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)
June 11, 1998
EXCHANGE BANCSHARES, INC.
(Exact name of Registrant as specified in its Charter)
Ohio 033-54566 34-1721453
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification Number)
237 Main Street, Luckey, Ohio 43443
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (419) 833-3401
N/A
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets
On June 11, 1998, Exchange Bancshares, Inc., Luckey, Ohio (the
"Company") entered into a definitive agreement with Towne Bancorp,
Inc., an Ohio corporation located in Perrysburg, Ohio ("Towne
Bancorp"), and Towne Bank, a wholly-owned subsidiary of Towne
Bancorp, pursuant to which the Company agreed to purchase 1,000,000
shares of original issue common stock of Towne Bank for an aggregate
purchase price of $2,000,000 (the "Agreement"). On June 19, 1998,
the parties entered into a Merger Agreement whereby Towne Bank would
merge with and into The Exchange Bank, the wholly-owned subsidiary
bank of the Company, with The Exchange Bank being the surviving bank
in the merger (the "Merger"). Cash consideration for the Merger was
paid to Towne Bancorp in exchange for the remaining common stock of
Towne Bank held by Towne Bancorp. The cash consideration paid to
Towne Bancorp pursuant to the Merger Agreement consisted of $1.5
million to be adjusted upward or downward on a dollar for dollar
basis based upon the amount of capital in Towne Bank's capital
account that was greater than or less than $1,000,000 at the Closing
of the transaction, with a minimum purchase price of $1,000,000.
The actual cash consideration paid to Towne Bancorp at the Closing
was $1,100,560, of which 25% was held back by the Company in an
escrow account for a period of 6 months from Closing against which
the Company may collect for any breaches of the representations,
warranties and covenants given by Towne Bancorp and Towne Bank in
the Agreement. The transactions contemplated by both the Agreement
and by the Merger were consummated on June 19, 1998.
Concurrently, on June 18, 1998, The Exchange Bank purchased the two
parcels of real estate that contained the main office and the one
branch of Towne Bank in Perrysburg and Sylvania, Ohio, respectively.
Exchange Bancshares, Inc. and Ms. Carol Haas entered into a real
estate purchase agreement on May 19, 1998 whereby the Company or its
subsidiary would purchase the two parcels for $2,550,000, contingent
upon the consummation of the transactions contemplated by the
Agreement and the Merger Agreement. The purchase was closed into
escrow on June 18, 1998, and the funds were released on June 19,
1998 upon the consummation of the Agreement and Merger Agreement.
The Exchange Bank is an Ohio state-chartered bank which, prior to
the transaction described herein, operated from its main office in
Luckey, Ohio and through two branches located in Holland and
Walbridge, Ohio.
Item 7. Financial Statements and Exhibits
(a) Financial Statements
The financial statements of Towne Bank for the year ended December
31, 1997 and for the quarter ended March 31, 1998 included in the
consolidated financial statements of Towne Bancorp, Inc. are hereby
incorporated by reference from the Towne Bancorp, Inc. Annual Report
on Form 10-KSB for the year ended December 31, 1997 and the
Quarterly Report on Form 10-QSB for the quarter ended March 31,
1998.
<PAGE>
(b) Pro Forma Financial Information
<TABLE>
<CAPTION>
(Dollars in Thousands)
December 31, 1997 Exchange Towne Pro forma Pro forma
Bancshares, Inc. Bank Adjustments Combined
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
ASSETS
Cash and Due From Banks 2,266 1,014 3,280
Federal Funds Sold 3,926 3,142 (2,502) 4,566
Available-for-Sale Securities 16,362 999 17,361
Held-to-Maturity Securities 2,406 1,597 4,003
Total Investments 18,768 2,596 21,364
Gross Loans 46,872 13,857 60,729
Allowance for Loan Losses (624) (742) (1,366)
Net Loans 46,248 13,115 59,363
Premises & Equipment 844 87 931
Goodwill 500 500
Other Assets 743 300 1,043
Total Assets 72,795 20,254 91,047
LIABILITIES
Total Deposits 63,928 18,117 82,045
Borrowed Funds 198 198
Other Liabilities 226 130 356
Total Liabilities 64,352 18,247 82,599
Shareholders' Equity
Common Stock 2,498 1,600 (1,600) 2,498
Surplus 3,370 1,600 (1,600) 3,370
Undivided Profits 2,626 800 (800) 2,626
Treasury Stock (126) (126)
Income to Date (1,998) 1,998 0
Unrealized Gains/Losses-
Investments 75 5 80
Total Shareholders' Equity 8,443 2,007 8,448
Total Liabilities and
Shareholders' Equity 72,795 20,254 91,047
</TABLE>
<TABLE>
<CAPTION>
(Dollars in Thousands)
December 31, 1997 Exchange Towne Pro forma
Bancshares, Inc. Bank Combined
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
INTEREST INCOME
Loans 4,159 787 4,946
Investments 1,214 191 1,405
Federal Funds Sold 192 188 380
Total Interest Income 5,565 1,166 6,731
INTEREST EXPENSE 2,387 593 2,980
Net Interest Income 3,178 573 3,751
PROVISION FOR LOAN LOSSES 0 722 722
Net Interest Income after
provision for Loan Losses 3,178 (149) 3,029
NON-INTEREST INCOME
Service Charges on Deposits
Accounts 260 23 283
Gain on Sale of Securities 0 0
Other Operating Income 60 30 90
Total Non-Interest Income 320 53 373
NON-INTEREST EXPENSE
Salaries, wages & employee
benefits 1,112 441 1,553
Net occupancy expense 295 391 686
Other operating expense 881 528 1,409
Total Non-Interest Expense 2,288 1,360 3,648
Income/Loss before Federal
Income Taxes 1,210 (1,457) (246)
Provision for Federal Income
Taxes 375 0 375
Net Income 835 (1,457) (621)
</TABLE>
<TABLE>
<CAPTION>
(Dollars in Thousands)
March 31, 1998 Exchange Towne Pro forma Pro forma
Bancshares, Inc. Bank Adjustments Combined
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
ASSETS
Cash and Due From Banks 2,170 479 2,649
Federal Funds Sold 5,667 3,618 (2,023) 7,262
Available-for-Sale Securities 15,977 1,001 16,978
Held-to-Maturity Securities 1,757 1,397 3,154
Total Investments 17,734 2,398 20,132
Gross Loans 48,457 14,737 63,194
Allowance for Loan Losses (613) (644) (1,257)
Net Loans 47,844 14,093 61,937
