<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) February 12, 1997
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RELIANCE ACCEPTANCE GROUP, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-23854 36-3235321
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(Commission File Number) (I.R.S. Employer Identification No.)
400 North Loop 1604 East, Suite 200, San Antonio, Texas 78232
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area code (210) 496-5910
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COLE TAYLOR FINANCIAL GROUP, INC.
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(Former Name or Former Address, if Changed Since Last Report)
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<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 12, 1997 (the "Closing Date"), pursuant to an Amended and
Restated Exchange Agreement (the "Share Exchange Agreement") dated as of June
12, 1996, Reliance Acceptance Group, Inc. ("RAG") (until the Closing Date, known
as "Cole Taylor Financial Group, Inc.,"("CTFG")) and the Taylor Family Group
(as defined below), completed the exchange of (a) 1 share of Common Stock, $.01
par value per share, of Taylor Capital Group, Inc., a subsidiary of RAG,
holding, among other things, all of the capital stock of Cole Taylor Bank (the
"Bank"), CT Mortgage Company, Inc. and an investment in Alpha Capital Fund II,
L. P. ("Alpha Capital"), which went to the Taylor Family Group, for (b) all of
the 4.5 million shares of Common Stock, $.01 par value per share, of RAG owned
by the Taylor Family Group, which went to RAG (the "Share Exchange"). Prior to
the Share Exchange, the Bank transferred to Cole Taylor Auto Finance, Inc.
("Auto Sub"), a newly formed subsidiary of the Bank, which was subsequently
transferred to RAG prior to the Share Exchange, the Bank's used automobile
receivables business consisting of, among other things, used automobile finance
contracts with a fair market value of $31 million, and$52.03 million in cash. At
the same time as the Share Exchange, Reliance Acceptance Corporation (formerly
Cole Taylor Finance Co.), a subsidiary of RAG, was merged with and into Auto Sub
(the "Merger"), and the surviving corporation was renamed Reliance Acceptance
Corporation. The terms of the transaction were the result of arm's length
negotiations between the Board of Directors of RAG, assisted by independent
financial and legal advisors, and the Taylor Family Group, and the transaction
was approved by the Board without the participation of members of the Taylor
Family and by the stockholders of RAG at its Annual Meeting held on November 15,
1996. The Taylor Family Group consists of Jeffrey W. Taylor, Bruce W. Taylor,
Sidney J. Taylor, Iris A. Taylor, who is a trustee of several trusts that are
part of the Taylor Family Group, Cindy Taylor Bliel, related trusts and a
related partnership. Certain present and former directors of the Bank (Edward
McGowan, Richard Kaplan, Ronald Emanuel and Corky Eisen) who are not members of
the Taylor Family are investors in the partnership that is part of the Taylor
Group. Until the Share Exchange, Jeffrey W. Taylor had been a director and the
Chairman of the Board and Chief Executive Officer of CTFG and Chairman of the
Bank, Bruce W. Taylor had been a director and President of CTFG and President
and Chief Executive Officer of the Bank, and Sidney J. Taylor had been a
director of CTFG and chairman of the Executive Committee of CTFG's board of
directors. Melvin E. Pearl, who until the Share Exchange was a director of CTFG,
is a trustee of several trusts that are part of the Taylor Family Group.
Item 5. OTHER EVENTS
On February 12, 1997, Bruce W. Taylor, Richard W. Tinberg, Jeffrey W.
Taylor, Sidney J. Taylor, Melvin E. Pearl and Adelyn Dougherty resigned from the
Board of CTFG. Also, Jeffrey W. Taylor resigned as Chairman and Chief Executive
Officer of CTFG, Bruce W. Taylor resigned as President of CTFG and John
Christopher Alstrin resigned as Chief Financial Officer of CTFG.
On February 14, 1997, Thomas L. Barlow and Howard B. Silverman became
the principal executive officers of RAG. Thomas L. Barlow became President and
Chief Executive Officer of RAG and Howard B. Silverman became Chairman of the
Board of Directors of RAG. Also, Thomas L. Barlow and Cathy Cole Williams were
elected to the Board of Directors of RAG.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
b) Pro Forma Financial Information
Pursuant to Form 8-K, Item 7 (b)(1), the pro forma financial information
required by this Item is attached hereto and incorporated herein as
Appendix A.
c) Exhibits
See Index to Exhibits.
