . . . . . . . . 33,197 42.14 31,235 41.88
Loans . . . . . . . . . . . . . . . . . . . 35,519 45.08 32,919 44.14
Less: Allowance for loan losses . . . . . . (468) (0.59) (496) (0.67)
Property and equipment, net . . . . . . . . 4,244 5.39 4,158 5.58
Accrued interest and other assets . . . . . 1,817 2.30 2,600 3.49
-------------------- ------------------
$ 78,785 100.00 % 75,574 100.00 %
==================== ==================
AVERAGE LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits:
Demand:
Individuals, partnerships and corporations 12,592 15.99 11,636 15.61
Due to banks . . . . . . . . . . . . . . - 0.00 - 0.00
NOW and money market checking . . . . . . 9,009 11.43 7,824 10.49
Savings and money market savings . . . . . 19,328 24.53 16,656 22.33
Time . . . . . . . . . . . . . . . . . . . 29,464 37.40 30,421 40.79
------------------- -----------------
Total deposits . . . . . . . . . . . . . 70,393 89.35 66,537 89.22
Short-term borrowings . . . . . . . . . . . 18 0.03 17 0.03
Long-term debt . . . . . . . . . . . . . . . 635 0.80 1.125 1.51
Accrued interest and other liabilities . . . 1,851 2.35 1,642 2.20
------------------- ------------------
Total liabilities . . . . . . . . . . . 72,897 92.53 69,321 92.96
------------------- ------------------
Stockholders' equity:
Preferred stock . . . . . . . . . . . . . 4,356 5.53 4.356 5.84
Common stock . . . . . . . . . . . . . . . 2,805 3.56 2,805 3.76
Additional paid-in capital . . . . . . . . 7,358 9.34 7,358 9.87
Accumulated deficit . . . . . . . . . . . (7,545) (9.58) (8.180) (10.97)
------------------- -------------------
6,974 8.85 6,339 8.50
Less cost of common stock held in treasury (1,086) (1.38) (1.086) (1.46)
------------------- ------------------
Net stockholders' equity . . . . . . . . 5,888 7.47 5,253 7.04
------------------ ------------------
78,785 100.00 % 74,574 100.00 %
================== =================
</TABLE>
-30-
<PAGE> 31
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF NET INTEREST INCOME
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------------------------------------
1993 1992
-----------------------------------------------------------------
Average Income/ Yield Average Income/ Yield
Balance Expense Rate Balance Expense Rate
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning Assets:
Investment securities . . . . . . . . 33,197 1,936 5.83 31,235 2,211 7.08
Federal funds sold . . . . . . . . . . 1,933 56 2.90 1,720 59 3.43
Loans, net of unearned discount (1) . 35,519 3,243 9.13 32,919 3,190 9.69
------------------------- ------------------------
Total earning assets/total interest $70,649 5,235 7.41 % 65,874 5,460 8.29 %
========================= ========================
Income . . . . . . . . . . . . . . .
Interest Bearing Liabilities:
Interest bearing deposits . . . . . 57,801 1,804 3.12 54,901 2,232 4.07
Short-term borrowings . . . . . . . 18 1 5.56 17 1 5.88
Long-term debt . . . . . . . . . . . 635 42 6.61 1,125 66 5.87
------------------------ -------------------------
Total interest bearing
liabilities/total interest expense 58,454 1,847 3.16 56,043 2.299 4.10
Differentials/net interest income . . . . . 12,195 3,388 4.25 % 9,831 3,161 4.19 %
======================== ========================
Net interest income as reported/net
interest yield on interest earning assets 4.80 % 4.80 %
==== ====
</TABLE>
(1) Loans, classified as non-accruing at included in the average balance
calculation.
-31-
<PAGE> 32
SELECTED STATISTICAL, INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
LOAN CONCENTRATIONS
<TABLE>
<CAPTION>
December 31, 1993
--------------------------
Percent
Amount of Total
-------------------------
<S> <C> <C>
Commercial, financial and agricultural . . . . . . . . . . . $ 13,953 37.71 %
Real estate-construction . . . . . . . . . . . . . . . . . . 1,860 5.03
Real estate-mortgage . . . . . . . . . . . . . . . . . . . . 13,236 35.77
Credit card receivables . . . . . . . . . . . . . . . . . . . 719 1.94
Installment . . . . . . . . . . . . . . . . . . . . . . . . . 7,239 19.55
------------------------
Total loans . . . . . . . . . . . . . . . . . . . . . . $ 37,007 100.00 %
========================
- ----------------
</TABLE>
Participations purchased amounting to $1,570,000 at December 31, 1993 are
included in commercial. In addition, it should be noted that certain commercial
loans may be secured by real estate.
-32-
<PAGE> 33
SELECTED STATISTICAL INFORMATION
UNITED 0KLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Years ended December 31
-----------------------------
1993 1992
-----------------------------
(In thousands)
<S> <C> <C>
Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . $ 469 495
Charge-offs:
Commercial, financial and agricultural . . . . . . . . . . . . . . . (264) (175)
Credit card receivables, installment . . . . . . . . . . . . . . . . (23) (12)
-----------------------------
Total charge-offs . . . . . . . . . . . . . . . . . . . . . . . (287) (187)
-----------------------------
Recoveries:
Commercial, financial and agricultural . . . . . . . . . . . . . . . 19 33
-----------------------------
Total recoveries . . . . . . . . . . . . . . . . . . . . . . . . 19 33
-----------------------------
Net charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (268) (154)
Additions charged to operating expense . . . . . . . . . . . . . . . . . 236 128
-----------------------------
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . $ 437 469
=============================
Total average loans, net of unearned discount . . . . . . . . . . . . . . $ 35,519 32,919
=============================
Ratio of net charge-offs to total average loans,
net of unearned discount . . . . . . . . . . . . . . . . . . . . . . . 0.75 % 0.47%
=============================
Total loans, net of unearned discount . . . . . . . . . . . . . . . . . . $ 36,946 34,273
=============================
Ratio of allowance for loan losses to total loans,
net of unearned discount . . . . . . . . . . . . . . . . . . . . . . . 1.18% 1.37%
=============================
</TABLE>
-33-
<PAGE> 34
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------------------------------------------
1993 1992
---------------------------------------------------------------
% of Loans
IN EACH
AMOUNT CATEGORY Amount
(In thousands)
<S> <C> <C> <C> <C> <C>
Commercial, financial and agricultural . . . . $ 73 37.44 % 146 38.88
Real estate-construction . . . . . . . . . . . 4 5.29 3 3.39
Real estate-mortgage . . . . . . . . . . . . . 99 35.51 90 33.49
Credit card receivables and installment . . . - 21.76 4 24.24
------------------------- -----------------------
Total . . . . . . . . . . . . . . . . . . . 176 100.00 % 243 100.00
====== =======
Unallocated . . . . . . . . . . . . . . . . . . 261 226
--------- -------
Total allowance . . . . . . . . . . . . . . $ 437 469
========= =======
</TABLE>
- -------------------
The basis allocation of the allowance for loan losses is a review of individual
loans, based on the bank's credit review and grading system, for possible
exposure to loss, except for credit card and installment loans whose allocation
is based primarily on historical net charge-off experience. The unallocated
portion of the allowance provides for unforeseen credit risk exposure. The
specific allocation of the allowance, therefore, represents only a numerical
evaluation of identified risks in the portfolio at a point in time and does not
necessarily represent anticipated charge-offs.
-34-
<PAGE> 35
SELECTED Statistical INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
MATURITY DISTRIBUTION OF INVESTMENT SECURITIES
<TABLE>
<CAPTION>
Within One Year After One Year After Five Years Average
But Within But Within After Maturity
Five Years Ten Years Ten Years Total (In Years)*
Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield %
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1993
U.S. Treasury $ - - % 3,383 7.39 % - - % - - % 3,383 7.39
Securities
Mortgage-backed - - - - - - - - 20,60 5.56
securities
State & municipals - - 2,325 3.71 3,050 4.64 436 6.20 5,811 4.39
------------- ------------- -------------- ------------- ------------- -------
Total % 5,708 7.17 % $3,050 4.64 % $ 436 6.20 % $29.7 5.54 % 18.51
============= ============= ============== ============= ============= =======
December 31, 1992
U.S. Treasury $ - - % $3,377 7.18 % - - - - $ 3,377 7.18 %
securities
Mortgage-backed - - - -
securities
State & municipals - - 107 6.80 1,394 5.98 - - 1,501 6.04
------------- ------------- -------------- ------------- ------------- -------
Total - - $ $3,484 7.18 % 1,394 5.98 % - - % $33,352 7.62 % 21.25
amount/yield ============= ============= ============== ============= ============= =======
</TABLE>
- --------------
*Includes contractual maturities of mortgage-backed securities which may vary
significantly from actual cash flows due to prepayments.
DISTRIBUTION OF AVERAGE DEPOSITS
<TABLE>
<CAPTION>
--------------------------------------------------------------
Years ended December 31,
--------------------------------------------------------------
1993 1992
-------------------- --------------------
Average Average
-------------------- --------------------
Amount Rate Amount Rate
-------------------- --------------------
<S> <C> <C> <C> <C>
Demand:
Individuals, parties hips and $ 12,592 - % $ - %
corporations . . . . . . . . . . . . . 11,636
Due to banks . . . . . . . . . . . . - - - -
NOW and money market checking . . . . . . 9,009 2.55 7,824 3.04
Savings and money market savings . . . . 19,328 2.90 16,656 3.60
Time of less than $100',000 17,089 3.67 18,920 4.72
Tune of $100,000 or more 12,375 3.12 11,501 4.36
-------------------- --------------------
$ 70,393 2.56 % $ 66,537 3.35 %
==================== ====================
</TABLE>
-35-
<PAGE> 36
SELECTED STATISTICAL INFORMATION
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
The following table summarizes information with respect to certain short-term
borrowings for the years indicated.
<TABLE>
<CAPTION>
Amount Outstanding Average Amount
End of Year Maximum Outstanding
------------------- Amount ------------------------
Average Outstanding Average
Interest at any Month Interest
Amount Rate End Amount Rate
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Federal funds purchased and securities sold . . - - % $ - $ 18 2.93%
1992
Federal funds purchased and securities sold - - % 1,000 17 5.88%
1991
Federal funds purchased and securities sold - - % 410 37 5.41%
- -------------
</TABLE>
RETURN ON EQUITY AND ASSETS
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1993 1992 1991
-----------------------------
<S> <C> <C> <C>
Ratio of net income (loss) to:
Average ending assets . . . . . . . . . . . . . . . . . . . . . . . 1.09% 1.00 (0.65)%
Average total assets . . . . . . . . . . . . . . . . . . . . . . . . 0.98 0.87 (0.54)
Average total assets . . . . . . . . . . . . . . . . . . . . . . . . 13.09 12.34 (7.32)
Ratio of net income (loss) to:
Average stockholders' equity 7.47 7.04 7.44
Average total loans . . . . . . . . . . . . . . . . . . . . . . . . 16.58 15.96 17.54
Dividend payment ratio . . . . . . . . . . . . . . . . . . . . . . . . N/A N/A N/A
</TABLE>
-36-
<PAGE> 37
DIRECTORS AND EXECUTIVE OFFICERS
UNITED OKLAHOMA BANKSHARES, INC.
JOHN N. AINSWORTH, 85. Director of the Company since 1982 - term expiring in
1995. Mr. Ainsworth, formerly a senior bank executive, is retired.
WILLIS WHEAT, 68. Director of the Company since 1989 - term expiring in 1994.
Mr. Wheat is past Dean of The Meinders School of Business Education at
Oklahoma City University. Prior to that time, Mr. Wheat was Executive Vice
President at Liberty National Bank, N.A., in Oklahoma City from 1964 to
1987.
MORRISON G. TUCKER, 82. Director of UB since 1984, and of the Company since
1974 - term expiring in 1996. Mr. Tucker is Chairman of UB and the
Company. Mr. Tucker is the principal common stockholder.
WILLIAM P. DOWLING, 60. President and Director of UB since February 1989.
Prior to that time Mr. Dowling served as Executive Vice President of
Liberty National Bank. N.A. in Oklahoma City, since 1959.
JUNE A. O'STEEN, 57. Senior Vice President of UB, and Principal Accountant for
the Company since June, 1989. Prior to that time Ms. O'Steen was Senior
Vice President and General Auditor of UB, since 1984, and the Company,
since 1980.
-37-
<PAGE> 38
EXECUTIVE COMPENSATION
The executive compensation disclosures required by Regulation S-K will be
included in the annual meeting proxy statement to be filed not later than
120 days after the end of the fiscal year and are hereby incorporated by
reference.
\
<PAGE> 39
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the name and address of each shareholder who
beneficially owns more than 5% of the Company's common stock, the number of
shares beneficially owned by each, and the percent of outstanding common stock
so owned as of December 31, 1993. Unless otherwise indicated, each person has
sole voting and investment power with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
Number of Percent
Name and Address Shares of Class
- ---------------- ------ --------
<S> <C> <C>
John G. Tucker 260,000 9.83%
524 East 84th Street
New York, New York
Morrison G. Tucker
2403 Northwest Grand Blvd. 261,142 9.91%
Oklahoma City, Oklahoma
Suzanne Tucker-Fong 150,716 5.70%
P O Box 82958
Oklahoma City, Oklahoma
</TABLE>
-39-
<PAGE> 40
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF CLASS
COMMON 9% PREFERRED COMMON 9% PREFERRED
<S> <C> <C> <C> <C>
John N. Ainsworth 30,000(1) 1,924(1) 1.13% 1.33%
Morrison G. Tucker 261,142 36,998(2) 9.91% 25.48%
All officers and
directors as a
group 291,142 38,922 11.04% 26.81%
</TABLE>
- ---------
(1) Includes 1,200 shares of common stock and 34 shares of 9% preferred
stock held of record and beneficially owned by Mr. Ainsworth's wife.
(2) Includes 36,998 shares of 9% preferred stock held of record and
beneficially owned by Mr. Tucker's wife.
-40-
<PAGE> 41
CERTAIN TRANSACTIONS
In the ordinary course of business, United Bank ("UB") has had banking
transactions with some of the directors, executive officers and controlling
shareholders of the Company. UB expects to have such banking transactions in
the future. All such loans are and have been made in compliance with
applicable laws, in the ordinary course of business and on substantially the
same terms (including interest rates and collateral) as those prevailing at the
time for comparable transactions with unaffilliated persons. In the opinion of
management, no such loan did involve more than the normal risk of
collectibility or present any other unfavorable features.
-41-
<PAGE> 42
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.
UNITED OKLAHOMA BANKSHARES, INC.
By: /s/Morrison O. Tucker
--------------------------------
Morrison G. Tucker, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has linen signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/Morrison G. Tucker Chairman of the Board
---------------------------------- and President
Morrison G. Tucker
/s/June A. O'Steen Principal Accountant March 28, 1994
----------------------------------
June A. O'Steen
/s/John N. Ainsworth Director
----------------------------------
John N. Ainsworth
/s/Willis Wheat Director
----------------------------------
Willis Wheat
* By: Morrison G. Tucker
--------------------------
Morrison G. Tucker
* As Attorney in fact pursuant to Power
of Attorney filed as Exhibit 25
-42-
<PAGE> 43
<TABLE>
FORM 10-K CROSS REFERENCE SECTION
<S> <C> <C> <C>
Part I Item 1 Business 2
Item 2 Properties 2
Item 3 Legal Proceedings 2
Item 4 Submission of Matters to a Vote of Security Holders (during the *
fourth quarter of 1993)
Part II Item 5 Market for the Company's Common Stock and Related Stockholder 3
Matters
Item 6 Selected Financial Data 4
Item 7 Management's Discussion and Analysis of Financial Condition and 5-11
Results of Operations
Item 8 Financial Statements and Supplementary Data 12-36
Item 9 Disagreements on Accounting and Financial Disclosure *
Part III Item 10 Directors and Executive Officers and Corporations 37
Item 11 Executive Compensation 38
Item 12 Security Ownership of Certain Beneficial Owners and Management 39,40
Item 13 Certain Relationships and Related Transactions 41
Part IV Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1) Financial Statements: 29
o Independent Auditors' Report 12
o Consolidated Statements of Operations - years ended 13
December 3, 1993, 1992, and 1991
o Consolidated Balance Sheets 14
December 31, 1993 and 1992
o Consolidated Statements of Changes in Stockholders' 15
Equity - years ended December 31, 1993, 1992, and
1991
o Consolidated Statements of Cash Flows - years ended 15
December 31, 1993, 1992, and 1991
o Notes to Consolidated Financial Statements - years 16-28
ended December 31, 1993, 1992, and 1991
(2) Financial Statement Schedules:
o All schedules normally required by Form 10-K are
omitted since they are either not applicable or the
required information is shown in the consolidated
financial statements or the notes thereto.
</TABLE>
-43-
<PAGE> 44
(a) (3) (3) Exhibits:
3 Articles of incorporation and bylaws (filed as **
Exhibit 3(a) and 3(b) to Company's Registration
Statement No. 2-85935, "Registration Statement")
4 Instruments defining the rights of security **
holders, including indentures (filed as Exhibit
3(a) to Company's Registration Statement
10 Material Contracts: **
(a) United Oklahoma Bankshares, Inc. Incentive **
Stock Option Plan of 1982 (filed as Exhibit
10(a) to Company's Registration Statement Co
(b) Forms of United Oklahoma Bankshares, Inc. **
Incentive Stock Option Agreements (filed as
Exhibit 10(b) to Company's Registration
Statement
(c) United Oklahoma Bankshares, Inc. Employee **
Stock Ownership Plan and Trust of 1982 (file
as Exhibit 10(c) to Company's Registration
Statement
(d) Stockholders' resolutions establishing Unite **
Oklahoma Bankshares Employees' Stock Purchas
Plan of 1983 (filed as Exhibit 10(d) to
Company's Registration Statement
(e) Form of agreements relating to stock purchas **
under the United Oklahoma Bankshares
Employees' Stock Purchase Plan of 1983 (file
as Exhibit 10(e) to Company's Registration
Statement)
(f) Letter Agreement, dated April 26, 1982, **
between United Oklahoma Bankshares, Inc. and
Fort Worth National Bank, as amended (filed
Exhibit 10(1) to Company's Registration
Statement)
(g) Promissory Note and Security Agreement, date **
April 29, 1982, between United Oklahoma
Bankshares, Inc. Employee Stock Ownership Pl
and Trust of 1982 and The Fort Worth National
Bank (filed as Exhibit 10(m) to Company's
Registration Statement)
-44-
<PAGE> 45
(a) (3) Exhibits:
10 Material Contracts: **
(h) Deposit Insurance Transfers and Asset Purchase **
Agreement, dated May 11, 1984, between United
Oklahoma Bankshares, Inc., as agent for United
Del City Bank, and the Federal Deposit
Insurance Corporation (filed as Exhibit to
Form 8-K dated May 25, 1984
(i) Stock Purchase Agreement between United Del **
City Bank and United Oklahoma Bank (filed as
Exhibit 10 to Form 10-K dated December 31,
1986)
(j) Accounts Receivable Purchase Agreement between **
United Del City Bank and United Oklahoma Bank
(filed as Exhibit 10 to Form 10-K dated
December 31, 1986)
22 Subsidiaries of the Company 46
25 Power of Attorney 47,48
(b) Reports on Form 8-K 49
* Not Applicable
** Included in previous filings
-45-
<PAGE> 46
SUBSIDIARIES
The Company has two wholly owned subsidiaries, United Bank and United Loan and
Thrift Company, Inc. The following corporation is a wholly Owned subsidiary of
United Bank:
United Del City Tower, Inc.
-46-
<PAGE> 47
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That each of the undersigned do hereby constitute and appoint Morrison G.
Tucker his true and lawful attorney-in-fact and agent with full power of
substitution, for him and in his name, place and stead, and in any and all
capacities to execute and sign Annual Report on Form 10-K for the 1993 fiscal
year of United Oklahoma Bankshares, Inc. and to file the same, with all
exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and age fit may lawfully do or cause
to be done by virtue hereof.
DATED THIS 28th day of March, 1994.
---------------------------
JOHN N. AINSWORTH, Director
---------------------------
WILLIS WHEAT, Director
----------------------------
MORRISON G. TUCKER, Director
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 28th day of Mach,
1994, by Ainsworth:
---------------------------------------
Notary Public
My commission expires:
June 6, 1994
- ----------------------
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 28th day of May, 1994,
by Willis Wheat.
---------------------------------------
Notary Public
My commission expires:
June 6, 1994
- ----------------------
-47-
<PAGE> 48
STATE OF OKLAHOMA )
) ss.
COUNTY OF OKLAHOMA )
The foregoing instrument was acknowledged before me this 28th:day of March,
1994, by Morrison G. Tucker.
-------------------------------
Notary Public
My commission expires:
June 6. 1994
- ------------
-48-
<PAGE> 49
REPORT'S ON FORM 8-K
The Company did not file any reports on Form 8-K during the fourth quarter of
1993.
-49-
<PAGE> 1
EXHIBIT 13(d)(5)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarter ended March 31,1996 Commission file number 0-12047
UNITED OKLAHOMA BANKSHARES, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Oklahoma 73-0969432
- ---------------------------------------------------- ----------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 S.E. 29th Street
Del City, Oklahoma 73115
------------------ ----------------------------------------------------
(Address of principal executive offices) Zip Code
</TABLE>
Registrant's telephone number, including area code (405) 677-8711
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 such
filing requirements for the past 90 days.
[X] Yes No [ ]
As of April 30, 1996, 2,532,237 shares of the registrant's common stock, par
value $1.00 per share, were outstanding.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM I. Financial Statements
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except earnings per share)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
1996 1995
(Unaudited)
<S> <C> <C>
Interest income:
Interest and fees on loans . . . . . . . . . . . . $1,172 975
Interest on federal funds sold . . . . . . . . . . 49 49
Interest on securities . . . . . . . . . . . . . . 403 434
-------------------------------
Total interest income. . . . . . . . . . . . . . 1,624 1,458
Interest expense:
Interest on deposits . . . . . . . . . . . . . . . 632 609
Interest on long-term debt . . . . . . . . . . . . --- ---
-------------------------------
Total interest expense . . . . . . . . . . . . . 632 609
-------------------------------
Net interest income . . . . . . . . . . . . . . 992 849
Provision for loan losses . . . . . . . . . . . . . . . 84 73
-------------------------------
Net interest income after provision for loan losses 908 776
-------------------------------
Non-interest expense:
Service charges on deposits . . . . . . . . . . . 191 188
Other service charges and fees, net . . . . . . . 56 44
Security gains . . . . . . . . . . . . . . . . . . --- ---
-------------------------------
Total non-interest income . . . . . . . . . . . 247 232
-------------------------------
Non-interest expense:
Salaries and employee benefits . . . . . . . . . . 555 463
Occupancy expense, net . . . . . . . . . . . . . . 57 53
Other real estate owned . . . . . . . . . . . . . 2 ---
-------------------------------
Other . . . . . . . . . . . . . . . . . . . . . . 185 282
-------------------------------
Total non-interest expense . . . . . . . . . . . 799 798
-------------------------------
Income before income taxes . . . . . . . . . . . 356 210
-------------------------------
Income tax expense . . . . . . . . . . . . . . . . . . 97 41
-------------------------------
Net income . . . . . . . . . . . . . . . . . . .
-------------------------------
259 169
===============================
Earnings per share** . . . . . . . . . . . . . . . . . 0.06 0.03
===============================
Average outstanding common shares . . . . . . . . . . . 2,532 2,532
===============================
</TABLE>
** Earnings per share is calculated on year-to-date net income less the
unpaid year-to-date preferred stock dividends. Preferred stock
dividends accrue at $98,000 per quarter. See the Consolidated Balance
Sheet, Stockholder Equity section for the number of authorized shares
outstanding and total cumulated unpaid dividends.
<PAGE> 3
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
---- ----
(In thousands)
<S> <C> <C>
ASSETS
Cash and due from banks . . . . . . . . . . . . . . . . $2,616 2,440
Federal funds sold . . . . . . . . . . . . . . . . . . 2,530 ---
Investment securities . . . . . . . . . . . . . . . . . 28,550
Loans . . . . . . . . . . . . . . . . . . . . . . . . . 48,482 41,974
Unearned discounts . . . . . . . . . . . . . . . . (1) (14)
Allowance for loan losses . . . . . . . . . . . . (593) (559)
-----------------------------------
Loans, net . . . . . . . . . . . . . . . . . . 47,888 41,401
Property and equipment, net . . . . . . . . . . . . . . 3,828 4,051
Other real estate . . . . . . . . . . . . . . . . . . . 114 180
Accrued interest receivable . . . . . . . . . . . . . . 612 612
Accounts receivable . . . . . . . . . . . . . . . . . 74 90
Other assets . . . . . . . . . . . . . . . . . . . . . 210 358
-----------------------------------
$86,422 79,720
===================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest bearing . . . . . . . . . . . . . . . . . $58,818 56,178
Non-interest bearing . . . . . . . . . . . . . . . 17,838 13,469
===================================
Total deposits 76,656 69,647
===================================
Securities sold under repurchase agreement . . . . . . --- 1,500
Deferred taxes . . . . . . . . . . . . . . . . . . . . 1,295 1,199
Other liabilities . . . . . . . . . . . . . . . . . . . 493 425
===================================
Total liabilities . . . . . . . . . . . . . . 78,444 72,771
===================================
Commitments and contingencies . . . . . . . . . . . . . --- ---
Stockholders' equity:
Preferred stock, 9% cumulative, nonvoting $30 par
value, redeemable at the Company's option at par
plus cumulative unpaid dividends. Cumulative
unpaid preferred dividends amount to $4,116,430 or
$28.35 per share at March 31, 1996. Authorized
150,000 shares; issued and outstanding 145,199
shares in 1996 and 1995 . . . . . . . . . . . . 4,356 4,356
Class B preferred stock, $1 par value. Authorized --- ---
50,000 shares; none issued or outstanding . . .
Common stock, $1 par value. Authorized 10,000,000
shares; issued 2,805,385 in 1996 and 1995 . . .
2,805 2,805
Additional paid-in capital . . . . . . . . . . . . 7,358 7,358
Accumulated deficit . . . . . . . . . . . . . . . (5,281) (6,315)
Net unrealized holding loss on investment securities
available for sale, net of deferred taxes . . . (163) (158)
-----------------------------------
9,075 8,046
Less cost of common stock held in treasury (273,148 (1,097) (1,097)
shares in 1996 and 1995) . . . . . . . . . . . .
-----------------------------------
Net stockholders' equity . . . . . . . . . . . 7,978 6,949
-----------------------------------
$86,422 79,720
===================================
</TABLE>
-3-
<PAGE> 4
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Preferred stock:
Balance at beginning and end of year . . . . . . . $4,356 4,356
-----------------------------------
Common stock:
Balance at beginning and end of year . . . . . . . 2,805 2,805
-----------------------------------
Additional paid-in capital:
Balance at beginning and end of year . . . . . . . 7,358 7,358
-----------------------------------
Accumulated deficit:
Balance at beginning of year . . . . . . . . . . . (5,540) (6,315)
Net income . . . . . . . . . . . . . . . . . . . . 259 775
-----------------------------------
Balance at end of year . . . . . . . . . . . . . . (5,281) (5,540)
-----------------------------------
Net unrealized holding gain (loss) on investment
securities available for sale:
Balance at beginning of year . . . . . . . . . . . (59) (158)
Implementation of change in accounting for investment --- ---
securities, net of deferred taxes . . . . . .
Change in net unrealized holding gain (loss) on (104) 99
investment securities available for sale, net of
deferred taxes . . . . . . . . . . . . . . . .
-----------------------------------
Balance at end of year . . . . . . . . . . . . . . (163) (59)
Treasury stock:
Balance at beginning and end of year . . . . . . . (1,097) (1,097)
Purchase stock . . . . . . . . . . . . . . . . . . --- ---
-----------------------------------
Balance at end of year . . . . . . . . . . . . . . (1,097) (1,097)
Net stockholders' equity . . . . . . . . . . . $7,978 7,823
===================================
</TABLE>
-4-
<PAGE> 5
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1996 1995
------------------------------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net Income (loss) . . . . . . . . . . . . . . . . $259 169
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation . . . . . . . . . . . . . . . . . 106 102
Provision for loan losses . . . . . . . . . . 84 73
Provision for market decline-other real estate 2 ---
Amortization of intangibles . . . . . . . . . --- 37
Amortization of premium, accretion of discounts,
net . . . . . . . . . . . . . . . . . . . . 22 19
Gain on sale of securities . . . . . . . . . . --- ---
Decrease in interest payable . . . . . . . . . (178) 46
(Increase) decrease in interest receivable . . (23) 68
(Increase) decrease in other assets . . . . . (84) 34
Increase (decrease) in deferred income taxes . 86 12
Increase (decrease) in other liabilities . . (196) (48)
-----------------------------------
Total adjustments . . . . . . . . . . . . . (181) 343
-----------------------------------
Net cash provided by operating activities . . . . . . . 78 512
-----------------------------------
Cash flows from investing activities:
Proceeds from principal payments on mortgage backed 294 368
securities . . . . . . . . . . . . . . . . . .
Net (increase) decrease in loans . . . . . . . . . (4,338) 2,265
Capital expenditures . . . . . . . . . . . . . . . (158) (36)
-----------------------------------
Net cash used in investing activities . . . . . . . . . (4,202) 2,597
-----------------------------------
Cash flows from financing activities:
Net increase in interest bearing and non-interest 386 3,441
bearing demand deposits, savings and certificates of
deposit . . . . . . . . . . . . . . . . . . . . .
Repayment of short-term debt . . . . . . . . . . . - (1,500)
==================-----------------
Net cash provided by financing activities . . . . . . . 386 1,941
==================-----------------
Net increase in cash and cash equivalents . . . . . . . (3,738) 5,050
==================-----------------
Cash and cash equivalents at beginning of period . . . 8,884 2,440
==================
. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,146 7,490
===================================
Supplemental disclosure of noncash investing activities:
Net unrealized holding loss on investment securities (163) (59)
available for sale, net of deferred tax
</TABLE>
-5-
<PAGE> 6
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of United Oklahoma Bankshares, Inc. (the
"Company") and its subsidiaries conform to generally accepted accounting
principles and practices within the banking industry. The following represent
the more significant of those policies and practices.
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all wholly owned, after elimination of all significant
intercompany accounts and transactions.
SECURITIES
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (Statement 115), AT January 1, 1994. Under Statement 115, the
Company classified its debt and marketable equity securities in one of three
categories: trading, available for sale, or held to maturity. Trading
securities are bought and held principally for the purpose of selling them in
the near term. No investment securities within the portfolio are considered
trading. Held to maturity securities are those securities for which the Company
has the ability and intent to hold until maturity. All other securities not
included in held to maturity are classified as available for sale.
-6-
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND OPERATING RESULTS
Results of Operations-Quarter Ended March 31, 1996
The following discussion and analysis is designed to provide a better
understanding of the significant factors related to the Company's results of
operations, financial condition, liquidity and capital resources (including its
subsidiary bank, United Bank (LIB) and its non-bank subsidiaries). Management
is unaware of any trends, events or uncertainties that will have or that are
reasonably likely to have a material effect on the Company's operations.
OVERVIEW
Net income for the first quarter of 1996 was approximately $259,000, compared
to $169,000 for the first quarter of 1995. The before tax income for the first
quarter of 1996 was $356,000 compared to $210,000 for the first quarter of
1995. Earnings per share reflected income of $0.06 at March 31, 1996 compared
to income of $0.03 per share at March 31, 1995. Earnings per share is
calculated on year-to date net income less the unpaid year-to date preferred
stock dividends. Unpaid preferred stock dividends accrue AT $98,000 per
quarter.
NET INTEREST INCOME
Net interest income was $992,000 for the three months ended March 31, 1996
compared to $849,000 for the same period in 1995, representing an increase of
$143,000 or 17%. The volume of average earning assets increased $2,981,000
while average interest bearing liabilities decreased $440,000 between March 31,
1995 and 1996. The yield on average earning assets increased 35 basis points
from March 31, 1995 to March 31, 1996 while the rate paid on average interest
bearing liabilities increased 20 basis points during the same time period
resulting in an increase in the spread between the yield on earning assets and
rate paid on interest bearing liabilities of 15 basis points.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses was approximately $593,000 at March 31, 1996
compared to $538,000 at December 31, 1995 and $601,000 AT March 31, 1995. As a
percentage of loans, the allowance for loan losses was 1.24%, 1.23% and 1.51%
at March 31, 1996, December 31, 1995 and March 31, 1995 respectively.
-7-
<PAGE> 8
SECURITIES
The Company has designated securities as "Held to maturity" or "Available for
sale". A comparison of recorded value and market value of securities is as
follows (in thousands):
<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------------------------------------------------
ESTIMATED
Held to maturity: AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
State & municipals . . . . . . . . . . . . . . $ 789 22 (1) 810
Total "Held to maturity" securities . . . . . . 789 22 (1) 810
==================================================================
Available for sale:
U.S. Treasury securities . . . . . . . . . . . $ 2,094 6 (3) 2,097
Mortgage-backed securities . . . . . . . . . . 16,869 44 (239) 16,674
State & municipals . . . . . . . . . . . . . . 9,070 26 (106) 8,990
------------------------------------------------------------------
Total "Available for sale" securities . . . . . $ 28,033 76 (348) 27,761
==================================================================
</TABLE>
NON-PERFORMING ASSETS
Non-performing assets, including other real estate, totalled $231,000 at March
31, 1996, a decrease of $16,000 from December 31, 1995.