Premises & Equipment 856 81 937
Goodwill 500 500
Other Assets 799 271 1,070
Total Assets 75,070 20,940 94,487
LIABILITIES
Total Deposits 65,917 19,348 85,265
Borrowed Funds 196 196
Other Liabilities 299 63 362
Total Liabilities 66,412 19,411 85,823
Shareholders' Equity
Common Stock 2,498 1,600 (1,600) 2,498
Surplus 3,370 1,600 (1,600) 3,370
Undivided Profits 2,834 800 (800) 2,834
Treasury Stock (126) (126)
Accumulated Deficit (2,477) 2,476 1
Unrealized Gains/Losses-
Investments 82 6 88
Total Shareholders' Equity 8,658 1,529 8,664
Total Liabilities and
Shareholders' Equity 75,070 20,940 94,487
</TABLE>
<TABLE>
<CAPTION>
(Dollars in Thousands)
March 31, 1998 Exchange Towne Pro forma
Bancshares, Inc. Bank Combined
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
INTEREST INCOME
Loans 1,110 320 1,430
Investments 267 38 305
Federal Funds Sold 59 49 108
Total Interest Income 1,436 407 1,843
INTEREST EXPENSE 626 242 868
Net Interest Income 810 165 975
PROVISION FOR LOAN LOSSES 0 333 333
Net Interest Income after
provision for Loan Losses 810 (168) 642
NON-INTEREST INCOME
Service Charges on Deposits
Accounts 62 18 80
Gain on Sale of Securities 0
Other Operating Income 18 25 43
Total Non-Interest Income 80 43 123
NON-INTEREST EXPENSE
Salaries, wages & employee
benefits 277 107 384
Net occupancy expense 39 93 132
Other operating expense 270 154 424
Total Non-Interest Expense 586 354 940
Income/Loss before Federal
Income Taxes 304 (479) (175)
Provision for Federal Income
Taxes 96 0 96
Net Income 208 (479) (271)
Other Comprehensive Income 7 7
Net Income 215 (479) (264)
</TABLE>
<PAGE>
(c) Exhibits
2.1 Agreement dated June 11, 1998 by and among Exchange Bancshares,
Inc., Towne Bank and Towne Bancorp, Inc.
2.2 Merger Agreement dated as of June 19, 1998 by and between Towne
Bank and the Exchange Bank
2.3 Letter Agreement dated May 19, 1998 by and between Exchange
Bancshares, Inc. and Carol M. Haas
3.1 The Amended and Restated Articles of Incorporation of Exchange
Bancshares, Inc. (incorporated by reference to the quarterly report
on Form 10-QSB for the quarter ended June 30, 1995)
3.2 Regulations of Exchange Bancshares, Inc. (incorporated by
reference to the Registration Statement on Form S-4 dated November
16, 1992, as amended on Amendment No. 1 to the Registration
Statement on Form S-4 dated January 14, 1993; Registration Number
33-54566)
23 Consent of Clifton Gunderson Ltd.
99 Press Release dated June 11, 1998
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
EXCHANGE BANCSHARES, INC.
Date: June 24, 1998 By: /s/ Marion Layman
Marion Layman
President
<PAGE>
Exhibit 2.1
AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into on this
11th day of June, 1998, by and among Exchange Bancshares, Inc.
("Buyer"), Towne Bank ("Bank") and Towne Bancorp, Inc. ("Towne
Bancorp").
WHEREAS, Towne Bancorp owns, of record and beneficially, all of the
320,000 issued and outstanding shares of the $5 par value common
shares of Bank ("Bank Common Stock"), an Ohio banking corporation;
and
WHEREAS, Towne Bancorp and Bank desire to sell additional shares of
Bank Common Stock to Buyer in order to provide additional capital to
Bank on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, Towne Bancorp desires to cause the merger (hereinafter the
"Merger") of Bank with and into The Exchange Bank, an Ohio banking
corporation and a wholly owned subsidiary of Buyer ("Exchange
Bank"), pursuant to the terms of a Merger Agreement attached hereto
as Exhibit A; and
WHEREAS, Buyer desires to purchase additional shares of Bank upon
the terms and conditions herein set forth and to cause the Merger.
NOW, THEREFORE, based on the foregoing and in consideration of the
agreements, representations, warranties, and covenants contained
herein, the parties agree as follows:
1. Purchase of Bank Common Stock.
1.1 Purchase of Bank Common Stock by Buyer. Subject to all of the
terms and conditions set forth in this Agreement, Bank shall sell,
convey, transfer, assign and deliver to Buyer and Buyer shall
purchase from Bank 1,000,000 shares of Bank Common Stock for an
aggregate purchase price of $2,000,000.
1.2 Closing of Purchase of Bank Common Stock. The sale of the Bank
Common stock provided for herein, shall be completed at the Closing.
The "Closing" shall mean the date and place as shall be mutually
agreed upon by Buyer, Towne Bancorp and the Bank for the closing of
the purchase of the shares of Bank Common Stock provided in Section
1.1 of this Agreement; provided, however, that the date of Closing
shall not be later than five (5) calendar days following the
expiration of statutory waiting periods, if any, imposed by the
receipt of all required regulatory approvals.
2. Representations and Warranties of Towne Bancorp and Bank as to
Bank Common Stock Purchased by Buyer.
Towne Bancorp and the Bank represent and warrant to Buyer that:
2.1 Buyer shall, upon the consummation of the purchase of the shares
of Bank Common Stock as set forth in Section 1.1 hereof receive such
shares of Bank Common Stock from the Bank free and clear of all
liens, encumbrances, security interests, options, charges, claims,
assessments, voting trust agreements, community property rights,
rights of others, and restrictions on transferability.
2.2 The shares of Bank Common Stock purchased by Buyer pursuant to
Section 1.1 hereof shall constitute 75.76% of the total outstanding
shares of Bank Common Stock immediately after the Closing.
3. Representations and Warranties of Towne Bancorp and Bank as to
Bank and/or Towne Bancorp.
Towne Bancorp and Bank represent and warrant to Buyer that:
3.1 Bank is a state chartered bank duly organized and existing in
good standing under the laws of the State of Ohio and has all
requisite power and authority to own its assets and carry on its
business as now conducted. Bank has obtained all charters,
licenses, permits, orders, authorizations and other governmental
approvals necessary therefor, including insurance of its deposits by
the Federal Deposit Insurance Corporation, all of which are in full
force and effect.