<PAGE>
APPENDIX A
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma consolidated financial statements of the Company as
of September 30, 1996 and December 31, 1995 and for the periods then ended, have
been derived from the Company's consolidated financial statements included in
the Company's Current Report on Form 8-K dated October 10, 1996 (the "Form 8-K")
and the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1996 (the "September 1996 10-Q"), and reflect the Split-Off of the Company's
banking segment, consisting of the Bank and the Mortgage Company. The pro forma
statements begin with the historical amounts which have been reclassified to
reflect the banking segment as discontinued operations. The pro forma
adjustments reflect the exchange of cash and shares to effect the Split-Off.
These statements should be read in conjunction with the Form 8-K and the
September 1996 10-Q. The pro forma balance sheets assume that the Split-Off was
consummated at the end of the reporting period and include nonrecurring expenses
directly attributable to the transaction. The pro forma income statements
assume the Split-Off was consummated as of the first day of the reporting period
and include only those adjustments expected to have continuing impact on the
Company. The pro forma statements are based on the assumptions set forth in the
accompanying notes and are not necessarily indicative of the Company's future
financial position or results of operations.
<PAGE>
RELIANCE ACCEPTANCE GROUP, INC.
(FORMERLY KNOWN AS COLE TAYLOR FINANCIAL GROUP, INC.)
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Notes to Unaudited Pro Forma Consolidated Financial Statements
(a) Reflects the tender of 4,500,000 shares of the Company's Common Stock from
the Taylor Family to the Company, the transfer of $52 million and the
transfer of $31 million fair market value of Automobile Receivables from
the Bank, in exchange for the Company's net investment in the Bank,
Mortgage Company and Alpha Capital Fund. The 4,500,000 shares acquired are
reflected as treasury shares at their fair value, which is the average
market price of the stock for the few days surrounding the date of the
Share Exchange Agreement and the announcement of the transaction. The
accounting gain on the transaction is reflected as a credit to retained
earnings. The cash received is assumed to be used to reduce long-term debt
at the Company and then bank debt at the Finance Company.
One time charges of $1.9 million, net of anticipated income tax effect, for
financial advisory, investment bankers and special payments to certain
employees as a result of the Split-Off Transaction are considered as a
reduction in proceeds for purposes of calculating the gain. Included in
income from discontinued operations for the period ended September 30, 1996
is approximately $800,000 of expenses directly attributable to the Split-
Off Transaction.
(b) Reflects the exercise of the Taylor Family stock options and the use of the
cash received from their exercise to reduce borrowings and the tax benefit
used to reduce income taxes payable.
(c) Reflects the payoff of the ESOP loan, primarily relating to the employees
of the Bank, in connection with the Bank terminating from the Company's
ESOP.
(d) Reflects the related interest income, loan fees and late charges earned on
the Automobile Receivables transferred to the Company from the Bank, along
with the provision for credit losses, salaries and benefits of employees
and other direct costs of originating and servicing these Automobile
Receivables.
(e) Reflects the reduction in interest expense as a result of the debt
reductions from the cash received through the sale of the net assets of
discontinued operations and the exercise of the Taylor Family Options.
(f) Reflects the write down to realizable value of the deferred tax asset
relating to certain state net operating loss carryforwards.
(g) Reflects the tax effect of the pro forma adjustments at a 38% effective tax
rate.
(h) The pro forma statements do not reflect the possible exercise of Bank
employee stock options, all of which become fully vested as a result of the
Split-Off Transaction. Total Bank employee options outstanding at September
30, 1996 were 819,999 shares with a weighted average exercise price of
$15.75. The exercise of these options would result in an increase in
stockholders' equity of approximately $3.7 million, of which $3 million
relates to the exercise price and $700,000 relates to the income tax
benefit, assuming the market price of the Common Stock at the date of
exercise is $14.00 per share.
<PAGE>
Reliance Acceptance Group, Inc.
(Formerly known as Cole Taylor Financial Group, Inc.)
Unaudited Pro Forma Condensed Consolidated Statement of Income
Nine months ended September 30, 1996
(in thousands, except per share data)
<TABLE>
<CAPTION>
Pro forma
Historical Adjustments Pro forma
----------- ----------- ---------
<S> <C> <C> <C>
Interest Income:
Interest and fee income $ 51,774 2,574 (d) $ 54,348
Interest expense 14,706 (3,022)(e) 11,684
----------- ---------- -----------
Interest income before provision for credit losses 37,068 5,596 42,664
Provision for credit losses - (450)(d) (450)
----------- ---------- -----------
Net interest income after provision for credit losses 37,068 5,146 42,214
Other income 928 - 928
Operating expense:
Salaries and employee benefits 10,780 310 (d) 11,090
Occupancy 683 45 (d) 728
Furniture, fixtures and equipment, net 386 36 (d) 422
Computer processing 321 63 (d) 384
Other operating expense 8,312 153 (d) 8,465
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Total operating expense 20,482 607 21,089
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Income from continuing operations before income taxes 17,514 4,539 22,053
Income taxes 6,853 1,721 (g) 8,574
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Net income from continuing operations 10,661 2,818 13,479
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Discontinued operations:
Income from discontinued operations before income taxes 17,633 (17,633) -
Income taxes 5,486 (5,486) -
----------- ---------- -----------
Net income from discontinued operations 12,147 (12,147) -
----------- ---------- -----------
Net income $ 22,808 (9,329) $ 13,479
=========== ========== ===========
Average number of common and common 101,024 (b)
equivalent shares outstanding 15,360,508 (4,500,000)(a) 10,961,532
=========== ========== ===========
Net income per share from continuing operations $ 0.69 $ 1.23
===========
Net income per share from discontinued operations $ 0.79
-----------
Net income per share $ 1.48
===========
</TABLE>
See accompanying notes to the Unaudited Pro Forma
Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Reliance Acceptance Group, Inc.