The following table sets forth such loans and other real estate at the dates
indicated:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
1996 1995 1995
------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Non-accrual loans . . . . . . . . . . . . . . . . . . . . $ 117 184 188
------------------------------------------------------
Loans contractually past due 90 days or more . . . . . . - - 10
------------------------------------------------------
Total non-performing loans . . . . . . . . . . . . . 117 184 198
------------------------------------------------------
Other real estate . . . . . . . . . . . . . . . . . . . . 114 63 180
------------------------------------------------------
Total non-performing assets . . . . . . . . . . . . 231 247 378
======================================================
Non-performing loans to total loans . . . . . . . . . . . 0.24% 0.42% 0.95%
</TABLE>
-8-
<PAGE> 9
CAPITAL AND LIQUIDITY
The Company's primary capital totalled $8,571,000 and $8,361,000 at March 31,
1996 and December 31, 1995, respectively. Equity capital totalled $7,928,000
and $7,823,000 at March 31, 1996 and December 31, 1995, respectively. The
Company's ratio of primary capital and equity capital to assets are as follows:
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
Company's primary capital to assets ratio 9.94% 10.13%
Company's equity capital to assets ratio 9.32 9.54
</TABLE>
UB's primary capital totalled $8,521,000 and $8,308,000 at March 31, 1996 and
December 31, 1995 respectively. Equity capital totalled $7,928,000 and
$7,770,000 at March 31, 1996 and December 31, 1995 respectively. UB's ratio of
primary capital and equity capital to assets are as follows:
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
UB's primary capital to assets ratio 9.89% 10.07%
UB's equity capital to assets ratio 9.26 9.48
</TABLE>
UB is subject to certain regulatory capital regulations which require the
maintenance of certain levels of capital as a percentage of risk-adjusted
assets. These regulations define capital as either core capital (Tier 1) or
.supplementary capital (Tier 2). Core capital consists primarily of common
shareholders' equity, while supplementary capital is comprised of preferred
stock, certain debt instruments, and a portion of the allowance for loan
losses. At December 31, 1995, the required core capital was 4.00% and total
risk-based capital was 8.00%. UB's core and total risk-based capital exceed
regulatory guidelines at March 31, 1996 and December 31, 1995 respectively, and
are as follows:
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
Tier I capital (core) 13.6 14.29%
Tier 2 capital (total risk-based) 14.7 15.28
</TABLE>
-9-
<PAGE> 10
ACCOUNTING STANDARDS ADOPTED
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-lived
assets and for long-lived assets to be disposed of." The Company adopted this
statement in January 1, 1996. The impact of this statement does not have a
material effect on the Company's consolidated financial statements.
-10-
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiaries are not defendants in any legal proceedings.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
None
b. None
-11-
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED OKLAHOMA BANKSHARES, .INC.
Registrant
DATE:
--------------------------- ---------------------------------------
GEORGE N. COOK, JR.
Chairman of the Board
--------------------------------------
JUNE A. O'STEEN
Principal Accountant
-12-
<PAGE> 1
EXHIBIT 13(d)(6)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarter ended June 30, 1996 Commission file number 0-12047
------------- -------
UNITED OKLAHOMA BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Oklahoma 73-0969432
----------------------------------------------- --------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 S.E. 29th Street
Del City, Oklahoma 73115
------------------ --------------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (405) 677-8711
---------------------------
</TABLE>
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 such
filing requirements for the past 90 days.
[X]Yes No[ ]
As of April 30, 1996, 2,532,237 shares of the registrant's common stock,
par value $1.00 per share, were outstanding.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM I. Financial Statements
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except earnings per share)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
---------------- -------------------
1996 1995 1996 1995
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $2,342 1,962 1170 987
Interest on federal funds sold 91 99 42 50
Interest on securities 801 873 398 439
-------------------------------------------------
Total interest income 3,234 2,934 1610 1476
-------------------------------------------------
Interest Expense:
Interest on deposits 1,243 1,257 611 648
Interest on long-term debt -- -- -- --
-------------------------------------------------
Total interest expense 1,243 1,257 611 648
-------------------------------------------------
Net interest income 1,991 1,677 992 828
Provision for loan losses 354 149 270 76
-------------------------------------------------
Net interest income after provision for 1,637 1,528 729 752
loan losses
-------------------------------------------------
Non-interest income:
-------------------------------------------------
Service charges on deposits 394 381 203 193
-------------------------------------------------
Other service charges and fees, net 122 117 66 73
-------------------------------------------------
Securities gains -- -- -- --
-------------------------------------------------
Total non-interest income 516 498 269 266
-------------------------------------------------
Non-interest expense:
-------------------------------------------------
Salaries and employee benefits 1,024 920 469 457
-------------------------------------------------
Occupancy expense, net 115 105 58 52
-------------------------------------------------
Other real estate owned 2 9 -- 9
-------------------------------------------------
Other 549 539 364 257
-------------------------------------------------
Total non-interest expenses 1,690 1,573 891 775
-------------------------------------------------
-------------------------------------------------
Income before income taxes 463 453 107 243
-------------------------------------------------
Income tax expense 95 101 (2) 60
-------------------------------------------------
Net income $ 368 352 109 183
-------------------------------------------------
Earnings per share** $ 0.07 0.06 0.01 0.03
-------------------------------------------------
Average outstanding commons shares 2,532 2,532 2532 2532
=================================================
</TABLE>
** Earnings per share is calculated on year-to-date net income less the
unpaid year-to-date preferred stock dividends. Preferred stock dividends
accrue at $98,000 per quarter. See the Consolidated Balance Sheet,
Stockholder Equity section for the number of authorized shares
outstanding and total cumulated unpaid dividends.
-2-
<PAGE> 3
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---- ----
(In thousands)
ASSETS
<S> <C> <C>
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . $ 3,427 2,584
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . 2,875 6,300
Investment securities . . . . . . . . . . . . . . . . . . . . . . . 27,820 28,800
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,181 44,144
Unearned discounts . . . . . . . . . . . . . . . . . . . . . . -- (2)
Allowance for loan losses. . . . . . . . . . . . . . . . . . . (872) (538)
---------------------------
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . 47,309 43,604
Property and equipment, net . . . . . . . . . . . . . . . . . . . . 3,775 3,880
Other real estate . . . . . . . . . . . . . . . . . . . . . . . . . 47 63
Accrued interest receivable . . . . . . . . . . . . . . . . . . . . 612 589
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . 91 93
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 319 158
---------------------------
$ 86,275 86,071
===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest bearing . . . . . . . . . . . . . . . . . . . . . . . $ 58,803 60,975
Non-interest bearing . . . . . . . . . . . . . . . . . . . . . 17,829 15,295
---------------------------
Total deposits 76,632 76,270
---------------------------
Securities sold under repurchase agreement. . . . . . . . . . . . . -- --
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 1,170 1,209
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 453 769
---------------------------
Total liabilities . . . . . . . . . . . . . . . . . . . . 78,255 78,248
---------------------------
Commitments and contingencies . . . . . . . . . . . . . . . . . . . -- --
Stockholders' equity:
Preferred stock, 9% cumulative, nonvoting $30 par value, redeemable at the
Company's option at par plus cumulative unpaid dividends. Cumulative
unpaid preferred dividends amount to $4,214,620 or $29.03 per share at
June 30, 1996. Authorized 150,000 shares; issued and outstanding 145,199
shares in 1996 and 1995 . . . . . . . . . . . . . . . . . .
4,356 4,356
Class B preferred stock, $1 par value. Authorized -- --
500,000 shares; none issued or outstanding
Common stock, $1 par value. Authorized 10,000,000
shares; issued 2,805,385 in 1996 and 1995 2,805 2,805
Additional paid-in capital . . . . . . . . . . . . . . . . . . 7,358 7,358
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . (5,172) (5,540)
Net unrealized holding loss on investment securities
available for sale, net of deferred taxes . . . . . . . . . (230) (59)
---------------------------
9,117 8,920
Less cost of common stock held in treasury (273,148
shares in 1996 and 1995) . . . . . . . . . . . . . . . . . . (1,097) (1,097)
---------------------------
Net stockholders' equity . . . . . . . . . . . . . . . . . 8,020 7,823
---------------------------
$ 86,275 86,071
===========================
</TABLE>
-3-
<PAGE> 4
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
(In thousands)
<S> <C> <C>
Preferred stock:
Balance at beginning and end of year . . . . . . . . . . . . . . . . $ 4,356 4,356
------------------
Common stock:
Balance at beginning and end of year . . . . . . . . . . . . . . . . 2,805 2,805
------------------
Additional paid-in capital:
Balance at beginning and end of year . . . . . . . . . . . . . . . . 7,358 7,358
------------------
Accumulated deficit:
Balance at beginning of year (5,540) (6,315)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368 775
------------------
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . (5,172) (5,540)
------------------
Net unrealized holding gain (loss) on investment securities available for
sale:
Balance at beginning of year. . . . . . . . . . . . . . . . . . . . (59) (158)
Implementation of change in accounting for investment -- --
securities, net of deferred taxes . . . . . . . . . . . . . . .
Change in net unrealized holding gain (loss) on (171) 99
investment securities available for sale, net of
deferred taxes . . . . . . . . . . . . . . . . . . . . . . . .
------------------
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . (230) (59)
Treasury stock:
Balance at beginning and end of year . . . . . . . . . . . . . . . (1,097) (1,097)
Purchase stock . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
------------------
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . (1,097) (1,097)
Net stockholders' equity . . . . . . . . . . . . . . . . . . . $ 8,020 7,823
==================
</TABLE>
-4-
<PAGE> 5
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30
1996 1995
------------------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net Income . . . . . . . . . . . . . . . . . . . . . . $ 368 352
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . 209 206
Provision for loan losses . . . . . . . . . . . . 354 149
Provision for market decline-other real estate . . 2 9
Amortization of intangibles. . . . . . . . . . . . -- 74
Amortization of premium, accretion of discounts, net 47 38
Gain on sale of securities . . . . . . . . . . . . -- --
(Increase) decrease in interest payable . . . . . (162) 142
(Increase) decrease in interest receivable . . . . (23) 38
(Increase) decrease in other assets . . . . . . . (141) 23
Decrease in deferred income taxes . . . . . . . . (39) (17)
Decrease in other liabilities. . . . . . . . . . . (329) (7)
------------------
Total adjustments . . . . . . . . . . . . . . (82) 655
------------------
Net cash provided by operating activities . . . . . . . . . 286 1,007
------------------
Cash flows from investing activities:
Proceeds from principal payments on mortgage backed
securities . . . . . . . . . . . . . . . . . . . . 1,443 764
Proceeds from maturities of securities . . . . . . . . -- 235
Purchase of securities . . . . . . . . . . . . . . . . (510) (1,534)
------------------
Net (increase) decrease in loans . . . . . . . . . . . (4,059) 814
------------------
Capital expenditures . . . . . . . . . . . . . . . . . (104) (110)
------------------
Net cash used in investing activities . . . . . . . . . . . (3,230) 169
------------------
Cash flows from financing activities:
Net increase in interest bearing and non-interest
bearing demand deposits, savings and certificates of
deposit . . . . . . . . . . . . . . . . . . . . . . . 362 3,734
------------------
Repayment of short-term debt . . . . . . . . . . . . . -- (1,500)
------------------
Net cash provided by financing activities . . . . . . . . . 362 2,234
Net increase in cash and cash equivalents. . . . . . . . . (2,582) 3,410
Cash and cash equivalents at beginning of period . . . . . 8,884 2,440
Cash and cash equivalents at end of period. . . . . . . . . $ 6,302 5,850
Net unrealized holding loss on investment securities . . . 230 89
available for sale, net of deferred tax
==================
</TABLE>
-5-
<PAGE> 6
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of United Oklahoma Bankshares, Inc. (the
"Company") and its subsidiaries conform to generally accepted accounting
principles and practices within the banking industry. The following represent
the more significant of those policies and practices.
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all wholly owned, after elimination of all significant
intercompany accounts and transactions.
SECURITIES
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (Statement 115), AT January 1, 1994. Under Statement 115, the
Company classified its debt and marketable equity securities in one of three
categories: trading, available for sale, or held to maturity. Trading
securities are bought and held principally for the purpose of selling them in
the near term. No investment securities within the portfolio are considered
trading. Held to maturity securities are those securities for which the Company
has the ability and intent to hold until maturity. All other securities not
included in held to maturity are classified as available for sale.
-6-
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND OPERATING RESULTS
Results of Operations-Quarter Ended June 30, 1996
The following discussion and analysis is designed to provide a better
understanding of the significant factors related to the Company's results of
operations, financial condition, liquidity and capital resources (including its
subsidiary bank, United Bank (UB) and its non-bank subsidiaries). Management is
unaware of any trends, events or uncertainties that will have or that are
reasonably likely to have a material effect on the Company's operations.
OVERVIEW
Net income for the first quarter of 1996 was approximately $109,000, compared
to $183,000 for the first quarter of 1995. The before tax income for the first
quarter of 1996 was $107,000 compared to $243,000 for the first quarter of
1995. Earnings per share reflected income of $0.07 at June 30, 1996 compared to
income of $0.06 per share at June 30, 1995. Earnings per share is calculated on
year-to date net income less the unpaid year-to date preferred stock dividends.
Unpaid preferred stock dividends accrue AT $98,000 per quarter.
NET INTEREST INCOME
Net interest income was $1,991,000 for the six months ended June 30, 1996
compared to $1,677,000 for the same period in 1995, representing an increase of
$314,000 or 19%. The volume of average earning assets increased $4,415,000
while average interest bearing liabilities increased $853,000 between June 30,
1995 and 1996. The yield on average earning assets increased 19 basis points
from June 30, 1995 to June 30, 1996 while the rate paid on average interest
bearing liabilities increased 10 basis points during the same time period
resulting in an increase in the spread between the yield on earning assets and
rate paid on interest bearing liabilities of 9 basis points.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses was approximately $872,000 at June 30, 1996
compared to $538,000 at December 31, 1995 and $569,000 at June 30, 1995. As a
percentage of loans, the allowance for loan losses was 1.81%, 1.23% and 1.39%
at June 30, 1996, December 31, 1995 and June 30, 1995 respectively.
-7-
<PAGE> 8
SECURITIES
The Company has designated securities as "Held to maturity" or "Available for
sale". A comparison of recorded value and market value of securities is as
follows (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------------------------
ESTIMATED
Held to maturity: AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
State & municipals .............................. $ 786 13 (4) 795
Total "Held to maturity" securities ............. 786 13 (4) 795
======================================
Available for sale:
U.S. Treasury securities ........................ $ 2,093 4 (20) 2,077
Mortgage-backed securities ...................... 16,256 33 (322) 15,967
State & municipals .............................. 9,066 16 (130) 8,990
--------------------------------------
Total "Available for sale" securities............ $27,415 53 (472) 27,034
======================================
</TABLE>
NON-PERFORMING ASSETS
Non-performing assets, including other real estate, totalled $303,000 at June
30, 1996, an decrease of $56,000 from December 31, 1995.
The following table sets forth such loans and other real estate at the dates
indicated:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31, JUNE 30,
1996 1995 1995
----------------- ----------------- ----------------
(Dollars in thousands)
<S> <C> <C> <C>
Non-accrual loans ................................... 256 184 102
--------------------------------------------
Loans contractually past due 90 days or more ........ -- -- --
--------------------------------------------
Total non-performing loans ..................... 256 184 102
--------------------------------------------
Other real estate ................................... 47 63 171
--------------------------------------------
Total non-performing assets .................... 303 247 273
============================================
Non-performing loans to total loans ................. 0.53% 0.42% 0.24%
</TABLE>
-8-
<PAGE> 9
CAPITAL AND LIQUIDITY
The Company's primary capital totalled $8,892,000 and $8,361,000 at June 30,
1996 and December 31, 1995, respectively. Equity capital totalled $8,020,000
and $7,823,000 at June 30, 1996 and December 31, 1995, respectively. The
Company's ratio of primary capital and equity capital to assets are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
Company's primary capital to assets ratio 10.20% 10.13%
Company's equity capital to assets ratio 9.29 9.54
</TABLE>
UB's primary capital totalled $8,834,000 and $8,308,000 at June 30, 1996 and
December 31, 1995 respectively. Equity capital totalled $7,962,000 and
$7,770,000 at June 30, 1996 and December 31, 1995 respectively. UB's ratio of
primary capital and equity capital to assets are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
<S> <C> <C>
UB's primary capital to assets ratio 10.14% 10.07%
UB's equity capital to assets ratio 9.23 9.48
</TABLE>
UB is subject to certain regulatory capital regulations which require the
maintenance of certain levels of capital as a percentage of risk-adjusted
assets. These regulations define capital as either core capital (Tier 1) or
.supplementary capital (Tier 2). Core capital consists primarily of common
shareholders' equity, while supplementary capital is comprised of preferred
stock, certain debt instruments, and a portion of the allowance for loan
losses. At December 31, 1995, the required core capital was 4.00% and total
risk-based capital was 8.00%. UB's core and total risk-based capital exceed
regulatory guidelines at June 30, 1996 and December 31, 1995 respectively, and
are as follows:
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
<S> <C> <C> <C>
Tier 1 capital (core) 13.68% 14.29%
Tier 2 capital (total risk-based) 15.38 15.28
</TABLE>
-9-
<PAGE> 10
ACCOUNTING STANDARDS ADOPTED
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-lived
assets and for long-lived assets to be disposed of." The Company adopted this
statement in January 1, 1996. The impact of this statement does not have a
material effect on the Company's consolidated financial statements.
-10-
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiaries are not defendants in any legal proceedings.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
None
b. None
-11-
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED OKLAHOMA BANKSHARES, .INC.
Registrant
DATE: ------------------------- ---------------------------------
GEORGE N. COOK, JR.
Chairman of the Board
---------------------------------
JUNE A. O'STEEN
Principal Accountant
-12-
<PAGE> 1
EXHIBIT 13(d)(7)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarter ended September 30, 1996 Commission file number 0-12047
------------------ -------
UNITED OKLAHOMA BANKSHARES, INC.
--------------------------------
(Exact name of registrant as specified in its charter)
Oklahoma 73-0969432
- ---------------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 S.E. 29th Street
Del City, Oklahoma 73115
- ---------------------------------------- -------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (405) 677-8711
------------------------------
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 such
filing requirements for the past 90 days.
[X] Yes No [ ]
As of October 30, 1996, 2,532,237 shares of the registrant's common stock, par
value $1.00 per share, were outstanding.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM I. Financial Statements
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except earnings per share)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans ............................... $ 3,499 3,020 1,157 1,058
Interest on federal funds sold ........................... 127 115 36 16
Interest on securities ................................... 1,202 1,319 401 446
-----------------------------------------
Total interest income .................................. 4,828 4,454 1,594 1,520
Interest expense:
Interest on deposits ..................................... 1,843 1,900 600 643
Interest on long-term debt ............................... -- -- -- --
-----------------------------------------
Total interest expense ................................. 1,843 1,900 600 643
-----------------------------------------
Net interest income .................................... 2,985 2,554 994 877
Provision for loan losses ..................................... 384 234 30 85
-----------------------------------------
Net interest income after provision for loan losses .... 2,601 2,320 964 792
-----------------------------------------
Non-interest expense:
Service charges on deposits .............................. 600 590 206 209
Other service charges and fees, net ...................... 215 186 93 69
Security gains ........................................... -- -- -- --
-----------------------------------------
Total non-interest income .............................. 815 776 299 278
-----------------------------------------
Non-interest expense:
Salaries and employee benefits ........................... 1,506 1,368 482 448
Occupancy expense, net ................................... 176 189 61 84
Other real estate owned .................................. 2 (170) -- (26)
Other .................................................... 706 769 157 230
-----------------------------------------
Total non-interest expense ............................. 2,390 2,309 700 736
-----------------------------------------
Income before income taxes ............................. 1,026 787 563 334
Income tax expense ............................................ 288 193 193 92
-----------------------------------------
Net income ............................................. 738 594 370 242
=========================================
Earnings per share** .......................................... 0.18 0.12 0.11 0.06
=========================================
Average outstanding common shares ............................. 2,532 2,532 2,532 2,532
=========================================
</TABLE>
** Earnings per share is calculated on year-to-date net income less the
unpaid year-to-date preferred stock dividends. Preferred stock dividends
accrue at $98,000 per quarter. See the Consolidated Balance Sheet,
Stockholder Equity section for the number of authorized shares outstanding
and total cumulated unpaid dividends.
-2-
<PAGE> 3
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
----------------------------
(In thousands)
<S> <C> <C>
ASSETS
Cash and due from banks .................................... $ 4,144 2,584
Federal funds sold ......................................... 1,625 6,300
Investment securities ...................................... 26,416 28,800
Loans ...................................................... 47,162 44,144
Unearned discounts .................................... -- (2)
Allowance for loan losses ............................. (752) (538)
----------------------------
Loans, net ........................................ 46,410 43,604
Property and equipment, net ................................ 4,156 3,880
Other real estate .......................................... 47 63
Accrued interest receivable ................................ 507 589
Accounts receivable ........................................ 86 93
Other assets ............................................... 123 158
----------------------------
$ 83,514 86,071
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Interest bearing ...................................... $ 56,566 60,975
Non-interest bearing .................................. 16,587 15,295
----------------------------
Total deposits .................................... 73,153 76,270
----------------------------
Securities sold under repurchase agreement ................. -- --
Deferred taxes ............................................. 1,170 1,209
Other liabilities .......................................... 754 769
----------------------------
Total liabilities ................................. 75,077 78,248
----------------------------
Commitments and contingencies .............................. -- --
Stockholders' equity:
Preferred stock, 9% cumulative, nonvoting $30
par value, redeemable at the Company's
option at par plus cumulative unpaid
dividends. Cumulative unpaid preferred
dividends amount to $4,312,450 or $29.70
per share at September 30, 1996. Authorized
150,000 shares; issued and outstanding
145,199 shares in 1996
and 1995 ............................................ 4,356 4,356
Class B preferred stock, $1 par value. Authorized
50,000 shares; none issued or outstanding ........... -- --
Common stock, $1 par value. Authorized 10,000,000
shares; issued 2,805,385 in 1996 and 1995 ........... 2,805 2,805
Additional paid-in capital ............................ 7,358 7,358
Accumulated deficit ................................... (4,802) (5,540)
Net unrealized holding loss on investment securities
available for sale, net of deferred taxes ........... (183) (59)
----------------------------
9,534 8,920
Less cost of common stock held in treasury (273,148
shares in 1996 and 1995) ............................ (1,097) (1,097)
----------------------------
Net stockholders' equity .......................... 8,437 7,823
----------------------------
$ 83,514 86,071
============================
</TABLE>
-3-
<PAGE> 4
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
996 1995
------------ ------------
(In thousands)
<S> <C> <C>
Preferred stock:
Balance at beginning and end of year ..................... $ 4,356 4,356
------------ ------------
Common stock:
Balance at beginning and end of year ..................... 2,805 2,805
------------ ------------
Additional paid-in capital:
Balance at beginning and end of year ..................... 7,358 7,358
------------ ------------
Accumulated deficit:
Balance at beginning of year ............................. (5,540) (6,315)
Net income ............................................... 738 775
------------ ------------
Balance at end of year ................................... (4,802) (5,540)
------------ ------------
Net unrealized holding gain (loss) on investment
securities available for sale:
Balance at beginning of year ............................. (59) (158)
Implementation of change in accounting for investment
securities, net of deferred taxes .................... -- --
Change in net unrealized holding gain (loss) on
investment securities available for sale, net of
deferred taxes ....................................... (124) 99
------------ ------------
Balance at end of year ................................... (183) (59)
Treasury stock:
Balance at beginning and end of year ..................... (1,097) (1,097)
Purchase stock ........................................... -- --
------------ ------------
Balance at end of year ................................... (1,097) (1,097)
Net stockholders' equity ............................. $ 8,437 7,823
============ ============
</TABLE>
-4-
<PAGE> 5
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
1996 1995
-------- --------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net Income (loss) ......................................... $ 738 594
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation .......................................... 314 312
Provision for loan losses ............................. 384 234
Provision for market decline-other real estate ........ 2 6
Amortization of intangibles ........................... -- 111
Amortization of premium, accretion of
discounts, net ..................................... 68 60
Gain on sale of securities ............................ -- --
Decrease in interest payable .......................... (191) 238
(Increase) decrease in interest receivable ............ 82 47
(Increase) decrease in other assets ................... 56 68
Increase (decrease) in deferred income taxes .......... (39) (40)
Increase (decrease) in other liabilities .............. 176 88
--------------------
Total adjustments ................................. 852 1,124
--------------------
Net cash provided by operating activities ...................... 1,590 1,718
--------------------
Cash flows from investing activities:
Proceeds from principal payments on mortgage backed
securities ............................................ 1,804 1,195
Proceeds from maturities of securities .................... 1,960 525
Purchase of securities .................................... (1,572) (1,534)
Net decrease in loans ..................................... (3,190) 466
Capital expenditures ...................................... (590) (156)
--------------------
Net cash used in investing activities .......................... (1,588) 496
--------------------
Cash flows from financing activities:
Net increase in interest bearing and non-interest
bearing demand deposits, savings and certificates of
deposit ................................................... (3,117) 2,090
Repayment of short-term debt .............................. -- (1,500)
--------------------
Net cash provided by financing activities ...................... (3,117) 590
--------------------
Net (decrease) increase in cash and cash equivalents ........... (3,117) 2,804
--------------------
Cash and cash equivalents at beginning of period ............... 8,884 2,440
--------------------
Cash and cash equivalents at end of period ..................... 5,769 5,244
====================
Supplemental disclosure of noncash investing activities:
Net unrealized holding loss on investment securities
available for sale, net of deferred tax ..................... (183) (67)
</TABLE>
-5-
<PAGE> 6
UNITED OKLAHOMA BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of United Oklahoma Bankshares, Inc. (the
"Company") and its subsidiaries conform to generally accepted accounting
principles and practices within the banking industry. The following represent
the more significant of those policies and practices.
PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company and
its subsidiaries, all wholly owned, after elimination of all significant
intercompany accounts and transactions.
SECURITIES
The Company adopted the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (Statement 115), at January 1, 1994. Under Statement 115, the
Company classified its debt and marketable equity securities in one of three
categories: trading, available for sale, or held to maturity. Trading
securities are bought and held principally for the purpose of selling them in
the near term. No investment securities within the portfolio are considered
trading. Held to maturity securities are those securities for which the Company
has the ability and intent to hold until maturity. All other securities not
included in held to maturity are classified as available for sale.
-6-
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND OPERATING RESULTS
Results of Operations-Quarter Ended September 30, 1996
The following discussion and analysis is designed to provide a better
understanding of the significant factors related to the Company's results of
operations, financial condition, liquidity and capital resources (including its
subsidiary bank, United Bank ("UB") and its non-bank subsidiaries). Management
is unaware of any trends, events or uncertainties that will have or that are
reasonably likely to have a material effect on the Company's operations.
OVERVIEW
Net income for the third quarter of 1996 was approximately $370,000, compared
to $242,000 for the third quarter of 1995. The before tax income for the third
quarter of 1996 was $563,000 compared to $334,000 for the third quarter of
1995. Earnings per share reflected income of $0.18 at September 30, 1996
compared to income of $0.12 per share at September 30, 1995. Earnings per share
is calculated on year-to date net income less the unpaid year-to date preferred
stock dividends. Unpaid preferred stock dividends accrue at $98,000 per
quarter.
NET INTEREST INCOME
Net interest income was $2,985,000 for the nine months ended September 30, 1996
compared to $2,554,000 for the same period in 1995, representing an increase of
$431,000 or 16.9%. The volume of average earning assets increased $4,892,000
while average interest bearing liabilities decreased $435,000 between September
30, 1995 and 1996. The yield on average earning assets increased 11 basis
points from September 30, 1995 to September 30, 1996 while the rate paid on
average interest bearing liabilities increased 15 basis points during the same
time period resulting in an increase in the spread between the yield on earning
assets and rate paid on interest bearing liabilities of 26 basis points.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses was approximately $752,000 at September 30, 1996
compared to $538,000 at December 31, 1995 and $511,000 at September 30, 1995.
As a percentage of loans, the allowance for loan losses was 1.60%, 1.23% and
1.26% at September 30, 1996, December 31, 1995 and September 30, 1995
respectively.
-7-
<PAGE> 8
SECURITIES
The Company has designated securities as "Held to maturity" or "Available for
sale". A comparison of recorded value and market value of securities is as
follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------------------------------
ESTIMATED
Held to maturity: AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
State & municipals ..................... $ 784 21 -- 805
Total "Held to maturity" securities .... 784 21 -- 805
=================================================
Available for sale:
U.S. Treasury securities ............... $ 1,093 -- (5) 1,088
Mortgage-backed securities ............. 15,797 56 (249) 15,604
State & municipals ..................... 8,850 34 (65) 8,819
=================================================
Total "Available for sale" securities .. $ 25,740 90 (319) 25,511
=================================================
</TABLE>
NON-PERFORMING ASSETS
Non-performing assets, including other real estate, totalled $237,000 at
September 30, 1996, a decrease of $10,000 from December 31, 1995.
The following table sets forth such loans and other real estate at the dates
indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
1996 1995 1995
------------ ------------ ------------
(Dollars in thousands)
<S> <C> <C> <C>
Non-accrual loans ............................. $ 190 184 270
--------------------------------------------
Loans contractually past due 90 days or more .. -- -- --
--------------------------------------------
Total non-performing loans ............... 190 184 270
--------------------------------------------
Other real estate ............................. 47 63 148
--------------------------------------------
Total non-performing assets .............. 237 247 418
============================================
Non-performing loans to total loans ........... 0.40% 0.42% 0.66%
</TABLE>
-8-
<PAGE> 9
CAPITAL AND LIQUIDITY
The Company's primary capital totalled $9,189,000 and $8,361,000 at September
30, 1996 and December 31, 1995, respectively. Equity capital totalled
$8,437,000 and $7,823,000 at September 30, 1996 and December 31, 1995,
respectively. The Company's ratio of primary capital and equity capital to
assets are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
----------------------------
<S> <C> <C>
Company's primary capital to assets ratio 10.61% 10.13%
Company's equity capital to assets ratio 9.82 9.54
</TABLE>
UB's primary capital totalled $9,162,000 and $8,308,000 at September 30, 1996
and December 31, 1995 respectively. Equity capital totalled $8,410,000 and
$7,770,000 at September 30, 1996 and December 31, 1995 respectively. UB's ratio
of primary capital and equity capital to assets are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
----------------------------
<S> <C> <C>
UB's primary capital to assets ratio 10.58% 10.07%
UB's equity capital to assets ratio 9.80 9.48
</TABLE>
UB is subject to certain regulatory capital regulations which require the
maintenance of certain levels of capital as a percentage of risk-adjusted
assets. These regulations define capital as either core capital (Tier 1) or
.supplementary capital (Tier 2). Core capital consists primarily of common
shareholders' equity, while supplementary capital is comprised of preferred
stock, certain debt instruments, and a portion of the allowance for loan
losses. At December 31, 1994, the required core capital was 4.00% and total
risk-based capital was 8.00%. UB's core and total risk-based capital exceed
regulatory guidelines at September 30, 1996 and December 31, 1995 respectively,
and are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
----------------------------
<S> <C> <C>
Tier I capital (core) 14.97% 14.29%
Tier 2 capital (total risk-based) 16.30 15.28
</TABLE>
-9-
<PAGE> 10
ACCOUNTING STANDARDS ADOPTED
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-lived
assets and for long-lived assets to be disposed of." The Company adopted this
statement in January 1, 1995. The impact of this statement does not have a
material effect on the Company's consolidated financial statements.
-10-
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiaries are not defendants in any legal proceedings.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
(1) Exhibit 27 - Financial Data Schedule
b. None
-11-
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED OKLAHOMA BANKSHARES, .INC.
Registrant
DATE: November 13, 1996 /s/ George N. Cook
-----------------------------------
GEORGE N. COOK, JR.
Chairman of the Board
/s/ June A. O'Steen
-----------------------------------
JUNE A. O'STEEN
Principal Accountant
-12-
<PAGE> 1
EXHIBIT 19(b)(1)
GEORGE K. BAUM & COMPANY
Investment Bankers
Member Twelve Wyandotte Plaza
New York Stock Exchange, Inc. 120 West 12th Street
Chicago Stock Exchange, Inc. Kansas City, Missouri 64105
October 25, 1996 Telephone (816) 474-1100
Special Committee of the Board
United Oklahoma Bankshares, Inc.
c/o Mr. Claude Rappaport
Chairman, Special Committee of the Board
1506 Bedford Drive Oklahoma
City, OK 73116
Dear Gentlemen:
You have asked us to render our opinion as to the fairness, from a
financial point of view, to the proposed cash out merger offer of $1,300,000 by
Ameribank Corporation ("Ameribank") for all the remaining Preferred Stock
("Preferred") (approximately 11.16%) and Common Stock ("Common") (approximately
38.42%) and of United Oklahoma Bankshares, Inc. (the "Company") not presently
owned by Ameribank.
Our approach as to the fairness of the Ameribank offer was to look at
each of the equity pieces separately, for pricing purposes. This was done to
see what was "FAIR" for each security.
To find the value of the Preferred, two methods of value were used (1)
liquidation and (2) discounted cash flow at various discount rates. The
liquidation method places the highest value of the two methods on the
Preferred. As of the June 30, 1996 balance sheet shown in the Form 10-Q filed
with the Securities and Exchange Commission ("SEC"), the liquidation value of
the Preferred would be $58.35. The $58.35 value per share of Preferred is fair
from a financial point of view. This would aggregate to approximately $946,000
for all Preferred not presently owned by Ameribank.
To find the value of the Common, two methods of value were used (1)
(a) liquidation based on book value and (b) liquidation based on the entity
market value and (2) discounted cash flow at various discount rates.
The discounted cash flow is a little more complicated because of the
"rights" of the preferred and the preferred stock's cumulative dividends.
These are the following assumptions used for the discounted cash flow Common
value:
<PAGE> 2
(1) The Common does not have any dividend payments for 44 quarters
or 11 years;
(2) The net interest spread used is based on 1995 and 1996 (10-K
1995, page 32) and is 4.45% with provision for loan losses at
0.45% of the prior year's loan portfolio. This produces an
average spread on average interest earning assets of
approximately 4.64%;
(3) Interest income grows at approximately 6.95% from the 1995
base;
(4) Income tax rate of 25.00% based on 1994 and 1995;
(5) Net after-tax income grows at approximately 6.50% from the
1995 base;
(6) In the year 2006, the earnings are projected to be $1,811,000
after tax. This gives the Company an equity value of
$24,445,000 based on a multiple of 13.5 times. From this
number we need to subtract the Preferred redemption of
$8,473,000 for a net of $15,972,000 for the Common, which when
discounted back over the period at the differing rates
produces the following values:
<TABLE>
<CAPTION>
DISCOUNT RATE VALUE PER COMMON SHARE TOTAL COST TO REDEEM
- ------------- ---------------------- ---------------------
<S> <C> <C>
25.00% $ 0.542 $ 530,000
22.50% 0.677 660,000
20.00% 0.849 825,000
17.50% 1.070 1,040,000
</TABLE>
Our conclusion as to the Common value exists in the above range. The
liquidation value based on book value is negative while the
liquidation value based on the entity market value places the value of
the Common in the range shown above.
We find support for the above pricing based on (1) The SNL Pink
Quarterly "Pink Sheet" and OTC-BB traded Banks and Thrifts dated
September 1996 produced by SNL Securities on a quarterly basis; and
(2) OTC Time & Sales Report: 1/1/94 - 9/20/96on the Company's common
stock produced by Nasdaq Trading & Market Services. The Nasdaq
information shows no sale in excess of 9/16 or 56.25c. per share and
the last trade on 8/6/96 was at 1/4 or 25c. for 1,399 shares. The
first trade listed as of 1/21/94 shows a price of $29.125 per share
for 2,500 shares. We called Nasdaq but were told that was the
information they had and there was no way to verify it. We assume
that price is not correct.