3.2 The authorized capital stock of Bank currently consists of
320,000 shares of voting common stock, all of which are issued and
outstanding. All of the issued and outstanding shares of the Bank
are duly authorized, validly issued and outstanding, and are fully
paid and, except as provided by law, nonassessable. No shares of
any other class or series of capital stock of Bank are authorized,
issued or outstanding. Except as provided for in this Agreement,
Bank has not agreed to issue or sell any additional shares of its
capital stock or any obligation convertible into shares of its
capital stock, Bank has no outstanding subscriptions, options,
warrants, rights or other security or obligation which would permit
or require Bank to issue any additional shares of its capital stock,
to purchase or otherwise acquire shares of its capital stock, or
convert any obligation into shares of capital stock of Bank. No
shares are held as treasury stock of the Bank.
3.3 The execution, delivery and performance of this Agreement and
the Merger Agreement have been duly authorized by Towne Bancorp and
Bank. No other corporate proceedings on the part of Towne Bancorp
or Bank are necessary to authorize this Agreement, the Merger
Agreement or the consummation of the transactions contemplated
hereby and thereby. This Agreement and all instruments and
agreements contemplated by this Agreement to which either Towne
Bancorp or Bank is a party or signatory have been duly authorized,
executed and delivered by Towne Bancorp or Bank as the case may be,
and constitute their respective legal, valid and binding obligations
enforceable in accordance with their terms.
3.4 Bank has good and marketable title to its respective assets.
Said assets are subject to no liens or encumbrances, whether by
mortgage, pledge, lien, security agreement, conditional sale
agreement, encumbrance, charge or otherwise, except for pledges or
securities to secure its Treasury Tax and Loan Account, public funds
deposits, transactions in Federal Funds, and liens attributable to
borrowings by the Bank from the Federal Home Loan Bank Board in the
ordinary course of the Bank's business.
3.5 Bank has no liability to pay deposits other than as shown on the
books and records of Bank.
3.6 Since December 31, 1997, the business of Bank has been conducted
in the ordinary course of business, and all books, records and
accounts of Bank are in all material respects complete and correct.
3.7 The Bank has no material obligations or liabilities, contingent
or otherwise, which were not previously disclosed in the financial
statements furnished to the Buyer or which were not previously
otherwise disclosed in writing to Buyer.
3.8 To the best of the knowledge of Towne Bancorp and Bank, all
income, franchise, and other taxes assessments and other
governmental charges (federal, state or local) against the Bank, or
any of its income or assets, shall have been duly paid and satisfied
on or before their respective due dates. There are not now and
there will be no additional liabilities, interest, penalties, or
deferred taxes due and payable with respect to such taxes,
assessments, or charges. The respective tax returns (federal,
state, or local) of the Bank (and in the case of those returns filed
jointly, Towne Bancorp and the Bank) required by law to be filed on
or before the Closing have been correctly and timely filed. Neither
Towne Bancorp nor Bank is a party to any pending action or
proceedings by any taxing authority for assessment or collection of
taxes against Towne Bancorp or Bank, and no such actions or
proceedings have been threatened. The provision for taxes made in
the respective financial statements of Towne Bancorp and the Bank is
sufficient for the payment of all accrued and unpaid current and
deferred federal, state and local tax liabilities of Towne Bancorp
and the Bank for the period ended on the date of such financial
statements and for all years prior thereto. Towne Bancorp and the
Bank have not received any notice of deficiency or other adjustment
with respect to their income and franchise tax returns. No issue
has been raised by the Internal Revenue Service or applicable state
taxing authorities which might result in a deficiency for any fiscal
year for Towne Bancorp or the Bank, whether or not yet audited.
There are no agreements, waivers or other arrangements providing for
an extension of time with respect to the assessment of any tax or
deficiency against Towne Bancorp or Bank (except for applicable
extensions of time for filing returns), nor are any actions, suits
or claims now pending or threatened against Towne Bancorp or Bank in
respect of any tax or assessment.
3.9 Neither the execution nor the delivery of this Agreement nor the
consummation of the transactions contemplated herein, nor compliance
with nor fulfillment of the terms and provisions herein will
conflict with or result in a material breach of the terms,
conditions or provisions of, or constitute a material default under,
the Articles of Incorporation, as the same are to be amended, or
Code of Regulations of Towne Bancorp or the Bank, or any other
restriction to which Towne Bancorp or the Bank is a party or by
which Towne Bancorp or the Bank is bound, or any regulatory
provisions affecting Towne Bancorp or the Bank.
3.10 The Bank has delivered to Buyer the Consolidated Statement of
Condition of Bank as of March 31, 1998 and Consolidated Statement of
Income for the three month period ended March 31, 1998, as reported
to the Federal Financial Institutions Examination Council, which
statements have been prepared in conformity with the appropriate
regulatory requirements. Such statements do not omit or misstate any
material fact necessary to be set forth therein in order to make the
information set forth therein not misleading.
3.11 All buildings, offices and other structures, and all machinery,
equipment, furniture, fixtures, motor vehicles and other properties
owned or used by Bank are in good operating condition and repair,
ordinary wear and tear excepted.
3.12 Towne Bancorp and Bank have provided Buyer with an opportunity
to review all policies of insurance in which either Towne Bancorp or
Bank is named as an insured party, or which otherwise relate to or
cover any assets, properties, premises, operations and personnel of
Towne Bancorp or Bank. Towne Bancorp or Bank, as the case may be,
has in full force and effect the policies of insurance provided to
Buyer. Except in regard to the Directors' and Officers' Liability
Insurance and fidelity bond for which Towne Bancorp and Bank have
received a notice of cancellation, there has been no notice given by
any party of interest in or to any such policies claiming any breach
or violation of any provisions thereof, disclaiming or denying any
coverage thereunder, or canceling or threatening cancellation of any
such insurance contracts.
3.13 To the knowledge of the executive management of Towne Bancorp
and Bank, no property owned or leased by either Towne Bancorp or
Bank is the subject of any action, suit or proceeding claiming that
any of such properties is contaminated with any wastes or hazardous
substances as such terms are defined under applicable federal, state
or local law.
4. Other Representations and Warranties of Towne Bancorp.
Towne Bancorp represents and warrants to Buyer that it is an Ohio
corporation and registered bank holding company under the Federal
Bank Holding Company Act.