(Formerly known as Cole Taylor Financial Group, Inc.)
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 1996
(in thousands)
Pro forma
Assets Historical Adjustment Pro forma
---------- ---------- ---------
<S> <C> <C> <C>
Cash $ 488 1,071 (a) $1,559
Short-term investments 1,900 - 1,900
Finance receivables, net before dealer discount 348,662 32,000 (a) 380,662
Less nonrefundable dealer discount (13,965) (1,000) (a) (14,965)
-------- -------- --------
Finance receivables, net before allowance
for credit losses 334,697 31,000 365,697
Allowance for credit losses - -
-------- -------- --------
Finance receivables, net of allowance 334,697 31,000 365,697
-
Other assets 25,506 (1,280) (f) 24,226
Net assets of discontinued operations 146,228 (146,228) (a) -
-------- -------- --------
Total assets 508,819 (115,437) 393,382
======== ======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Liabilities:
Commercial paper 191,288 - 191,288
Long-term debt 133,960 (52,700) (a) 78,493
(2,767) (b)
Accounts payable and other liabilities 7,193 (1,151) (a) 3,793
(2,249) (b)
-------- -------- --------
Total liabilities 332,441 (58,867) 273,574
-------- -------- --------
Stockholders' equity:
Common stock 148 3 (b) 151
Surplus 77,870 5,013 (b) 82,883
Retained Earnings 98,360 55,414 (a) 153,774
Treasury stock - (117,000) (a) (117,000)
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Total stockholders' equity 176,378 (56,570) 119,808
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Total liabilities and stockholders'
equity $508,819 (115,437) $393,382
======== ======== ========
See accompanying notes to the Unaudited Pro Forma Consolidated Financial Statements
</TABLE>
<PAGE>
Reliance Acceptance Group, Inc.
(Formerly known as Cole Taylor Financial Group, Inc.)
Unaudited Pro Forma Condensed Consolidated Statement of Income
Year ended December 31, 1995
(in thousands, except per share data)
<TABLE>
<CAPTION>
Pro forma
Historical Adjustments Pro forma
---------- ----------- ----------
<S> <C> <C> <C>
Interest Income:
Interest and fee income $ 36,419 3,439 (d) $ 39,858
Interest expense 11,594 (4,130)(e) 7,464
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Interest income before provision
for credit losses 24,825 7,569 32,394
Provision for credit losses - (600)(d) (600)
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Net Interest income after provision
for credit losses 24,825 6,969 31,794
Other income 1,250 - 1,250
Operating expense:
Salaries and employee benefits 8,679 417 (d) 9,096
Occupancy 627 60 (d) 687
Furniture, fixtures and equipment, net 230 48 (d) 278
Computer processing 427 84 (d) 511
Other operating expense 4,611 203 (d) 4,814
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Total operating expense 14,574 812 15,386
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Income from continuing operations before income taxes 11,501 6,157 17,658
Income taxes 4,439 2,335 (g) 6,774
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Net income from continuing operations 7,062 3,822 10,884
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Discontinued operations:
Income from discontinued operations before income taxes 22,521 (22,521) -
Income taxes 5,911 (5,911) -
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Net income from discontinued operations 16,610 (16,610) -
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Net income $ 23,672 (12,788) $ 10,884
============ =========== ===========
Average number of common and common 98,274 (b)
equivalent shares outstanding 15,222,426 (4,500,000)(a) 10,820,700
============ =========== ===========
Net income per share from continuing operations $ 0.46 $ 1.01
===========
Net income per share from discontinued operations $ 1.09
------------
Net income per share $ 1.56
============
</TABLE>
See accompanying notes to the Unaudited Pro Forma Consolidated
Financial Statements
<PAGE>
Reliance Acceptance Group, Inc.