Using the liquidation value based on the entity market value as well
as discounted cash flow, a value of $0.75 per share of Common is fair
from a financial point of view. This would aggregate to approximately
$730,000 for all Common not presently owned by Ameribank.
<PAGE> 3
Based on information supplied by Ameribank, they placed a total entity
value range on the Company of $10,382,000 on the high side and $10,216,973 on
the low side. Ameribank placed a value of $58.35 for each Preferred share and
$0.754 for each Common share. These per share values would put the following
total costs on the non-Ameribank owned shares:
16,205 preferred shares @ $58.35 = $ 945,562
972,903 common shares @ $0.754 = 733,569
Total value for non-Ameribank equity = $ 1,679,131
We find Ameribank's overall value for the Company and each equity
piece to be fair from a financial point of view. Our understanding is that,
according to the legal counsel for the Special Committee of the Board of
Directors of the Company, Mr. Irwin H. Steinhorn, no discounts of any nature
may be applied to a cash out merger such as that proposed by Ameribank.
You can reach me at 816-283-5280.
Respectfully submitted,
GEORGE K. BAUM & COMPANY
<PAGE> 1
-26-
EXHIBIT 19(b)(2)
GEORGE K. BAUM & COMPANY
Investment Bankers
Member Twelve Wyandotte Plaza
New York Stock Exchange, Inc. 120 West 12th Street
Chicago Stock Exchange, Inc. Kansas City, Missouri 64105
January 23, 1997 Telephone (816) 474-1100
Special Committee of the Board
United Oklahoma Bankshares, Inc.
c/o Mr. Claude Rappaport
Chairman, Special Committee of the Board
1506 Bedford Drive Oklahoma
City, OK 73116
Dear Gentlemen:
You have asked us to render our opinion as to the fairness, from a
financial point of view, to the proposed cash out merger offer of $1,700,000 by
Ameribank Corporation ("Ameribank") for all the remaining Preferred Stock
("Preferred") (approximately 11.16%) at $58.35 per share and Common stock
("Common") (approximately 38.42%) at approximately $0.776 per share of United
Oklahoma Bankshares, Inc. (the "Company") not presently owned by Ameribank.
We issued such a letter, dated October 25, 1996, based on the
information that had been requested and supplied to us. Information requested
and supplied to us at that date had indicated that the highest price Ameribank
had paid for the Preferred was $18.00. On January 17, 1997, we were informed
by the information in the Form 4 filings with the U.S. Securities and Exchange
Commission that Ameribank had purchased Preferred shares at prices higher than
$18.00, prior to October 25, 1996, (the highest price was $49.50 per share).
Some of these purchases were done with agreements that, for one year from the
date of purchase, Ameribank would pay these sellers the same price, if higher,
that Ameribank paid for the remaining Preferred that Ameribank did not own at
the time of those purchases.
With this additional Preferred pricing information considered, we
still find Ameribank's overall offer for the Company and each equity price to
be fair from a financial point of view as set forth in our letter dated October
25, 1996.
Respectfully Submitted,
GEORGE K. BAUM & COMPANY
<PAGE> 1
UNITED OKLAHOMA BANKSHARES, INC.
4600 S.E. 29TH STREET
DEL CITY, OKLAHOMA 73115
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON _____________, 1997
A Special Meeting of shareholders of United Oklahoma Bankshares, Inc.
(the "Company") will be held at 4600 S.E. 29th Street, Del City, Oklahoma
73115 on _____________, 1997, at _______ a.m., local time, for the following
purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger (the "Merger Agreement"), dated as of December 3,
1996, adopted by the Board of Directors of the Company, pursuant to the
recommendation of the Special Committee pursuant to which, among other things,
(a) the Company will be merged into Ameribank Corporation ("Ameribank") with
Ameribank being the surviving corporation (the "Merger"), and (b) all shares of
the Company's Common Stock (the "Common Stock") and Preferred Stock (the
"Preferred Stock") other than the shares of stock owned by Ameribank, will
receive a total consideration of $1,700,000.00 with $0.776901 in cash (rounded
to the nearest $0.01) for each share of Common Stock and $58.35 in cash for
each share of Preferred Stock. Thereafter the Company will be merged into
Ameribank with Ameribank as the sole surviving entity.
2. To transact such other business as may properly come before
the Special Meeting and any adjournment thereof.
The Merger Agreement is attached as ANNEX A to the accompanying Proxy
Statement. Shareholders who do not wish to accept the cash per share payment
and who comply with the requirements of Section 1091 of the Oklahoma General
Corporation Act have the right to seek an appraisal by the District Court of
Oklahoma County, or in any other district court in a county in which any of the
principal officers of the Company reside or may be surrounded of the fair value
of their shares of stock. For a description of the rights of shareholders
pursuant to Section 1091 and a description of the procedures thereunder, see
"Appraisal Rights" in the accompanying Proxy Statement. A copy of the text of
Section 1091 is attached as ANNEX B to the accompanying Proxy Statement. The
Proxy Statement and the ANNEXES form a part of this Notice.
The Board of Directors of the Company has fixed the close of business
on _____________, 1997 as the record date for determining the shareholders
entitled to notice of and to vote at the Special Meeting and any adjournment
thereof. The affirmative vote of holders of a majority of the outstanding
shares Common Stock and Preferred Stock each voting as a class is required to
approve and adopt the Merger Agreement. The Merger does not require the
approval of a majority of the shareholders of the Company other than Ameribank.
Because Ameribank owns approximately 61.58% of the Common Stock and 88.85% of
the Preferred Stock and intends to vote all of such shares in favor of the
Merger Agreement, approval and adoption of the Merger Agreement is expected.
<PAGE> 2
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY TO ENSURE YOUR
REPRESENTATION AT THE SPECIAL MEETING, WHETHER OR NOT YOU PLAN TO ATTEND. YOUR
PROXY MAY BE REVOKED BY YOU AT ANY TIME BEFORE IT IS VOTED AT THE SPECIAL
MEETING. PROXIES MAY BE REVOKED BY FILING WITH THE SECRETARY OF THE COMPANY
WRITTEN NOTICE OF REVOCATION BEARING A LATER DATE THAN THE PROXY, BY DULY
EXECUTING AND DELIVERING TO THE SECRETARY OF THE COMPANY, AT OR PRIOR TO THE
SPECIAL MEETING, A SUBSEQUENT PROXY RELATING TO THE SAME SHARES OF STOCK, OR BY
ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON (ALTHOUGH ATTENDANCE AT THE
SPECIAL MEETING WILL NOT, BY ITSELF, CONSTITUTE A REVOCATION OF PROXY). ANY
WRITTEN NOTICE REVOKING A PROXY SHOULD BE SENT TO UNITED OKLAHOMA BANKSHARES,
INC., 4600 S.E. 29TH STREET, DEL CITY, OKLAHOMA 73115.
George N. Cook, Jr., Chairman
Oklahoma City, Oklahoma
_____________, 1997
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY,
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE SPECIAL MEETING.
PLEASE DO NOT SEND IN ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.
<PAGE> 3
EXHIBIT 20(d)
UNITED OKLAHOMA BANKSHARES, INC.
4600 S.E. 29TH STREET
DEL CITY, OKLAHOMA 73115
(405) 677-8711
----------------
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
---------------------------
INTRODUCTION
This Proxy Statement is being furnished to shareholders (the
"Shareholders") of United Oklahoma Bankshares, Inc., an Oklahoma corporation
(the "Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board") for use at the Company's Special Meeting
of Shareholders to be held on ____________, 1997 and at any adjournment or
postponement thereof (the "Special Meeting").
MATTERS TO BE CONSIDERED AT THE MEETING
At the Special Meeting, Shareholders will be asked to approve the
Agreement and Plan of Merger, dated as of December 3, 1996 (the "Merger
Agreement"), between the Company and Ameribank Corporation ("Ameribank"). The
Merger Agreement provides for the merger (the "Merger") of the Company into
Ameribank and for the payment of $1,700,000 by Ameribank to the Shareholders
(other than Ameribank) of the Company for the acquisition by Ameribank of all
shares of the Common Stock, par value $1.00 per share (the "Common Stock"),
and 9% Cumulative Non-Voting Preferred Stock, par value $30.00 per share (the
"Preferred Stock"), in the Company which are not owned by Ameribank (Common
Stock and Preferred Stock are collectively referred to herein as the "Stock").
Ameribank owns approximately 61.58% of the Common Stock and 88.85% of the
Preferred Stock. If the Merger is consummated, Ameribank will pay $1,700,000
(the "Total Consideration") for the Stock, at the rate of $0.776901 cash per
share (rounded to the nearest $0.01) for Common Stock (the "Common
Consideration") and $58.35 cash per share for Preferred Stock (the "Preferred
Consideration"). The Merger will become effective as of the filing of a
Certificate of Merger consistent with the Merger Agreement, with the Secretary
of State of the State of Oklahoma (the "Effective Time"). As a result of the
Merger, the Company will be merged into Ameribank and Ameribank will be the
surviving entity. A copy of the Merger Agreement is attached to this Proxy
Statement as ANNEX A. At the Effective Time, each share of the Common Stock
outstanding immediately prior to the Effective Time (other than shares of
Common Stock held by Ameribank) will be converted into the right to receive the
Common Consideration in cash, without interest, and each share of the Preferred
Stock outstanding immediately prior to the Effective Time (other than shares of
Preferred Stock held by Ameribank) will be converted into
<PAGE> 4
-2-
the right to receive the Preferred Consideration in cash, without interest.
See "SPECIAL FACTORS" and "THE MERGER."
---------------------------------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") NOR HAS THE COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
----------------------------------------------------------
The date of this Proxy Statement, and the approximate date it will be
mailed to Shareholders, is ___________, 1997.
VOTING AT THE MEETING
The Board has fixed the close of business on ___________, 1997 as the
record date (the "Record Date") for determining the holders of Stock entitled
to notice of, and to vote at, the Special Meeting. As of the Record Date,
there were (i) 2,532,237 shares of Common Stock and 145,199 shares of Preferred
Stock outstanding and entitled to vote and (ii) approximately 460 holders of
record of Common Stock and 86 holders of record of Preferred Stock. The
presence, in person or by properly executed proxy, of a majority of the
outstanding shares of the Common Stock and Preferred Stock, respectively, is
necessary to constitute a quorum at the Special Meeting. Each shareholder is
entitled to one vote for each share of Common Stock held by such shareholder
and one vote for each share of Preferred Stock held by such shareholder.
Under Oklahoma law, the affirmative vote of holders of a majority of
the outstanding shares of Common Stock and Preferred Stock, each voting as a
class is required to approve the Merger. Because Ameribank, which owns
approximately 6l.58% of the Common Stock and 88.85% of the Preferred Stock,
intends to vote its shares in favor of the Merger, approval of the Merger
Agreement is expected.
APPRAISAL RIGHTS
Under Section 1091 of the Oklahoma General Corporation Act ("OGCA"),
holders of record of shares of Stock who do not wish to accept the Common
Consideration or Preferred Consideration and who have neither voted in favor of
the Merger nor consented to it in writing have the right to seek an appraisal
of the fair value of their shares of Stock in the District Court of Oklahoma
County, or in any other district court in a county in which any of the
principal officers of the Company reside or may be summoned (the "District
Court"). A vote in favor of the Merger or a consent to it in writing
constitutes a waiver of such appraisal rights. In addition, Shareholders who
<PAGE> 5
-3-
vote in favor of the Merger may later be estopped from challenging the Merger
in a subsequent lawsuit. See "SPECIAL FACTORS - - Appraisal Rights" and ANNEX
B.
PROXIES
All shares of Stock represented at the Special Meeting by properly
executed proxies received prior to or at the Special Meeting, unless such
proxies previously have been revoked, shall be voted at the Special Meeting in
accordance with the instructions on the proxies. IF NO SUCH INSTRUCTIONS ARE
INDICATED, PROXIES WILL BE VOTED FOR THE APPROVAL OF THE MERGER AGREEMENT. As
noted under "Appraisal Rights" herein, a vote FOR the approval of the Merger
will constitute a waiver of the appraisal rights associated with the Stock.
The Board does not know of any other matters which are to come before the
Special Meeting. If any other matters are properly presented at the Special
Meeting for action, the persons named in the enclosed form of proxy and acting
thereunder will have the discretion to vote on such matters in accordance with
their best judgment.
Any proxy given pursuant to this solicitation may be revoked by the
person giving the proxy at any time before it is voted. Proxies may be revoked
by filing with the Secretary of the Company written notice of revocation
bearing a date later than the proxy, by duly executing and delivering to the
Secretary of the Company, at or prior to the Special Meeting, a subsequent
proxy relating to the same shares of Stock, or by attending the Special Meeting
and voting in person (although attendance at the Special Meeting will not, by
itself, constitute a revocation of proxy). Any written notice revoking a proxy
should be sent to United Oklahoma Bankshares, Inc., 4600 S.E. 29th Street, Del
City, Oklahoma 73115.
Proxies are being solicited by and on behalf of the Board of
Directors. Ameribank, however, will bear the cost of preparing and mailing the
proxy material furnished to the Company's Shareholders in connection with the
Special Meeting. Proxies will be solicited by mail. Directors, officers and
employees of the Company may also solicit proxies by telephone, telegram or
personal contact. Such persons will receive no additional compensation for
such services but may be reimbursed for out-of-pocket expenses in connection
with such solicitation. Copies of solicitation materials will be furnished to
fiduciaries, custodians and brokerage houses for forwarding to beneficial
owners of Stock held in the names of such fiduciaries, custodians and brokerage
houses.
All information contained in this Proxy Statement concerning Ameribank
and the plans related to the Company after the Merger has been supplied by
Ameribank. All other information contained in this Proxy Statement has been
supplied by the Company.
POSITION OF THE COMPANY'S BOARD; CONFLICTS OF INTEREST
The Board of Directors appointed a Special Committee (the "Special
Committee"), composed of two directors who are not affiliated with Ameribank,
to consider the proposal of Ameribank for a Merger with the Company. Pursuant
to the recommendations of the Special Committee, the Board of Directors
determined that the acquisition of the Stock by Ameribank pursuant to the
Merger Agreement is in the best interests of the Company and the Shareholders
<PAGE> 6
-4-
(other than Ameribank) and has approved the Merger Agreement. George K. Baum &
Company ("Baum & Company"), the Special Committee's financial advisor, has
advised the Special Committee that, in its opinion, based on certain
assumptions, the Merger is fair, from a financial point of view, to the
Shareholders of the Company (other than Ameribank).
No person is authorized to give information or make any representation
not contained in this Proxy Statement, and, if given or made, such information
or representation should not be relied upon as having been authorized. The
delivery of this Proxy Statement shall not, under any circumstances, create any
implication that there has been no change in the information set forth herein
or in the affairs of the Company or Ameribank since the date hereof.
ADDITIONAL INFORMATION
Pursuant to the requirements of Section 13(e) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and Rule 13e-3
promulgated thereunder, the Company, as issuer of the class of equity
securities which is the subject of the Rule 13e-3 transaction, together with
Ameribank, has filed with the Commission a Transaction Statement on Schedule
13E-3 (the "Schedule 13E-3") relating to the transactions contemplated by the
Merger Agreement. As permitted by the rules and the regulations of the
Commission, this Proxy Statement omits information, exhibits and undertakings
contained in the Schedule 13E-3. Such additional information can be inspected
at and obtained from the Commission in the manner set forth below under
"AVAILABLE INFORMATION".
Statements contained herein concerning any documents are not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Schedule 13E-3. Each such statement
is qualified in its entirety by such reference.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the Commission relating to
its business, financial statements and other matters. Such reports, proxy
statements and other information filed by the Company, as well as the Schedule
13E-3, may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and may be available at the Regional Offices of the Commission
located at 500 West Madison Avenue, Suite 1400, Chicago, Illinois 60661, and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can also be obtained from the Commission at prescribed rates by
addressing written requests for such copies to the Public Reference Section of
the Commission at 450 Fifth Street, N.W. Washington, D.C. 20549.
<PAGE> 7
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THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED OR DELIVERED. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE
UPON REQUEST FROM THE CORPORATE SECRETARY'S OFFICE, UNITED OKLAHOMA BANKSHARES,
INC., 4600 S.E. 29TH STREET, DEL CITY, OKLAHOMA 73115 TELEPHONE NUMBER (405)
677-8711. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE NO LATER THAN ____________.
INFORMATION INCORPORATED BY REFERENCE
(See Exhibit 99)
The following documents are incorporated by reference:
The Company's Annual Report on Form 10-K for the years ended
December 31, 1995, December 31, 1994 and December 31, 1993;
The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996;
The Company's Current Report on Form 8-K filed with the
Commission on December 12, 1996; and
All other documents filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act after December 31, 1995,
and prior to the date of the Special Meeting on Stockholders
to be held on ___________________, are incorporated by
reference.
Any statement contained in a document filed with the
Commission prior to the date of this Proxy Statement and incorporated by
reference is modified or superseded to the extent that a statement contained in
this Proxy Statement (or in any other subsequently filed document which also is
incorporated by reference) modifies or supersedes such statement. The
modifying or superseding statement may, but need not, state that it has
modified or superseded a prior statement or include any other information set
forth in the document that is not modified or superseded. The making of a
modifying or superseding statement shall not be deemed an admission that the
modified or superseded statement, when made, constituted an untrue statement of
a material fact, an omission to state a material fact necessary to make a
statement not misleading, or the employment of a manipulative, deceptive or
fraudulent device, contrivance, scheme, transaction, act, practice, course of
business or artifice to defraud, as those terms are used in the Securities Act
of 1933, as amended (the "Securities Act"), the Exchange Act or the rules and
regulations thereunder. Any statement so modified shall not be deemed in its
unmodified form to constitute a part hereof for purposes of the Exchange Act.
Any statement so superseded shall not be deemed to constitute a part hereof for
purposes of the Exchange Act.
<PAGE> 8
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Matters to be Considered at the Meeting . . . . . . . . . . . . . . . . . . . . . . . . 1
Voting at the Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Position of the Company's Board; Conflicts of Interest . . . . . . . . . . . . . . . . . 3
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INFORMATION INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
The Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Recommendation of Board of Directors and the Special Committee . . . . . . . . . . . . . 14
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Fairness of the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Interests of Certain Persons in the Merger; Conflicts of Interest . . . . . . . . . . . 17
Financing of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Expenses of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Conditions to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Certain Litigation Concerning the Proposed Merger . . . . . . . . . . . . . . . . . . . 19
Business of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SPECIAL FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Background of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Appointment of and Deliberations by the Special Committee . . . . . . . . . . . . . . . 22
Proceedings of the Board and Recommendation of the Special Committee . . . . . . . . . . 31
Fairness of the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Structure and Purpose of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
<PAGE> 9
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<TABLE>
<S> <C> <C>
Alternatives to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Certain Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Interests of Certain Persons in the Merger; Conflicts of Interest . . . . . . . . . . . 35
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . 36
Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Financing of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Expenses of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Certain Litigation Concerning the Proposed Merger . . . . . . . . . . . . . . . . . . . 41
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Payment for Shares of Common Stock and Preferred Stock . . . . . . . . . . . . . . . . . 42
Conditions to the Merger; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Certain Covenants of the Company and Ameribank . . . . . . . . . . . . . . . . . . . . . 45
Termination and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
CERTAIN INFORMATION REGARDING AMERIBANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Recent Market Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
BUSINESS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Management's Discussion and Analysis of Results of Operations and Financial Condition . 50
BENEFICIAL OWNERSHIP OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Beneficial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Certain Transactions in Common Stock and Preferred Stock . . . . . . . . . . . . . . . . 53
Proxy Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Current Information: Delisting and Deregistration . . . . . . . . . . . . . . . . . . . 55
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Future Stockholder Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Other Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ANNEX A: AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
<PAGE> 10
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<TABLE>
<S> <C>
ANNEX B: SECTION 1091 OF THE OKLAHOMA GENERAL CORPORATION ACT . . . . . . . . . . . . . . . . . . 68
ANNEX C: OPINION OF GEORGE K. BAUM & COMPANY, DATED OCTOBER 25, 1996 . . . . . . . . . . . . . . 73
ANNEX D: SUPPLEMENTAL LETTER OF GEORGE K. BAUM & COMPANY, DATED JANUARY 23, 1997 . . . . . . . . 76
</TABLE>
<PAGE> 11
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SUMMARY
The following is a summary of information contained in this
Proxy Statement. This summary is not intended to be a complete statement of
all material features of the Merger and is qualified in its entirety by
reference to the more detailed information appearing elsewhere in this Proxy
Statement, including the attached Annexes. Terms used but not defined in this
summary have the meanings described to them elsewhere in this Proxy Statement.
Shareholders are urged to read this Proxy Statement and the Annexes in their
entirety.
THE SPECIAL MEETING
A Special Meeting of Shareholders of the Company will be held
on ____________ 1997 at _______ a.m. local time, at 4600 S.E. 29th Street, Del
City, Oklahoma 73115, to consider and vote on a proposal adopted by the Board
of Directors, pursuant to the recommendations of the Special Committee, to
approve the Merger Agreement between the Company and Ameribank, which provides
for the merger of the Company into Ameribank. A copy of the Merger Agreement
is attached as ANNEX A. See "INTRODUCTION."
THE MERGER
The Merger Agreement provides that, subject to the approval of
the Merger Agreement by the Shareholders of the Company and satisfaction of
other conditions, the Company will be merged into Ameribank, with Ameribank
being the surviving corporation. Ameribank owns 1,559,498 shares, or
approximately 61.58%, of the outstanding Common Stock and 129,016 shares of
Preferred Stock, representing approximately 88.85% of the outstanding Preferred
Stock of the Company. Pursuant to the Merger Agreement, each share of Common
Stock outstanding, other than shares held by Ameribank, will be automatically
converted into the Common Consideration. In addition, each share of Preferred
Stock outstanding, other than shares held by Ameribank, will be automatically
converted into the Preferred Consideration. In connection with, and only in
connection with the consummation of the Merger, Ameribank has agreed to cancel,
simultaneously with the consummation of the Merger, the shares of Common Stock
and Preferred Stock owned by it and has waived its right to receive any of the
Total Consideration. After consummation of the Merger, the entire equity
interest in the Company will be owned by Ameribank and Ameribank will be the
sole surviving entity. See "THE MERGER," "SPECIAL FACTORS -- Interests of
Certain Persons in the Merger, Conflicts of Interest" and "SPECIAL FACTORS --
Certain Effects of the Merger."
REQUIRED VOTE
Under Oklahoma law, the affirmative vote of the holders of a
majority of the shares of Common Stock voting as a class and Preferred Stock
voting as a class at the Special Meeting is required for approval of the Merger
Agreement. Because Ameribank, which owns approximately 61.58% of the Common
Stock and 88.85% of the Preferred Stock, intends to vote its shares in favor of
the Merger, approval and adoption of the Merger Agreement is expected.
<PAGE> 12
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APPRAISAL RIGHTS
Under Section 1091 of the OGCA, holders of record of shares of
Common Stock or Preferred Stock who do not wish to accept the Common
Consideration or Preferred Consideration have the right to seek an appraisal to
determine the fair value of their shares of Common Stock or Preferred Stock in
the District Court.
Each Shareholder who has not voted in favor of the Merger and
who wishes to assert a right to appraisal must make a written demand to the
Company which reasonably informs the Company of the Shareholder's identity and
his or her intention to demand an appraisal for his or her shares of Stock.
Failure to make such demand before the vote is taken to approve the Merger will
eliminate a Shareholder's right to an appraisal.
Within 120 days after the Effective Time (the "120-Day
Period"), any Shareholder who has properly demanded an appraisal and who has
not withdrawn his or her demand (such Shareholders are hereinafter referred to
collectively as the "Dissenting Shareholders") has the right to file in the
District Court a petition (the "Petition") demanding a determination of the
fair value of the shares of Stock (the "Dissenting Shares") held by all of the
Dissenting Shareholders. If, within the 120-Day Period, no Petition shall have
been filed as provided above, all rights to an appraisal will cease and all of
the Dissenting Shareholders will receive the Common Consideration or Preferred
Consideration, without interest, applicable to such Dissenting Shares. The
Company is not obligated and does not intend to file a Petition.
Upon the filing of the Petition, service of a copy is required
to be made upon the surviving corporation, which shall, within 20 days after
such service, file in the office of the court in which the Petition was filed,
a duly verified list containing the names and addresses of all Dissenting
Shareholders. The District Court may order that notice of the time and place
fixed for the hearing on the Petition be sent by registered or certified mail
to the surviving corporation and all of the Dissenting Shareholders, and be
published at least one week before the day of the hearing in a newspaper of
general circulation published in the City of Oklahoma City, Oklahoma, or in
another publication determined by the District Court. If a hearing on the
Petition is held, the District Court is empowered to determine which Dissenting
Shareholders have complied with the provisions of Section 1091 of the OGCA and
are entitled to an appraisal of their shares of Common Stock. See "SPECIAL
FACTORS -- Appraisal Rights" and ANNEX B.
THE EFFECTIVE TIME
The Merger will become effective as of the filing of a
Certificate of Merger, consistent with the Merger Agreement, with the Secretary
of State of the State of Oklahoma. The Merger will be consummated only upon
satisfaction or waiver, where permissible, of the terms and conditions
contained in the Merger Agreement and provided that the Merger Agreement has
not been terminated. The Merger Agreement may be terminated by the mutual
written consent of the Company and Ameribank and Ameribank may terminate the
Merger Agreement at any time if there has been a material adverse change in the
business, assets, financial condition or prospects of the Company. If the
Merger has not been consummated by April 1, 1997, either the Company or
<PAGE> 13
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Ameribank may terminate the Merger Agreement so long as the reason that the
Merger has not been consummated is not due to the failure of the party choosing
to terminate to fulfill any of its obligations thereunder. No such waiver or
termination will require the vote or consent of the holders of Common Stock or
Preferred Stock.
BACKGROUND OF THE MERGER
In November 1994, George N. Cook, Jr. ("Mr. Cook") and J.
Michael Adcock ("Mr. Adcock"), directors of Ameribank, met with Willis J.
Wheat, a director and the President of the Company to discuss the possible sale
to Ameribank of approximately 28% of the Common Stock and approximately 64% of
the Preferred Stock. Over the next six months, representatives of Ameribank
and the Company had substantial contacts to negotiate for the purchase by
Ameribank of stock from various officers and directors of the Company and
reached an agreement in April, 1995, for Ameribank to acquire 702,266 shares of
Common Stock, or 27.7% of the outstanding shares of Common Stock, and 92,790
shares of the Preferred Stock, or 63.9% of the outstanding shares of Preferred
Stock, from seven shareholders of the Company. During the course of these
negotiations, a subsequent merger transaction was discussed in general, but no
specific proposals were presented.
In April 1995, Ameribank filed an application with the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board")
seeking approval to acquire more than 5% of the outstanding shares in the
Company. On April 27, 1995, the Federal Reserve Board approved the transaction
for consummation on or after fifteen calendar days following that date.
On May 16, 1995, the acquisition was completed. At the date
of closing of this acquisition of Common Stock and Preferred Stock, the Board
of Directors of the Company consisted of 3 directors: Mrs. Gladys Tucker,
Willis J. Wheat and J. N. Ainsworth. At the closing on May 16, 1995, Mrs.
Tucker resigned as a director and Ameribank's designee, Mr. Cook, was elected
as a director of the Company to fill such vacancy by the remaining members of
the Board of the Company. Pursuant to an agreement with Ameribank, Messrs.
Wheat and Ainsworth resigned as directors and officers of the Company effective
June 15, 1995. D. Wesley Schubert ("Mr. Schubert") and Mr. Adcock, designees
of Ameribank, were elected as directors of the Company to fill such vacancies
by the remaining director of the Company. After the election of Messrs.
Schubert and Adcock to the Board of Directors of the Company, Ameribank
effectively controlled the Company. Messrs. Cook, Schubert and Adcock are
officers and directors of both the Company and Ameribank and have been involved
in every decision by Ameribank to acquire additional shares of the Company.
In July, 1995, Ameribank decided to seek to acquire additional
shares of Preferred Stock and on July 20, 1995, sent a letter to all holders of
Preferred Stock offering to purchase all outstanding shares of Preferred Stock
for $18.00 per share. As a result of that offer, Ameribank acquired an
additional 8,256 shares of the Company's Preferred Stock.
On November 3, 1995, Ameribank commenced a tender offer to
purchase up to 1,478,036 shares of Common Stock for a price of $0.50 per share.
That tender offer was subsequently decreased and, when it terminated on
December 29, 1995, Ameribank had acquired
<PAGE> 14
-12-
588,146 additional shares of Common Stock. Ameribank has continued to purchase
Common Stock and Preferred Stock in private transactions and presently owns a
total of 1,559,160 shares of Common Stock and 129,016 shares of Preferred Stock
representing approximately 61.58% of the outstanding shares of Common Stock and
88.85% of the outstanding shares of Preferred Stock, respectively. See
"BENEFICIAL OWNERSHIP OF SHARES--Certain Transactions in Common Stock and
Preferred Stock."
Ameribank and Messrs. Cook, Schubert and Adcock entered into a
Stock Purchase Agreement, dated November 3, 1995, which provided that Ameribank
would sell to each of Messrs. Cook, Schubert and Adcock 16.33% of the total
number of shares of Common Stock and Preferred Stock which Ameribank now owned
or acquired in future purchases. The terms provided that the purchase price
for such Stock was the price at which Ameribank acquired the shares, plus costs
incurred, plus interest, accrued from the date of Ameribank's acquisition of
such Stock to the closing of the purchase contemplated by the agreement, at a
rate equal to the base rate of interest of Chase Manhattan Bank, N.A. from time
to time. The consummation of the transactions are subject to (1) approval from
the Federal Reserve System; (2) the entering into by the parties of a
Shareholders' Agreement restricting the future transfer of the Stock by Messrs.
Adcock, Schubert and Cook; and (3) the entering into by the parties of a Voting
Trust Agreement appointing Ameribank as Trustee to vote the shares of Common
Stock. On November 27, 1996, Mr. Adcock entered into an agreement with his
wife, Dona B. Adcock ("Mrs. Adcock") , transferring to her his rights to
purchase shares of the Company under the Stock Purchase Agreement. Mrs. Adcock
is the daughter of Don Bodard ("Mr. Bodard"), the sole shareholder of
Ameribank. Messrs. Cook and Schubert and Mrs. Adcock have entered into an
Addendum to the Stock Purchase Agreement with Ameribank dated January 27, 1997,
whereby Ameribank agrees that if the Merger is consummated, Ameribank will sell
to each of Messrs. Cook and Schubert and Mrs. Adcock 16.33% of the total number
of shares of common stock outstanding of United Bank, Del City, Oklahoma
("United") at a price per share equal to the total consideration, plus costs
and interest paid by Ameribank for the Stock, divided by the total number of
outstanding shares of common stock of United, and on the same terms and subject
to the same conditions as previously agreed.
In March, 1996, Mr. Cook approached David A. Nichols ("Mr.
Nichols"), a banker whom Mr. Cook has known since 1984, to ask Mr. Nichols
whether he would become a member of the Board of Directors of the Company. Mr.
Cook had previously had the opportunity to work with Mr. Nichols on loan
transactions and participation agreements during the course of their
acquaintance.
At the annual meeting of shareholders, held on April 25, 1996,
"Mr. Nichols" was elected as a director of the Company and Mr. Adcock was
re-elected as a director of the Company to serve in addition to Mr. Cook and
Mr. Schubert.
Claude Rappaport ("Mr. Rappaport") has been a member of the
Board of Directors of United, since January 30, 1989. In May, 1996, Messrs.
Cook and Adcock asked Mr. Rappaport if he would be willing to serve as a
director of the Company. On May 25, 1996, Mr. Rappaport was elected to the
Board of Directors of the Company by the unanimous vote of the directors.
<PAGE> 15
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At a Special Meeting of the Board of the Company held on June
14, 1996, Ameribank presented a written proposal to merge the Company into
Ameribank for a cash price of $1,300,000 for all of the outstanding shares of
Common Stock and Preferred Stock of the Company not already owned by Ameribank,
subject to certain conditions.
Because three of the five members of the Board of Directors of
the Company were affiliated with Ameribank, the Board appointed a Special
Committee of the Board of Directors comprised of Mr. Nichols and Mr. Rappaport.
Neither Mr. Nichols nor Mr. Rappaport have any financial or personal interest
in Ameribank and neither of them are officers, directors, employees or
stockholders of Ameribank. The Special Committee's role was to: (i) evaluate
any offer by Ameribank to merge the Company with Ameribank; (ii) negotiate the
terms and conditions of any cash merger with Ameribank; and (iii) make a
recommendation to the Board of Directors of the Company. The Shareholders were
advised of the Ameribank proposal and appointment of a Special Committee by
letter dated June 17, 1996 from Mr. Cook, the Chairman of the Board. See
"SPECIAL FACTORS -- Appointment of and Deliberations by the Special Committee."
In July 1996, the Special Committee interviewed
representatives of several law firms and investment banking firms to obtain
legal counsel and financial advice for the Special Committee in the performance
of its duties and to assist the Special Committee in its negotiations with
Ameribank. The Special Committee retained the law firm of Conner & Winters
(the "Special Committee Counsel") and the investment banking firm of George K.
Baum & Company ("Baum & Company"), both of which have experience in
transactions as proposed by Ameribank. On August 5, 1996, the Special
Committee sent a letter to the Shareholders notifying them of the engagement of
a financial advisor and legal counsel. The Special Committee also, based on a
recommendation by the Special Committee Counsel, authorized the Chairman of the
Special Committee to interview and recommend to the Special Committee
employment of an appraiser to perform an appraisal on the bank building (the
"Bank Tower") located in Del City, Oklahoma and owned by United. See "SPECIAL
FACTORS-- Appointment of and Deliberations by the Special Committee."
On July 23, 1996 the Special Committee met with
representatives of, and legal counsel for Ameribank. Ameribank agreed to
extend expiration of its offer from August 1, 1996 to November 1, 1996.
Ameribank further indicated its offer of $1,300,000 was based, in part, on an
appraisal of United by GRA, Petty & Co. The Special Committee requested a copy
of the report by GRA, Petty & Co. and an explanation of how Ameribank
determined the $1,300,000 price in its offer.
On August 16, 1996, the Special Committee met with
representatives of the Special Committee Counsel, Baum & Company and the
Company. The Company was instructed on how to assist Baum & Company in its
review of the Company's records. The Company and Baum & Company were also
advised by the Special Committee Counsel of the current law in Oklahoma and
Delaware to be considered when determining the fair value of the Company. At
the meeting, the Special Committee further discussed various valuation issues
of the minority shares of the Company; including, the difficulty in selling the
minority Stock to a buyer other than Ameribank and the current trading price of
the Stock.