5. Representations and Warranties of Buyer.
Buyer represents and warrants to Towne Bancorp that it will have at
the Closing all requisite power and authority to consummate the
transactions provided for in this Agreement. This Agreement and all
instruments and agreements contemplated by this Agreement to which
Buyer is a party or signatory have been duly authorized, executed
and delivered by Buyer, and constitute its legal, valid and binding
obligations enforceable in accordance with their terms.
6. Extent of and Survivability of Representations.
Each of the representations, warranties, covenants and agreements of
Towne Bancorp, Bank and Buyer contained in this Agreement shall be
deemed to have been made again on and as of the Closing, and be
true, correct and complete on and as of the Closing. All of the
representations, warranties, covenants and agreements contained in
this Agreement shall survive for a period of six (6) months after
the Closing. Notwithstanding the fact that the representations,
warranties, covenants and agreements are to survive closing for six
(6) months, the sole remedy of Buyer for the breach of any such
representations, warranties, covenants and agreements by Towne
Bancorp or Bank shall be to recover against the "escrow account"
established by paragraph IV(1)(b) of the Merger Agreement attached
hereto as Exhibit A.
7. Covenants of Towne Bancorp Concerning Conduct of Business.
Towne Bancorp and Bank covenant and agree that during the period
from the date of this Agreement through the Closing, Towne Bancorp
and Bank shall use their best efforts to conduct their respective
businesses and operations in the usual and ordinary course, in a
safe and prudent manner, and shall use their best efforts to
preserve intact the banking and business organization, to keep
available the services of the officers and employees, and to
preserve their relations with customers, suppliers and others having
business dealings with them to the end that the goodwill and
continuing business of Towne Bancorp and Bank shall not be
materially and adversely affected at the Closing. During said
period, Towne Bancorp covenants and agrees that Towne Bancorp shall
cause Towne Bancorp and Bank to do or refrain from doing (as
applicable) the following, unless the prior written consent of Buyer
shall have been received:
7.1 Bank shall not declare or pay any dividends, stock splits
(reverse or otherwise), stock dividends or any other distributions
with respect to its common stock.
7.2 Bank shall not increase the rate of compensation payable to any
of its directors, officers or other personnel, whether by salary,
bonus or otherwise.
7.3 Bank shall not incur any obligations or liabilities, absolute or
contingent, other than current liabilities incurred in the ordinary
and usual course of business.
7.4 Bank shall not sell, transfer or lease any of its properties or
subject any of its properties or assets to a mortgage, pledge,
security interest or lien, except encumbrances of the character
heretofore incurred in the ordinary and usual course of business.
7.5 Bank shall refrain from applying for any bank office and shall
not close any bank office.
7.6 Bank shall assist Buyer in obtaining all regulatory approvals
and consents of third parties necessary to consummate the
transactions contemplated by this agreement.
7.7 Bank shall continue to pay all interest on deposits and any
other debts as such obligations become due and payable in the
ordinary course of business.
7.8 Bank shall not loan funds or accept any deposits or enter into
any commitments for such loans or deposits, except in the ordinary
course of business and upon substantially the same terms, including
interest rates, maturities, collateral security and other applicable
terms as those prevailing among banks in Bank's market area at the
time for comparable transactions.
7.9 Bank shall not merge or consolidate with any other entity or
enter into any agreement therefor for the sale of substantially all
of its assets or acquire or agree to acquire any stock, business,
properties or assets of any other person, firm, association,
corporation, bank or other business organization.
7.10 Bank shall not cancel, without payment in full, any notes,
loans or other obligations receivable from any officer or director
Towne Bancorp of Bank, or any member of their families, or from any
corporation, partnership or other entity in which any officer or
director of Towne Bancorp or Bank, or any member of their families,
has any direct or indirect interest.
7.11 There shall not have been any material adverse change in the
condition, quality, composition or maturity of the assets, deposits,
other liabilities, or the business of Bank; provided, however, that
the following factors shall not be considered in determining what
shall constitute such a material adverse change.
(a) Changes in rates of return or yields received on various Bank
assets or changes in the fair market value of Bank's investment
securities, which changes are caused by general money market
fluctuations; and
(b) Changes in interest rates paid by Bank with respect to its
sources of borrowed funds, including deposits, repurchase agreements
and Federal funds purchased, which changes are caused by general
money market fluctuations.
7.12 The officers of Bank shall furnish Buyer will all internal
reports and information, including financial information pertinent
to the operation of Bank's business, which are legally permissible
to be disclosed, and shall consult with Buyer on any major
managerial decision.
7.13 The Bank shall not settle or dismiss any lawsuit on behalf of
or against Bank.
8. Conditions Precedent to Obligations of Buyer.
The obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or on the Closing of each of the following
conditions precedent, except to the extent any such condition is
waived in writing by Buyer:
8.1 Representatives of Buyer shall have completed a purchase
examination of the Bank and Towne Bancorp prior to the Closing, and
the results thereof, including, but not limited to, the financial
condition, business, assets, deposit mix or composition and other
liabilities of Towne Bank and Towne Bancorp shall have been
satisfactory to Buyer in its sole discretion. Pursuant to this
examination, the Bank's assets and liabilities may be verified by
such representatives by confirmation, requests or otherwise. The
examination performed pursuant to this Section shall not affect the
right of Buyer to rely on the representations, warranties and
covenants of Towne Bancorp and the Bank contained in this Agreement.
8.2 Buyer shall have obtained all requisite banking regulatory
orders and approvals required by applicable law or governmental
regulations necessary or appropriate to permit the consummation of
the transactions contemplated by this Agreement. All applicable
waiting periods imposed by statute, regulation, rule or order shall
have expired.
8.3 Buyer shall not have discovered any material error,
misstatement or omission in the representations and warranties made
herein by Towne Bancorp or the Bank.
8.4 Towne Bancorp and the Bank shall have performed and complied
with all of the terms, agreements, obligations, covenants and
conditions required by this Agreement to be performed and complied
with by Towne Bancorp or the Bank prior to or on the Closing,
including, but not limited to the amendment of the Articles of
Incorporation of Bank to increase its authorized shares of common
stock to 1,320,000.
8.5 Buyer shall have received the written release of Towne Bancorp
and each of the directors of Towne Bancorp and Towne Bank in the
form attached hereto as Exhibits B and C, respectively.
