As filed with the Securities and Exchange Commission on April 20, 2000
Registration No. 333-91035
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
to
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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BELMONT BANCORP.
(Exact Name of Registrant as specified in charter)
OHIO 6021 34-1376776
(State or jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification No.)
325 Main Street
Bridgeport, OH 43912
(740) 695-3323
(Address and telephone number of principal executive offices
and principal place of business)
Wilbur R. Roat
President and Chief Executive Officer
Belmont Bancorp.
325 Main Street
Bridgeport, OH 43912
(740) 695-3323
(Name, address, and telephone number of agent for service)
Copies to:
David G. Edwards, Esq.
Doepken Keevican & Weiss Professional Corporation
58th Floor, USX Tower
600 Grant Street
Pittsburgh, PA 15219
(412) 355-2600
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
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If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. [_]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
Proposed
maximum aggregate
Title of each class of offering Amount of
securities to be registered price (1) registration fee
-------------- ----------------
Common Stock, $.25 par value......... $10,000,000 $2,780 (2)
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
(2) This amount was paid at the time the registrant filed the initial
Registration Statement on Form S-2 on November 16, 1999.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
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BELMONT BANCORP.
Supplement dated April 20, 2000 to
Prospectus dated February 4, 2000,
as supplemented February 23, 2000
Acceptance of Subscriptions and Extension of the Offering
Belmont has accepted subscriptions for 2,039,849 shares of its common
stock. Of the $4.1 million in gross offering proceeds held in its escrow account
with Firstar Bank (formerly referred to as Firstar Trust Company), $3.8 million
was released to Belmont on April 14, 2000 for subscriptions received through
April 13, 2000. The balance of the offering proceeds for subscriptions received
on April 14, 2000 or post-marked on or prior to that date and subsequently
received will be released to Belmont on April 21, 2000. On April 14, 2000,
Belmont concluded the rights and ancillary offerings, but desires to reopen the
ancillary offering and extend it until May 26, 2000, subject to further
extension for up to an 90 additional days, under revised escrow terms which
permits Belmont to direct the release of funds on a weekly basis. To that end,
Belmont has entered into a new escrow agreement with Firstar.
Additional Capital Required
As disclosed in the prospectus, the Bank entered into a consent order with
the Comptroller of the Currency which requires, among other things, that the
Bank achieve by March 31, 2000, and thereafter maintain, Tier 1 capital at least
equal to 6% of adjusted total assets, which is referred to as a 6% Tier 1
leverage ratio. On March 30, 2000, the Bank advised the Comptroller of the
Currency that it would not achieve the specified Tier 1 capital level by March
31, 2000 and submitted a revised capital restoration plan which sets forth other
means to achieve the objectives, including by seeking to raise additional
capital though an extension of this offering or by selling additional assets or
deposits. On April 14, 2000, the Comptroller of the Currency advised the Bank
that it could not accept the capital restoration plan as submitted and would
require additional detail and support of the actions proposed. The Bank has
begun to gather the additional information needed to revise the plan.
In order to achieve a Tier 1 leverage ratio of 6%, the Bank will need
approximately $4.9 million in additional capital after taking into account the
subscriptions for $4.1 million received to date in the offering and $1.65
million invested by the directors prior to the offering. At March 31, 2000, the
Bank's unaudited Tier 1 leverage ratio was 3.1%. As of the date of this
supplement, the Bank's estimated Tier 1 leverage ratio, including the proceeds
from the offering, was 4.3%. Management believes that, if additional funds are
not raised in the offering, its capital restoration plan provides for an
effective manner for the Bank to continue its operations through the sale of
specified assets and deposits.
See "Risk Factors--If We Do Not Raise Funds Sufficient to Maintain an
Adequate Capital Position, We will Need to Take Steps Either to Sell the Bank or
Seek Alternative Sources of Financing" and Recent Developments--Consent Order"
and notes 2 and 20 to Belmont's consolidated financial statements which are
included in its annual report on Form 10-K for the year ended December 31, 1999
which accompanies this supplement.
New Subscription Agreement
The revised form of the Subscription Agreement to be used for subscriptions
on or after the date of this supplement is attached as Annex 1 to this
supplement.
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Withdrawal of Subscriptions
Persons whose subscriptions were received and accepted by Belmont prior to
the date of this supplement may withdraw those subscriptions and receive a full
refund by notifying either Shareholder Relations, Belmont Bancorp., 980 National
Road, Wheeling, West Virginia 26003, fax number 304-233-8947, or 3 Firstar Bank,
N.A., escrow agent, 425 Walnut Street, ML CN-WN-06CT, Cincinnati, Ohio 45202,
Attention: Brian George. Requests to withdraw must be received on or before May
12, 2000. Upon receipt of your request, we will promptly return your
subscription funds.