<PAGE> 16
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By letter dated September 5, 1996, counsel for Ameribank
advised the Special Committee of the method used by Ameribank in determining
the $1,300,000 offer, which included a minority discount of the Stock. In this
letter, counsel for Ameribank further advised that Ameribank had not received
any offers to purchase the Company and that Ameribank would provide the Special
Committee with a copy of the GRA, Petty & Co. appraisal at such time as the
Special Committee informed Ameribank that it has developed a reasonable basis
for valuation of the minority Stock.
On October 18, 1996 the Special Committee had a meeting to
discuss valuation of the minority Stock by representatives of Baum & Company
and to review the appraisal performed by R.W. Finley & Co., Inc. of the Bank
Tower. As of August 31, 1996, the appraisal estimated the value of the Bank
Tower at $2,950,000. The Special Committee and Baum & Company then reviewed
the proposed opinion of Baum & Company concerning the valuation of the Company.
The Special Committee was advised by Baum & Company that a price of $58.35 per
share for the minority held Preferred Stock and $0.754 per share for the
minority held Common Stock, being a valuation without a minority discount and
which came to a total of $1,679,131 for the minority Stock, was fair from a
financial point of view based upon Baum & Company's methods for determining
value. Baum & Company delivered its written fairness opinion, dated October
25, 1996 to the Special Committee. At the same meeting, the Special Committee
Counsel advised the Special Committee that minority discounts are not
appropriate under Oklahoma and Delaware law.
RECOMMENDATION OF BOARD OF DIRECTORS AND THE SPECIAL COMMITTEE
On October 28, 1996, the Special Committee met with
representatives of Ameribank to negotiate the price offered for the Common
Stock and the Preferred Stock not owned by Ameribank. As a result of these
negotiations, the Special Committee recommended to the Company's Board of
Directors that a revised proposal by Ameribank be accepted. Under the revised
proposal, Ameribank would pay a total of $1,700,000 for all the shares of
Stock not owned by Ameribank with $58.35 per share allocated to holders of
Preferred Stock and the balance to be paid to holders of Common Stock. The
Special Committee's financial advisor advised the Special Committee that, in
the advisor's opinion, consideration in these amounts is fair from a financial
point of view. Based upon the recommendations of the Special Committee, the
Board of Directors of the Company approved the proposed Merger. See "SPECIAL
FACTORS--Appointment of and Deliberations by the Special Committee".
Mr. Cook wrote to the Shareholders on November 4, 1996,
notifying them of the revised proposal and stating that completion of the
proposed merger transaction was subject to preparation of a mutually
satisfactory merger agreement with Ameribank, certain filings and approvals
with regulatory agencies and approval by vote of holders of a majority of the
shares of Common Stock and Preferred Stock, each voting as a class at a Special
Shareholder's meeting. On December 3, 1996, the Special Committee met with the
Special Committee's Counsel to review the proposed Merger Agreement with
Ameribank. The members of the Special Committee approved the Merger Agreement
and passed a recommendation that the Board of Directors of the Company enter
into the Merger Agreement. Following the meeting of the Special Committee, the
Company's Board of Directors met to consider the Special Committee's
recommendation and after discussion, voted to approve the Merger Agreement as
recommended by the Special Committee and to
<PAGE> 17
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authorize the execution of the Merger Agreement on behalf of the Company. Mr.
Cook again wrote to the Shareholders on December 5, 1996, advising the
Shareholders of the execution of the Merger Agreement and stating that
completion of the Merger was subject to preparation of all necessary filings
and approvals with regulatory agencies and the approval by vote of holders of a
majority of the shares of the Company's Common Stock and Preferred Stock, each
voting as a class at a Special Shareholder's meeting. See "SPECIAL FACTORS --
Appointment of and Deliberations by the Special Committee."
On December 12, 1996, the Company filed a Current Report on
Form 8-K with the Commission reporting the Merger Agreement between Ameribank
and the Company.
During the first part of January 1997, counsel for Ameribank
provided the Special Committee's Counsel with copies of certain Forms 4, which
indicated that from January 1, 1996 through June 30, 1996, Ameribank bought
Preferred and Common Stock from certain shareholders of the Company at a price
between $18.00 and $49.50 per share for Preferred Stock and not more than $0.50
per share for Common Stock. The Special Committee's Counsel forwarded the
Forms 4 to the Special Committee and Baum & Company.
As a result of the additional information in the Forms 4, the
Special Committee, along with the Special Committee's Counsel held a telephonic
meeting on January 14, 1997, with a representative of Baum & Company. In light
of the information provided in the Forms 4, the Special Committee inquired of
Baum & Company as to whether the fairness opinion of Baum & Company, dated
October 25, 1996, would change and whether the $1,700,000 total purchase price
to be paid by Ameribank for the Common Stock and Preferred Stock held by
non-Ameribank Shareholders was still fair from a financial point of view. Baum
& Company's representative advised that there was no need to redetermine if the
Total Consideration was fair from a financial point of view since the $58.35
per share being offered for the Preferred Shares by Ameribank was approximately
a 16% premium over the highest price of $49.50 previously paid by Ameribank for
the Preferred Stock and as a result the Merger was still fair from a financial
point of view.
The Special Committee reaffirmed its approval and
recommendation to the Board of Directors of the Merger, subject to (i)
Ameribank or its counsel certifying that during the past twelve (12) months the
maximum price paid by Ameribank has not exceeded $49.50 and $ 0.50 for
Preferred and Common Stock, respectively, and (ii) receipt of the supplemental
fairness opinion from Baum & Company that the aggregate price of $1,700,000 to
be paid by Ameribank to non-Ameribank Shareholders is fair from a financial
point of view, as set forth in Baum & Company's fairness letter of October 25,
1996.
As requested by the Special Committee, Ameribank's counsel
informed the Special Committee's Counsel that (i) Ameribank has not paid more
than $0.50 per share for shares of Common Stock, and (ii) Ameribank made an
offer in July, 1995, to purchase shares of Preferred Stock for $18.00 per share
and subsequently acquired additional shares of Preferred Stock through private
purchases at amounts between $18.00 and $49.50 per share. Ameribank further
advised that it had entered into separate stock purchase agreements with
several Shareholders of the Company, which agreements provided that if within
one (1) year form the date of the stock purchase
<PAGE> 18
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agreement, Ameribank should enter into a merger with the Company in which
Ameribank pays a higher price, Ameribank would pay the sellers the difference
in cash. Ameribank also provided the Special Committee's Counsel copies of
these stock purchase agreements.
By letter dated January 23, 1997 to the Special Committee,
Baum & Company issued its supplemental opinion which indicated that, even with
the additional information regarding the Preferred Stock purchased by
Ameribank, Baum & Company finds the Total Consideration to be paid to the
holders of Common and Preferred Stock to be fair from a financial point of
view, as set forth in its letter dated October 25, 1996.
On January 27, 1997, the Special Committee, along with the
Special Committee's Counsel held a telephonic meeting. After review of the
letter from Ameribank's counsel dated January 16, 1997, and the supplemental
fairness opinion issued by Baum & Company dated January 23, 1997, the Special
Committee reaffirmed its approval and recommendation to the Board of Directors
that the Merger should be consummated for an aggregate price of $1,700,000.
For a description of the factors considered in the determination of the Common
Consideration and the Preferred Consideration and the fairness of the
transaction, see "SPECIAL FACTORS -- Appointment of and Deliberations by the
Special Committee -- Fairness of the Transaction, -- Opinion of the Financial
Advisor." For a description of the events leading up to the approval of the
Merger Agreement, see "SPECIAL FACTORS -- Background of the Merger."
For a discussion of the factors considered by the Board in
reaching their determination, see "SPECIAL FACTORS -- Proceedings of the Board
and Recommendation of the Special Committee -- Fairness of the Transaction and
- -- Opinion of the Financial Advisor."
THE BOARD HAS APPROVED THE MERGER AGREEMENT EVEN THOUGH
MEMBERS OF THE BOARD HAVE CERTAIN INTERESTS WHICH MAY PRESENT THEM WITH
CONFLICTS OF INTEREST IN CONNECTION WITH THE MERGER. See "SPECIAL FACTORS --
Interest of Certain Persons in the Merger, Conflicts of Interest."
OPINION OF FINANCIAL ADVISOR
The Special Committee engaged Baum & Company to act as its
financial advisor in connection with the Merger and related matters. Prior to
the Board of Directors meeting on October 28, 1996, Baum & Company delivered to
the Special Committee its written opinion that the Merger is fair from a
financial point of view to Shareholders (other than Ameribank). The full text
of the opinion of Baum & Company, which sets forth the procedures followed,
matters considered and assumptions made in connection with rendering such
opinion is attached as ANNEX C and should be read in its entirety as should the
supplemental letter of Baum & Company, dated January 23, 1997, attached as
ANNEX D. For a summary of the Baum & Company opinion, including the procedures
followed, the matters considered and the assumptions made by Baum & Company in
arriving at its opinion, See "SPECIAL FACTORS -- Opinion of Financial Advisor".
<PAGE> 19
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FAIRNESS OF THE TRANSACTION
In concluding that a total consideration of $1,700,000 was a
fair price for the Common and Preferred Stock of the Company not owned by
Ameribank, the Special Committee and Ameribank considered a number of factors
which are set out in detail under "SPECIAL FACTORS -- Fairness of the
Transaction".
The structure of the acquisition as a Merger was proposed by
Ameribank and conditioned upon Ameribank obtaining 100% ownership of the
Company, thus eliminating the separate existence of the Company. The Special
Committee negotiated the Total Consideration and the terms of the Merger
Agreement with Ameribank. At the Effective Time the Company will merge into
Ameribank and Ameribank will be the surviving corporation. See "SPECIAL
FACTORS--Structure and Purpose of the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER; CONFLICTS OF INTEREST
In considering the recommendation of the Special Committee and
the approval of the Board with respect to the Merger, Shareholders should be
aware that three members of the Board have interests summarized below which
present them with conflicts of interest in connection with the Merger
Agreement. The Special Committee was aware of these conflicts and considered
them among the other matters described under "SPECIAL FACTORS -- Background of
the Merger" "Appointment of and Deliberations by the Special Committee" --
"Proceedings of the Board and Recommendation of the Special Committee --
Fairness of the Transaction." See "SPECIAL FACTORS -- Interests of Certain
Persons in the Merger, Conflicts of Interest."
OWNERSHIP OF THE COMPANY AND UNITED AFTER THE MERGER.
Ameribank and Messrs. Cook, Schubert and Adcock entered into a Stock Purchase
Agreement, dated November 3, 1995, which provides that, subject to certain
conditions, Ameribank will sell to each of them 16.33% of the total number of
shares of Common Stock and Preferred Stock which Ameribank owns. Mr. Adcock
transferred his rights pursuant to this Stock Purchase Agreement to Mrs.
Adcock. Messrs. Cook, Schubert and Mrs. Adcock have entered into an Addendum
to the Stock Purchase Agreement which will permit each of them, if the Merger
is consummated, to acquire 16.33% of the outstanding shares of common stock in
United. If the Merger is consummated, the Company will be merged into
Ameribank and Ameribank will be the surviving entity. See "CERTAIN INFORMATION
REGARDING AMERIBANK" and "SPECIAL FACTORS -- Background of the Merger."
DIRECTORS OF THE COMPANY AFTER THE MERGER. The Merger
Agreement provides that, after the Merger, the current directors of Ameribank
will continue as the directors of the surviving corporation, until their
successors are duly elected or appointed in accordance with applicable law.
EMPLOYMENT OF COMPANY'S EMPLOYEES. Ameribank has indicated
that, subsequent to the Merger, the current officers and employees of the
Company will remain in such capacities with the surviving corporation.
<PAGE> 20
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INDEMNIFICATION OF DIRECTORS AND OFFICERS. Under the
Company's Certificate of Incorporation, the Bylaws, the Merger Agreement,
certain indemnification arrangements, and under currently effective officers'
and directors' liability insurance, the Company's officers and directors may
have certain rights to indemnification with respect to any litigation relating
to the Merger. See "SPECIAL FACTORS -- Interests of Certain Persons in the
Merger; Conflicts of Interest," and "THE MERGER -- Certain Covenants of the
Company and Ameribank."
Outstanding Loan
FINANCING OF THE MERGER
Ameribank will be required to pay the Total Consideration of
$1,700,000 under the Merger Agreement plus the expenses in connection with the
Merger. Ameribank has represented to the Company that it has sufficient cash
to enable it to consummate the Merger which Ameribank will receive through an
existing line of credit and a possible dividend to Ameribank from American
National Bank & Trust Company, Shawnee, Oklahoma ("ANB") a subsidiary of
Ameribank. The line of credit to Ameribank is evidenced by a revolving
promissory note with Boatmen's First National Bank of Oklahoma in the maximum
principal amount of $2,700,000. As of December 31, 1996, the principal balance
outstanding was $100,000. See "SPECIAL FACTORS -- Financing of the Merger."
EXPENSES OF THE MERGER
Whether or not the Merger is consummated, Ameribank has agreed
to pay all reasonable expenses and disbursements incurred in connection with
the transactions contemplated by the Merger Agreement. See "SPECIAL FACTORS -
- - Expenses of the Merger."
CONDITIONS TO THE MERGER
The obligations of the parties to consummate the Merger are
subject to the approval of the Merger Agreement by the Shareholders of the
Company, and compliance with other covenants and conditions. See "THE MERGER
- -- Conditions to the Merger, Waiver" and "-- Certain Covenants of the Company
and Ameribank."
EXCHANGE OF CERTIFICATES
As soon as practicable following the Effective Time, a letter
of transmittal and instructions for use in surrendering certificates of Common
Stock and Preferred Stock will be mailed to all Shareholders except Ameribank.
Shareholders must return the completed letters of transmittal and their
certificates in accordance with the instructions in order to exchange their
certificates for the Common Consideration or Preferred Consideration to be
received by such shareholder.
At or promptly after the Effective Time, cash in an amount
sufficient to pay all Shareholders the amounts to which they will become
entitled as a result of the Merger will be deposited with Liberty Bank and
Trust Company of Oklahoma City, N.A. (the "Exchange Agent").
<PAGE> 21
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As soon as practicable after the Effective Time, the Exchange Agent will
commence distributing cash to each shareholder (other than Ameribank) upon the
surrender by such shareholder of certificates for Common Stock or Preferred
Stock accompanied by a duly executed letter of transmittal. After the Merger,
each outstanding certificate which prior thereto represented issued and
outstanding shares of Common Stock or Preferred Stock shall be deemed for all
purposes to represent only the right of the holder to receive $0.776901 in
cash, without interest, per share of Common Stock, or $58.35 in cash, without
interest, per share of Preferred Stock (other than shares held by Ameribank).
HOLDERS OF COMMON STOCK AND PREFERRED STOCK SHOULD NOT FORWARD THEIR STOCK
CERTIFICATES WITH THE ENCLOSED PROXY CARD. TRANSMITTAL MATERIALS AND
INSTRUCTIONS RELATING TO STOCK CERTIFICATES WILL BE MAILED TO SHAREHOLDERS AS
SOON AS PRACTICABLE AFTER THE EFFECTIVE TIME. SEE "THE MERGER."
FEDERAL INCOME TAX CONSEQUENCES
Generally, if the Merger is consummated, each shareholder of
record at the Effective Time (other than Ameribank) will be entitled to receive
cash for their Stock and will recognize taxable gain or loss for federal income
tax purposes equal to the difference, if any, between the amount of such cash
received and the tax basis of the Stock exchanged. Each shareholder should
consult such shareholder's tax adviser as to the particular consequences of the
Merger to such shareholder, including the application of state, local and
foreign tax laws. See "SPECIAL FACTORS -- Certain Federal Income Tax
Consequences of the Merger."
CERTAIN LITIGATION CONCERNING THE PROPOSED MERGER
There is no litigation concerning the Merger.
BUSINESS OF THE COMPANY
The Company is a one bank holding company registered under the
Bank Holding Company Act. See "BUSINESS OF THE COMPANY." The Company is
incorporated in Oklahoma and its principal executive offices are located at
4600 S.E. 29th Street, Del City, Oklahoma 73115; telephone number (405)
677-8711.
SELECTED CONSOLIDATED FINANCIAL DATA
The table in "BUSINESS OF THE COMPANY -- Selected Consolidated
Financial Data" sets forth selected historical financial information for the
Company for each of the five years in the period ended December 31, 1996. The
information should be read in conjunction with "BUSINESS OF THE COMPANY --
Management's Discussion and Analysis of Results of Operations and Financial
Condition". The Company's audited financial statements for the fiscal years
ended December 31, 1995, December 31, 1994 and December 31, 1993 are
incorporated herein by reference to the Company's Annual Report on Form 10-K
for the years ended December
<PAGE> 22
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31, 1995, December 31, 1994 and December 31, 1993. The Company's unaudited
balance sheets and comparative year-to-date income statements and statement of
cash flows and related earnings per share amounts for the period ended
September 30, 1996, are incorporated herein by reference to the Company's
Quarterly report on Form 10-Q for the period ended September 30, 1996. The
selected financial information for the Company for the period ended December
31, 1996 is also unaudited.
As the Company's existence will be eliminated in the Merger,
pro forma data disclosing the effect of the Merger on its balance sheet,
statement of income, earnings per share amounts, ratio of earnings to fixed
charges and book value per share is not provided.
DIVIDENDS
The Company has 145,199 shares of Preferred Stock outstanding
which have an aggregate par value of $4,355,970. No dividends have been paid
on the Preferred Stock since October 1, 1985. Cumulative unpaid dividends at
September 30, 1996, amount to $4,312,450 or approximately $29.70 per share.
All accumulated dividends on Preferred Stock shall remain undeclared and unpaid
prior to and during the Merger. Until the dividends payable on the Preferred
Stock are brought current, no dividends may be paid on the Common Stock. No
dividends have been paid on the Common Stock in the last 44 quarters or 11
years.
SPECIAL FACTORS
BACKGROUND OF THE MERGER
In November 1994, Mr. Cook and Mr. Adcock, directors of
Ameribank, met with Willis J. Wheat, a director and the President of the
Company to discuss the possible sale to Ameribank of approximately 28% of the
Common Stock and approximately 64% of the Preferred Stock. Over the next six
months, representatives of Ameribank and the Company had substantial contacts
to negotiate for the purchase by Ameribank of stock from various officers and
directors of the Company and reached an agreement in April, 1995, for Ameribank
to acquire 702,266 shares of Common Stock, or 27.7% of the outstanding shares
of Common Stock, and 92,790 shares of the Preferred Stock, or 63.9% of the
outstanding shares of Preferred Stock, from seven shareholders of the Company.
During the course of these negotiations, a subsequent merger transaction was
discussed in general, but no specific proposals were presented.
In April 1995, Ameribank filed an application with the Federal
Reserve Board seeking approval to acquire more than 5% of the outstanding
shares in the Company. On April 27, 1995, the Federal Reserve Board approved
the transaction for consummation on or after fifteen calendar days following
that date.
On May 16, 1995, the acquisition was completed. At the date
of closing of this acquisition of Common Stock and Preferred Stock, the Board
of Directors of the Company consisted of 3 directors: Mrs. Gladys Tucker,
Willis J. Wheat and J. N. Ainsworth. At the closing on May 16, 1995, Mrs.
Tucker resigned as a director and Ameribank's designee, Mr. Cook, was
<PAGE> 23
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elected as a director of the Company to fill such vacancy by the remaining
members of the Board of the Company. Pursuant to an agreement with Ameribank,
Messrs. Wheat and Ainsworth resigned as directors and officers of the Company
effective June 15, 1995. Mr. Schubert and Mr. Adcock, designees of Ameribank,
were elected as directors of the Company to fill such vacancies by the
remaining director of the Company. After the election of Messrs. Schubert and
Adcock to the Board of Directors of the Company, Ameribank effectively
controlled the Company. Messrs. Cook, Schubert and Adcock are officers and
directors of both the Company and Ameribank and have been involved in every
decision by Ameribank to acquire additional shares.
In July, 1995, Ameribank decided to seek to acquire additional
shares of Preferred Stock and on July 20, 1995, sent a letter to all holders of
Preferred Stock offering to purchase all outstanding shares of Preferred Stock
for $18.00 per share. As a result of that offer, Ameribank acquired an
additional 8,256 shares of the Company's Preferred Stock.
On November 3, 1995, Ameribank commenced a tender offer to
purchase up to 1,478,036 shares of Common Stock for a price of $0.50 per share.
The number of shares sought in the tender offer was subsequently decreased and,
when the offer terminated on December 29, 1995, Ameribank had acquired 588,146
additional shares of Common Stock. Ameribank has purchase additional shares of
Common Stock and Preferred Stock in private transactions and presently owns a
total of 1,559,160 shares of Common Stock and 129,016 shares of Preferred Stock
representing approximately 61.58% of the outstanding shares of Common Stock and
88.85% of the outstanding shares of Preferred Stock, respectively. See
"BENEFICIAL OWNERSHIP OF SHARES -- Certain Transactions in Common Stock and
Preferred Stock."
Ameribank and Messrs. Cook, Schubert and Adcock entered into a
Stock Purchase Agreement, dated November 3, 1995, which provided that Ameribank
will sell to each of Messrs. Cook, Schubert and Adcock 16.33% of the total
number of shares of Common Stock and Preferred Stock which Ameribank owns or
acquires in future purchases. The terms provided that the purchase price for
such Stock would be the price at which Ameribank acquired the shares plus
interest, accrued from the date of Ameribank's acquisition of such Stock to the
closing of the purchase contemplated by the agreement, at a rate equal to the
base rate of interest of Chase Manhattan Bank, N.A. from time to time. The
consummation of the transactions is subject to (1) approval from the Federal
Reserve System; (2) the entering into by the parties of a Shareholders'
Agreement restricting the future transfer of the Stock by Messrs. Adcock,
Schubert and Cook; and (3) the entering into by the parties of a Voting Trust
Agreement appointing Ameribank as Trustee to vote the shares of Common Stock.
On November 27, 1996, Mr. Adcock entered into an agreement with his wife, Mrs.
Adcock, transferring to her his rights to purchase shares of the Company under
the Stock Purchase Agreement. Mrs. Adcock is the daughter of Mr. Bodard, the
sole shareholder of Ameribank. Messrs. Cook and Schubert and Mrs. Adcock have
entered into an Addendum to the Stock Purchase Agreement with Ameribank dated
January 27, 1997, whereby Ameribank agrees that if the Merger is consummated,
Ameribank will sell to each of Messrs. Cook and Schubert and Mrs. Adcock 16.33%
of the total number of shares of outstanding common stock of United at a price
per share equal to the total consideration, plus costs and interest paid by
Ameribank for the Stock, divided by the total number of outstanding
<PAGE> 24
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shares of common stock of United, and on the same terms and subject to the same
conditions as previously agreed.
In March, 1996, Mr. Cook invited David A. Nichols ("Mr.
Nichols"), to join the Board of Directors of the Company as an independent
director. Mr. Cook has known Mr. Nichols since 1984 and had the opportunity to
work with Mr. Nichols on loan transactions and participation agreements during
the course of their acquaintance.
At the annual meeting of shareholders, held on April 25, 1996,
Mr. Nichols was elected as a director of the Company and Mr. Adcock was
re-elected as a director of the Company to serve in addition to Mr. Cook and
Mr. Schubert.
Mr. Rappaport has been a member of the Board of Directors of
United since January 30, 1989. In May, 1996, Messrs. Cook and Adcock asked Mr.
Rappaport if he would serve as a director of the Company. On May 25, 1996, Mr.
Rappaport was elected to the Board of Directors of the Company by the unanimous
vote of the directors.
APPOINTMENT OF AND DELIBERATIONS BY THE SPECIAL COMMITTEE
As previously stated, Ameribank owns approximately 61.58% of
the Common Stock and approximately 88.85% of the Preferred Stock. By virtue of
its stock ownership of the Company, Ameribank controls the Company. In
addition, three members of the Board of Directors of the Company are officers,
directors and management employees of Ameribank. Two members of the Board of
Directors of the Company, Mr. Rappaport and Mr. Nichols, are not affiliates of
Ameribank, do not have a financial interest in Ameribank and have not served as
an officer, director, or employee of Ameribank.
During June, 1996, Ameribank presented a written offer to the
Company to merge the Company into Ameribank, and as consideration therefor,
Ameribank offered to pay $1,300,000 in cash for all the shares of Common Stock
and Preferred Stock of the Company not owned by Ameribank, subject to the
execution of a binding merger agreement by the Company and Ameribank, receipt
of approval, if required, from applicable regulatory agencies and approval of
the merger by the Company Shareholders. Ameribank provided that its offer
would expire on August 1, 1996.
Since three members of the Board of Directors of the Company
were affiliated with Ameribank and had a financial interest in the proposal,
the Board established a Special Committee of the Board of Directors, consisting
of Mr. Rappaport and Mr. Nichols, who have no financial interest in Ameribank
and have not been officers, directors, or employees of Ameribank. The special
Committee was authorized to evaluate any offer by Ameribank, to negotiate for
the Company concerning the terms and conditions of any proposal as to a merger
with Ameribank and to make a recommendation to the Company's Board of Directors
regarding such merger. The Board of Directors further authorized the Special
Committee to engage a financial advisor to provide the Special Committee with
financial and other business advice, legal counsel to advise the Special
Committee concerning relevant legal issues in discharging its duties and
responsibilities and such
<PAGE> 25
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other advisers as the Special Committee deems necessary to carry out its
duties. The Shareholders were informed of the Ameribank proposal and
appointment of a Special Committee by letter dated June 17, 1996, from Mr.
Cook, the Chairman of the Board.
On June 19, 1996, the Special Committee met and interviewed
two (2) law firms in connection with the possible representation of the Special
Committee. One of the law firms interviewed was Conner & Winters. During the
interview, Irwin H. Steinhorn, a member and director of Conner & Winters
advised the Special Committee that the firm has represented numerous publicly
held companies and has represented publicly held companies in connection with
mergers and other similar transactions. Mr. Steinhorn further advised the
Special Committee that (i) approximately two (2) years ago and while he was a
member of another law firm, he received a call from Mr. Adcock, counsel for,
and a director of, Ameribank regarding certain filings with the Commission by
Ameribank in connection with Ameribank's initial purchase of shares of Common
Stock and Preferred Stock and that (ii) other attorneys in Mr. Steinhorn's
previous law firm may, at or about the same time, have also advised Ameribank
in connection with the purchase of such Stock. Mr. Steinhorn further informed
the Special Committee that, other than this previous representation neither he
nor Conner & Winters have performed any legal services for Ameribank or the
Company, and that he did not believe that Conner & Winters, if selected to
represent the Special Committee, would have a conflict in connection with such
representation. Representatives of Ameribank advised the Special Committee
that certain attorneys in Mr. Steinhorn's previous law firm (other than Mr.
Steinhorn) had represented Ameribank in its initial purchase of Common Stock
and Preferred Stock and that such representation had ceased prior to the
end of May, 1995.
After interviewing the two (2) law firms, the Special
Committee determined that Conner & Winters did not have a conflict in
representing the Special Committee and Conner & Winters had expertise in
representing publicly held companies involved in mergers and similar
transactions. As a result, the Special Committee retained Conner & Winters as
the Special Committee Counsel.
On July 15, 1996, the Special Committee met and interviewed
two investment banking firms for the purpose of retaining one to act as the
financial advisor to the Special Committee in connection with Ameribank's offer
and to advise the Special Committee as to a fair price to the non-Ameribank
Shareholders from a financial point of view.
On July 23, 1996, the Special Committee met for the purposes
of selecting an investment banking firm. At such meeting, the Special
Committee unanimously retained Baum & Company, who had advised the Special
Committee that it has had no prior involvement with Ameribank or the Company,
as its financial advisor based on Baum & Company's experience with providing
financial and business advice to publicly held bank holding companies and the
type of transaction being proposed by Ameribank. It was agreed that the
Company would pay Baum & Company for its services to the Special Committee a
fee of Twenty-Five Thousand Dollars ($25,000), plus 0.1% of the total cash
merger price payable to non-Ameribank Shareholders if a merger with Ameribank
is consummated, all reasonable travel and out-of-pocket expenses incurred by
Baum & Company in connection with, or arising out of, its services to the
Special Committee
<PAGE> 26
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and up to Two Thousand Five Hundred Dollars ($2,500) for Baum & Company's
outside legal expenses, if any, in connection with questions from the
Commission or comments regarding Baum & Company's fairness opinion and
analysis. It was further agreed that the Company would indemnify Baum &
Company for any losses or claims made against Baum & Company as a result of,
among other things, its services performed on behalf of the Special Committee,
except if it is judicially determined by a court of competent jurisdiction in a
final judgment that such claim or loss resulted from Baum & Company's bad
faith, reckless disregard, gross negligence or willful misconduct. Baum &
Company was not provided any specific instructions from the Special Committee
in performing its review, nor did the Special Committee impose any limitations
in the scope of Baum & Company's investigation. On August 5, 1996, the Special
Committee sent a letter to the Shareholders notifying them of the engagement of
a financial advisor and legal counsel.
At the meeting of the Special Committee held on July 23, 1996,
based on the recommendation of Special Committee Counsel, the Special Committee
determined that it needed a current MAI appraisal on the Bank Tower. The
Special Committee authorized Mr. Rappaport, Chairman of the Special Committee,
to interview and recommended to the Special Committee a qualified appraiser.
The Special Committee adjourned its July 23, 1996, meeting to
meet with representatives of Ameribank. Also in attendance at the meeting was
legal counsel for the Special Committee. Upon the request of the Special
Committee, Ameribank agreed to extend the expiration date of its offer from
August 1, 1996 to November 1, 1996. Members of the Special Committee requested
Ameribank to advise the Special Committee as to the basis used by Ameribank in
arriving at its offer of $1,300,000 for all shares of Common and Preferred
Stock of the Company not owned by Ameribank. Representatives of Ameribank
advised the Special Committee that the value of the outstanding shares of the
Company held by non-Ameribank Shareholders was based, in part, on an appraisal
of United prepared by GRA, Petty & Co., in 1996, which updated an appraisal
previously prepared by GRA, Petty & Co. in 1995, prior to the July 1995 offer
by Ameribank to purchase all the shares of Preferred Stock less a 25% minority
discount. The Special Committee requested a copy of the report by GRA, Petty &
Co. and an analysis as to how Ameribank arrived at the $1,300,000 offer.
On August 16, 1996, the Special Committee met with
representatives of the Special Committee Counsel, Baum & Company, and the
Company. The Company's representative was instructed to assist Baum & Company
in its review of the Company's and United's records and to provide to Baum &
Company copies of all documents as requested by Baum & Company. The
representative of the Company also discussed with the Special Committee, and
representatives of Baum & Company and the Special Committee Counsel, the
pending safety and soundness examination by the bank examiners and the
availability of reports on prior examinations for review by Baum & Company.
During the meeting, the representative of Baum & Company requested copies of
numerous documents from the Company including, but not limited to, copies of
Schedule 13-D filings with the Commission by Ameribank involving Ameribank's
purchases of Common and Preferred Stock of the Company.
<PAGE> 27
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At such meeting, the Special Committee and Baum & Company were
advised by the Special Committee Counsel that the OGCA was originally based on
the Delaware General Corporation Law ("Delaware Law"), and, as a result, should
be interpreted in accordance with the Delaware decisions. Under the Delaware
Law, the Delaware decisions have concluded that "fair value" is to be used to
determine the value of minority stock, and that to determine "fair value" a
company must be viewed as a going concern and includes the use of all generally
accepted techniques of valuation used in the financial community and should
take into account all relevant factors, except speculative elements of value,
that may arise from the accomplishment or expectation of the merger. Special
Committee Counsel discussed with the Special Committee and Baum & Company the
various factors the Delaware decisions have considered in determining fair
value of minority stock. Special Committee Counsel further advised the Special
Committee and Baum & Company that present court decisions in both Delaware and
Oklahoma have held that the application of a discount to minority shares is
contrary to the requirement that the company be viewed as a going concern and
application of a minority discount is not appropriate.
At the August 16, 1996, meeting, the Special Committee
requested that Special Committee Counsel request from Ameribank a copy of the
appraisal by GRA, Petty & Co. and an analysis as to the basis used by Ameribank
to arrive at the $1,300,000 offer for the outstanding non-Ameribank shares of
the Company. The Special Committee further discussed with its financial
advisor and legal counsel that since Ameribank presently owns more than a
majority of all outstanding classes of Stock of the Company and controls the
Company, it would be difficult, if not impossible, to find another potential
buyer for the minority shares of the Company, and that if the price to be paid
by Ameribank for the minority shares of the Company is fair and consistent with
legal requirements, Ameribank would be the appropriate party to buy the
outstanding minority shares of the Company. The Special Committee requested
its legal counsel to request from Ameribank as to whether Ameribank has
received any offers to acquire the Company, and if so, the terms of such offer.
The Special Committee reviewed the records of the Company available to the
Special Committee and Baum & Company as to any recent transactions involving
the Company's Common Stock and copies of Schedule 13-D filings as to the
purchase price paid for the Company Common Stock and Preferred Stock in recent
transactions. It was noted that there were very few trades in the Company
Common Stock over the last twelve months. Based on Schedule 13-D filings with
the Commission during the past twelve months, Baum & Company noted that during
such period the maximum price paid for shares of Common Stock of the Company
was $0.60 per share.
The Special Committee noted that there is no market for the
Company's outstanding Preferred Stock, and, based on Schedule 13-D filings with
the Commission provided to the Special Committee and George K. Baum, the only
transactions in Preferred Stock since July, 1995, were by Ameribank at $18.00
per share.