8.6 Towne Bancorp shall have assigned to the Bank the rights and
privileges of the lessee under the leases in respect of the branches
of the Bank, and Buyer shall have accepted all duties and
obligations under such leases. The form of such assignment and
assumption of leases shall be mutually acceptable to Buyer, Towne
Bancorp and the Bank.
9. Conditions Precedent to Obligations of Towne Bancorp and the
Bank.
The obligations of Towne Bancorp and the Bank under this Agreement
are subject to the fulfillment, prior to or on the Closing, of each
of the following conditions precedent, except to the extent any such
condition is waived in writing by Towne Bancorp or the Bank,
respectively.
9.1 There shall not have been discovered any error, misstatement or
omission in the representations and warranties made herein by Buyer.
9.2 Buyer shall have performed and complied with all of the terms,
agreements, obligations, covenants and conditions required by this
agreement to be performed and complied with by Buyer prior to or at
the Closing.
9.3 Buyer shall have obtained all requisite banking regulatory
orders and approvals required by applicable law or governmental
regulations necessary or appropriate to permit the consummation of
the transactions contemplated by this Agreement and all applicable
waiting periods imposed by statute, regulation, rule or order shall
have expired within 60 days after the date of this Agreement.
9.4 Towne Bancorp shall have assigned to the Bank the rights and
privileges of the lessee under the leases in respect of the branches
of the Bank, and Buyer shall have accepted all duties and
obligations under such leases. The form of such assignment and
assumption of leases shall be mutually acceptable to Buyer, Towne
Bancorp and the Bank.
10. Covenant with respect to the Merger of the Bank and Exchange
Bank.
With respect to the Merger of the Bank with and into Exchange Bank,
the parties agree to cause the execution of the Merger Agreement
attached hereto as Exhibit A in accordance with all the applicable
requirements of law and the respective Articles of Incorporation and
Code of Regulations of the Bank and Exchange Bank, and further to
cause the approval by the Board's of Directors of the Bank and
Exchange Bank, and each of the Bank's and Exchange Bank's respective
shareholders. The parties agree to cooperate and to take all such
actions as may be reasonably required to cause the Merger of Bank
with and into Exchange Bank pursuant to and in accordance with the
terms of the Merger Agreement. Towne Bancorp covenants to forbear
from the exercise of its statutory right to dissent under applicable
law in connection with the Merger and the shares of Towne Bank held
by it on the effective date of the Merger. The covenants of the
parties contained herein shall survive the Closing. The obligations
of the parties hereto shall be contingent upon and subject to the
satisfaction of the conditions set forth in the Merger Agreement and
the consummation of the Merger contemplated therein.
11. Termination.
This Agreement and the transactions contemplated by this Agreement
may be terminated at any time on or before Closing:
11.1 By the mutual written consent of Buyer, Towne Bancorp and the
Bank.
11.2 By written notice from Buyer to Towne Bancorp and the Bank if
one or more of the conditions set forth in Section 8 shall not have
been satisfied or if Buyer determines one or more of such conditions
cannot or will not be satisfied for any reason other than a breach
by one of the parties hereto; or
11.3 By written notice from Towne Bancorp or the Bank to Buyer if
one or more of the conditions set forth in Section 9 shall not have
been satisfied or if Towne Bancorp or the Bank determine one or more
of such conditions cannot or will not be satisfied for any reason
other than a breach by one of the parties hereto.
12. Expenses.
Each party hereto shall pay its own legal, accounting and other
expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement.
13. Publicity.
Each party agrees to hold the fact of this Agreement and its terms
in strictest confidence and not to make any public announcement
after the date of this Agreement concerning the Agreement without
the written consent of Buyer, Towne Bancorp and the Bank. All
notices, releases, statements and communications to depositors,
customers and correspondents of Bank and to the press and general
public relating to the Agreement or transactions contemplated by
this Agreement shall be made only at such times and in such manner
as shall be mutually agreed between Buyer, Towne Bancorp and the
Bank.
14. Representatives.
14.1 Towne Bancorp and the Bank hereby appoint John Blevins to act
as their agent for the purpose of approving such publicity under
Section 13 and for all other purposes under this Agreement for which
a Towne Bancorp or Bank representative is required. The filing of
public documents that may disclose the existence of this Agreement,
or the effects of the terms hereof, with any federal and state
regulatory authorities in connection with the transactions
contemplated herein, or as may be required in the ordinary course of
business of either party hereto, shall not constitute a breach of
the terms of Section 13.
14.2 Buyer hereby appoints Thomas Elder to act as its agent for the
purpose of approving such publicity under Section 13 and for all
other purposes under this Agreement for which a Buyer representative
is required. The filing of public documents that may disclose the
existence of this Agreement, or the effects of the terms hereof,
with any federal and state regulatory authorities in connection with
the transactions contemplated herein, or as may be required in the
ordinary course of business of either party hereto, shall not
constitute a breach of the terms of Section 13.
15. Notices.
Any notice, report or demand required or permitted by any provision
of this Agreement shall be deemed to have been sufficiently given
and delivered when placed in the U.S. mail, if it is sent by
registered mail, postage and registered charges prepaid, addressed
as follows:
If to Buyer to:
Mr. Marion Layman
Exchange Bancshares, Inc.
c/o Exchange Bank
237 Main Street
Luckey, Ohio 43443
With copies to:
Susan Zaunbrecher, Esq.
Dinsmore & Shohl, LLP
1900 Chemed Center
255 East Fifth Street
Cincinnati, Ohio 45202-3172
(513) 977-8200/PH
(513) 977-8141/FX
{REMAINDER OF PAGE INTENTIONALLY LEFT BLANK}
If to Towne Bancorp or Bank to:
Mr. John Blevins
Towne Bancorp, Inc.
c/o Towne Bank
610 E. South Boundary
Perrysburg, Ohio 43551-2535
With copies to:
Thomas C. Blank, Esq.
Werner & Blank Co., LPA
7205 W. Central Ave.
Toledo, OH 43517
(419) 841-8051/PH
(419) 841-8380/FX
16. Risk of Loss.
In the event any material loss not covered by insurance to the
assets of Bank occurs due to fire or casualty prior to the Closing,
or in the event the business of Bank is closed or interrupted by
reason of any event not in the ordinary course of business, Buyer
shall have the right to terminate this Agreement.
17. Miscellaneous.
17.1 This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Ohio.
17.2 The headings contained herein are for reference purposes only
and shall not in any way affect the meaning and interpretation of
this Agreement.