Incorporation of Annual Report on Form 10-K
The SEC allows us to "incorporate by reference" information we have filed
with the SEC. We are incorporating by reference our annual report on Form 10-K
for the year ended December 31, 1999 filed with the SEC on April 14, 2000 (SEC
file number 0-12724). A copy of this annual report on Form 10-K is being
delivered to you with the prospectus and this supplement.
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Annex 1 to Supplement
dated April 20, 2000
SUBSCRIPTION AGREEMENT
for Subscriptions received in the Offering of
Belmont Bancorp. on or after April 20, 2000
Firstar Bank, N.A.
425 Walnut Street
ML CN-WN-06CT
Cincinnati, Ohio 45202
Attention: Brian George
Ladies and Gentlemen:
The undersigned hereby subscribes for and agrees to purchase the number of
shares of common stock, par value $0.25 (the "Shares"), of Belmont Bancorp., an
Ohio corporation ("Belmont"), indicated below. The undersigned has executed and
delivered this Subscription Agreement in connection with Belmont's offering of
Shares described in the Prospectus dated February 4, 2000, as supplemented by
Supplements dated February 23, 2000 and April 19, 2000 and as may be further
supplemented from time to time (the "Supplements"), which Prospectus and
Supplements accompany this Subscription Agreement.
The undersigned agrees to purchase the Shares subscribed for herein for the
purchase price of $2.00 per share and has delivered to our escrow agent, Firstar
Bank, N.A., with this Subscription Agreement a check made payable to "Firstar
Bank, N.A., escrow agent" in an amount equal to the aggregate purchase price of
all Shares for which the undersigned desires to subscribe.
The undersigned acknowledges receipt of a copy of (1) our Prospectus, as
supplemented by the Supplements, and (2) our Annual Report on Form 10-K for the
year ended December 31, 1999.
The undersigned acknowledges that Belmont may accept or decline the
undersigned's subscription. Generally, it is our intention to accept
subscriptions for shares in the Offering on a weekly basis.
______________ Shares ($_______________)
subscribed for (minimum of 500 Shares and
total subscription price at $2.00 per Share)
- --------------------------------------
How Shares are to be held if this is a
co-investment, e.g., as joint
tenants (with right of survivorship) or
tenants-in-common
- ------------------------------------------
Social Security or Tax I.D. number(s)
- -------------------------------------
Please print name(s) of subscriber(s)
- -------------------------------------
Signature of subscriber
- -------------------------------------
Signature of co-subscriber
- -------------------------------------
- -------------------------------------
Address
- -------------------------------------
Date
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BELMONT BANCORP.
Supplement dated February 23, 2000 to
Prospectus dated February 4, 2000
Revised Estimate of Results for the Fourth Quarter of 1999
We disclosed in the prospectus that we expected to incur a loss of $2.4
million to $2.6 million for the fourth quarter of 1999, or $0.45 to $0.50 per
share. We attributed the estimated loss to three factors, including our plan to
record a loan loss provision of approximately $850,000 for the fourth quarter
for reserves and credit downgrades on a variety of loans. On February 22, 2000,
the Office of the Comptroller of the Currency, following completion of its
review of our loan portfolio, advised that it would require us to increase this
loan loss provision to $2.5 million. As a result, we now estimate that we will
incur a loss for the fourth quarter of 1999 of from $3.5 million to $3.7
million, or $0.66 to $0.71 per share. We have also revised our previous estimate
of book value of between $2.02 and $2.07 per share at December 31, 1999 to
between $1.80 and $1.85 per share.
As disclosed in the prospectus, we have undertaken a thorough assessment of
all of our operations, personnel, policies and procedures, with particular
emphasis on the loan portfolio. We originated the loans that required additional
reserves well before we implemented these new policies. None of these loans
involved the Schwartz Home matters. Neither the Comptroller of the Currency nor
our outside accountants have identified any other loans which they believe
require additional loan loss reserves at this time.
Revised Estimate of Capital Requirements
The Comptroller of the Currency has also required the Bank to limit the
amount of deferred tax assets that the Bank includes in Tier 1 capital. As a
result of this limitation and the loss we expect to incur for the fourth quarter
of 1999, we now estimate our Tier 1 capital at December 31, 1999 to be $9.1
million and our Tier 1 leverage ratio to be 2.8%. At this level of
capitalization, the Bank is currently regarded as "significantly
undercapitalized" under regulatory Prompt Corrective Action requirements.