By letter dated September 5, 1996, counsel for Ameribank
advised that Ameribank used the following methodology to arrive at the
$1,300,000 offer: (i) total market value of the Company was arrived at by
three methods, all of which counsel for Ameribank advised resulted in similar
values: (a) using the GRA, Petty & Co. appraisal of the Company of
approximately $10,382,000; (b) determining market value by multiplying the five
year average earnings of the Company (assuming that the Company earnings for
1996 reaches $725,000) of $756,000 by 13.5
<PAGE> 28
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(which counsel for Ameribank advised was based on Sword & Associates Banking
Company Report as being the multiple that banks with the Company's
characteristics were selling for in 1995), resulting in a market value for the
Company of approximately $10,260,000; and (c) book value method determined by
stockholders' equity of the Company at March 31, 1996 of $7,987,000, less net
book value of land and buildings of $3,500,053, resulting in a total of
$4,477,947 times 1.5 (multiple for cash sale) plus value of land and buildings
of $3,500, 053, totaling $10,216,973; (ii) the outstanding Preferred Stock of
the Company has a liquidation value of $58.35 per share at March 31, 1996, for
a total liquidation value of $8,472,472. After applying a 25% discount, the
outstanding Preferred Stock not owned by Ameribank would be $43.75 per share,
totaling $700,265 for all outstanding shares of Preferred Stock of the Company
not owned by Ameribank; and (iii) the value of the Common Stock of the Company
was determined by subtracting from the market value of the Company based on the
appraisal performed by GRA, Petty & Co. ($10,352,000) the liquidation value of
the outstanding Preferred Stock of the Company ($8,472,420) for a market value
of the Common Stock of $1,909,580, or $0.754 per share, and 75% of the market
value being $0.566 per share for a total of $550,254 for outstanding shares of
the Common Stock not owned by Ameribank. Counsel for Ameribank advised that
although the total was $1,250,519, Ameribank rounded such number to $1,300,000.
In said letter, counsel for Ameribank further advised that Ameribank had not
received any offers to purchase the Company and would provide the Special
Committee with a copy of the appraisal performed by GRA, Petty & Co. at such
time as the Special Committee informed Ameribank that it had developed a
reasonable basis for valuation of the minority stock of the Company.
On October 21, 1996, the Special Committee held a meeting to
discuss the valuation by Baum & Company of the minority Common and Preferred
Stock of the Company and the appraisal of the Bank Tower by R.W. Finley Co.,
Inc., which had been previously delivered to members of the Special Committee,
Baum & Company and the Special Committee Counsel. The R.W. Finley Co.
appraisal estimated the value of the Bank Tower to be $2,950,000 as of August
31, 1996, excluding trade fixtures.
A representative of Baum & Company then reviewed with the
Special Committee its proposed fairness analysis of the Company. The Special
Committee was advised that a price of $58.35 per share for the outstanding
Preferred Stock of the Company and $0.754 per share for the outstanding Common
Stock of the Company not owned by Ameribank, being the valuation placed on the
Company's Preferred and Common Stock by Ameribank, without a minority discount,
is fair from a financial point of view, and, as a result, a total value of
$1,679,131 for all of the Company's outstanding Common and Preferred Stock held
by non-Ameribank Shareholders was fair from a financial point of view.
To determine the fairness of the price, Baum & Company
reviewed with the Special Committee each equity security separately. To
determine the value of the Company's outstanding Preferred Stock the following
two methods of value were used by Baum & Company: (i) liquidation, and (ii)
discounted cash flow at various discount rates. Based on the liquidation
method, which Baum & Company advised places the highest value on the
outstanding Preferred Stock, Baum & Company determined that $58.35 per share
for the Company's outstanding
<PAGE> 29
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Preferred Stock was fair from a financial point of view. Baum & Company noted
that the Company had not paid dividends on its outstanding Preferred Stock
since 1985.
Baum & Company used the following two methods to value the
Common Stock: (i) (a) liquidation based on book value and (b) liquidation
based on the entity market value, and (ii) discounted cash flow at various
discount rates. Using the liquidation value based on the entity market value,
as well as discounted cash flow, Baum & Company determined that a value of
$0.754 per share of the outstanding Common Stock is fair from a financial point
of view. Baum & Company did not consider the fairness from a financial point
of view of a minority discount since the Special Committee Counsel had advised
the Special Committee and Baum & Company that Delaware and Oklahoma courts have
held that minority discounts were not applicable to the valuation of minority
stock.
Baum & Company delivered to the Special Committee its written
fairness opinion, dated October 25, 1996. A copy of the Baum & Company's
fairness opinion is attached hereto as ANNEX C and should be read in its
entirety. See "SPECIAL FACTORS --Fairness of the Transaction."
On October 28, 1996, the Special Committee met with
representatives of Ameribank. Also present were legal counsel for Ameribank
and the Special Committee. The Special Committee advised Ameribank that it
could not accept an offer of $1,300,000 for the outstanding shares of Common
and Preferred Stock of the Company held by non-Ameribank Shareholders, as in
the opinion of the Special Committee such was not a fair price due to such
offer containing a 25% minority discount. The Special Committee advised
Ameribank that Special Committee Counsel had advised the Special Committee
that, based on Delaware and Oklahoma court decisions, it could not use a
minority discount to determine the value of the outstanding Common and
Preferred Stock held by non-Ameribank Shareholders. The Special Committee then
discussed with Ameribank the opinion of Baum & Company that a price of $0.754
per share for the outstanding Common Stock and $58.35 per share for the
outstanding Preferred Stock, without a minority discount, for a total cash
consideration of approximately $1,700,000 to non-Ameribank Shareholders was
fair from a financial point of view. The Special Committee reviewed with the
representatives of Ameribank the fairness letter issued by Baum & Company.
After further negotiations, Ameribank agreed to pay a total consideration of
$1,700,000 for the Common and Preferred Stock of the Company held by
non-Ameribank Shareholders, as follows: $58.35 per share for the outstanding
Preferred Stock and the balance for the outstanding Common Stock.
The Special Committee then met separately. The Special
Committee concluded that the revised offer by Ameribank totaling $1,700,000 for
all outstanding shares of the Company equity securities held by non-Ameribank
Shareholders, consisting of $58.35 per share for the Preferred Stock held by
non-Ameribank Shareholders and the balance (being approximately $0.776902 per
share) for the Common Stock held by non-Ameribank Shareholders was a fair
price. The Special Committee considered that (i) Ameribank already owns more
than a majority of the outstanding Common and Preferred Stock of the Company
and controls the Company, and that it would be difficult, if not impossible, to
find another party to buy the minority interest, (ii) there is no market for
the Preferred Stock and the highest price paid for the Preferred Stock since
July, 1995, based on
<PAGE> 30
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information provided to the Special Committee and Baum & Company by the
Company, was $18.00 per share paid by Ameribank and (iii) that there is very
little market for the Common Stock of the Company and during the last twelve
months, based on Schedule 13-D filings with the Commission, copies of which
were provided to the Special Committee and Baum & Company by the Company, the
maximum price paid for shares of Common Stock was $0.60 per share. In
determining that such was a fair price, the Special Committee considered and
gave the greatest weight to the fairness opinion of Baum & Company that any
aggregate consideration of $1,700,000, based on $58.35 per share for the
outstanding Preferred Stock held by non-Ameribank Shareholders and $0.754 per
share for the outstanding Common Stock held by non-Ameribank Shareholders, was
fair from a financial point of view. The Special Committee then unanimously
approved the merger of the Company into Ameribank for a total consideration of
$1,700,000 for all of the outstanding Preferred and Common Stock held by
non-Ameribank Stockholders, with the unanimous recommendation that such merger
by approved by the Board of Directors of the Company.
After the meeting of the Special Committee on October 28,
1996, the Board of Directors of the Company met, together with counsel for the
Special Committee and counsel for Ameribank. At such meeting the Special
Committee reported that it had unanimously approved, and recommended approval
by the Board of Directors of the Company of, Ameribank's offer to merge the
Company into Ameribank for a total cash payment of $1,700,000 to be paid for
all Common and Preferred Stock held by non-Ameribank Shareholders, with $58.35
per share to be paid to each non-Ameribank Preferred Shareholder (totaling
$944,278) and the balance ($755,722) to be paid for all shares of the Common
Stock held by non-Ameribank Shareholders at $0.776901 per share. The Board of
Directors of the Company, based on the recommendations of the Special Committee
and the written fairness opinion of Baum & Company, approved the merger of the
Company into Ameribank for a total consideration of $1,700,000 for all of the
outstanding Preferred and Common Stock of the Company held by non-Ameribank
Shareholders, with $58.35 per share to be paid for the outstanding Preferred
Stock and the balance to be paid for the outstanding Common Stock. The members
of the Board of Directors affiliated with Ameribank abstained from voting.
Mr. Cook wrote to the Shareholders on November 4, 1996,
notifying them of the revised proposal and stating that completion of the
proposed merger transaction was subject to preparation of a mutually
satisfactory merger agreement with Ameribank, certain filings and approvals
with regulatory agencies and approval by vote of holders of a majority of the
shares of Common Stock and Preferred Stock, each voting as a class at a Special
Shareholder's meeting.
During the month of November, 1996, counsel for Ameribank and
the Special Committee negotiated the final terms of the Merger Agreement
between Ameribank and the Company. On December 3, 1996, the Special Committee
met and reviewed the final Merger Agreement. Counsel for the Special Committee
advised the Special Committee that most of the changes to the Merger Agreement
requested by the Special Committee Counsel were accepted by Ameribank. The
Special Committee then reviewed, in detail, the Merger Agreement and noted that
pursuant to such agreement Ameribank would pay to the Shareholders of the
Company (other than Ameribank) an aggregate sum of $1,700,000 with $58.35 per
share being paid to non-Ameribank holders of the outstanding the Preferred
Stock and $0.776901 per share (rounded to the nearest $0.01) to be paid to
non-Ameribank holders of the outstanding Common Stock. After
<PAGE> 31
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reviewing the Merger Agreement, the Special Committee approved the Merger
Agreement and recommended approval of the Merger Agreement by the Board of
Directors of the Company.
Following the meeting of the Special Committee, the Company's
Board of Directors met to consider the Special Committee's recommendation and
after discussion, voted to approve the Merger Agreement as recommended by the
Special Committee and to authorize the execution of the Merger Agreement on
behalf of the Company. The members of the Board of Directors affiliated with
Ameribank abstained from voting.
Mr. Cook again wrote to the Shareholders on December 5, 1996,
advising the Shareholders of the execution of the Merger Agreement and stating
that completion of the Merger is subject to preparation of all necessary
filings and approvals with regulatory agencies and the approval by vote of
holders of a majority of the shares of the Common Stock and Preferred Stock,
each voting as a class at a Special Shareholder's meeting.
On December 12, 1996, the Company filed a Current Report on
Form 8-K with the Commission reporting the Merger Agreement between Ameribank
and the Company.
During the first part of January, 1997, counsel for Ameribank
provided the Special Committee Counsel with copies of the Forms 4, as
previously filed by Ameribank with the Commission, showing that from January 1,
1996, through June 30, 1996, Ameribank had purchased shares of Preferred and
Common Stock at prices ranging from $18.00 to $49.50 per share for Preferred
Stock and not more than $0.50 per share for Common Stock. The Special
Committee Counsel forwarded copies of these Forms 4 to the members of the
Special Committee and Baum & Company.
As a result of this additional information, the Special
Committee held a telephonic meeting on January 14, 1997, with a representative
of Baum & Company. The Special Committee Counsel also participated in such
meeting. During the meeting, members of the Special Committee reviewed the
factors considered by the Special Committee in approving and recommending to
the Board of Directors the Merger of the Company into Ameribank and determining
that the $1,700,000 offer by Ameribank to the non-Ameribank Shareholders of the
Company in connection with such Merger, with $58.35 for each share of Preferred
Stock and $0.776901 (rounded to the nearest $.01) for each share of Common
Stock was fair. One of the considerations was the belief by the Special
Committee and Baum & Company that the highest price Ameribank paid for the
Preferred Stock since July, 1995 was $18.00 per share. Based on the
information that Ameribank had paid from $18.00 to $49.50 per share for
Preferred Stock, as noted in the Forms 4, members of the Special Committee
asked Baum & Company's representative if the fairness opinion of Baum &
Company, dated October 25, 1996, would change and whether the $1,700,000 offer
by Ameribank remained fair from a financial point of view. Baum & Company's
representative advised the Special Committee that, since the highest amount
paid for the Preferred Stock since January 1, 1996, was $49.50 per share, and
that the current offer of $58.35 per share represented approximately a 16%
premium over the highest price paid by Ameribank for the Preferred Stock, Baum
& Company's fairness opinion would not change and the $1,700,000 purchase price
to be paid by Ameribank to
<PAGE> 32
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non-Ameribank Shareholders in connection with the Merger is still fair from a
financial point of view.
During the meeting, the members of the Special Committee asked
the Special Committee Counsel to request from Ameribank or Ameribank's counsel
a letter certifying that during the last twelve months Ameribank has not paid
more than $49.50 per share for Preferred Stock nor more than $0.50 per share
for Common Stock. As a result of the additional information, the Special
Committee also requested Baum & Company to issue a supplemental fairness
opinion reaffirming its fairness opinion, dated October 25, 1996.
The Special Committee then reaffirmed its approval and
recommendation to the Board of Directors of the Merger of the Company with
Ameribank for $1,700,000 to be paid to non-Ameribank Shareholders, subject to
(i) Ameribank or its counsel certifying that during the past twelve months the
maximum prices paid by Ameribank for Preferred Stock has not exceeded $49.50
per share and Common Stock has not exceeded $.50 per share, and (ii) receipt of
the supplemental fairness opinion from Baum & Company that the aggregate price
of $1,700,000 to be paid to non-Ameribank Shareholders is fair from a financial
point of view, as set forth in Baum & Company's letter of October 25, 1996.
As a result of the request of the Special Committee Counsel,
counsel for Ameribank wrote to the Special Committee Counsel advising, among
other things, that (i) Ameribank has not paid more than $0.50 per share for
shares of Common Stock, and (ii) Ameribank made an offer in July, 1995, to
purchase shares of Preferred Stock for $18.00 per share, and that subsequently,
Ameribank has acquired shares of Preferred Stock through private purchases at
prices ranging from $18.00 to $49.50 per share. In addition, counsel for
Ameribank advised in such letter that Ameribank entered into separate stock
purchase agreements with several persons, in which Ameribank agreed that if
Ameribank, among other transactions, entered into a merger agreement with the
Company within one (1) year of the date of the stock purchase agreements and
paid a higher price for the outstanding shares of Common and Preferred Stock
than that provided in the stock purchase agreements, Ameribank would pay the
sellers the difference.
Pursuant to the request of the Special Committee Counsel,
Ameribank provided to the Special Committee and Baum & Company copies of the
above-referenced stock purchase agreements. Under such stock purchase
agreements, which are dated May 31, 1996 and June 6, 1996, Ameribank agreed to
purchase 5,799 shares of Common Stock of the Company for $0.50 per share from
two sellers and 17,795 shares of Preferred Stock at $49.50 per share from two
sellers, with the agreement that in the event Ameribank paid a higher price
than the price paid to such sellers in a subsequent tender offer or merger
transaction occurring within one (1) year from the date of the respective stock
purchase agreement, Ameribank would pay the sellers the difference in cash.
By letter dated January 23, 1997, a copy of which is attached
as ANNEX D, Baum & Company issued its supplemental fairness opinion, which
stated in part that (i) it issued its fairness opinion letter dated October 25,
1996, based on information that had been requested and supplied to it by the
Company; (ii) such information supplied to it indicated, among other things,
that the
<PAGE> 33
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highest price Ameribank had paid for Preferred Stock of the Company was $18.00
per share; (iii) that on January 17, 1997, it had been informed that Ameribank
had purchased Preferred Stock at prices ranging from $18.00 to $49.50, and (iv)
that certain purchases by Ameribank were made under agreements providing that,
for one (1) year from the date of the purchases, Ameribank would pay the
sellers the same price, if higher, that Ameribank paid for the Common and
Preferred Stock. The supplemental fairness opinion issued by Baum & Company
states that, even with the additional information regarding the Preferred Stock
purchased by Ameribank, Baum & Company finds the Total Consideration to be paid
to holders of Common and Preferred Stock (other than Ameribank) in connection
with the Merger and the Common Consideration and the Preferred Consideration to
be fair from a financial point of view, as set forth in its letter dated
October 25, 1996.
On January 27, 1997, the Special Committee held a telephonic
meeting in which the Special Committee Counsel participated. The Special
Committee Counsel reviewed the letter from Ameribank's counsel, dated January
16, 1997, the stock purchase agreements discussed above, and the supplemental
fairness opinion, dated January 23, 1997, issued by Baum & Company. Based on
the supplemental fairness opinion issued by Baum & Company and the other
considerations previously considered by the Special Committee and discussed
above, the Special Committee reaffirmed its approval and recommendation to the
Board of Directors of the Merger for an aggregate price of $1,700,000.
PROCEEDINGS OF THE BOARD AND RECOMMENDATION OF THE SPECIAL COMMITTEE
THE COMPANY. At a meeting held on October 28, 1996, pursuant
to the recommendations of the Special Committee, the Board determined that the
terms of the Merger were fair to and in the best interests of the Shareholders
(other than Ameribank) and approved the Merger Agreement. The Merger Agreement
was subsequently executed and delivered on December 3, 1996. See "SPECIAL
FACTORS -- Appointment and Deliberations by the Special Committee -- Fairness
of the Transaction."
THE COMPANY'S BOARD OF DIRECTORS. The Company's Board is
comprised of five directors, three of whom are affiliated with Ameribank. Mr.
Cook is a director of the Company as well as its Chairman. He is also a
director and the Secretary of Ameribank and has served as the President and
Chief Executive Officer of ANB, since December 16, 1992. Mr. Adcock is a
director and the Secretary of the Company. He is also a director of Ameribank
and ANB. Mr. Adcock is the son-in law of Mr. Bodard, the sole shareholder of
Ameribank. Mr. Schubert is a director and the President of the Company as well
as a Vice President, director and the Treasurer of Ameribank. As officers and
directors of Ameribank, Messrs. Cook, Schubert and Adcock have been involved in
every decision by Ameribank to acquire additional shares of the Company. Mr.
Nichols and Mr. Rappaport are also directors of the Company. Mr. Nichols was
elected to the Board by the shareholders at the annual meeting held on April
25, 1996. Mr. Rappaport was elected to the Board by the remaining four
directors on May 25,1996. Neither of them have any financial or personal
interest in Ameribank and they are not officers, directors, employees or
stockholders of Ameribank.
<PAGE> 34
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FAIRNESS OF THE TRANSACTION
In concluding that a total consideration of $1,700,000 was a
fair price for the outstanding Common and Preferred Stock of the Company not
owned by Ameribank, consisting of $58.35 per share for such outstanding
Preferred Stock (totaling $944,278) and $0.766901 (rounded to the nearest
$0.01) per share for the such outstanding Common Stock, the Special Committee
considered the following factors:
1. Ameribank owns more than a majority of all
outstanding classes of Stock of the Company and
controls the Company, and, as a result, it would be
difficult, if not impossible, to find another
potential buyer for the minority value of the
Company.
2. There is a very limited market, if any, for the
outstanding Common Stock.
3. There is no market for the outstanding Preferred
Stock.
4. Based on filings with the Commission, during the last
twelve months the maximum price paid for shares of
the Common Stock was $0.60 per share. Based on
information supplied to the Special Committee by
Ameribank, Ameribank bought 5,799 shares of Common
Stock in June, 1996, for $0.50 per share, with the
agreement that if a transaction is consummated for
the Common Stock by Ameribank within twelve (12)
months at a price higher than $0.50 per share,
Ameribank would pay such sellers the difference.
5. Based on information supplied to the Special
Committee by Ameribank, as previously filed with the
Commission, since January 1, 1996, the prices paid by
Ameribank for shares of Preferred Stock have ranged
from $18.00 to $49.50 per share, with agreements
between certain sellers and Ameribank in connection
with shares of Preferred Stock providing that if
within one (1) year from the date of such stock
purchase agreements Ameribank pays more for the
Preferred Stock in a tender offer or merger than that
received by such sellers, Ameribank will pay to such
sellers the difference.
6. Ameribank has advised the Special Committee that it
has not received any offers for the Company.
7. The determinations and opinion of Baum & Company.
Ameribank considers the Merger fair to the Shareholders other
than Ameribank based on the determinations made by the Special Committee as set
out above. However, Ameribank also considers the Merger fair to the
Shareholders other than Ameribank as the Total Consideration to be paid to the
Shareholders is $400,000 greater than the $1,300,000 offer made by Ameribank to
the Board of Directors of the Company on June 14, 1996. Additionally, the
Preferred Consideration to be paid by Ameribank is a premium of approximately
16% over the highest price previously paid by Ameribank for the Preferred Stock
and the Common Consideration to be paid by Ameribank is a premium of
approximately 50% over the highest price previously paid by Ameribank for the
<PAGE> 35
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Common Stock. Furthermore, Ameribank's offer of $1,700,000 is greater than the
sum of $1,697,131 which Baum & Company considered fair to Shareholders other
than Ameribank.
OPINION OF FINANCIAL ADVISOR
In concluding that Ameribank's offer to pay an aggregate of
$1,700,000 to non-Ameribank Shareholders of the Company, with $58.35 per share
for the outstanding Preferred Stock (totaling $994,278) and the balance
($755,722) payable for the outstanding shares of the Common Stock at $0.776901
per share (rounded to the nearest $0.01), is fair, the Special Committee and
the Board of Directors gave considerable weight to the fairness opinion of Baum
& Company that such consideration is fair from a financial point of view. In
determining that such consideration was a fair price from a financial point of
view, Baum & Company reviewed each equity security separately. To determine
the value of the outstanding Preferred Stock the following methods of value
were used by Baum & Company: (i) liquidation, and (ii) discounted cash flow at
various discount rates. Based on the liquidation methods, which Baum & Company
advised places the highest value on the outstanding Preferred Stock, Baum &
Company determined that $58.35 per share for the outstanding Preferred Stock
held by non-Ameribank Shareholders was fair from a financial point of view.
Baum & Company used the following two methods to value the Common Stock:
(i)(a) liquidation based on book value, and (b) liquidation based on the equity
market value, and (ii) discounted cash flow at various interest rates. Using
the above methods, Baum & Company found that $0.754 for each outstanding share
of the Common Stock held by non-Ameribank Shareholders was fair from a
financial point of view. A copy of Baum & Company's fairness opinion dated
October 25, 1996, is attached hereto as ANNEX C and the supplemental fairness
opinion, issued by Baum & Company, dated January 23, 1997, is attached hereto
as ANNEX D and both should be read in their entirety. See "SPECIAL FACTORS --
Appointment of and Deliberations by the Special Committee".
STRUCTURE AND PURPOSE OF THE MERGER
The Merger is not structured to require the approval of a
majority of the Shareholders excluding Ameribank. While this factor could be
viewed as unfavorable to a determination of fairness, the Company believes,
based upon the factors discussed above, that the terms of the Merger are fair
to the Shareholders (other than Ameribank).
The Merger has been structured as a merger of Ameribank and
the Company in order to effectuate the acquisition of all the outstanding
shares of Common Stock and Preferred Stock other than shares owned by
Ameribank, thereby transferring the entire equity interest in the Company to
Ameribank. The Company will merge into Ameribank and Ameribank will be the
surviving corporation.
In addition to providing the Company the additional
flexibility in dealing with its assets that is inherent in a closely held
corporation, Ameribank believes that the Company and its subsidiary, United,
would benefit from the reduction in costs associated with the termination of
the Company's obligations and reporting requirements under the securities laws.
See "SPECIAL
<PAGE> 36
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FACTORS -- Background of the Merger," "-- Proceedings of the Board and
Recommendation of the Special Committee Fairness of the Transaction" and
"Alternatives to the Merger."
Ameribank also believes that the Merger is fair to the
Shareholders other than Ameribank. The members of the Board of Directors of
Ameribank did not attach relative weight to the factors considered in reaching
its conclusions. See "SPECIAL FACTORS -- Proceedings of the Board and the
Recommendation of the Special Committee -- Fairness of the Transaction."
ALTERNATIVES TO THE MERGER
The Board of Ameribank considered the following alternatives
to the Merger: (i) a further tender offer; (ii) private purchases; (iii)
exchange of Preferred Stock for Common Stock and a repurchase of the Common
Stock by the Company; (iv) exchange of shares of Common Stock for the Preferred
Stock and accrued dividends; and (v) a reverse stock split.
Ameribank rejected a further tender offer as the initial
tender offer did not result in the tender of as great a percentage of shares of
Common Stock as Ameribank had anticipated. Ameribank continued to purchase
shares of Stock in private transactions as set out in "BENEFICIAL OWNERSHIP OF
SHARES -- Certain Transactions in Common Stock and Preferred Stock." After
considering the other alternatives, Ameribank decided to proceed with the
Merger as the best long term strategy for the Company which would consolidate
the Company's business and operating structure with a view to improving
operations and reducing expenses of the Company by eliminating the burden and
cost for the Company to comply with the reporting requirements of the Exchange
Act and to maintain audited financial statements. By eliminating the Company
as a separate holding company, Ameribank would be able to reduce operating
costs caused by the duplication of legal and accounting expenses, directors
fees, administration costs and the costs of preparing separate reports to the
Federal Reserve Board, including the cost and expense of separate banking
examinations by the Federal Reserve Board. Representatives of Ameribank also
determined that due to potential conflicts of interest of certain persons
associated with Ameribank and the Company, an independent opinion on the
fairness of any transaction from a financial point of view proposed by
Ameribank would be required. Because of the lack of any public market for
shares of the Company's Common Stock or Preferred Stock, Ameribank
representatives also believed that a Merger based on financial terms approved
by an independent financial advisor would be in the best interests of the
Shareholders.
No alternatives were considered whereby the Shareholders other
than Ameribank would maintain an equity interest in the Company.
CERTAIN EFFECTS OF THE MERGER
If the proposed Merger is consummated, the holders of the
Common Stock and Preferred Stock other than Ameribank will no longer have an
equity interest in the Company and its subsidiary. Instead, each holder of
Common Stock will receive $0.776901 in cash, without interest, and each holder
of Preferred Stock will receive $58.35 in cash, without interest, for each such
share held (other than shares held by Ameribank).
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The Company would, as a result of the Merger, become a
privately held company. Common Stock would cease trading entirely, the
registration of Common Stock under the Exchange Act would terminate and the
Company would cease filing reports with the Commission. Moreover, the Company
would be relieved of the obligation to comply with the proxy rules of
Regulation 14A under Section 14 of the Exchange Act and its officers, directors
and 10% shareholders would be relieved of the reporting requirements and
restrictions on insider trading under Section 16 of the Exchange Act.
Accordingly, less information would be required to be made publicly available
than presently is the case.
As a result, the Company will be merged into Ameribank and
Ameribank will be the surviving entity. See "SPECIAL FACTORS -- Interests of
Certain Persons in the Merger, Conflicts of Interest" and "Certain Information
Regarding Ameribank."
INTERESTS OF CERTAIN PERSONS IN THE MERGER; CONFLICTS OF INTEREST
In considering the recommendation of the Board of Directors
and the Special Committee with respect to the Merger, Shareholders should be
aware that three members of the Company's Board have certain interests in the
Merger which are described below and which are in addition to, and may conflict
with the interests of Shareholders generally, in connection with, the Merger
Agreement.
THE COMPANY'S BOARD OF DIRECTORS. The Company's Board is
comprised of five directors, three of whom are affiliated with Ameribank. Mr.
Cook is a director of the Company as well as its Chairman. He is also a
director and the Secretary of Ameribank and has served as the President and
Chief Executive Officer of ANB a subsidiary of Ameribank since December 16,
1992. Mr. Adcock is a director and the Secretary of the Company. He is also a
director of Ameribank and ANB. Mr. Adcock is the son-in law of Mr. Bodard, the
sole shareholder of Ameribank. Mr. Schubert is a director and the President of
the Company as well as a Vice President, director and the Treasurer of
Ameribank. As officers and directors of Ameribank, Messrs. Cook, Schubert and
Adcock have been involved in every decision by Ameribank to acquire additional
shares of the Company. Mr. Nichols and Mr. Rappaport are directors of the
Company. Neither of them have any financial or personal interest in Ameribank
and they are not officers, directors, employees or stockholders of Ameribank.
OWNERSHIP OF THE COMPANY AFTER THE MERGER. After consummation
of the Merger, the entire equity interest in the Company will be owned by
Ameribank. Ameribank and Messrs. Cook, Schubert and Adcock have entered into a
Stock Purchase Agreement, dated November 3, 1995, which provides that Ameribank
will sell to each of Messrs. Cook, Schubert and Adcock 16.33% of the total
number of shares of Common Stock and Preferred Stock which Ameribank now owns
or acquires in future purchases. The terms provide that the purchase price for
such Stock shall be the price at which Ameribank acquired the shares plus costs
incurred, plus interest, accrued from the date of Ameribank's acquisition of
such Stock to the closing of the purchase contemplated by the agreement, at a
rate equal to the base rate of interest of Chase Manhattan Bank, N.A. from time
to time. The consummation of the transactions are subject to (1) approval from
the Federal Reserve System; (2) the entering into by the parties of a
<PAGE> 38
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Shareholders' Agreement restricting the future transfer of the Stock by Messrs.
Adcock, Schubert and Cook; and (3) the entering into by the parties of a Voting
Trust Agreement appointing Ameribank as Trustee to vote the shares of Common
Stock. On November 27, 1996, Mr. Adcock entered into an agreement with his
wife, Dona B. Adcock, transferring to her his rights to purchase shares of the
Company under the Stock Purchase Agreement. Mrs. Adcock is the daughter of Mr.
Bodard, the sole shareholder of Ameribank. Messrs. Cook and Schubert and Mrs.
Adcock have entered into an Addendum to the Stock Purchase Agreement with
Ameribank dated January 27, 1997, whereby Ameribank agrees that if the Merger
is consummated, Ameribank will sell to each of Messrs. Cook and Schubert and
Mrs. Adcock 16.33% of the total number of shares of common stock outstanding of
United at a price per share equal to the total consideration, plus costs and
interest paid by Ameribank for the Stock, divided by the total number of
outstanding shares of common stock of United, on the same terms and subject to
the same conditions as previously agreed.
DIRECTORS OF THE COMPANY AFTER THE MERGER. The Merger
Agreement provides that after the Merger, the current directors of Ameribank
will continue as the directors of the surviving corporation, until successors
are duly elected or appointed in accordance with applicable law.
EMPLOYMENT OF COMPANY'S EMPLOYEES. Ameribank has indicated
that, subsequent to the Merger, the current officers and employees of the
Company will remain in such capacities with the surviving corporation.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. Under the
Company's existing Certificate of Incorporation, the Bylaws, the Merger
Agreement, applicable indemnification agreements, and under currently effective
officers' and directors' liability insurance, the Company's officers and
directors may have rights to indemnification with respect to any litigation
relating to the Merger. In addition, pursuant to certain terms of the Merger
Agreement, Ameribank has agreed to indemnify from the Effective Date of the
Merger, without limitation, each and every member of the Company's Board of
Directors against any claims arising out of the Merger. See "THE MERGER --
Certain Covenants of the Company and Ameribank."
Nevertheless, based upon careful consideration of all of the
factors discussed in this Proxy Statement, the Board of Directors and the
Special Committee believe that the terms of the Merger are fair to the
Shareholders (other than Ameribank).
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER.
The following is a brief description of the material federal
income tax consequences of the Merger. This summary contains general
information and does not address tax consequences that may be relevant to types
of investors subject to special treatment under the federal income tax laws
(such as dealers in securities, banks, insurance companies and foreign
individuals and entities). EACH SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX
ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO
<PAGE> 39
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HIM OR HER, INCLUDING THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND
FOREIGN TAX LAWS.
The exchange of shares of Common Stock for the Common
Consideration and of Preferred Stock for the Preferred Consideration in the
Merger will be a taxable transaction to the Shareholders. A Shareholder will
recognize gain or loss under federal income tax laws in an amount by which the
proceeds received in exchange for such shares exceed or are less than the
holder's tax basis in the shares. If the shares were a capital asset in the
hands of the Shareholder, such gain or loss would be capital rather than
ordinary and, in such instances, would be long term if the shares are
considered to have been held more than one year and short term if they are
considered to have been held one year or less on the date of the Merger.
Currently, the maximum federal income tax rate on capital gains is 28% as
opposed to 39.6% for ordinary income. Capital losses may be used to offset
capital gains. For individuals, any capital losses in excess of capital gains
may be used to offset income from other sources of up to $3,000 per year. Any
remaining capital losses carry forward to future years, subject to the same
annual limits. For corporations, capital losses may only be used to offset
capital gains. Any unused capital losses may generally be carried back for
three years and carried forward five years.
The waiver by Ameribank in connection with, and only in
connection with, the consummation of the Merger, of its right to receive the
Common Consideration or Preferred Consideration will not result in the
recognition by it of taxable gain.
The consummation of the Merger will not result in the
recognition by the Company of taxable gain.
Under the backup withholding rules, unless an exemption
applies under the applicable law and regulations, the Exchange Agent will be
required to withhold, and will withhold, 31% of all cash payments made in
exchange for shares of Stock unless the shareholder or other payee provides his
tax identification number (social security number, in the case of an
individual, or employer identification number, in the case of a corporation)
and certifies that such number is correct. Each shareholder and, if
applicable, each other payee should complete and sign the substitute Form W-9
to be included in the transmittal materials and instructions relating to stock
certificates to be mailed to Shareholders as soon as practicable after the
Effective Time, so as to provide the information and certification necessary to
avoid backup withholding, unless an applicable exemption exists and is proved
in a manner satisfactory to the Company and the Exchange Agent.
APPRAISAL RIGHTS
The following is a summary of the provisions of Section 1091
of the OGCA relating to appraisal rights. Section 1091 of the OGCA is
reproduced in its entirety as ANNEX B to this Proxy Statement, and this summary
is qualified in its entirety by reference to ANNEX B. Shareholders should read
carefully ANNEX B and, if they wish to exercise their rights to an appraisal,
follow carefully the procedures set forth therein. Any Shareholders
considering demanding an appraisal are advised to consult legal counsel.
<PAGE> 40
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Under Section 1091 of the OGCA, holders of record of shares of
Common Stock or Preferred Stock who do not wish to accept the Common
Consideration or Preferred Consideration have the right to seek an appraisal to
determine the fair value of their shares of Stock in the District Court. EACH
SHAREHOLDER IS URGED TO READ CAREFULLY THE MATERIALS CONTAINED IN THIS PROXY
STATEMENT, INCLUDING ANNEX B, AND THE OTHER MATERIALS INCORPORATED HEREIN IN
MAKING A DETERMINATION WHETHER TO ACCEPT THE COMMON CONSIDERATION OR PREFERRED
CONSIDERATION OR TO SEEK AN APPRAISAL PURSUANT TO THE OGCA. FAILURE TO COMPLY
WITH THE PROCEDURES SET FORTH HEREIN OR IN THE OGCA MAY RESULT IN A LOSS OF
THEIR APPRAISAL RIGHTS.
Each Shareholder who has not voted in favor of the Merger and
who wishes to assert a right to appraisal must make a written demand for the
appraisal of his or her shares of Stock to the Company at the address set forth
below. A VOTE AGAINST THE MERGER SHALL NOT CONSTITUTE A DEMAND FOR APPRAISAL
OF STOCK. Failure to make such demand before the vote is taken to approve the
Merger will eliminate a Shareholder's right to an appraisal. The demand must
reasonably inform the Company of the identity of the Shareholder making the
demand as well as the intention of such Shareholder to demand an appraisal of
the fair value of the shares of Stock held by such Shareholder.