17.3 This Agreement and the respective rights and obligations of the
parties hereunder shall not be assignable by any party without the
prior written consent of the other parties.
17.4 This Agreement, together with the related Schedules and
Exhibits represents the entire understanding and agreement among the
parties hereto with respect to the subject matter hereof, supersedes
all prior and contemporaneous negotiations, correspondence and
understandings relating to the subject matter hereof, and shall be
amended or modified only by the written agreement of all of the
parties hereto.
17.5 The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner
affect the right to enforce the same, and a waiver by any party of
any breach of any provision of this Agreement shall not be construed
to be a waiver by such party of any breach of any other provision.
17.6 This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
17.7 The rights and obligations contained in this Agreement shall
inure to the benefit of and be binding upon the parties to this
Agreement and their respective heirs, personal representatives,
successors and assigns.
17.8 Nothing in this Agreement, express or implied, is intended to
confer upon any party, other than the parties hereto and their
respective heirs, personal representatives, successors and assigns,
any rights, remedies, obligations, or liabilities under or by reason
of this Agreement, except as and the extent expressly provided
herein.
17.9 Any provision of this Agreement prohibited either by law or
court decrees in any locality or state shall be ineffective to the
extent of such prohibition without in any way invalidating or
affecting the remaining provisions of this Agreement within the
states or localities where not prohibited by law or court decrees.
Notwithstanding the foregoing, in no event shall the capital
infusion described in paragraph 1.1 be consummated unless the Merger
(as defined herein) is ready to be and will be consummated
immediately subsequent to such capital infusion.
17.10 Time is of the essence in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
EXCHANGE BANCSHARES, INC.:
By: /s/ Marion Layman
Marion Layman, President
By: /s/ Joseph R. Hirzel
Joseph R. Hirzel, Secretary
TOWNE BANCORP, INC.: TOWNE BANK:
By: /s/ John Weinert By: /s/ John Weinert
John Weinert, Chairman John Weinert, Chairman
By: /s/ Lois A. Brigham By: /s/ Lois A. Brigham
Lois A. Brigham, Secretary Lois A. Brigham, Secretary
<PAGE>
Exhibit 2.2
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") dated as of June 19,
1998, is entered into by and between Towne Bank, Perrysburg, Ohio
("Towne Bank"), an Ohio state banking corporation and The Exchange
Bank, Luckey Ohio ("Exchange Bank"), an Ohio state banking
corporation and is joined in by Towne Bancorp, Inc. ("Towne
Bancorp"), the sole shareholder of Towne Bank, and Exchange
Bancshares, Inc., ("Exchange Bancshares"), the sole shareholder of
Exchange Bank.
WITNESSETH:
WHEREAS, the Board of Directors of Exchange Bank and the Board
of Directors of Towne Bank have determined that it is in the best
interests of Exchange Bank and Towne Bank to merge Towne Bank with
and into Exchange Bank in accordance with the provisions of the laws
of the State of Ohio (the "Merger"); and
WHEREAS, the Board of Directors of Towne Bank and the Board of
Directors of Exchange Bank have each adopted a resolution approving
this Agreement and have directed that the Merger Agreement be
submitted to the shareholders of Towne Bank and Exchange Bank
entitled to vote in respect thereof for adoption and approval;
NOW, THEREFORE, the parties hereto, subject to the terms and
conditions contained herein, agrees as follows:
ARTICLE I
Constituent Corporations
Towne Bank and Exchange Bank shall be the constituent banking
corporations with respect to the Merger.
ARTICLE II
Merger
Effective as of the date set forth in the Certificate of Merger
filed in accordance with Section 1115.11 (F) of the Ohio Revised
Code with the Superintendent of Banks for the State of Ohio (the
"Effective Time"), Towne Bank shall be merged into Exchange Bank and
Exchange Bank shall be the surviving banking corporation (the
"Surviving Corporation"), which after the effective time of the
Merger shall be known as "Exchange Bank."
ARTICLE III
Articles of Incorporation, Etc.
1. At the Effective Time, the Articles of Incorporation and Code
of Regulations of Exchange Bank shall constitute the Articles of
Incorporation Code of Regulations of the Surviving Corporation.
2. The Surviving Corporation's main office shall be located at
235 Main Street, Luckey, Ohio, until otherwise changed in accordance
with law.
3. The officers of Exchange Bank immediately prior to the
Effective Time shall be the officers of the Surviving Corporation,
each to hold office until his respective successor is duly elected
or appointed and qualified in accordance with the provisions of the
Articles of Incorporation and Code of Regulations of the Surviving
Corporation and of applicable law, or until his earlier death,
resignation or removal.
4. The directors of the Surviving Corporation shall be all of the
directors of Exchange Bank immediately prior to the Effective Time.
ARTICLE IV
Manner of Converting and Exchanging Stock and Capital Structure
1. Subject to the provisions of this Article IV, the manner of
converting and exchanging the shares of the constituent
corporation's stock at the Effective Time shall be as follows.
Conversion and Exchange of Shares.
(a) At the time the Merger shall become effective;
(i) All of the outstanding shares of Towne Bank Common Stock held
by Towne Bancorp, Inc. shall, subject to statutory dissenters rights
as provided Ohio Revised Code Section 1115.19 and 1701.85, be
exchanged for and converted into the right to receive $1,500,000, in
cash; provided, however, that the consideration to be received by
Towne Bancorp, Inc. pursuant to this paragraph IV(1)(a)(i) shall be
increased or reduced, dollar for dollar, by the amount by which the
capital of Towne Bank as of the Closing is more than or less than
$1,000,000. However, in no event will the consideration paid
hereunder be less than $1,000,000. The capital of Towne Bank as of
the Closing shall be determined in accordance with generally
accepted accounting procedures.
(ii) All of the shares of common stock $10 par value of Exchange
Bank issued and outstanding immediately prior to the time the Merger
shall become effective shall constitute all of the of the issued and
outstanding shares of the Surviving Corporation and shall be held by
Exchange Bancshares.