As disclosed in the prospectus, the Bank entered into a consent order with
the Comptroller of the Currency which requires, among other things, that the
Bank achieve by March 31, 2000, and thereafter maintain, Tier 1 capital at least
equal to 6% of adjusted total assets, which is referred to as a 6% Tier 1
leverage ratio. The Bank would not be treated as "well capitalized" even if it
achieved and maintained a Tier 1 leverage ratio of 6% unless and until the
consent order is terminated or modified to eliminate this capital requirement.
Tier 1 capital consists principally of shareholders' equity less goodwill and a
portion of deferred tax assets. We now expect to need $9.2 million in offering
proceeds, in addition to the $1.65 million recently invested in Belmont by our
directors, in order to achieve a Tier 1 leverage ratio of 6% by March 31, 2000.
As a result of these revised estimates, the shares offered in the offering
are being offered at a price more than our estimated book value. Assuming that
our estimated book value at December 31, 1999 is in fact $1.80 per share, a
purchaser of shares in the offering will pay a premium of $0.20 per share or 11%
over book value.
Withdrawal of Subscriptions
The subscription funds received in the offering will be held in an escrow
account with Firstar Trust Company until both the rights offering and the
ancillary offering are completed, which will be March 28, 2000, unless either
offering is extended. We will not decide whether or not to accept subscriptions
until that date. At any time during the offering and until we accept your
subscription, you may withdraw your subscription to purchase our
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common stock by notifying either Shareholder Relations, Belmont Bancorp., 980
National Road, Wheeling, West Virginia 26003, fax number 304-233-8947, or
Firstar Trust Company, escrow agent, 425 Walnut Street, ML CN-WN-06CT,
Cincinnati, Ohio 45202, Attention: Brian George. Upon receipt of your request,
we will promptly return your subscription funds.
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<PAGE>
Prospectus
February 4, 2000
BELMONT BANCORP.
5,000,000 COMMON SHARES
Belmont Bancorp.
o Belmont Bancorp.
325 Main Street
Bridgeport, Ohio 43912
Trading
o Our shares are listed on the Nasdaq SmallCap Market with the trading symbol
BLMT.
The Offering:
o We are offering shares of our common stock to our existing shareholders on
the basis of 0.95 shares for each share owned. This rights offering will
remain open for the period from February 7, 2000 to March 17, 2000, subject
to extension for up to 30 additional days in our sole discretion.
o We are also offering to our existing shareholders, depositors and other
persons shares of our common stock, subject to shares remaining available
for purchase upon completion of the rights offering. This ancillary
offering will remain open for the period from February 7, 2000 to March 28,
2000, subject to extension for up to an additional 45 days in our sole
discretion.
o We plan to use the net proceeds from this offering to increase the
Bank's capitalization in order to meet a minimum capital requirement
specified by our Federal regulators of Tier l Capital at least equal
to 6% of adjusted total assets. At December 31, 1999, the Bank's
estimated Tier l Capital of $12.0 million was approximately $8.6
million less than the required amount and its estimated Tier l Capital
ratio was approximately 3.7%. If the Bank does not have Tier l Capital
of 6% by March 31, 2000, we will discuss various steps with the
regulators, which could include the following or other actions:
$2.00 PER SHARE
-- We could reject all subscriptions and refund all payments and seek to
sell the Bank or enter into a strategic partnership with another financial
institution.
-- We could accept all subscriptions and seek additional financing through
other sources. In this instance, we could sell common stock or securities
convertible into common stock at a price per share less than the price in
this offering, and any sales of additional stock would dilute your interest
in Belmont. We could also sell preferred stock or debt securities, either
of which would have rights preferential to those of our common stock.
-- We could accept all subscriptions and further reduce the total assets of
the Bank through the sale of assets, or seek to sell all of our assets or
enter into a strategic partnership. If we reduce our assets, we could limit
our ability to generate earnings in future periods to the extent we sell
our most productive assets. If the Bank is sold or a strategic partner or
other person invests in or provides financing to us, any shares you
purchase could have a market value less than the offering price as a result
of the terms of any such transaction.
o We are selling our common stock on a best effort basis. This is not an
underwritten offering
o There is no minimum offering amount. However, all subscription funds will
be held in escrow. The escrow agent will not be permitted to release these
funds until the conclusion of the offering.
Per Share Total Amount
--------- ------------
Public offering price: $2.00 $10,000,000
This investment involves risk. Investors should be able to afford the loss of
their investment. See "Risk Factors" beginning on page 5.
Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
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The shares offered hereby are not bank deposits and are not insured by the
Federal Deposit Insurance Corporation or any other agency or company. The
Federal Deposit Insurance Corporation has not passed, and does not pass, upon
the merits of these or any other securities nor do they pass upon the accuracy
or completeness of any prospectus or other selling literature.
For Pennsylvania Residents: You have accepted an offer to purchase these
securities made pursuant to a prospectus which contains a notice explaining your
right to withdraw your acceptance pursuant to Section 207(m) of the Pennsylvania
Securities Act of 1972 (70 P.S. ss. 1-207(m)), you may elect, within two
business days after the first time you have received the notice and a prospectus
to withdraw from your purchase agreement and receive a full refund of all monies
paid by you. Your withdrawal will be without any further liability to any
person. To accomplish this withdrawal, you need only send a letter or telegram
to the issuer (or underwriter if one is listed on the front page of the
prospectus) indicating your intention to withdraw. Such letter or telegram
should be sent and postmarked prior to the end of the aforementioned second
business day. If you are sending a letter, it is prudent to send it by certified
mail, return receipt requested, to ensure that it is received and also to
evidence the time when it was mailed. Should you make the request orally, you
should ask for written confirmation that your request has been received.
Notice to Ohio Investors: a Registration Statement concerning the shares has
been filed with the Ohio Division of Securities pursuant to Sections
1707.06(a)(1) and 1707.05A of the Ohio Revised Code. These shares have not been
approved or disapproved as an investment for any Ohio resident by the Ohio
Division of Securities, nor has the Division passed upon the accuracy of this
prospectus.
You should rely only on the information contained in this document or
incorporated by reference. We have not authorized anyone to provide you
information that is different. This prospectus shall not constitute an offer to
sell or a solicitation of an offer to buy any securities in any jurisdiction in
which it would be unlawful to make such offer or solicitation.
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PROSPECTUS SUMMARY
The following summarizes information in other sections of our prospectus.
You should read the entire prospectus carefully.
Belmont
Belmont Bancorp., an Ohio corporation, is a registered bank holding company
headquartered in Bridgeport, Ohio. Our principal business is presently to
operate the Bank, which is a wholly owned subsidiary and our principal asset.
The Bank conducts a general commercial banking business through its 13 banking
offices in eastern Ohio and northern West Virginia. A second subsidiary, Belmont
Financial Network, Inc., invests in low income housing. Our mailing address is
P.O. Box 249, St. Clairsville, Ohio 43950 and our telephone number is (740)
695-3323.
As of October 31, 1999, we had consolidated total assets of approximately
$336 million, deposits of approximately $272 million and shareholders' equity of
approximately $12 million.
We provide a wide range of retail banking services to individuals and small
to medium-sized businesses. These services include various deposit products,
business and personal loans, credit cards, residential mortgage loans, home
equity loans, and other consumer oriented financial services including IRA and
Keogh accounts, safe deposit and night depository facilities.
The Offering
Securities Offered...................... 5,000,000 common shares, $0.25 par
value at a subscription price of
$2.00 per share, or $10.0 million in
the aggregate.
Shares Outstanding/Authorized........... We had 5,236,534 shares of common
stock issued and outstanding as of
the record date of this offering,
January 21, 2000. If the offering is
fully subscribed, we will have
10,236,534 shares issued and
outstanding. We have 17,800,000
shares authorized.
Rights Offering......................... All current shareholders will be
entitled to purchase 0.95 shares of
common stock at $2.00 per share for
each share of stock held by them as
of the record date. We will not issue
fractional shares. We will round the
rights to the nearest whole share.
Rights are generally ontransferable.
This rights offering will remain open
during the period from February 7,
2000 to March 17, 2000, subject to
extension for up to 30 additional
days in our sole discretion.
Ancillary Offering...................... We are also offering to our existing
shareholders, depositors and other
persons shares of our common stock,
subject to shares remaining available
for purchase upon completion of the
rights offering. We will offer shares
in the ancillary offering for the
period from February 7, 2000 to March
28, 2000, subject to extension for up
to 45 days in our sole discretion. A
minimum
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subscription of 500 shares is
required in this ancillary offering.