For purposes of making an appraisal demand, the address of the
Company is: United Oklahoma Bankshares, Inc., 4600 S.E. 29th Street, Del City,
Oklahoma 73115, Attention: D. Wesley Schubert, President.
Only a holder of record of shares of Stock, or a person duly
authorized and explicitly purporting to act on the record holder's behalf, is
entitled to assert an appraisal right with respect to the shares of Stock
registered in the record holder's name. BENEFICIAL OWNERS WHO ARE NOT RECORD
HOLDERS AND WHO WISH TO EXERCISE APPRAISAL RIGHTS ARE ADVISED TO CONSULT
PROMPTLY WITH THE APPROPRIATE RECORD HOLDERS AS TO THE TIMELY EXERCISE OF
APPRAISAL RIGHTS. A record holder, such as a broker, who holds shares of Stock
as a nominee for others may exercise appraisal rights with respect to the
shares of Stock held for one or more beneficial owners, while not exercising
such rights for other beneficial owners. In such a case, the written demand
should set forth the number of shares of Stock as to which the demand is made.
Where no shares of and no class of Stock are expressly mentioned, the demand
will be presumed to cover all shares of Stock held in the name of such record
holder.
A holder of shares of Stock held in "street name" who desires
an appraisal must take such actions as may be necessary to ensure that a timely
and proper demand for an appraisal is made by the record holder of such shares
of Stock. Shares of Stock held through brokerage firms, banks and other
financial institutions are frequently deposited with and held of record in the
name of a nominee of a central security depository. Any holder of shares of
Stock desiring an appraisal who held his or her shares of Stock through a
brokerage firm, bank or other financial institution is responsible for ensuring
that the demand for an appraisal is made by the record holder. The Shareholder
should instruct such firm, bank or institution that the demand for an appraisal
must be
<PAGE> 41
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made by the record holder of the shares of Stock, which might be the nominee of
a central security depository if the shares of Stock have been so deposited.
As required by Section 1091 of the OGCA, a demand for an appraisal must
reasonably inform the Company of the identity of the record holder (which might
be a nominee as described above) and of such holder's intention to seek an
appraisal of such shares of Stock.
A demand for an appraisal of shares of Stock owned of record
by two or more joint holders must identify and be signed by or for all of the
holders. A demand for an appraisal signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity must so identify the
persons signing the demand.
An appraisal demand may be withdrawn by a Shareholder within
60 days after the Effective Time, but thereafter the written approval of the
Company is needed for any such withdrawal. Upon withdrawal of an appraisal
demand, a holder of shares of Stock will be entitled to receive the Common
Consideration or Preferred Consideration. No interest will be paid on this
amount.
Within 120 days after the Effective Time (the "120-Day
Period"), any Shareholder who has properly demanded an appraisal and who has
not withdrawn his or her demand as provided above (such Shareholders are
hereinafter referred to collectively as the "Dissenting Shareholders") has the
right to file in the District Court a petition (the "Petition") demanding a
determination of the fair value of the dissenting shares of Stock (the
"Dissenting Shares") held by all of the Dissenting Shareholders. If, within
the 120-Day Period, no Petition shall have been filed as provided above, all
rights to an appraisal will cease and all of the Dissenting Shareholders will
become entitled to receive the Common Consideration or Preferred Consideration,
without interest thereon after the Effective Time, with respect to such
Dissenting Shares of Stock. The Company is not obligated and does not intend
to file such a Petition. Any Dissenting Shareholder is entitled, pursuant to a
written request to the Company made within the 120-Day Period, to receive from
the Company a statement setting forth the aggregate number of shares of Stock
with respect to which demands for appraisal have been received and the
aggregate number of Dissenting Shareholders.
Upon the filing of the Petition, service of a copy thereof is
required to be made upon the surviving corporation, which, within 20 days after
such service, must file in the office of the court clerk of the District Court
in which the Petition was filed, a duly verified list containing the names and
addresses of all Dissenting Shareholders. The District Court may order that
notice of the time and place fixed for the hearing on the Petition be sent by
registered or certified mail to the surviving corporation and all of the
Dissenting Shareholders, and be published at least one week before the day of
the hearing in a newspaper of general circulation published in the City of
Oklahoma City, Oklahoma or in another publication determined by the District
Court. The District Court will approve the form of notice by mail and by
publication. The costs relating to these notices will be borne by the Company.
If a hearing on the Petition is held, the District Court is empowered to
determine which Dissenting Shareholders have complied with the provisions of
Section 1091 of the OGCA and are entitled to an appraisal of their shares of
Stock. The District Court may require that Dissenting Shareholders submit
their Stock certificates which had represented shares of Common Stock or
Preferred Stock for notation thereon of the pendency of the appraisal
<PAGE> 42
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proceedings. The District Court is empowered to dismiss the proceedings as to
any Dissenting Shareholder who does not comply with such requirement.
Accordingly, Dissenting Shareholders are cautioned to retain their stock
certificates pending resolution of the appraisal proceedings.
Dissenting Shares of Common Stock will be appraised by the
District Court at their fair value as of the Effective Time, exclusive of any
element of value arising from the accomplishment or expectation of the Merger.
The value so determined for the shares of Stock could be equal to, more than or
less than the Common Consideration or Preferred Consideration, and could be
based upon considerations other than, in addition to, or the same as, the
Common Consideration or Preferred Consideration, the market value of the shares
of Common Stock, asset values and earning capacity. The Company reserves the
right to assert in any appraisal proceeding that the fair value of the shares
of Common Stock or Preferred Stock as of the Effective Time is less than the
Common Consideration or Preferred Consideration.
The District Court may also, on application, (i) determine a
fair rate of interest, simple or compound, if any, to be paid to Dissenting
Shareholders in addition to the value of the Dissenting Shares of Stock for the
period from the Effective Time to the date of payment, (ii) assess costs among
the parties as the District Court deems equitable, and (iii) order all or a
portion of the expenses incurred by any Dissenting Shareholder in connection
with the appraisal proceeding, including, without limitation, reasonable
attorney's fees and fees and expenses of experts, to be charged pro rata
against the value of all Dissenting Shares of Common Stock. Determinations by
the District Court are subject to appellate review by the Oklahoma Supreme
Court.
Dissenting Shareholders are generally permitted to participate
in the appraisal proceedings. No appraisal proceeding in the District Court
shall be dismissed as to any Dissenting Shareholder without the approval of the
District Court, and this approval may be conditioned upon terms which the
District Court deems just.
From and after the Effective Time, Dissenting Shareholders
will not be entitled to vote their shares of Stock for any purpose and will not
be entitled to receive payment of dividends or other distributions in respect
of such shares of Common Stock payable to Shareholders of record thereafter.
FINANCING OF THE MERGER
Ameribank will be required to pay the Total Consideration of
$1,700,000 under the Merger Agreement plus the expenses in connection with the
Merger. Ameribank has represented to the Company that it has sufficient cash
to enable it to consummate the Merger and that it will be funded through a
certain line of credit to Ameribank and a possible dividend from ANB to
Ameribank. The line of credit to Ameribank is evidenced by a revolving
promissory note with Boatmen's First National Bank of Kansas City
("Boatmen's"), dated May 15, 1996, in the maximum principal amount of
$2,700,000 with an interest rate equal to 0.050 percentage points less than the
corporate base rate as established by the bank from time to time and a maturity
date of May 15, 1997. The current corporate base rate is 8.25%. Ameribank is
required to make quarterly payments of interest only commencing August 15,
1996, with the unpaid principal balance and all interest accrued due and
payable in full on May 15, 1997. If Ameribank reduces the principal amount of
the
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note in the amount of $300,000 on May 15, 1997, Boatmen's intends to renew the
note from time to time on substantially the same terms and conditions. The
principal balance on the note as of December 31, 1996 was $100,000. Payment of
the note is secured by a first pledge and security interest covering 99,500
shares of the capital stock of ANB, 702,266 shares of the Company's Common
Stock and 92,790 shares of the Company's Preferred Stock. Ameribank has
received Boatmen's consent to the Merger pursuant to a certain Consent to
Merger dated, December 3, 1996.
EXPENSES OF THE MERGER
<TABLE>
<CAPTION>
EXPENSE ITEM ESTIMATED AMOUNT
<S> <C>
Common Consideration . . . . . . . . . . . . . . . . . . . . . . . $755,721.95
Preferred Consideration . . . . . . . . . . . . . . . . . . . . . . 944,278.05
Printing and Mailing Costs . . . . . . . . . . . . . . . . . . . . 4,958.35
Legal and Accounting Fees and Expenses
[Conner & Winters to advise on legal costs and appraisal fees for
Special Committee]
Appraisal Fees . . . . . . . . . . . . . . . . . . . . . . . . . .
-----------
</TABLE>
CERTAIN LITIGATION CONCERNING THE PROPOSED MERGER
There is no litigation concerning the Merger.
THE MERGER
GENERAL
The Merger Agreement provides that, subject to the adoption of
the Merger Agreement by the Shareholders of the Company and compliance with
certain other covenants and conditions, the Company will be merged into
Ameribank and Ameribank will be the surviving corporation. All material terms
of the Merger Agreement have been disclosed in the body of this Proxy
Statement. All references to the terms and conditions of the Merger Agreement
in this Proxy Statement are qualified in their entirety by reference to the
Merger Agreement, a copy of which is attached hereto as ANNEX A.
At the Effective Time, each outstanding share of Common Stock
(other than shares of Common Stock held by Ameribank) will receive $0.776901 in
cash, without interest, and each outstanding share of Preferred Stock (other
than shares of Preferred Stock held by Ameribank) will receive $58.35 in cash,
without interest. In connection with, and only in connection with, the
consummation of the Merger, Ameribank is waiving its right to receive any of
the Total Consideration in exchange for the Common Stock or Preferred Stock
owned by it.
<PAGE> 44
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REQUIRED VOTE
The presence, in person or by properly executed proxy, of the
holders of a majority of the outstanding shares of Common Stock, as a class,
and Preferred Stock, as a class, is necessary to constitute a quorum at the
Special Meeting. Each Shareholder is entitled to one vote for each share of
Common Stock and each share of Preferred Stock held by such Shareholder. Under
Oklahoma law, the affirmative vote of holders of a majority of the shares of
outstanding Common Stock and Preferred Stock, each voting as a class at the
Special Meeting is required to approve the Merger. For purposes of a quorum,
abstentions will be counted as shares of Common Stock or Preferred Stock voted,
while broker non- votes will not be so counted. The Merger does not require
the approval of a majority of the Shareholders of the Company other than
Ameribank. Because Ameribank, which holds approximately 61.58% of the Common
Stock and 88.85% of the Preferred Stock, intends to vote its shares of Common
Stock and Preferred Stock in favor of the Merger, approval and adoption of the
Merger Agreement is expected.
EFFECTIVE TIME
The Merger will become effective by filing a Certificate of
Merger, consistent with the Merger Agreement, with the Secretary of State of
Oklahoma. The Merger will be consummated only upon satisfaction or waiver,
where permissible, of the terms and conditions of the Merger Agreement and
provided that the Merger Agreement has not been terminated. The Merger
Agreement may be terminated by the mutual written consent of the Company and
Ameribank, and Ameribank may terminate the Merger Agreement at any time if there
has been a material adverse change in the business, assets, financial condition
or prospects of the Company. If the Merger has not been consummated by April 1,
1997, either the Company or Ameribank may terminate the Merger Agreement so long
as the reason that the Merger has not been consummated is not due to the failure
of the party choosing to terminate to fulfill any of its obligations
thereunder. No such waiver or termination will require the vote or consent of
the holders of Common Stock or Preferred Stock.
PAYMENT FOR SHARES OF COMMON STOCK AND PREFERRED STOCK
In order to receive the cash to which Shareholders will be
entitled as a result of the Merger, each holder of certificates representing
shares of Stock (other than Ameribank) will be required to surrender such
holder's stock certificate or certificates, together with a duly executed
letter of transmittal, to the Exchange Agent. Upon receipt of such certificate
or certificates together with a duly executed letter of transmittal, the
Exchange Agent will issue a check or draft to the person or persons entitled
thereto in an amount equal to $0.776901 (rounded to the nearest $0.01) for each
share of Common Stock and $58.35 for each share of Preferred Stock represented
by such stock certificate or certificates. If any payment for shares of Stock
is to be made in a name other than that in which the certificates for such
shares of Stock surrendered for payment are registered on the stock transfer
books of the Company as of the Effective Time, certificates so surrendered must
be properly endorsed or otherwise in proper form for transfer and the person
requesting such payment must pay to the Exchange Agent any transfer or other
taxes required by reason of the payment to a person other than the registered
owner of the certificate or certificates surrendered or
<PAGE> 45
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shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. No interest will be paid or accrued on amounts
payable upon the surrender of any stock certificate.
Instructions with regard to the surrender of certificates,
together with a letter of transmittal to be used for this purpose, will be
mailed to Shareholders as promptly as practicable after the Effective Time. It
also is expected that letters of transmittal will be available at the office of
the Exchange Agent no later than the first business day following the Effective
Time. Shareholders should surrender certificates for shares of Common Stock
and Preferred Stock only with a letter of transmittal.
SHAREHOLDERS SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH
THE ENCLOSED PROXY CARD.
CONDITIONS TO THE MERGER; WAIVER
The respective obligations of Ameribank and the Company to
consummate the Merger are subject to the satisfaction or waiver, on or before
the Effective Time, of the following conditions: (a) approval of the Merger and
the Merger Agreement at the Special Meeting by the affirmative vote of the
holders of at least a majority of the outstanding shares of Common Stock and
Preferred Stock the Special Meeting, (b) approval of the Merger, if required,
by the Board of Governors of the Federal Reserve System and any other necessary
regulatory approvals, and (c) no applicable statute, rule or regulation which
makes consummation of the Merger illegal or otherwise prohibited nor any order,
decree, injunction or judgment enjoining the consummation of the Merger.
The obligations of Ameribank to consummate the Merger are
subject to the satisfaction or waiver, on or before the Effective Time, of the
additional conditions that: (a) the representations and warranties of the
Company contained in the Merger Agreement and in any certificate or other
writing delivered by the Company pursuant thereto shall be true and correct in
all material respects at and as of the Effective Time as if made at and as of
such time; (b) the Company shall have performed and complied in all material
respects with each obligation, agreement and covenant to be performed by and
complied with by it under the Merger Agreement at or prior to the Effective
Time; (c) receipt by Ameribank of a certificate signed by an executive officer
of the Company to the effect set forth in the preceding clauses (a) and (b);
(d) the holders of not more than 12% of the outstanding shares of Common Stock
shall have exercised their appraisal rights in the Merger in accordance with
Oklahoma law; (e) there has been no material adverse change in the business,
assets, financial condition or prospects of the Company; and (f) no action or
proceeding shall have been commenced or threatened for the purpose of obtaining
an injunction, order or damages before any court or governmental agency or
other regulatory or administrative agency or commission, domestic or foreign,
which Ameribank shall on advice of counsel reasonably determine would (1)
result in the imposition of material limitations on the ability of the Company
or Ameribank effectively to consummate the Merger, (2) have the effect of
rendering the Merger violative of any applicable law, or (3) have a material
adverse effect on the business, assets or financial condition of the surviving
corporation, which event is not within the reasonable control of Ameribank.
<PAGE> 46
-44-
The obligations of the Company to consummate the Merger are
subject to the satisfaction or waiver, on or before the Effective Time, of the
additional conditions that: (a) the representations and warranties of Ameribank
contained in the Merger Agreement and in any certificate or other writing
delivered by Ameribank pursuant thereto shall be true and correct in all
material respects as of the Effective Time as if made at and as of such time
(other than any inaccuracies in such representations or warranties that are
attributable to the Company); (b) Ameribank shall have performed in all
material respects all of its obligations to be performed and complied with by
it under the Merger Agreement at or prior to the Effective Time; (c) receipt by
the Company of a certificate signed by an executive officer of Ameribank to the
effect set forth in the preceding clauses (a) and (b); and (d) no action or
proceeding shall have been commenced or threatened for the purpose of obtaining
an injunction, order or damages before any court or governmental agency or
other regulatory or administrative agency or commission, domestic or foreign,
which the Company shall on advice of counsel reasonably determine would (1)
result in the imposition of material limitations on the ability of the Company
or Ameribank effectively to consummate the Merger, or (2) have the effect of
rendering the Merger violative of any applicable law.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the
"HSR Act") provides that certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the
Federal Trade Commission (the "FTC") and certain waiting period requirements
have been satisfied. The Company believes that the HSR Act is not applicable
to the Merger. If the HSR Act were deemed to be applicable to the Merger, the
consummation of the Merger could be delayed pending compliance therewith.
The Antitrust Division and the FTC may scrutinize the legality
under the antitrust laws of transactions such as the Merger. Whether or not
the HSR Act is applicable, the Antitrust Division or the FTC could take any
action under the antitrust laws as it deems necessary or desirable in the
public interest at any time before or after the Merger. Such action may
include seeking to enjoin the Merger. Private parties may also seek to take
action under the antitrust laws. The Company's and Ameribank's obligation
under the Merger is subject to the condition, among others, that there shall
not be instituted or pending any action by any government or governmental
authority or agency, domestic or foreign, challenging the Merger.
The Company and Ameribank believe that the Merger does not
violate the applicable antitrust laws. Nevertheless, there can be no assurance
that a challenge to the Merger on antitrust grounds will not be made, or, if
such challenge is made, what the result will be.
Under the provisions of the Bank Holding Company Act of 1956,
as amended (12 U.S.C. Section 1841, et seq.) (the "Bank Holding Company Act")
and the regulations that have been promulgated thereunder, no bank holding
company shall merge or consolidate with any other bank holding company without
the prior approval of the Federal Reserve Board. Ameribank received approval
from the Federal Reserve Board for the July 1995 tender offer. Ameribank was
advised by the Federal Reserve Board on August 8, 1996 that because it
controlled more than fifty percent
<PAGE> 47
-45-
(50%) of the outstanding voting securities of the Company after the tender
offer, it would not be required to file an application with the Federal Reserve
Board to obtain approval for the Merger.
Under the provisions of the Oklahoma Banking Code (Okla. Stat.
tit. 6, Section 218) (the "Oklahoma Banking Code"), the approval of the
Commissioner of the Oklahoma Banking Department is required when, in the
opinion of the Commissioner, the condition of any bank is such that the
transfer of capital stock of such bank would jeopardize the interest of its
customers. Contemporaneously with the filing of this Proxy Statement with the
Commission, a copy of the Proxy Statement shall be submitted to the Oklahoma
Banding Department for approval.
CERTAIN COVENANTS OF THE COMPANY AND AMERIBANK
VOTE. The Company has agreed, in accordance with applicable
law, to use its best efforts to solicit from its Shareholders proxies in favor
of the approval of the Merger and the Merger Agreement.
PAYMENT OF EXPENSES. Whether or not the Merger is
consummated, Ameribank has agreed to pay all reasonable expenses and
disbursements incurred in connection with the transactions contemplated by the
Merger Agreement.
INDEMNIFICATION. Ameribank has agreed, from the Effective
Date of the Merger, to indemnify, without limitation, each member of the
Company's Board of Directors against any claims arising out of the Merger.
Each member of the Company's Board of Directors has additional rights to
indemnification and advance of expenses under the OGCA and the Certificate of
Incorporation and/or Bylaws of the Company as a director of the Company or
otherwise. In addition, pursuant to certain terms of the Merger Agreement,
Ameribank has agreed to indemnify from the Effective Date of the Merger,
without limitation, each and every member of the Company's Board of Directors
against any claims arising out of the Merger.
TERMINATION AND AMENDMENTS
The Merger Agreement may be terminated before the Effective
Time (a) by the mutual written consent of the Boards of Directors of Ameribank
and the Company, (b) at any time by Ameribank if there has been a material
adverse change in the business, assets, financial condition or prospects of the
Company, or (c) by either the Board of Directors of Ameribank or the Company if
the Merger shall not have been consummated on or before April 1, 1997;
PROVIDED, HOWEVER, that neither party may terminate the Merger Agreement
pursuant to clause (b) if the failure of such party to fulfill any of its
obligations under the Merger Agreement shall have been the reason the Merger
shall not have been consummated on or before said date.
Subject to applicable law, the Merger Agreement may be
amended, modified and supplemented by the mutual consent of the Company and
Ameribank (as authorized by each Board of Directors) at any time prior to the
Effective Time.
<PAGE> 48
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NO THIRD-PARTY BENEFICIARIES
The Merger is being consummated expressly and solely for the
benefit of the parties to the Merger Agreement and no other person is entitled
or shall be deemed to be entitled to any benefits or rights thereunder, nor
shall be authorized or entitled to enforce any rights, claims or remedies
thereunder.
CERTAIN INFORMATION REGARDING AMERIBANK
Ameribank is an Oklahoma corporation with its principal
offices located at 201 North Broadway, Shawnee, Oklahoma 74801.
Ameribank was organized in 1982 and is registered as a bank
holding company under the Bank Holding Company Act and primarily engaged,
through its banking subsidiary, ANB, in providing a full range of traditional
banking and related financial services to the commercial, consumer, energy,
real estate, agriculture and financial sectors, principally in the State of
Oklahoma. The principal business address of ANB is 201 North Broadway,
Shawnee, Oklahoma 74801. Set forth below are the name, business address and
present principal occupation or employment, and material occupations,
positions, offices or employments for the past five years of each director and
executive officer of Ameribank. Except as otherwise noted, each director and
executive officer of the Ameribank is a citizen of the United States and has
been employed in his or her present principal occupation listed below during
the last five years.
Mr. Don Bodard is Chairman of the Board of Directors and
President of Ameribank as well as the owner of Ameribank. Mr. Bodard also
serves as a director of ANB, and as a director of Unit Corporation, a New York
Stock Exchange Company. Mr. Bodard is the father-in-law of Mr. Adcock.
Mr. D. Wesley Schubert is a director and President of the
Company and is a director of United Bank, Del City, and its subsidiaries,
United Del City Tower and 4600 Corporation. Mr. Schubert has been the Vice
Chairman of ANB and Vice President of Ameribank since October 23, 1991. He is
also a director of Ameribank and the Treasurer. Mr. Schubert is Chairman of
the Board of First National Bank of Medicine Lodge, Kansas and a director of
Medicine Lodge Bancshares, Inc. Mr. Schubert has been employed in the past as
a certified public accountant by various investment, oil and gas, and banking
businesses owned by Mr. Bodard.
Since December 16, 1992, Mr. George N. Cook, Jr. has been
President and Chief Executive Officer of ANB and serves as a director and the
Secretary of Ameribank. Mr. Cook is a director of First National Bank of
Medicine Lodge, Kansas and Medicine Lodge Bancshares, Inc. He is the Chairman
of the Board of the Company and also the Chairman of the Board of United Bank,
Del City, and its subsidiaries, United Del City Tower, Inc. and 4600
Corporation. From 1990 to 1992, Mr. Cook was an Associate with the Kansas City
bank consulting firm of Swords & Associates.
<PAGE> 49
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Mr. J. Michael Adcock joined Ameribank full time as General
Counsel on March 1, 1996. Prior to that time he was engaged in the private
practice of law. He currently serves as a member of the Board of Directors of
Grant Geophysical, Inc., Ameribank, ANB, First National Bank of Medicine Lodge,
Kansas, Medicine Lodge Bancshares, Inc., the Company and United Bank, Del City,
and its subsidiaries, United Del City Tower and 4600 Corporation. Grant
Geophysical filed a voluntary Chapter 11 bankruptcy petition in Delaware on
December 31, 1996. Mr. Adcock is the Secretary of the Company. Mr. Adcock
served in various management positions with Hadson Corporation (a New York
Stock Exchange Company) from 1983 to 1993, including Chief Executive Officer,
President and Chief Operating Officer and General Counsel. In October 1992,
Hadson Corporation filed a Chapter 11 bankruptcy petition and plan of
reorganization. The bankruptcy court confirmed the plan of reorganization in
November 1992 and the plan was consummated in December 1992. Mr. Adcock left
Hadson Corporation in December 1993.
Neither Ameribank nor any of its affiliates is subject to the
information and reporting requirements of the Exchange Act and, therefore, is
not required to file periodic reports, proxy statements or other information
with the Commission relating to their respective businesses, financial
condition and other matters. Ameribank is, however, required to file periodic
reports and other information with the Federal Reserve Board. Such periodic
reports and other information relating to Ameribank may be inspected and copied
at the offices of the Federal Reserve Bank of Kansas City, 925 Grand Ave,
Kansas City, Missouri 64198. ANB is also required to file quarterly reports of
income and condition with the Federal Deposit Insurance Corporation, 550 17th
Street, N.W., Washington D.C. 20429.
Financial information regarding Ameribank may be inspected and
copied at the offices of the Federal Reserve Bank of Kansas City as previously
noted. Financial Information regarding Ameribank is not included as Ameribank
believes that such information is not material to a decision by a Shareholder
of the Company whether to vote in favor of the Merger. Financing by Ameribank
is not a condition to the Merger. The Merger proposed is a cash transaction
and not a transaction involving an exchange of shares.
Ameribank owns approximately 61.58% of the Common Stock and
88.85% of the Preferred Stock. Pursuant to the Merger Agreement, Ameribank
will be the surviving corporation in the Merger under the laws of Oklahoma.
The Certificate of Incorporation and Bylaws of Ameribank as in effect
immediately prior to the Effective Time will be the surviving corporation's
Certificate of Incorporation and Bylaws. The directors of Ameribank
immediately prior to the Effective Time will be the directors of the surviving
corporation and the officers of Ameribank immediately prior to the Effective
Time will be the officers of the surviving corporation.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
CAPITAL STOCK.
The authorized capital stock of the Company consists of 10,650,000
shares of stock comprised of 10,000,000 shares of Common Stock, $1.00 par
value, 150,000 shares of 9%
<PAGE> 50
-48-
Cumulative Non-Voting Preferred Stock, $30.00 par value, and 500,000 shares of
Class B Preferred Stock, $1.00 par value. As of September 30, 1996, 2,532,237
shares of Common Stock were issued and outstanding and held by approximately
460 Shareholders of record, 145,199 shares of Preferred Stock were issued and
outstanding, and held by approximately 86 Shareholders of record and no shares
of Class B Preferred Stock were issued or outstanding.
RECENT MARKET PRICES.
The Common Stock is not listed on a national securities exchange or
quoted on the National Quotation Bureau's "Pink Sheets". There is currently no
established public trading market for the Company's Common Stock. According to
information supplied to the Company on Schedule 13-D filings with the
Commission, Ameribank has paid $0.50 for shares of Common Stock and Mr. Robert
B. Krumme and his affiliates have paid between $0.50 and $0.60 per share of
Common Stock acquired between November 21, 1995 and December 24, 1995. Certain
transactions in the Common Stock are set out in "SPECIAL FACTORS -- Background
of the Merger" and "BENEFICIAL OWNERSHIP OF SHARES -- Beneficial Ownership and
- -- Certain Transactions in Common Stock and Preferred Stock."
DIVIDENDS.
The Company has 145,199 shares of Preferred Stock outstanding which
have an aggregate par value of $4,355,970. No dividends have been paid on the
Preferred Stock since October 1, 1985. Cumulative unpaid dividends at
September 30, 1996 amount to $4,312,450 or approximately $29.70 per share. All
accumulated dividends on Preferred Stock shall remain undeclared and unpaid
prior to and during the Merger. Until the accumulated dividends on the
Preferred Stock are paid, no dividends may be paid on the Common Stock.
Dividends have not been paid on the Common Stock in the last 44 quarters or 11
years.
BUSINESS OF THE COMPANY
OVERVIEW
The Company is an Oklahoma corporation with its principal
executive offices located at 4600 S.E. 29th Street, Del City, Oklahoma 73115.
The Company is a one-bank holding company registered under the
Bank Holding Company Act. The principal business of the Company is the
ownership and supervision of United. As of December 31, 1996, the Company and
its subsidiaries had approximately 50 full-time equivalent employees. United
is a state chartered banking association whose deposits are insured pursuant to
the Federal Deposit Insurance Act. United, which operates primarily in
Oklahoma, competes with other financial institutions in its trade area in
providing a full range of traditional banking and related financial services to
the commercial, consumer, energy, real estate and financial sectors. United
Bank, Del City, operates two wholly-owned subsidiaries, United Del City Tower,
Inc. and 4600 Corporation.
<PAGE> 51
-49-
United Del City Tower, Inc. owns and manages the Bank Tower of
which the first and part of the second floors are occupied by United. The
facility was approximately 90% occupied at the end of 1996. 4600 Corporation
was formed to sell assets on which United, foreclosed.
The Company is subject to the information and reporting
requirements of the Exchange Act and, therefore, is required to file periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Such annual and quarterly
statements, proxy statements and other information relating to the Company may
be inspected and copied at the Commission's public reference facilities at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition,
the Company is required to file periodic reports and other information with the
Federal Reserve Board. Such periodic reports and other information relating to
the Company may be inspected and copied at the offices of the Federal Reserve
Bank of Kansas City, 925 Grand Ave, Kansas City, Missouri 64198.
TRANSACTIONS WITH AFFILIATES
American Imaging Center ("AIC") is a joint venture partnership
composed of ANB and United as joint venture partners. On September 1, 1996,
AIC sold to Data Center, Inc. ("DCI"), a Kansas corporation, all of the assets
of AIC. For a term of five years from the sale, DCI agreed to rebate to the
joint venture partners for new imaging processing customers utilizing services
at AIC a royalty of five percent (5%) of gross imaging processing revenues from
new customers, less pass through charges.
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected historical financial
information for the Company for each of the five years in the period ended
December 31, 1995. The following information should be read in conjunction
with "BUSINESS OF THE COMPANY -- Management's Discussion and Analysis of
Results of Operations and Financial Condition". The Company's audited
financial statements for the fiscal years ended December 31, 1995, December 31,
1994 and December 31, 1993 are incorporated herein by reference to the
Company's Annual Report on Form 10-K for the years ended December 31, 1995,
December 31, 1994 and December 31, 1993. The Company's unaudited balance
sheets and comparative year-to-date income statements of cash flows and related
earnings per share amounts for the period ended September 30, 1996 are
incorporated herein by reference to the Company's Quarterly report on Form 10-Q
for the period ended September 30, 1996. The selected financial information
for the Company for the period ended December 31, 1996 is also unaudited.
<PAGE> 52
-50-
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED
1996 1995 1994 1993 1992
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C>
Sales $8,138 $7,031 $6,190 $6,070 $6,255
Operating Income 999 775 829 655 648
Total assets 84,051 86,071 79,720 74,564 78,556
Accumulated equity (deficit) 57 (551) (1,033) (1,301) (594)
Term loans and advances
Long-term debt 450 900
Dividends per share
Book Value per share* .02
</TABLE>
*The book value for holders of Common Stock was negative for years 1992 through
1995 after liquidation of Preferred Stock and Preferred dividends in arrears.
As the Company's separate existence will be eliminated in the
Merger, pro forma data disclosing the effect of the Merger on its balance
sheet, statement of income, earnings per share amounts, ratio of earnings to
fixed charges and book value per share is not provided.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Management has prepared and is responsible for the
consolidated financial statements and related financial information included in
this Proxy Statement. These financial statements were prepared in accordance
with generally accepted accounting principles which are consistently applied
and appropriate in the circumstances. The statements necessarily include
amounts based on management's best judgment and estimates.
The Company maintains accounting and other control systems,
including internal audits of its operations, to provide reasonable assurance
that assets are safeguarded and that the books and records reflect the
authorized transactions of the Company. Underlying the concept of reasonable
assurance is the premise that the cost of control should not exceed the
benefit. Management believes that the Company's accounting and other control
systems appropriately recognize this cost/benefit relationship.
The Company's independent accountants, KPMG Peat Marwick,
L.L.P., provide an independent objective assessment of the degree to which
management meets its responsibility for fairness in financial reporting. They
evaluate the Company's system of internal accounting control in determining the
nature and extent of audit tests and perform such tests and other procedures as
they deem necessary to reach and express an opinion on the financial
statements.
<PAGE> 53
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The Board is responsible for reviewing and monitoring the
Company's financial reports and accounting practices. The Board meets to
discuss audit and financial reporting matters with representatives of
management and the independent accountants. The independent accountants have
direct access to the Board.
BENEFICIAL OWNERSHIP OF SHARES OF COMMON STOCK AND PREFERRED
STOCK OF THE COMPANY
Beneficial Ownership
The following table sets forth, to the best of the Company's
knowledge, the beneficial ownership of voting securities, as of December 31,
1996, with respect to (i) each person or group known to the Company to own more
than 5% of the outstanding shares of Common Stock or Preferred Stock and (ii)
each director and executive officer of the Company.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS
The security ownership of each person known by the Company to
be the beneficial owner of more than five percent (5%) of the Common Stock and
Preferred Stock as of December 31, 1996 is as follows:
<TABLE>
<CAPTION>
AMOUNT
NAME AND ADDRESS OF BENEFICIALLY PERCENT OF
TITLE CLASS BENEFICIAL OWNER OWNED OWNERSHIP
<S> <C> <C> <C>
Common Stock Ameribank Corporation 1,559,498 61.58%
201 N. Broadway
Shawnee, OK 74801
Common Stock Dona B. Adcock Right to acquire* 10.06%
201 N. Broadway 254,666
Shawnee, OK 74801
Common Stock Robert B. Krumme 238,492** 9.4%
P.O. Box 749
Bristow, OK 74010
Preferred Stock Ameribank Corporation 129,016 88.85%
201 N. Broadway
Shawnee, OK 74801
Preferred Stock Dona B. Adcock Right to acquire* 14.51%
201 N. Broadway 21,068
Shawnee, OK 74801
</TABLE>
<PAGE> 54
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**The number of shares of Common Stock includes 106,796 shares held by Sooner
Southwest Bankshares and 121,696 shares held by Illinois Refining Company, of
which Mr. Krumme claims beneficial ownership .
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The security ownership of each director and executive officer
of the Common Stock and Preferred Stock as of December 31, 1996 is as follows:
<TABLE>
<CAPTION>
AMOUNT
NAME AND ADDRESS OF BENEFICIALLY PERCENT OF
TITLE CLASS BENEFICIAL OWNER OWNED OWNERSHIP
<S> <C> <C>
Common Stock D. Wesley Schubert Right to acquire* 10.06%
201 N. Broadway 254,666
Shawnee, OK 74801
Common Stock George N. Cook, Jr. Right to acquire* 10.06%
201 N. Broadway 254,666
Shawnee, OK 74801
Preferred Stock D. Wesley Schubert Right to acquire* 14.51%
201 N. Broadway 21,068
Shawnee, OK 74801
Preferred Stock George N. Cook, Jr. Right to acquire* 14.51%
201 N. Broadway 21,068
Shawnee, OK 74801
</TABLE>
*Ameribank Corporation and Messrs. George N. Cook, D. Wesley Schubert and J.