As soon as practicable after the time the Merger shall become
effective, Exchange Bank will distribute to Towne Bancorp, Inc.
seventy five percent (75%) of the total consideration payable in
accordance with paragraph IV(1)(a)(i) hereof in cash in payment for
the exchange of all of the shares of Towne Bank $5 1.00 par value
common stock ("Towne Bank Common Stock") owned by Towne Bancorp,
Inc. on the effective date of the Merger. The remaining twenty five
percent (25%) of the consideration due to Towne Bancorp, Inc. in
accordance with paragraph IV(1)(a)(i) hereof shall be retained in an
interest bearing account (the "escrow account") with Exchange Bank,
as escrow agent, for the benefit of Towne Bancorp, Inc. for a period
of six (6) months after Closing. At the conclusion of such six (6)
month period, in the event that Exchange Bancshares has not claimed
that either Towne Bancorp, Inc. or Towne Bank breached any
representation, warranty or covenant set forth in an agreement of
even date between Exchange Bancshares, Towne Bank and Towne Bancorp,
Inc. (the "Investment Agreement"), Exchange Bank shall deliver to
Towne Bancorp, Inc. the remaining twenty five percent (25%) of such
consideration together with interest earned thereon. In the event
that at any time during such six (6) month period, Exchange
Bancshares claims a breach by Towne Bancorp, Inc. or Towne Bank of
any representation, warranty or covenant set forth in the Investment
Agreement, Exchange Bancshares shall advise both Towne Bancorp, Inc.
and Exchange Bank in writing of the supposed breach and the
estimated amount of loss or damage caused by such supposed breach.
At the conclusion of such six (6) month period, Exchange Bank shall
deliver to Towne Bancorp, Inc. and Exchange Bancshares a written
summary of all breaches claimed by Exchange Bancshares and the
amount of loss or damage in the opinion of Exchange Bancshares.
Within thirty (30) days of receipt of such written summary, Towne
Bancorp, Inc. will either: (i) respond in writing to Exchange
Bancshares and Exchange Bank that it does not contest the loss or
damage noted in such summary; or (ii) object in writing to one, some
or all of the items contained in such summary. In the event that
Towne Bancorp, Inc. does not object to any supposed loss or damage
claimed, Exchange Bank shall disburse from the escrow account to
Exchange Bancshares the amount of loss or damage claimed by Exchange
Bancshares and shall distribute the balance of such escrow account,
if any, together with any interest earned thereon, to Towne Bancorp,
Inc. In the event that Towne Bancorp, Inc. objects to any supposed
loss or damages, the resolution of whether such breach and resulting
loss or damage has occurred will be determined by arbitration in
Toledo, Ohio under the rules of the American Arbitration
Association. The cost of such arbitration will be paid for by the
unsuccessful party in regard to such item in dispute. If more than
one item is disputed, the costs of arbitration shall be shared by
Towne Bancorp, Inc. and Exchange Bancshares based upon the
percentage of losses or damages awarded to each party in relation to
the total awards granted in such arbitration.
Certificates formerly representing shares of Towne Bank Common Stock
owned by Towne Bancorp, Inc. surrendered for cancellation to
Exchange Bank by reason of the Merger shall be accompanied by such
appropriate instruments of transfer as Exchange Bank may reasonably
require.
2. The Resulting Corporation shall have a capital structure equal
to the following:
(a) Common stock of $2,048,200, consisting of 204,820 shares of
$10 par value all of which will be issued and outstanding
immediately following the Effective Time of the Merger; and
(b) Surplus of $2,318,000; and
Undivided profits, including capital reserves, of $2,752,000,
adjusted for all earnings and losses between January 1, 1998, and
the Effective Time of the Merger.
ARTICLE V
Effect of Merger
From and after the Effective Time, the Surviving Corporation
shall have all of the rights, interests, privileges, powers,
immunities and franchises (public and private) of each of the
constituent corporations, and all property (real, personal and
mixed), all debts due on whatever account, and all other chooses in
action, of each of the constituent corporations. All interests of
or belonging to or due to either of the constituent corporations
shall thereupon be deemed to be transferred to and vested in the
Surviving Corporation without act or deed and no title to any real
estate or any interest therein vested in either of the constituent
corporations shall revert or be in any way impaired because of the
Merger.
ARTICLE VI
Surviving Corporation
From and after the Effective Time, the Surviving Corporation
shall be responsible for all obligations of each of the constituent
corporations and each claim existing and each action or proceeding
pending by or against either of the constituent corporations may be
prosecuted as if the Merger had not taken place, and the Surviving
Corporation may be substituted in the place of such constituent
corporation. No right of any creditor of either constituent
corporation and no lien upon the property of either constituent
corporation shall be impaired by the Merger.
ARTICLE VII
Further Documents
If at any time the Surviving Corporation shall consider or be
advised that any further assignments, conveyances or assurances in
law are necessary or desirable to vest, perfect or confirm of record
in the Surviving Corporation the title to any property or rights of
the constituent corporations, or otherwise to carry out the
provisions hereof, the persons who were the proper officers and
directors of the constituent corporations immediately prior to the
Effective Time (or their successors in office) shall execute and
deliver any and all proper deeds, assignments and assurances in law,
and do all things necessary or proper, to vest, perfect or confirm
title to such property or rights in the Surviving Corporation,
including, but not limited to, filing with each court or other
public tribunal, agency or officer by which Towne Bank or Exchange
Bank have been appointed in the capacity of fiduciary or agent, and
in the court file of each estate, suit or proceeding in which any of
them has been acting, a statement setting forth the information
required by law or otherwise to carry out the provisions hereof.
ARTICLE VIII
Termination
Notwithstanding the adoption and approval of this Agreement and
the Merger by the shareholders of Towne Bank and Exchange Bank, this
Agreement and the Merger may be terminated:
(a) At any time prior to the Effective Time, by the mutual
consent of the Boards of Directors of Towne Bancorp, Towne Bank and
Exchange Bank; or
(b) This Merger Agreement shall automatically terminate in the
event of the termination of the Investment Agreement.
(c) At any time prior to the Effective Time, by Towne Bank or
Exchange Bank if there shall have been a final judicial
determination (as to which all periods for appeal shall have expired
and no appeal shall be pending) that any material provision of this
Agreement or of the Merger is illegal, invalid or unenforceable;
In the event that this Agreement is terminated pursuant to this
Article VIII, the Merger provided for herein shall be abandoned
automatically and without any further act or deed by the parties
hereto.
ARTICLE IX
Conditions to Consummation of the Merger
The consummation of the Merger pursuant to this Merger Agreement
and the obligations of the parties hereto is subject to the
satisfaction of the provisions and conditions of the Investment
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and attested to on their behalf by the
following directors and officers thereunto duly authorized as of the
day and year first written above.