(Formerly known as Cole Taylor Financial Group, Inc.)
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 1995
(in thousands)
<TABLE>
<CAPTION>
Pro forma
Assets Historical Adjustment Pro forma
- ------ ---------- ---------- -----------
<S> <C> <C> <C>
Cash $ 3,375 1,071 (a) $ 4,446
Short-term investments 1,454 - 1,454
Finance receivables, net before dealer discount 231,726 32,000 (a) 263,726
Less nonrefundable dealer discount (12,655) (1,000) (a) (13,655)
-------- -------- ----------
Finance receivables, net before allowance
for credit losses 219,071 31,000 250,071
Allowance for credit losses - - -
-------- ------- ---------
Finance receivables, net of allowance 219,071 31,000 250,071
-
Other assets 10,009 (1,280) (f) 8,729
Net assets of discontinued operations 138,653 (138,653) (a) -
-------- -------- ---------
-
Total assets 372,562 (107,862) $ 264,700
======== ======== =========
Liabilities and Stockholders' Equity
- ------------------------------------
Liabilities:
Commercial paper 127,268 - 127,268
Long-term debt 82,657 (52,700) (a) 25,690
(4,010) (b)
(257) (c)
Accounts payable and other liabilities 8,020 (1,151) (a) 5,830
(1,039) (b)
-------- -------- ----------
Total liabilities 217,945 (59,157) 158,788
-------- -------- ----------
Stockholders' equity:
Common stock 146 3 (b) 149
Surplus 75,212 5,046 (b) 80,258
Retained Earnings 79,516 62,989 (a) 142,505
Treasury stock - (117,000) (a) (117,000)
Employee Stock Ownership Plan loan (257) 257 (c) -
-------- -------- ---------
Total stockholders' equity 154,617 (48,705) 105,912
-------- -------- ---------
Total liabilities and stockholders' equity $372,562 (107,862) $ 264,700
======== ======== =========
</TABLE>
See accompanying notes to the Unaudited Pro Forma Consolidated
Financial Statements
<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 hereunto duly authorized.
RELIANCE ACCEPTANCE GROUP, INC.
By: /s/ James I. Kaplan
---------------------------------------
Name: James I. Kaplan
Title: General Counsel and Corporate Secretary
Date: February 27, 1997
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Document Description
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2.1 Amended and Restated Share Exchange Agreement, dated June 12, 1996, by
and between Cole Taylor Financial Group, Inc. and the Taylor Family
(incorporated by reference from Appendix A to the Proxy Statement of
Reliance Acceptance Group, Inc., formerly Cole Taylor Financial Group,
Inc., dated 10/15/96).
99.1 Press Release of Reliance Acceptance Group, Inc., dated 2/12/97.
<PAGE>
EXHIBIT 99.1
NEWS RE: RELIANCE ACCEPTANCE GROUP, INC.
BULLETIN 400 North Loop 1604 East
San Antonio, Texas
(210) 402-5910
FROM: NASDAQ: RACC
FRB
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The Financial Relations Board Inc.
FOR FURTHER INFORMATION:
AT RELIANCE: AT THE FINANCIAL RELATIONS BOARD:
James Kaplan Jeff Wescott Bess Gallanis
General Counsel General Info. Media Inq.
(312) 214-4930 (312) 640-6732 (312) 640-6737
FOR IMMEDIATE RELEASE
RELIANCE ACCEPTANCE GROUP COMPLETES
DIVESTITURE OF COLE TAYLOR BANK
San Antonio, Texas, February 12, 1997 - Reliance Acceptance Group, Inc.
(formerly Cole Taylor Financial Group, Inc.) announced the completion of the
divestiture of its Cole Taylor Bank and at CT Mortgage subsidiaries. Immediately
following the divestiture, the Company changed its name from Cole Taylor
Financial Group, Inc. to Reliance Acceptance Group, Inc. Beginning tomorrow, its
shares will trade on Nasdaq under the new symbol of RACC.
No action is required by Cole Taylor shareholders, as "old" Cole Taylor
Financial Group, Inc. stock certificates represent the same number of shares of
the renamed company, Reliance Acceptance Group, Inc. All future corporate
communications will use the new corporate name.
As a result of the divestiture, Reliance Acceptance Group, Inc. has reduced
the number of outstanding common shares by 4,500,000 shares, and its equity
capital exceeds $100 million. Reliance Acceptance Group, Inc. is the parent of
Reliance Acceptance Corporation, a specialty finance company operating 53 branch
offices in 16 states.
For more information on Reliance Acceptance Group, Inc. via facsimile at no
cost, dial 1-800-PRO-INFO and enter the company code 199.
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