Michael Adcock entered into a Stock Purchase Agreement, dated November 3, 1995,
which provides that Ameribank will sell to each of Messrs. Cook, Schubert and
Adcock 16.33% of the total number of shares of Common Stock and 9% Cumulative
Non-Voting Preferred Stock which Ameribank owns or acquires in future
purchases. The terms provide that the purchase price for such Stock shall be
the price at which Ameribank acquired the shares, plus costs incurred, plus
interest, accrued from the date of acquisition of such Stock to the closing of
the purchase contemplated by the agreement, at a rate equal to the base rate of
interest of Chase Manhattan Bank, N.A. from time to time. The consummation of
the transactions are subject to (1) approval from the Federal Reserve System;
(2) the entering into by the parties of a Shareholders' Agreement restricting
the future transfer of the Stock by Messrs. Adcock, Schubert and Cook; and (3)
the entering into by the parties of a Voting Trust Agreement appointing
Ameribank as Trustee to vote the shares of Common Stock. On November 27, 1996,
Mr. Adcock entered into an agreement with his wife, Dona B. Adcock,
transferring to her his rights to purchase shares of the Company under the
Stock Purchase
<PAGE> 55
-53-
Agreement. Mrs. Adcock is the daughter of Mr. Bodard, the sole shareholder of
Ameribank. Messrs. Cook and Schubert and Mrs. Adcock have entered into an
Addendum to the Stock Purchase Agreement dated January 27, 1997, whereby
Ameribank agrees that if the Merger is consummated, Ameribank will sell to each
of Messrs. Cook and Schubert and Mrs. Adcock 16.33% of the total number of
shares of common stock outstanding of United at a price per share equal to the
total consideration, plus costs and interest paid by Ameribank for the Stock,
divided by the total number of outstanding shares of common stock of United,
and on the same terms and subject to the same conditions as previously agreed.
CERTAIN TRANSACTIONS IN COMMON STOCK AND PREFERRED STOCK
The following tables set forth certain information concerning the Common Stock
and Preferred Stock acquired by Ameribank in private transactions since the
termination of the tender offer on December 29, 1995.
<TABLE>
<CAPTION>
COMMON STOCK
DATE OF PURCHASE NUMBER OF SHARES AMOUNT PAID
<S> <C> <C>
*January 2, 1996 50,000 $0.50
January 24, 1996 22,368 $0.50
January 30,1996 1,000 $0.50
January 31, 1996 338 $0.50
March 4, 1996 1,100 $0.50
March 20, 1996 14,000 $0.50
April 10, 1996 2,676 $0.50
April 11, 1996 1,828 $0.50
May 7, 1996 6,000 $0.50
May 28, 1996 3,813 $0.50
June 4, 1996 264 $0.50
*June 6, 1996 840 $0.50
*June 6, 1996 4,959 $0.50
June 27, 1996 10,000 $0.50
</TABLE>
<PAGE> 56
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* The terms of agreements with sellers in these transactions included a
provision that in the event a higher price per share is paid by Ameribank to
other shareholders in a merger transaction occurring within one (1) year from
the date of such stock purchase agreement, Ameribank would pay to such seller
the difference in cash. The terms of the agreements, dated January 2, 1996,
with regard to additional consideration have now expired. However, if the
Merger is consummated by June 6, 1997, Ameribank would be required to pay
sellers in other transactions identified above additional consideration to
equal the Common Consideration per share.
<TABLE>
<CAPTION>
PREFERRED STOCK
DATE OF PURCHASE NUMBER OF SHARES AMOUNT
<S> <C> <C>
January 2, 1996 832 $25.00
January 17, 1996 100 $25.00
March 13, 1996 44 $18.00
March 13, 1996 2,510 $30.00
April 1, 1996 1,296 $37.00
April 22, 1996 120 $35.00
May 10, 1996 300 $30.00
**June 3, 1996 15,787 $49.50
June 4, 1996 22 $30.00
**June 6, 1996 2,008 $49.50
</TABLE>
**The terms of agreements with sellers in these transactions included a
provision that in the event a higher price per share is paid by Ameribank to
other shareholders in a merger transaction occurring within one (1) year from
the date of such stock purchase agreement, Ameribank would pay to such seller
the difference in cash. If the Merger is consummated by June 3, 1997,
Ameribank will be required to pay sellers in the transactions identified above
additional consideration to equal the Preferred Consideration per share.
PROXY SOLICITATION
Proxies are being solicited by and on behalf of the Company.
All expenses of this solicitation, including the cost of preparing and mailing
this Proxy Statement, will be borne by Ameribank. In addition to solicitation
by uses of the mails, proxies may be solicited by directors,
<PAGE> 57
-55-
officers and employees of the Company in person or by telephone, telegram or
other means of communication. Such directors, officers and employees will not
be additionally compensated, but may be reimbursed for out-of-pocket expenses
in connection with such solicitation. Arrangements will also be made with
custodians, nominees and fiduciaries for forwarding of proxy solicitation
material to beneficial owners of Common Stock and Preferred Stock held of
record by such persons, and Ameribank may reimburse such custodians, nominees
and fiduciaries for reasonable expenses incurred in connection therewith.
CURRENT INFORMATION: DELISTING AND DEREGISTRATION
After the Effective Time, the Common Stock will cease trading
entirely, registration of Common Stock under the Exchange Act will terminate
and the Company will cease filing reports with the Commission. Moreover, the
Company will be relieved of the obligation to comply with the proxy rules of
Regulation 14A under Section 14 of the Exchange Act, and its officers,
directors and 10% Shareholders will be relieved of the reporting requirements
and "short-swing" trading liability under Section 16 of the Exchange Act.
INDEPENDENT AUDITORS
Representatives of KPMG, Peat Marwick, L.L.P., the Company's
independent auditors, are expected to be present at the Special Meeting and
will have an opportunity to make a statement should they desire to do so. Such
representatives are also expected to be available to respond to questions.
FUTURE SHAREHOLDER PROPOSALS
If the Merger is not consummated, any shareholder who wishes
to present a proposal for inclusion in the Proxy Statement for action at future
Annual Meetings of Shareholders must comply with the rules and regulations of
the Commission then in effect. The date by which such proposals must be
received by the Company for inclusion in the Company's Proxy Statement for the
1997 Annual Meeting has not yet been determined. If the Merger is not
consummated, the Company will inform holders of the Common Stock of the date by
which such proposals must be received by the Company for inclusion in the
Company's Proxy Statement for the 1997 Annual Meeting of Shareholders.
OTHER BUSINESS
The Board does not intend to bring any other matters before
the Special Meeting and does not know of any matters to be brought before the
Special Meeting by others. If any other matter should come before the Special
Meeting, it is the intention of the persons named in the accompanying proxy to
vote the proxy on behalf of the Shareholders they represent in accordance with
their best judgment.
<PAGE> 58
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ANNEX A
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger dated as of December 3, 1996
(this "Agreement") is entered into by United Oklahoma Bankshares, Inc., an
Oklahoma corporation ("UOB") and Ameribank Corporation, an Oklahoma corporation
("Ameribank").
WHEREAS, Ameribank owns a majority of the shares of common
stock and preferred stock of UOB;
WHEREAS, a Special Committee of the Board of Directors of UOB
(the "Special Committee"), comprised of two (2) members of the Board of
Directors of UOB who do not have any financial or personal interest in
Ameribank and who are not officers, directors, employees or stockholders of
Ameribank, were appointed by the Board of Directors of UOB to, among other
things, evaluate any proposal by Ameribank to merge UOB with Ameribank and to
negotiate, for and on behalf of UOB, the terms and conditions of any merger of
UOB with Ameribank and to make recommendations to the Board of Directors of UOB
regarding a merger of UOB with Ameribank;
WHEREAS, pursuant to the negotiations between the Special
Committee and representatives of Ameribank, Ameribank has agreed to pay to the
non-Ameribank shareholders of UOB, in the aggregate, the sum of $1,700,000.00
in consideration for the Merger (as hereinafter defined), with $58.35 per share
to be paid for each of the 16,183 shares of UOB preferred stock held by
non-Ameribank preferred stockholders (totaling $944,278.05) and $0.776901 per
share (rounded to the nearest $.01) to be paid for each of the 972,739 shares
of common stock of UOB held by non-Ameribank common stockholders (totaling
$755,721.95), which consideration the financial advisor to the Special
Committee has determined to be fair from a financial point of view;
WHEREAS, the parties hereto desire to effect the merger of UOB
with and into Ameribank (the "Merger") pursuant to the terms of this Agreement;
and
WHEREAS, the Board of Directors of UOB, pursuant to the
recommendations of the Special Committee, and the Board of Directors of
Ameribank have determined that the Merger contemplated hereby is fair to and in
the best interests of UOB and its shareholders and Ameribank and its
shareholders;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follow:
ARTICLE I
THE MERGER
SECTION 1. Meeting of UOB's Stockholders. UOB will take all
action necessary in accordance with applicable law to convene a meeting of its
stockholders (the "Special Meeting")
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as promptly as practicable after the date hereof to consider and vote upon the
Merger. The Board of Directors of UOB, subject to its fiduciary duties as
advised by counsel, will recommend that UOB's stockholders vote in favor of the
Merger and the approval and adoption of this Agreement.
SECTION 1.1 Proxy Statement; Schedule 13E-3. As soon as
practicable, UOB shall file with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934 (the "Exchange Act"), and
shall use its reasonable efforts to have cleared by the SEC, a proxy statement
(together with any amendments or supplements thereto, the "Proxy Statement"),
with respect to the Special Meeting. In addition, UOB and Ameribank shall file
with the SEC and make available to UOB's stockholders, as required by
applicable law, a joint Schedule 13E-3 (together with any amendments or
supplements thereto, the "Schedule 13E-3") with respect to the Special Meeting
and the Merger. Ameribank will provide all information relating to it or its
affiliates (other than UOB), for use in the preparation of the Proxy Statement
and Schedule 13E-3. UOB will provide all information, other than that relating
to Ameribank or its affiliates (other than UOB), for use in the Proxy Statement
and in the Schedule 13E-3. The information provided and to be provided by UOB
and Ameribank, respectively, for use in the Proxy Statement and in the Schedule
13E-3 shall be true and correct in all material respects and shall not omit to
state any material fact necessary in order to make such information not
misleading as of the date of the Proxy Statement or the Schedule 13E-3, as the
case may be, and as of the date of the Special Meeting. UOB will promptly
advise Ameribank or Ameribank will promptly advise UOB, in writing, if at any
time prior to the Effective Time (as defined in Section 1.2) UOB or Ameribank
shall obtain knowledge of any facts that might make it necessary or appropriate
to amend or supplement the Proxy Statement or the Schedule 13E-3 in order to
make the statements contain or incorporated by reference therein not misleading
or to comply with applicable law. The Proxy Statement shall contain the
recommendation of the Board of Directors of UOB referred to in this Section 1
as well as the conclusion of the Board of Directors of UOB that the terms and
conditions of the Merger are fair to the stockholders of UOB (other than
Ameribank).
SECTION 1.2. The Merger. At the Effective Time, the Merger
shall occur in accordance with the Oklahoma General Corporation Act ("Oklahoma
Law"), whereupon the separate existence of UOB shall cease, and Ameribank shall
be the surviving corporation (the "Surviving Corporation"). As soon as
practicable after all the conditions set forth in Article VII have been
satisfied or waived, UOB and Ameribank will file, or cause to be filed, with
the Secretary of State of the State of Oklahoma a certificate of merger for the
Merger in accordance with Oklahoma Law (the "Certificate of Merger"). The
Merger shall become effective at the time such filing is made or at such other
time as is set forth in the Certificate of Merger (the "Effective Time"). From
and after the Effective Time, the Surviving Corporation shall possess all the
rights, privileges, powers and franchises and be subject to all of the
restrictions, disabilities, liabilities and obligations and duties of UOB and
Ameribank, all as provided under Oklahoma Law.
SECTION 1.3. Conversion of Outstanding Shares. At the
Effective Time Ameribank shall pay , in aggregate, to the non-Ameribank
shareholders of UOB a total of $1,700,000.00 (the "Total Consideration"), in
cash, as consideration for the Merger, payable as follows: (a) each share of
Common Stock (as defined in Section 2.2) of UOB (a "Share" and, collectively,
the "Shares") outstanding immediately prior to the Effective Time (except for
the
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Canceled Shares hereinafter referred to) shall, except as otherwise provided in
this Section 1.3, be converted into and shall receive $0.776901 (rounded to the
nearest $0.01) in cash (the "Merger Consideration"); (b) each share of
Preferred Stock (as defined in Section 2.2) of UOB (a Preferred Share and,
collectively, the Preferred Shares) outstanding immediately prior to the
Effective Time (except for the Canceled Shares hereinafter referred to) shall,
except as otherwise provided in this Section 1.3, be converted into and shall
receive $58.35 in cash (the "Preferred Merger Consideration"); (c) each Share
and each Preferred Share held by Ameribank or any subsidiary of Ameribank
outstanding immediately prior to the Effective Time (a "Canceled Share" and,
collectively, the "Canceled Shares") shall, by virtue of the Merger, and
without any action on the part of the holder thereof, be canceled and retired
and cease to exist, without any conversion thereof and shall not be entitled to
any of the consideration referred to in this Section 1.3; PROVIDED, HOWEVER,
that in connection with, and only in connection with, the consummation of the
Merger, Ameribank waives its right to receive, and shall not receive any
portion of the Total Consideration and consents to being treated less favorably
than the other stockholders of UOB; (d) each share of common stock of Ameribank
outstanding immediately prior to the Effective Time shall not be converted by
virtue of the Merger and each such outstanding share of common stock of
Ameribank shall remain issued and outstanding after the Merger; (e) each Share
held by UOB as treasury shares shall be canceled and retired without payment
thereof and; (f) each share of Class B Preferred Stock of UOB (as defined in
Section 2.2), none of which are issued and outstanding, shall be canceled and
retired without payment thereof.
1.3.1 Notwithstanding Section 1.3 (a) and (b), Shares and
Preferred Shares outstanding immediately prior to the Effective Time and held
by a holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such Shares and Preferred Shares in
accordance with Oklahoma Law shall not be converted into a right to receive the
Merger Consideration or Preferred Merger Consideration pursuant to such Section
1.3(a) and 1.3(b) unless such holder fails to perfect or withdraws or loses the
right to appraisal but the holder thereof shall be entitled only to such rights
and to receive such consideration, if any, as may be determined pursuant to
Section 1091 of the Oklahoma Law. If, after the Effective Time, such holder
fails to perfect or withdraws or loses the right to appraisal, such Shares or
Preferred Shares shall thereupon be deemed to have been converted into and
shall receive, at the Effective Time, the Merger Consideration pursuant to the
terms of Section 1.3 (a), or the Preferred Merger Consideration pursuant to the
terms of Section 1.3(b), without any interest thereon or addition thereto and
such Share or Preferred Share shall thereupon be canceled. UOB shall give
Ameribank prompt notice of any demands received by UOB for appraisal of Shares
or Preferred Shares, and Ameribank shall have the right to participate in all
negotiations and proceedings with respect to such demands. UOB shall not,
except with the prior written consent of Ameribank, make any payment with
respect to, or settle or offer to settle, any such demands.
SECTION 1.4. Surrender and Exchange. Promptly after the
Effective Time, the Surviving Corporation, or such bank or trust company acting
as paying agent (the "Paying Agent") for the Merger pursuant to an agreement in
a form to be mutually agreed upon by UOB and Ameribank, shall mail or cause to
be mailed to each holder of Shares and Preferred Shares (except the Canceled
Shares) at the Effective Time a letter of transmittal for use in surrendering
for
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exchange the certificate or certificates representing such Shares or Preferred
Shares. After the Effective Time, each such holder, upon surrender to the
Paying Agent of such certificate or certificates (together with such letter of
transmittal duly executed), will be entitled to receive the Merger
Consideration or the Preferred Merger Consideration. Until so surrendered,
each such certificate shall after the Effective Time represent for all purposes
only the right to receive the Merger Consideration or the Preferred Merger
Consideration, whichever is applicable. At the Effective Time, Ameribank shall
furnish or cause to be furnished to the Paying Agent good funds equal to the
aggregate of the Total Consideration payable to the holders of Shares and
Preferred Shares (except the Canceled Shares). After the Effective Time, there
shall be no further registration or transfers of Shares or Preferred Shares.
1.4.1 Prior to the Effective Time, the Surviving
Corporation, with the approval of UOB, shall establish reasonable procedures
for the delivery of the Merger Consideration or the Preferred Merger
Consideration to holders of Shares or Preferred Shares (except the Canceled
Shares) whose stock certificates have been lost, destroyed or mutilated. If
any delivery of the Merger Consideration or Preferred Merger Consideration is
to be made pursuant to Section 1.3(a) or Section 1.3(b) to a person other than
the registered holder of the certificate or certificates surrendered in
exchange therefor, it shall be a condition to such delivery that the
certificate or certificates so surrendered shall be properly endorsed or be
otherwise in proper form for transfer and that the person requesting such
delivery shall (a) pay to the Paying Agent any transfer or other taxes required
as a result of delivery to a person other than the registered holder or (b)
establish to the satisfaction of the Paying Agent that such tax has been paid
or is not payable. Any holder of Shares or Preferred Shares who has not
exchanged the Shares or Preferred Shares for the Merger Consideration or
Preferred Merger Consideration in accordance with Section 1.4 within one (1)
year after the Effective Time shall have no further claim upon the Paying Agent
and shall thereafter look only to the Surviving Corporation for payment in
respect of the Shares or Preferred Shares. Notwithstanding the foregoing, no
party hereto shall be liable to a holder of Shares or Preferred Shares for any
amount paid to a public official pursuant to applicable abandoned property
laws.
SECTION 1.5. Certificate of Incorporation. The Certificate
of Incorporation of Ameribank as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation
until amended in accordance with applicable law.
SECTION 1.6. By-Laws. The By-Laws of Ameribank as in effect
immediately prior to the Effective Time shall be the By-Laws of the Surviving
Corporation until amended in accordance with applicable law.
SECTION 1.7. Directors and Officers. From and after the
Effective Time, until successors are duly elected or appointed in accordance
with applicable law, (a) the directors of Ameribank at the Effective Time shall
be the directors of the Surviving Corporation and (b) the officers of Ameribank
at the Effective Time shall be the officers of the Surviving Corporation.
SECTION 1.8. Stock Transfer Books. At the Effective Time the
stock transfer books of UOB shall be closed and no transfer of shares of Common
Stock or Preferred Stock shall thereafter be made on such stock transfer books.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF UOB
SECTION 2. Representations and Warranties of UOB. UOB
represents and warrants to Ameribank that:
SECTION 2.1. Corporate Organization. UOB is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Oklahoma, and has all requisite corporate power and authority to own
its properties and assets and to conduct its businesses as now conducted.
SECTION 2.2. Capitalization. The authorized capital stock of
UOB consists of 10,650,000 shares of stock comprised of 10,000,000 shares of
Common Stock, par value $1.00 per share (the "Common Stock"), 2,532,237 shares
of which are issued and outstanding; 150,000 shares of 9% Cumulative Non-Voting
Preferred Stock, par value $30.00 per share (the "Preferred Stock"), 145,199
shares of which are issued and outstanding; and 500,000 shares of Class B
Preferred Stock, par value of $1.00 per shares ( the "Class B Preferred
Stock"), no shares of which are issued or outstanding. All shares of Common
Stock and Preferred Stock have been duly authorized and validly issued, and are
fully paid and nonassessable and no personal liability attaches to the
ownership thereof.
SECTION 2.3. Authorization and Validity of Agreement. UOB
has the corporate power to enter into this Agreement and to carry out its
obligations hereunder and to consummate the Merger subject to the approval of
the Merger by the shareholders of UOB, pursuant to the laws of the State of
Oklahoma and the Exchange Act, and approvals as may be required by the Board of
Governors of the Federal Reserve System ("Federal Reserve Approvals"). The
execution and delivery of this Agreement and the performance of UOB's
obligations hereunder have been duly authorized by all necessary corporate
action, including, without limitation, by the Board of Directors of UOB, except
approval by the shareholders of UOB pursuant to the laws of the State of
Oklahoma and the Exchange Act. The consummation of the Merger has been duly
authorized by all necessary corporate action, other than the affirmative vote
of the stockholders of UOB in accordance with applicable law and this
Agreement, and approval of the Merger by the stockholders of UOB has been
recommended by the Board of Directors of UOB. This Agreement has been duly
executed by UOB and constitutes the valid and binding obligation of UOB
enforceable against UOB in accordance with its terms, except (a) to the extent
that enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally, and (b) that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which
any proceeding therefor may be brought.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AMERIBANK
SECTION 3. Representations and Warranties of Ameribank.
Ameribank represents and warrants to UOB that:
SECTION 3.1. Corporate Organization. Ameribank is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Oklahoma and has all requisite corporate power and
authority to own its properties and assets and to conduct its business as now
conducted.
SECTION 3.2. Title To Canceled Shares. All of the Canceled
Shares are owned of record and beneficially by Ameribank free and clear of all
liens.
SECTION 3.3. Authorization and Validity of Agreement.
Ameribank has the corporate power to enter into this Agreement and to carry out
its obligations hereunder. The execution and delivery of this Agreement and
the performance of Ameribank's obligations hereunder have been duly authorized
by the Board of Directors and by the stockholders of Ameribank and no other
proceedings on the part of Ameribank are necessary to authorize such execution,
delivery and performance. This Agreement has been duly executed by Ameribank
and is the legal, valid and binding obligation of Ameribank, enforceable
against Ameribank in accordance with its terms, except (a) to the extent that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally, and (b) that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which
any proceeding therefor may be brought.
SECTION 3.4. No Conflict or Violation. As of the date hereof
and as of the Effective Time, the execution, delivery and performance by
Ameribank of this Agreement and consummation of the Merger does not and will
not (a) violate or conflict with any provision of the charter documents or
By-Laws of Ameribank, or (b) violate any provision of law, or any order,
judgment or decree of any court or other governmental or regulatory authority.
SECTION 3.5. Consents and Approvals. As of the Effective
Time, no material consent, waiver, authorization or approval of any
governmental or regulatory authority, domestic or foreign, or of any other
person, firm or corporation, and no material declaration or notification to or
filing or registration with any such governmental or regulatory authority, is
required on the part of Ameribank in connection with the execution and delivery
of this Agreement by Ameribank, the performance of Ameribank of its obligations
hereunder, or the consummation of the Merger, other than in connection with or
in compliance with the applicable provisions of Oklahoma Law, the Exchange Act
or Federal Reserve Approval.
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ARTICLE IV
COVENANTS OF UOB
SECTION 4. Covenants of UOB. UOB agrees that:
SECTION 4.1. Vote. UOB agrees that from and after the date
hereof, UOB will, to the extent permitted by applicable law or as otherwise
reasonably requested by Ameribank and in accordance with Oklahoma Law and its
Certificate of Incorporation and By-Laws, use its best efforts to (a) solicit
from the stockholders of UOB proxies in favor of the approval of this Agreement
and (b) take all other action necessary or helpful to secure a vote of
stockholders in favor of the Merger and to approve this Agreement.
SECTION 4.2. Access To Information. From and after the date
hereof and subject to the execution of such confidentiality agreements as UOB
shall reasonably require, UOB will give Ameribank and its counsel, financial
advisors, auditors and other authorized representatives reasonable access to
the offices, properties, books and records of UOB and will instruct UOB's
employees, counsel and financial advisors to cooperate with any such person in
its investigation of UOB.
ARTICLE V
COVENANTS OF AMERIBANK
SECTION 5. Covenants of Ameribank. Ameribank agrees that:
SECTION 5.1. Other Fees and Expenses. Ameribank will pay all
reasonable attorneys' fees, expenses and disbursements of UOB incurred prior to
or after the date hereof in connection with the transactions contemplated by
this Agreement.
SECTION 5.2. Vote. Ameribank will vote the Canceled Shares
in favor of the approval and adoption of this Agreement and the approval of the
Merger.
SECTION 5.3. No Sale or Disposition; Waiver. From and after
the date of this Agreement and until the earlier of the Effective Time and the
termination of this Agreement, Ameribank will not sell or otherwise dispose of
any Canceled Shares or otherwise to facilitate the consummation of the
transactions contemplated by this Agreement.
SECTION 5.4 Indemnification. In addition to the rights and
remedies of each member of the Board of Directors of UOB (including, but not
limited to, members of the Special Committee) for indemnification and advances
of expenses (including, but not limited to, attorneys' fees) under the Oklahoma
General Corporation Act and the Certificate of Incorporation and/or Bylaws of
UOB by reason of the fact that he is or was a director of UOB or otherwise,
from and after the Effective Time Ameribank shall indemnify, defend and hold
harmless, without limitation, each and every member of the Board of Directors
of UOB (including, but not limited to, each member of the Special Committee)
from and against any and all claims, demands, suits, proceedings,
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actions, or causes of actions threatened or pending against any member of the
Board of Directors of UOB (including, but not limited to, members of the
Special Committee) or any and all losses, judgments, damages, liabilities,
costs and expenses (including, but not limited to, attorneys' fees) suffered or
incurred or which may be suffered or incurred by any member of the Board of
Directors of UOB (including, but not limited to, the members of the Special
Committee), relating to, or in connection with, or arising out of the Merger or
for any reason whatsoever as a result of being a member of the Board of
Directors of UOB (including, but not limited to, a member of the Special
Committee) in connection with, or relating to , or arising out of, the Merger,
this Agreement or any filings made by UOB with the SEC or any proxy statement
or schedules issued by UOB to its shareholders or others in connection with the
Merger.
ARTICLE VI
OTHER AGREEMENTS
SECTION 6. Additional Agreements. The parties hereto agree
that:
SECTION 6.1. Best Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each party shall use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations,
including without limitation obtaining Federal Reserve Approval, to consummate
the transactions contemplated by this Agreement as promptly as possible.
SECTION 6.2. Notification of Certain Matters. Each party to
this Agreement will give prompt notice to the other parties hereof of: (a) any
notice or other communication from any person or entity alleging that the
consent of such person or entity is or may be required in connection with the
transactions contemplated by this Agreement; (b) any notice or other
communication from any governmental or regulatory agency or authority in
connection with the transactions contemplated by this Agreement; (c) any
action, suit, claim, investigation or proceeding commenced or, to its
knowledge, threatened against, relating to or involving or otherwise affecting
UOB on the one hand, or and/or Ameribank on the other hand, which is
reasonably likely to affect materially the transactions contemplated by this
Agreement; (d) the occurrence, or failure to occur, of any event or change in
circumstances where such occurrence or failure to occur would be likely to
cause any representation or warranty contained in this Agreement to be untrue
and inaccurate in any material respect at any time from the date hereof to the
Effective Time; and (e) any material failure of such party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder. No such notification shall affect the representations or
warranties of the parties or the conditions to the obligations of the parties
hereunder.
SECTION 6.3. Further Assurances. At and after the Effective
Time, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of UOB , any
deeds, bills of sale, assignments or assurances and to take and do in the name
and on behalf of UOB, any other actions and things to vest, perfect or confirm
of record or otherwise in the Surviving Corporation any and all right, title
and interest in, to and under any of the
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rights, properties or assets of UOB acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7. Conditions To The Obligations of Each Party. The
obligations of UOB and Ameribank to consummate the Merger are subject to: (a)
the approval of the Merger and this Agreement at the Special Meeting of UOB
stockholders by the affirmative vote of at least a majority of each class of
the stockholders of UOB outstanding on the record date of such Special Meeting;
(b) approval, if required, of the transactions contemplated herein by the Board
of Governors of the Federal Reserve System and any other necessary regulatory
approvals; and (c) any applicable statute, rule or regulation which makes
consummation of the Merger illegal or otherwise prohibited or any order,
decree, injunction or judgment enjoining the consummation of the Merger.
SECTION 7.1. Conditions To The Obligation of UOB. The
obligation of UOB to consummate the Merger is subject to the satisfaction or
waiver of the following further conditions: (a) Ameribank shall have performed
in all material respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time; (b) the representations and
warranties of Ameribank contained in this Agreement and in any certificate or
other writing delivered by Ameribank pursuant hereto shall be true in all
material respects at and as of the Effective Time as if made at and as of such
time (other than any inaccuracies in such representations or warranties that
are attributable to UOB); (c) receipt by UOB of a certificate signed by an
executive officer of Ameribank to the effect set forth in this Section; and (d)
no action or proceeding shall have been commenced or threatened for the purpose
of obtaining an injunction, order or damages before any court or governmental
agency or other regulatory or administrative agency or commission, domestic or
foreign, which UOB shall on advice of counsel, reasonably determine would (1)
result in the imposition of material limitations on the ability of UOB or
Ameribank effectively to consummate the Merger; or (2) have the effect of
rendering the Merger violate of any applicable law.
SECTION 7.2. Conditions To The Obligation of Ameribank. The
obligation of Ameribank to consummate the Merger is subject to the satisfaction
or waiver of the following further conditions: (a) UOB shall have performed in
all material respects all of its obligations hereunder required to be performed
by it at or prior to the Effective Time; (b) the representations and warranties
of UOB contained in this Agreement and in any certificate or other writing
delivered by UOB pursuant hereto shall be true in all material respects at and
as of the Effective Time as if made at and as of such time; (c) receipt by
Ameribank of a certificate signed by an executive officer of UOB to the effect
set forth in paragraphs (a) and (b) of this Section; (d) the holders (except
for Ameribank and its affiliates) of not more than 12% of the outstanding
shares of Common Stock shall have exercised their appraisal rights in the
Merger in accordance with Oklahoma Law; (e) there has been no material adverse
change in the business, assets, financial condition, or prospects of UOB; and
(f) no action or proceeding shall have been commenced or threatened for the
purpose of obtaining an injunction, order or damages before any court or
governmental agency or other regulatory or administrative agency or commission,
domestic or foreign, which Ameribank shall on
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advice of counsel, reasonably determine would (1) result in the imposition of
material limitations on the ability of UOB or Ameribank effectively to
consummate the Merger; (2) have the effect of rendering the Merger violative of
any applicable law; or (3) have a material adverse effect on the business,
assets or financial condition of the Surviving Corporation, which event is not
within the reasonable control of Ameribank.
ARTICLE VIII
TERMINATION
SECTION 8 Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time: (a) by
mutual written consent of UOB and Ameribank after approval of their respective
Board of Directors; (b) at any time by Ameribank if there has been a material
adverse change in the business, assets, financial condition or prospects of
UOB; or (c) by either UOB or Ameribank after approval of the Board of Directors
of UOB or Ameribank, as the case may be, if the Merger has not been consummated
on or before April 1, 1997; PROVIDED, HOWEVER, that neither party may terminate
this Agreement pursuant to this Section 8 if the failure of such party to
fulfill any of its obligations under this Agreement shall have been the reason
that the Merger shall not have been consummated on or before said date.
SECTION 8.1. Effect of Termination. If this Agreement is
terminated pursuant to Section 8, this Agreement shall become void and of no
effect with no liability on the party of any party hereto.
ARTICLE IX
MISCELLANEOUS
SECTION 9. General Matters.
SECTION 9.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given:
if to UOB to:
United Oklahoma Bankshares, Inc.
4600 S.E. 29th Street
Del City, Oklahoma 73115
Attn: Claude Rappaport, Chairman Special Committee
if to Ameribank to:
Ameribank Corporation
c/o D. Wesley Schubert
201 N. Broadway
Shawnee, OK 74801
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or such other address or facsimile number as such party may hereafter specify
by notice to the other party hereto. Each such notice, request or other
communication shall be effective (a) if given by facsimile, which such
facsimile is transmitted to the facsimile number specified in this Section and
the appropriate confirmation is provided, (b) if given via United States mail,
three days after such notice is deposited in the mail in a postage prepaid
envelope, or (c) if given by any other means, when delivered at the address
specified in this Section.
SECTION 9.2. Survival. None of the representations,
warranties, agreements or covenants contained herein shall survive the
Effective Time except for the agreements contained in Sections 1.2, 1.3, 1.4,
1.5, 1.6, 1.7, 1.8, 5.4 and 6.3.
SECTION 9.3. Amendment. Subject to applicable law, any
provision of this Agreement may be amended by the parties hereto, by action of
each of their respective Board of Directors or by their respective officers
duly authorized by such Board of Directors, at any time prior to the Effective
Time. Any amendment to this Agreement shall be in writing signed by all the
parties hereto.
SECTION 9.4. Waiver. At any time prior to the Effective
Time, Ameribank on the one hand, and UOB on the other hand, may (a) extend the
time for the performance of any agreement of the other party or parties hereto,
(b) waive any accuracy in the representations and warranties contained herein
or in any document delivered pursuant hereto, or (c) waive compliance with any
agreement or condition contained herein; PROVIDED, HOWEVER, that if such waiver
would have the same effect as any decrease of the amount or change in the type
of the Total Consideration or any amendment to Article VII, Article VIII or
Section 9.3 hereof, such waiver shall also be approved by the respective Board
of Directors of each of UOB and Ameribank. Any agreement on the part of any
party to any such extension or waiver shall be effective only if set forth in a
writing signed on behalf of such party and delivered to the other parties. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 9.5. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; PROVIDED, HOWEVER, that no party
may assign or otherwise transfer any of its rights under this Agreement without
the consent of the other parties hereto.
SECTION 9.6. Governing Law. This Agreement shall be
construed in accordance with and governed by the internal laws of the State of
Oklahoma without regard to principles of conflict of laws.
SECTION 9.7. Integration. This Agreement embodies the entire
agreement and understanding among the parties hereto and supersedes all prior
agreements and understandings relating to the subject matter hereof.
<PAGE> 69
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SECTION 9.8. Headings and References. The headings of the
Articles and Sections of this Agreement are inserted for convenience only and
shall not constitute a part hereof.
SECTION 9.9. Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by the other party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
UNITED OKLAHOMA BANKSHARES, INC.
By: /s/ GEORGE N. COOK, JR.
Name: George N. Cook, Jr.
Title: Chairman
AMERIBANK CORPORATION
By: /s/ D. WESLEY SCHUBERT
Name: D. Wesley Schubert
Title: Vice-President
<PAGE> 70
-68-
ANNEX B
TITLE 18, OKLAHOMA STATUTES [CORPORATIONS]
CHAPTER 22. - GENERAL CORPORATION ACT
Section 1091. APPRAISAL RIGHTS.