Towne Bancorp, Inc.:
By: /s/ John Weinert
Its: Chairman
Attest:
By: /s/ Lois Brigham
Its: Secretary
Towne Bank
By: /s/ John Blevins
Its: President
Attest:
By: /s/ Lois Brigham
Its: Secretary
Exchange Bank:
By: /s/ Thomas J. Elder
Its: President and Chief Executive Officer
Attest:
By: /s/ A. John Moore
Its: Secretary
Exchange Bancshares, Inc.
By: /s/ Marion Layman
Its: Chairman
Attest:
By: /s/ Joseph R. Hirzel
Its: Secretary
<PAGE>
Exhibit 2.3
CAROL M. HAAS
333 E. FLORIDA AVENUE, HOUSE 102
DENVER, COLORADO 80210
May 19, 1998
Exchange Bancshares, Inc.
237 Main Street
Luckey, Ohio 43443-0129
Re: Purchase of Two Parcels of Real Estate
Gentlemen:
The undersigned, the owner of the two parcels of real estate located
at 6401 Monroe Street, Sylvania, Ohio and 610 East South Boundary,
Perrysburg, Ohio currently leased from the undersigned to Towne
Bancorp, Inc. (to be referred to herein as "Real Estate"), does
hereby agree to sell and transfer by general warranty deed all
right, title and interest in and to the Real Estate on the following
terms and conditions:
1. Purchase Price. The purchase price for the Real Estate shall be
$2,550,000 (the "Purchase Price").
2. Deposit. Exchange Bancshares, Inc., as an indication of its good
faith, has delivered cash in the amount of $1,000 to be held in
escrow by John McCarthy, attorney for the undersigned, until the
closing of the sale and purchase of the Real Estate.
3. Consummation of the Sale and Payment of the Purchase Price. The
sale and purchase of the Real Estate shall take place simultaneously
with and be conditioned upon the consummation of the asset purchase
transaction contemplated by Exchange Bancshares, Inc. and Towne
Bancorp, Inc., whereby Exchange Bancshares, Inc. will purchase all
of the assets of The Towne Bank from Towne Bancorp, Inc. pursuant to
a proposed definitive Asset Purchase Agreement (the "Asset
Purchase").
4. Conduct Pending Sale. Exchange Bancshares, Inc. will ensure that
lease payments on the Real Estate are made by Towne Bancorp, Inc. on
a timely basis as required pursuant to the aforesaid leases on the
Real Estate pending the closing of the Asset Purchase.
5. Other Conditions. The purchase of the Real Estate shall also be
subject to the receipt by Exchange Bancshares, Inc. of satisfactory
title and the satisfaction of other terms and conditions ordinary
and necessary in a real estate purchase of this type.
6. Cooperation. In order to facilitate the consummation of the
purchase of Real Estate, the undersigned and Exchange Bancshares,
Inc. each agree to take any and all actions and execute any and all
instruments or documents necessary and appropriate to the sale and
purchase of the Real Estate and to the consummation of the Asset
Purchase.
/s/ Carol M. Haas
Carol M. Haas, Trustee
Dated: May 19, 1998
Acknowledged:
EXCHANGE BANCSHARES, INC.
By: /s/ Marion Layman Dated: May 20, 1998
Its: Chairman
<PAGE>
Exhibit 23
Consent of Clifton Gunderson Ltd.
The Board of Directors
Towne Bancorp, Inc.:
We consent to the incorporation by reference in the Form 8-K of
Exchange Bancshares, Inc., dated June 11, 1998 (date of earliest
event reported), of our report dated March 3, 1998, with respect to
the consolidated balance sheets of Towne Bancorp, Inc. and its
subsidiary as of December 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders' deficit, and
cash flows for each of the years in the three-year period ended
December 31, 1997.
Our report dated March 3, 1998, contains an explanatory paragraph
that states that the Company has incurred substantial losses since
its bank subsidiary began operations, is under severe operating
restrictions as a result of recent examinations by regulatory
authorities, and has a contingent liability relating to the sale of
common stock in its initial public offering, all of which raise
substantial doubt about its ability to continue as a going concern.
The consolidated financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
/s/ CLIFTON GUNDERSON LTD.
Toledo, Ohio
June 25, 1998
<PAGE>
Exhibit 99
___________________________________________________________
PRESS RELEASE
___________________________________________________________
Exchange Bancshares, Inc. Towne Bancorp, Inc.
237 Main Street 610 E. South Boundary Street
Luckey, Ohio 43443 Perrysburg, Ohio 43551-2535
Contact: Marion Layman, Chairman Contact: John Blevins, President
or Thomas Elder, President
Phone: (419) 833-3401 Phone: (419) 874-2090
FAX: (419) 833-3663 FAX: (419) 874-4740
FOR IMMEDIATE RELEASE
EXCHANGE BANCSHARES, INC. ANNOUNCES ACQUISITION OF
TOWNE BANK, PERRYSBURG, OHIO
Luckey, Ohio, June 11, 1998 -- Exchange Bancshares, Inc.,
headquartered in Luckey, Ohio, has announced plans to expand its
operations through the acquisition of Towne Bank, headquartered in
Perrysburg, Ohio. The acquisition will be accomplished through the
merger of Towne Bank with and into The Exchange Bank, the wholly
owned subsidiary bank of Exchange Bancshares. The parties announced
that they had signed a definitive agreement providing for the merger
after the approval of the Boards of Directors of the two holding
companies and their subsidiary banks.
"We are very excited to acquire Towne Bank and expand our operations
into both Perrysburg, where the main office of Towne is located, and
Sylvania, where Towne operates a branch office," said Marion Layman,
Chairman of Exchange Bancshares. "These are two of the fastest
growing areas in Northwest Ohio, which gives us the opportunity to
significantly expand our franchise," added Tom Elder, President of
Exchange.
John Weinert, Chairman of Towne Bancorp said "we are happy to have
found a partner which also believes in community banking." Weinert
added "Exchange has the type of philosophy towards its customers
that Towne was organized to fulfill."
The terms of the transaction call for Exchange Bancshares to infuse
capital into Towne Bank and for the payment of cash to Towne
Bancorp, Inc. in return for its ownership of Towne Bank. The
purchase price will be determined based upon a number of factors
under a formula contained in the definitive agreement signed by the
parties.
Conditions contained in the Agreement, including the approval of the
Ohio Division of Financial Institutions and the Federal Reserve Bank
of Cleveland are required to be met to consummate the transaction.
Regulatory approval is expected to be received in the near future.
Closing is expected to occur shortly after receipt of such approval.