Eff. Sept. 1, 1990.
A. Any shareholder of a corporation of this state who holds
shares of stock on the date of the making of a demand pursuant to the
provisions of subsection D of this section with respect to such shares, who
continuously holds such shares through the effective date of the merger or
consolidation, who has otherwise complied with the provisions of subsection D
of this section and who has neither voted in favor of the merger or
consolidation nor consented thereto in writing pursuant to the provisions of
Section 1073 of this title shall be entitled to an appraisal by the district
court of the fair value of his shares of stock under the circumstances
described in subsections B and C of this section. As used in this section, the
word "shareholder" means a holder of record of stock in a stock corporation and
also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation. The
provisions of this subsection shall be effective only with respect to mergers
or consolidations consummated pursuant to an agreement of merger or
consolidation entered into after November 1, 1988.
B. 1. Except as otherwise provided for in this subsection,
appraisal rights shall be available for the shares of any
class or series of stock of a constituent corporation in a
merger or consolidation, or of the acquired corporation in a
share acquisition, to be effected pursuant to the provisions
of Sections 1081, 1082, 1086, 1087, or 1091.1 [PROBABLY SHOULD
BE 1090.1] of this title or Section 12 of this act [12 O.S.
Section 1090.2].
2. a. No appraisal rights under this section shall
be available for the shares of any class or series of
stock which, at the record date fixed to determine
the shareholders entitled to receive notice of and to
vote at the meeting of shareholders to act upon the
agreement of merger or consolidation, were either:
(1) listed on a national securities exchange; or
(2) held of record by more than two thousand
shareholders.
b. In addition, no appraisal rights shall be
available for any shares of stock of the constituent
corporation surviving a merger if the merger did not
require for its approval the vote of the shareholders
of the surviving corporation as provided for in
subsection F of Section 1081 of this title.
<PAGE> 71
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3. Notwithstanding the provisions of paragraph 2 of this
subsection, appraisal rights provided for in this section
shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are
required by the terms of an agreement of merger or
consolidation pursuant to the provisions of Sections 1081,
1082, 1086 or 1087 of this title to accept for such stock
anything except:
a. shares of stock of the corporation surviving
or resulting from such merger or consolidation; or
b. shares of stock of any other corporation
which at the effective date of the merger or
consolidation will be either listed on a national
securities exchange or held of record by more than
two thousand shareholders; or
c. cash in lieu of fractional shares of the
corporations described in subparagraphs a and b of
this paragraph; or
d. any combination of the shares of stock and
cash in lieu of the fractional shares described in
subparagraphs a, b and c of this paragraph.
4. In the event all of the stock of a subsidiary
Oklahoma corporation party to a merger effected pursuant to
the provisions of Section 1083 of this title is not owned by
the parent corporation immediately prior to the merger,
appraisal rights shall be available for the shares of the
subsidiary Oklahoma corporation.
C. Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be available for
the shares of any class or series of its stock as a result of an amendment to
its certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or substantially
all of the assets of the corporation. If the certificate of incorporation
contains such a provision, the procedures of this section, including those set
forth in subsections D and E of this section, shall apply as nearly as is
practicable.
D. Appraisal rights shall be perfected as follows:
1. If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of shareholders, the
corporation, not less than twenty (20) days prior to the
meeting, shall notify each of its shareholders entitled to
such appraisal rights that appraisal rights are available for
any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each
shareholder electing to demand the appraisal of the shares of
the shareholder shall deliver to the corporation, before the
taking of the vote on the merger or consolidation, a written
demand for appraisal of the shares of the shareholder. Such
demand will be sufficient if it reasonably informs the
corporation of the identity of the shareholder and that the
shareholder intends thereby to demand the appraisal of the
shares of the shareholder. A proxy or vote
<PAGE> 72
-70-
against the merger or consolidation shall not constitute such
a demand. A shareholder electing to take such action must do
so by a separate written demand as herein provided. Within ten
(10) days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall
notify each shareholder of each constituent corporation who
has complied with the provisions of this subsection and has
not voted in favor of or consented to the merger or
consolidation as of the date that the merger or consolidation
has become effective; or
2. If the merger or consolidation was approved pursuant
to the provisions of Section 1073 or 1083 of this title, the
surviving or resulting corporation, either before the
effective date of the merger or consolidation or within ten
(10) days thereafter, shall' notify each of the shareholders
entitled to appraisal rights of the effective date of the
merger or consolidation and that appraisal rights are
available for any or all of the shares of the constituent
corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered
mail, return receipt requested, addressed to the shareholder
at the address of the shareholder as it appears on the records
of the corporation. Any shareholder entitled to appraisal
rights may, within twenty (20) days after the date of mailing
of the notice, demand in writing from the surviving or
resulting corporation the appraisal of the shares of the
shareholder. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the shareholder and
that the shareholder intends to demand the appraisal of the
shares of the shareholder.
E. Within one hundred twenty (120) days after the effective date
of the merger or consolidation, the surviving or resulting corporation or any
shareholder who has complied with the provisions of subsections A and D of this
section and who is otherwise entitled to appraisal rights, may file a petition
in district court demanding a determination of the value of the stock of all
such shareholders. Provided, however, at any time within sixty (60) days after
the effective date of the merger or consolidation, any shareholder shall have
the right to withdraw the demand of the shareholder for appraisal and to accept
the terms offered upon the merger or consolidation. Within one hundred twenty
(120) days after the effective date of the merger or consolidation, any
shareholder who has complied with the requirements of subsections A and D of
this section, upon written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the consolidation a
statement setting forth the aggregate number of shares not voted in favor of
the merger or consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such shares. Such
written statement shall be mailed to the shareholder within ten (10) days after
the shareholder's written request for such a statement is received by the
surviving or resulting corporation or within ten (10) days after expiration of
the period for delivery of demands for appraisal pursuant to the provisions of
subsection D of this section, whichever is later.
F. Upon the filing of any such petition by a shareholder, service
of a copy thereof shall be made upon the surviving or resulting corporation,
which, within twenty (20) days after such service, shall file in the office of
the court clerk of the district court in which the petition was filed a duly
verified list containing the names and addresses of all shareholders who have
demanded
<PAGE> 73
-71-
payment for their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting corporation. If the
petition shall be filed by the surviving or resulting corporation, the petition
shall be accompanied by such a duly verified list. The court clerk, if so
ordered by the court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the shareholders shown on the list at the
addresses therein stated. Such notice shall also be given by one or more
publications at least one (1) week before the day of the hearing, in a
newspaper of general circulation published in the City of Oklahoma City,
Oklahoma, or such publication as the court deems advisable. The forms of the
notices by mail and by publication shall be approved by the court, and the
costs thereof shall be borne by the surviving or resulting corporation.
G. At the hearing on such petition, the court shall determine the
shareholders who have complied with the provisions of this section and who have
become entitled to appraisal rights. The court may require the shareholders
who have demanded an appraisal for their shares and who hold stock represented
by certificates to submit their certificates of stock to the court clerk for
notation thereon of the pendency of the appraisal proceedings; and if any
shareholder fails to comply with such direction, the court may dismiss the
proceedings as to such shareholder.
H. After determining the shareholders entitled to an appraisal,
the court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to be
paid upon the amount determined to be the fair value. In determining such fair
value, the court shall take into account all relevant factors. In determining
the fair rate of interest, the court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have to pay to borrow money during the pendency of the proceeding. Upon
application by the surviving or resulting corporation or by any shareholder
entitled to participate in the appraisal proceeding, the court may, in its
discretion, permit discovery or other pretrial proceedings and may proceed to
trial upon the appraisal prior to the final determination of the shareholder
entitled to an appraisal. Any shareholder whose name appears on the list filed
by the surviving or resulting corporation pursuant to the provisions of
subsection F of this section and who has submitted the certificates of stock of
the shareholder to the court clerk, if such is required, may participate fully
in all proceedings until it is finally determined that the shareholder is not
entitled to appraisal rights pursuant to the provisions of this section.
I. The court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the shareholders entitled thereto. Interest may be simple or
compound, as the court may direct. Payment shall be so made to each such
shareholder, in the case of holders of uncertificated stock immediately, and in
the case of holders of shares represented by certificates upon the surrender to
the corporation of the certificates representing such stock. The court's
decree may be enforced as other decrees in the district court may be enforced,
whether such surviving or resulting corporation be a corporation of this state
or of any other state.
J. The costs of the proceeding may be determined by the court and
taxed upon the parties as the court deems equitable in the circumstances. Upon
application of a shareholder, the
<PAGE> 74
-72-
court may order all or a portion of the expenses incurred by any shareholder in
connection with the appraisal proceeding, including, without limitation,
reasonable attorney's fees and the fees and expenses of experts, to be charged
pro rata against the value of all of the shares entitled to an appraisal.
K. From and after the effective date of the merger or
consolidation, no shareholder who has demanded the appraisal rights of the
shareholder as provided for in subsection D of this section shall be entitled
to vote such stock for any purpose or to receive payment of dividends or other
distributions on the stock, except dividends or other distributions payable to
shareholders of record at a date which is prior to the effective date of the
merger or consolidation; provided, however, that if no petition for an
appraisal shall be filed within the time provided for in subsection E of this
section, or if such shareholder shall deliver to the surviving or resulting
corporation a written withdrawal of the shareholder's demand for an appraisal
and an acceptance of the merger or consolidation, either within sixty (60) days
after the effective date of the merger or consolidation as provided for in
subsection E of this section or thereafter with the written approval of the
corporation, then the right of such shareholder to an appraisal shall cease.
Provided, however, no appraisal proceeding in the district court shall be
dismissed as to any shareholder without the approval of the court, and such
approval may be conditioned upon such terms as the court deems just.
L. The shares of the surviving or resulting corporation into
which the shares of such objecting shareholders would have been converted had
they assented to the merger or consolidation shall have the status of
authorized and unissued shares of the surviving or resulting corporation.
<PAGE> 75
-73-
ANNEX C
GEORGE K. BAUM & COMPANY
Investment Bankers
Member Twelve Wyandotte Plaza
New York Stock Exchange, Inc. 120 West 12th Street
Kansas City, Missouri 64105
Chicago Stock Exchange, Inc. Telephone (816) 474-1100
October 25, 1996
Special Committee of the Board
United Oklahoma Bankshares, Inc.
c/o Mr. Claude Rappaport
Chairman, Special Committee of the Board
1506 Bedford Drive
Oklahoma City, OK 73116
Dear Gentlemen:
You have asked us to render our opinion as to the fairness, from a
financial point of view, to the proposed cash out merger offer of $1,300,000 by
Ameribank Corporation ("Ameribank") for all the remaining Preferred Stock
("Preferred") (approximately 11.16%) and Common Stock ("Common") (approximately
38.42%) and of United Oklahoma Bankshares, Inc. (the "Company") not presently
owned by Ameribank.
Our approach as to the fairness of the Ameribank offer was to look at
each of the equity pieces separately, for pricing purposes. This was done to
see what was "FAIR" for each security.
To find the value of the Preferred, two methods of value were used (1)
liquidation and (2) discounted cash flow at various discount rates. The
liquidation method places the highest value of the two methods on the
Preferred. As of the June 30, 1996 balance sheet shown in the Form 10-Q filed
with the Securities and Exchange Commission ("SEC"), the liquidation value of
the Preferred would be $58.35. The $58.35 value per share of Preferred is fair
from a financial point of view. This would aggregate to approximately $946,000
for all Preferred not presently owned by Ameribank.
To find the value of the Common, two methods of value were used (1)
(a) liquidation based on book value and (b) liquidation based on the entity
market value and (2) discounted cash flow at various discount rates.
The discounted cash flow is a little more complicated because of the
"rights" of the preferred and the preferred stock's cumulative dividends.
These are the following assumptions used for the discounted cash flow Common
value:
<PAGE> 76
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(1) The Common does not have any dividend payments for 44 quarters
or 11 years;
(2) The net interest spread used is based on 1995 and 1996 (10-K
1995, page 32) and is 4.45% with provision for loan losses at
0.45% of the prior year's loan portfolio. This produces an
average spread on average interest earning assets of
approximately 4.64%;
(3) Interest income grows at approximately 6.95% from the 1995
base;
(4) Income tax rate of 25.00% based on 1994 and 1995;
(5) Net after-tax income grows at approximately 6.50% from the
1995 base;
(6) In the year 2006, the earnings are projected to be $1,811,000
after tax. This gives the Company an equity value of
$24,445,000 based on a multiple of 13.5 times. From this
number we need to subtract the Preferred redemption of
$8,473,000 for a net of $15,972,000 for the Common, which when
discounted back over the period at the differing rates
produces the following values:
<TABLE>
<CAPTION>
DISCOUNT RATE VALUE PER COMMON SHARE TOTAL COST TO REDEEM
------------- ---------------------- ---------------------
<S> <C> <C>
25.00% $ 0.542 $ 530,000
22.50% 0.677 660,000
20.00% 0.849 825,000
17.50% 1.070 1,040,000
</TABLE>
Our conclusion as to the Common value exists in the above range. The
liquidation value based on book value is negative while the
liquidation value based on the entity market value places the value of
the Common in the range shown above.
We find support for the above pricing based on (1) The SNL Pink
Quarterly "Pink Sheet" and OTC-BB traded Banks and Thrifts dated
September 1996 produced by SNL Securities on a quarterly basis; and
(2) OTC Time & Sales Report: 1/1/94 - 9/20/96on the Company's common
stock produced by Nasdaq Trading & Market Services. The Nasdaq
information shows no sale in excess of 9/16 or 56.25c. per share and
the last trade on 8/6/96 was at 1/4 or 25c. for 1,399 shares. The
first trade listed as of 1/21/94 shows a price of $29.125 per share
for 2,500 shares. We called Nasdaq but were told that was the
information they had and there was no way to verify it. We assume
that price is not correct.
Using the liquidation value based on the entity market value as well
as discounted cash flow, a value of $0.75 per share of Common is fair
from a financial point of view. This would aggregate to approximately
$730,000 for all Common not presently owned by Ameribank.
<PAGE> 77
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Based on information supplied by Ameribank, they placed a total entity
value range on the Company of $10,382,000 on the high side and $10,216,973 on
the low side. Ameribank placed a value of $58.35 for each Preferred share and
$0.754 for each Common share. These per share values would put the following
total costs on the non-Ameribank owned shares:
16,205 preferred shares @ $58.35 = $ 945,562
972,903 common shares @ $0.754 = 733,569
Total value for non-Ameribank equity = $1,679,131
We find Ameribank's overall value for the Company and each equity
piece to be fair from a financial point of view. Our understanding is that,
according to the legal counsel for the Special Committee of the Board of
Directors of the Company, Mr. Irwin H. Steinhorn, no discounts of any nature
may be applied to a cash out merger such as that proposed by Ameribank.
You can reach me at 816-283-5280.
Respectfully submitted,
GEORGE K. BAUM & COMPANY
<PAGE> 78
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ANNEX D
GEORGE K. BAUM & COMPANY
Investment Bankers
Member Twelve Wyandotte Plaza
New York Stock Exchange, Inc. 120 West 12th Street
Chicago Stock Exchange, Inc. Kansas City, Missouri 64105
January 23, 1997 Telephone (816) 474-1100
Special Committee of the Board
United Oklahoma Bankshares, Inc.
c/o Mr. Claude Rappaport
Chairman, Special Committee of the Board
1506 Bedford Drive
Oklahoma City, OK 73116
Dear Gentlemen:
You have asked us to render our opinion as to the fairness,
from a financial point of view, to the proposed cash out merger offer of
$1,700,000 by Ameribank Corporation ("Ameribank") for all the remaining
Preferred Stock ("Preferred") (approximately 11.16%) at $58.35 per share and
Common stock ("Common") (approximately 38.42%) at approximately $0.776 per
share of United Oklahoma Bankshares, Inc. (the "Company") not presently owned
by Ameribank.
We issued such a letter, dated October 25, 1996, based on the
information that had been requested and supplied to us. Information requested
and supplied to us at that date had indicated that the highest price Ameribank
had paid for the Preferred was $18.00. On January 17, 1997, we were informed
by the information in the Form 4 filings with the U.S. Securities and Exchange
Commission that Ameribank had purchased Preferred shares at prices higher than
$18.00, prior to October 25, 1996, (the highest price was $49.50 per share).
Some of these purchases were done with agreements that, for one year from the
date of purchase, Ameribank would pay these sellers the same price, if higher,
that Ameribank paid for the remaining Preferred that Ameribank did not own at
the time of those purchases.
With this additional Preferred pricing information considered,
we still find Ameribank's overall offer for the Company and each equity price
to be fair from a financial point of view as set forth in our letter dated
October 25, 1996.
Respectfully Submitted,
GEORGE K. BAUM & COMPANY
<PAGE> 79
UNITED OKLAHOMA BANKSHARES, INC.
PROXY OF SPECIAL MEETING OF SHAREHOLDERS
_________, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned holder(s) of stock of United Oklahoma Bankshares,
Inc. an Oklahoma corporation, does hereby constitute and appoint George N.
Cook, Jr. and J. Michael Adcock as true and lawful attorneys and proxies for
the undersigned, each with full power of substitution and revocation, to vote
for and in the name, place and stead of the undersigned at the Special Meeting
of Stockholders of the Company to be held at 4600 S.E. 29th Street, Del City,
Oklahoma, 73115 on _____________, 1997, at __________ p.m., and any adjournment
thereof, all of the stock of the Company which the undersigned would be
entitled to vote if then personally present, hereby revoking any Proxy
heretofore given.
This Proxy will confer discretionary authority to vote upon matters
incidental to the conduct of the meeting and matters not known to management
prior to the date of the Proxy Statement, which are properly presented to the
meeting.
1. To Approve and Adopt the Agreement and Plan of Merger dated as of
December 3, 1996, (the "Merger Agreement") between the Company and
Ameribank Corporation as described in the Proxy Statement.
______For
______Against
______Abstain
2. To empower and authorize the offices of the Company to perform such
acts and sign and deliver such documents as they may deem reasonable
or necessary to carry out the Merger and other transactions as
described in the Proxy Statement.
______For
______Against
______Abstain
3. To transact such other business that may properly come before the
Special Meeting or any adjournment thereof.
______For
______Against
______Abstain
<PAGE> 80
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE MERGER.
This Proxy may be revoked at any time before the authority granted
therein is exercised; otherwise, it shall remain in full force and effect.
Proxies may be revoked by filing with the Secretary of the Company written
notice of revocation bearing a later date than the proxy, by duly executing and
delivering to the Secretary of the Company, at or prior to the Special Meeting,
a subsequent proxy relating to the same shares of Stock, or by attending the
Special Meeting and voting in person (although attendance at the Special
Meeting will not, by itself, constitute a revocation of proxy). Any written
notice revoking a proxy should be sent to United Oklahoma Bankshares, Inc.,
4600 S.E. 29th Street, Del City, Oklahoma 73115.
IN WITNESS WHEREOF the undersigned has executed this Proxy on the _____
day of _______, 1997. Number of Shares of Common Stock Signature
- ----------------------------------- -----------------------------------
Number of Shares of Preferred Stock Signature
- ----------------------------------- -----------------------------------
Number of Shares of Preferred Stock Signature if held Jointly
Please sign your name(s) exactly as it appears on your stock
certificate and return this Proxy promptly to save the Company additional
mailing expense. Executors, administrators, trustees, guardians and others
signing in a representative capacity please give their full titles. When
shares are held by joint tenants both should sign. If a corporation, please
sign full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
<PAGE> 1
-17-
EXHIBIT 99(a)
PROMISSORY NOTE
(REVOLVING)
$2,700,000.00
The undersigned ("Borrower") promises to pay to the order of Boatmen's First
National Bank of Kansas City, ("Bank") at Bank's address at 14 West 10th
Street, Kansas City, Missouri, 64105, or such other address as the holder
hereof may designate, the principal sum of Two Million Seven Hundred Thousand
and no/100 Dollars ($2,700,000) ("Credit Limit"), or so much thereof as has
been advanced by Bank and is outstanding, plus interest thereon as required
below. Interest shall accrue on the outstanding principal balance of this Note
at the rate specified by the checked block below (unchecked blocks do not
apply):
[ ] _______________________ percent (______$) per annum.
[ ] The Reference Rate described below which may change, without
notice, from time to time.
[ X ] That rate per annum which is 050/1000 (0.050) percentage
points LESS THAN the Reference Rate described below. Such
rate shall change, without notice, simultaneously with each
change in the Reference Rate.
After maturity, whether upon the lapse of time or by acceleration, all past due
principal, and interest to the extent permitted by law, shall bear interest
until paid at the same rate as would be applicable if it was before maturity,
plus 3.000%. All interest shall be calculated on the basis of the days
actually elapsed over a year deemed to consist of 360 days.
The "Reference Rate" is the rate described after the check block below:
[ X ] The Corporate Rate ("CBR") as established by Bank from time to
time.
[ ]
-----------------------------------------------
-----------------------------------------------
-----------------------------------------------.
The Reference Rate is not necessarily the lowest rate charged by Bank on its
loans.
Notwithstanding anything to the contrary contained in this Note, the rate of
interest payable under this Note shall not exceed the maximum amount Bank
lawfully may charge. If Bank receives anything of value deemed interest under
applicable law which would exceed the maximum amount of interest permissible
under applicable law, or if application of any variable rate, use of a 360-day
year or any other circumstances, including acceleration, prepayment, or demand,
would cause the effective interest rate under this Note to exceed such maximum
rate, then the interest rate under this Note shall be deemed reduced to such
maximum rate, and the excessive interest shall, at the option of Bank, be
applied to the reduction of the outstanding principal balance under this Note
or refunded to Borrower.
<PAGE> 2
-18-
The entire outstanding principal balance and all accrued interest thereon shall
be due and payable on May 15, 1997 ("Final Maturity").
Until Final Maturity, Borrower shall make payments as follows:
Interest only in QUARTERLY installments, commencing on August 15,
1996, and continuing QUARTERLY thereafter, with the unpaid principal
balance and all interest accrued thereon being due and payable in full
on May 15, 1997.
In the event that the rate of interest payable under this Note increases as a
result of an increase in the Reference Rate to which the interest rate is
linked and such increase causes the amount of interest due and payable on any
scheduled payment date to be in excess of the scheduled payment set forth
above, then, in that event, the amount of interest in excess of the scheduled
payment shall also be due and payable in addition to the scheduled payment.
Until Final Maturity, Bank may in its sole discretion make advances as
requested by Borrower from time to time, including advances that are
reborrowings of principal previously paid by Borrower on this Note; provided
however, that no advances will be made if doing so results in there being a
principal balance outstanding greater than the Credit Limit.
The date and amount of each advance and all receipts of principal and interest
with respect to this Note shall be recorded by Bank in the records it maintains
with respect thereto (Bank's records may, but need not, include the grid record
on the back of this Note). The failure to record, or any error in recording,
any of the foregoing shall not, however, affect the obligations of Borrower
under this Note to repay the entire outstanding principal amount advanced and
all interest accrued thereon. Such record as maintained by Bank shall
constitute prima facie evidence of the amount outstanding under this Note.
This Note is secured by the SECURITY AGREEMENT dated May 15, 1995.
There may be other security and Borrower acknowledges that omitting to list it
here shall not constitute a waiver or abandonment thereof. The holder of this
Note, in addition to any other rights the holder may have, shall have the right
to offset against amounts due under this Note all deposits, funds, securities,
and other property of Borrower in the possession of the holder.
If Borrower does not pay any principal or interest when due hereunder, or if
Borrower or any other party defaults under or otherwise fails to perform or pay
any covenant or obligation in any agreement that secures this Note or has been
executed and delivered to the holder hereof in connection with the indebtedness
evidenced by this Note, the holder hereof may declare all principal and unpaid
accrued interest to be immediately due and payable. Failure to do so at any
time shall not constitute a waiver of the right of the holder hereof to do so
at any other time.
Borrower and all others who are or become parties to this Note, whether as
makers, endorsers, or guarantors, by becoming parties to this Note waive
presentment for payment, notice of dishonor, protest, notice of protest, and
all other notices and lack of diligence in the enforcement of this Note. Every
such party by becoming a party to this Note assents to each and every extension
or postponement of the time of payment or other indulgence by the holder of
this Note, whenever made, and waives notice thereof. Every such party by
becoming a party to this Note further waives any and all defenses which such
party
<PAGE> 3
-19-
may have based on suretyship or impairment of collateral with respect to this
Note.
If this Note is not paid strictly according to its terms, Borrower shall (to
the extent permitted by law) pay all costs of collection, including but not
limited to court costs and attorney's fees and expenses (whether or not there
is litigation), and all costs of the holder hereof incurred in connection with
any proceedings affecting this Note under the United States Bankruptcy Code.
Borrower agrees that it will use the proceeds of this Note for business
purposes (other than agricultural purposes) only, and not for personal, family
or household purposes.
This Note shall be governed by the law of the state of Bank's Address without
regard to choice or conflict of laws rules.
IF THERE IS MORE THAN ONE UNDERSIGNED AS BORROWER, ALL REFERENCES HEREIN TO
"BORROWER" REFER TO ALL OF THE UNDERSIGNED AND TO EACH OF THEM, AND THEIR
OBLIGATIONS HEREUNDER ARE JOINT AND SEVERAL.
EXECUTED May 15, 1996
AMERIBANK CORPORATION
By: /s/ D. WESLEY SCHUBERT
---------------------------
Name: D. WESLEY SCHUBERT
Title: Vice-President
Borrower's Notice Address and
Telephone Number:
P.O. BOX 1089
SHAWNEE, OK 74802-1089
Telephone: ______________
<PAGE> 4
-20-
AGREEMENT
This Agreement is made this 15th day of May, 1996, between Ameribank
Corporation, Shawnee, Oklahoma, an Oklahoma Corporation (the "Borrower"), and
American National Bank & Trust Company, of Oklahoma, an Oklahoma Corporation
(the "Subsidiary Bank"), and Boatmen's First National Bank of Kansas City (the
"Bank"), having its principal office at 14 West 10th Street, Kansas City,
Missouri.
Subject to the Terms and conditions of this Agreement and the Note and
Security Agreement issued hereunder, the Bank agrees to extend credit to the
Borrower in an amount not to exceed Two Million Seven Hundred Thousand and
00/100 dollars ($2,700,000).
1. Promissory Note. The loan to be made hereunder will be
evidenced by the Note, which will be payable on the following
terms:
1.1 Interest. The Note will bear interest on the balance
at the Corporate Base Rate of the Bank less .050
percentage points. The interest rate will change
daily. Interest will be payable commencing August
15, 1996, and quarterly thereafter.
1.2 Maturity. The entire unpaid balance of the Note and
all accrued interest will be due and payable ON
DEMAND, but no later than May 15, 1997.
1.3 It is the Bank's expectation that, if the Borrower
reduces the principal amount of the Note in the
amount of $300,000 on May 15, 1997, the Note will be
renewed from time to time on principally the same
terms and under the same conditions until the
Borrower's obligation is paid in full.
Notwithstanding the above, the Borrower understands
that should the Bank determine, in its absolute
discretion, that Borrower's credit standing is
unsatisfactory, the Note will not be renewed by the
Bank and must be paid in full.
2. Collateral Security. Payment of the Note will be secured by
a first pledge and security interest covering ninety-nine
thousand five hundred (99,500) shares of the capital stock of
American National Bank & Trust Company, Shawnee, Oklahoma the
Subsidiary Bank, as well as seven hundred two thousand two
hundred sixty-six (702,266) shares common and ninety-two
thousand seven hundred ninety (92,790) shares preferred of
United Oklahoma Bancshares.
3. Conditions of Lending. Until payment in full of the Note, the
Borrower agrees that, unless the Bank otherwise consents in
writing, the Borrower will perform or cause to be performed
the following:
3.1 Records. Accurate books and records of account will
be maintained by the Borrower and the Subsidiary Bank
in accordance with sound accounting practices
consistently applied, and the Bank and its designated
representatives will have the right to examine such
books and records, and to discuss the affairs,
finances, accounts, and content of such books and
records of the Borrower and the Subsidiary Bank.
<PAGE> 5
-21-
3.2 Financial Statements. Furnish within ninety (90)
days after the close of each fiscal year of the
Borrower, complete copies of the balance sheets as of
the close of such fiscal year and the profit and loss
statements and surplus reconciliations of the
Borrower for such fiscal year prepared in accordance
with sound accounting principles by accountants and
in form satisfactory to the Bank.
3.3 Reports. Furnish within thirty (30) days after each
filing thereof: (a) copies of the FRY-6 Annual
Report of the Borrower to the Federal Reserve System;
and (b) copies of all Consolidated Reports of
Condition and Consolidated Reports of Income and Call
Reports filed by the Subsidiary Bank with the
appropriate regulatory agency.
3.4 Other Information. Such information concerning the
Borrower and Subsidiary Bank ad the Bank might
reasonably request.
4. Adverse Change. The Borrower will immediately advise the Bank
of any requirement by the regulatory authorities for
additional capital in the Subsidiary Bank, or the institution
of any agreement, order, or proceeding between any regulatory
authority and the Borrower or Subsidiary Bank, whether or not
such agreement, order or proceeding is agreed to by the
Borrower or Subsidiary Bank. The Borrower will immediately
advise the Bank of any significant litigation or other matter
which might result in a material adverse change in the
financial condition of the Borrower or the Subsidiary Bank.
5. Change in Ownership. Any change in ownership of the
Borrower or any merger or consolidation with or into another
corporation or other disposition of property the Borrower,
without the prior written consent of the Bank, shall
constitute an event of default and upon such an occurrence the
bank may demand the entire obligation of the Borrower to be
immediately due and payable. Borrower agrees to immediately
notify bank of any such change in ownership; provided
however, this Section 5 shall not apply to any transfer of
ownership of Borrower from Don Bodard to George Cook, Wesley
D. Schubert, or J. Michael Adcock unless such transfer results
in a change of control of Borrower.
6. In the event additional capital shall be injected in
Subsidiary Bank, whether by capital note, stock or in other
form, such capital note, stock or other instrument shall be
immediately pledged to Bank.
7. If default shall be made in the due observance or performance
of any terms, covenants or agreements in this Agreement, the
Bank may demand the entire obligation of the Borrower to be
due and payable. No failure on the part of the bank to
exercise and no delay in exercising any right hereunder shall
operate as a waiver thereof.
8. This agreement and the rights and obligation of the parties
shall be governed by and interpreted in accordance with the
laws of the State of Missouri.
<PAGE> 6
-22-
9. THIS AGREEMENT IS THE FINAL EXPRESSION OF THE AGREEMENT
BETWEEN BOATMEN'S AND THE BORROWER(S) OR GUARANTOR(S), IF ANY.
THIS AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY
PRIOR ORAL AGREEMENT OR OF A CONTEMPORANEOUS ORAL AGREEMENT
BETWEEN THE PARTIES.
ALL OF TERMS OF THE FINAL AGREEMENT OF THE PARTIES NOT SET
FORTH ABOVE OR WHICH VARY ANY TERMS SET FORTH ABOVE, INCLUDING
ANY PREVIOUS ORAL AGREEMENTS ARE AS FOLLOWS:
No unwritten oral agreements between the parties exists.
IN WITNESS WHEREOF, the parties have executed and delivered this
agreement effective on the date first above written.
AMERIBANK CORPORATION
"Borrower"
By: /s/ D. WESLEY SCHUBERT
------------------------
D. WESLEY SCHUBERT
Vice-President
AMERICAN NATIONAL BANK & TRUST
OF SHAWNEE, OKLAHOMA
"Subsidiary Bank"
By: /s/ GEORGE N. COOK, JR.
-----------------------
GEORGE N. COOK, JR.
President and CEO
BOATMEN'S FIRST NATIONAL BANK
OF KANSAS CITY
"Bank"
By: /s/ PAUL L. RICHMOND
-----------------------
PAUL L. RICHMOND
Vice-President
<PAGE> 1
EXHIBIT 99(d)(8)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 3, 1996
--------------------------------
United Oklahoma Bankshares, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Oklahoma 0-12047 73-0969432
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
4600 S.E. 29th Street, Del City, Oklahoma 73115
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (405) 677-8711
------------------------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
Item 5. OTHER EVENTS
Based upon the recommendation of the Special Committee of the Board of
Directors of United Oklahoma Bankshares, Inc. ("United"), the Board of
Directors of United approved the execution by the Company of a definitive
agreement, dated December 3, 1996, for the merger of United into Ameribank
Corporation ("Ameribank"). The merger is subject to the approval of the common
and preferred stockholders of United, each voting as a class, and, if required,
the preparation of all necessary filings and approvals with state and federal
regulatory authorities. The obligations of United and Ameribank to consummate
the Merger are subject to compliance with other customary covenants and
conditions. The obligation of Ameribank to proceed with the Merger is also
specifically subject to the condition that holders of not more than 12% of the
outstanding shares of Common Stock shall have exercised their appraisal rights
in the Merger in accordance with the provision of the Oklahoma General
Corporation Act.
Upon consummation of the merger, United will be merged into Ameribank,
with Ameribank being the surviving corporation. The Merger Agreement provides
that Ameribank will pay to stockholders of United (other than Ameribank) the
aggregate sum of $1,700,000 as consideration for the merger. Preferred
stockholders (other than Ameribank) will receive $58.35 per share for each
share of 9% Cumulative NonVoting Preferred Stock, par value $30.00 per share,
held by them. Common stockholders will
<PAGE> 2
receive $0.776901 per share (rounded to the nearest $0.01) for each share of
common stock, par value $1.00 per share, held by them. Ameribank will not
receive any of the merger consideration.
The Special Committee is comprised of two members of the Board of
Directors of United who do not have any financial or personal interest in
Ameribank and who are not officers, directors, employees or stockholders of
Ameribank. The Special Committee's financial advisor has advised the Special
Committee that it believes the consideration in these amounts to be received by
the non-Ameribank stockholders is fair from a financial point of view.
United will, as a result of the Merger, become a privately held company
and the registration of its Common Stock under the Exchange Act of 1934, as
amended will terminate.
The merger is expected to close during the first quarter of 1997.
As of the date of this report, Ameribank owns approximately 61.58% and
88.85% of the outstanding Common and Preferred Stock of United, respectively.
Ameribank is a privately held bank holding company registered under the Bank
Holding Company Act and primarily engaged, through its banking subsidiary,
American National Bank and Trust Company of Shawnee, Oklahoma, in providing a
full range of traditional banking and related financial services to the
commercial, consumer, energy, real estate, agriculture and financial sectors,
principally in the State of Oklahoma.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
United Oklahoma Bankshares, Inc.
Registrant
Date December 12, 1996 /s/ George N. Cook, Jr.
----------------- ------------------------------------
Chairman of the Board