Purchase of Shares by Directors......... In order to evidence their confidence
in Belmont and encourage
participation in the offering through
their example, in November 1999, 10
of our 12 directors agreed to
purchase $1.65 million of our stock
convertible into common stock at the
same price as the shares offered in
this offering. All of this
convertible stock will be converted
into common stock at $2.00 per share
unless all or substantially all of
the shares offered in the offering
are sold. In that event, we may
redeem for the original issuance
price the shares of convertible
stock. The shares of common stock
issued upon conversion of this
convertible stock will not be part of
this offering and will be treated as
"restricted securities" as that term
is defined in Rule 144 under the
Securities Act of 1933.
Escrow and Acceptance of Subscriptions.. We will deposit all subscription
funds received in a non-interest
bearing escrow account with Firstar
Trust Company, as escrow agent. The
escrow agent will hold in the escrow
account all subscription funds until
the conclusion of the offering. We
may elect to accept or reject all of
the subscriptions in the rights
offering and any or all of the
subscriptions in the ancillary
offering. We will accept
subscriptions in the ancillary
offering only if the rights offering
is not fully subscribed. If the
ancillary offering is
over-subscribed, we expect,
generally, to accept subscriptions in
the order received.
Use of Proceeds......................... We will use the net proceeds of the
offering to increase the
capitalization of the Bank.
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RISK FACTORS
An investment in the shares involves risks, many of which are beyond our
control and represent contingencies that cannot be reliably estimated. You
should carefully consider the following factors and other information in this
prospectus before deciding to invest in shares of our common stock.
If We Do Not Raise Funds Sufficient to Maintain an Adequate Capital Position, We
Will Need to Take Steps Either to Sell the Bank or Seek Alternative Sources of
Financing
The Bank has entered into a consent order with the Office of the
Comptroller of the Currency which requires, among other things, that the Bank
achieve by March 31, 2000, and thereafter maintain, Tier 1 capital at least
equal to 6% of adjusted total assets, which is referred to as a 6% Tier 1
leverage ratio. Tier 1 capital consists principally of shareholders' equity less
goodwill and a portion of deferred tax assets. Belmont has also entered into a
written agreement with the Federal Reserve Bank of Cleveland that requires,
among other things, that it maintain an adequate capital position for the Bank.
In October 1999, the Bank sold approximately $38 million in investment
securities and used approximately $33 million of the proceeds to repay
borrowings from the Federal Home Loan Bank of Cincinnati. Although losses and
prepayment penalties associated with the transactions totaled $1.1 million, the
capital required to support the Bank's assets based on the terms of the consent
order was reduced by approximately $2.0 million.
While it is difficult to estimate what our capital requirements will be at
March 31, 2000, based upon our estimated Tier 1 capital of $12.0 million and
estimated Tier 1 leverage ratio of 3.7% at December 31, 1999, we would need to
receive approximately $8.6 million in offering proceeds to achieve a Tier 1
leverage ratio equal to 6%, which is the level required for a bank to be
categorized as "well capitalized." If the Bank does not have Tier 1 capital of
6% by March 31, 2000, we will be in violation of the agreements with the
Comptroller of the Currency and the Federal Reserve Bank of Cleveland. In such
event, we expect to enter into discussions with the Comptroller of the Currency
and the Federal Reserve Bank of Cleveland to address various steps that we could
take. These steps could include the following or other actions:
o We could reject all subscriptions and refund all payments and seek to
sell the Bank or enter into a strategic partnership with another
financial institution. In this instance, you will not be permitted to
invest in our stock.
o We could accept all subscriptions and seek additional financing
through other sources. In this instance, we could sell common stock or
securities convertible into common stock at a price per share less
than the price in this offering, and any sales of additional stock
would dilute your interest in Belmont. We could also sell preferred
stock or debt securities, either of which would have rights
preferential to those of our common stock.
o We could accept all subscriptions and further reduce the total assets
of the Bank through the sale of assets, or seek to sell all of our
assets or enter into a strategic partnership. If we reduce our assets,
we could limit our ability to generate earnings in future periods to
the extent we sell our most productive assets. If the Bank is sold or
a strategic partner or other person invests in or provides financing
to us, any shares you purchase could have a market value less than the
offering price as a result of the terms of any such transaction.
We cannot offer any assurance to you that we will be able to enter into a
strategic partnership, obtain additional financing or sell the Bank or any of
its assets on terms favorable to us. If, following this offering, the Bank is
sold or a strategic partner or other person invests in or provides financing to
us, a single investor could obtain control of the Bank and install a new
management team unknown to current shareholders.
Furthermore, we cannot offer any assurance to you what position the
Comptroller of the Currency and the Federal Reserve Bank of Cleveland will take
if the Bank does not have Tier 1 capital of 6% by March 31, 2000. The
Comptroller of the Currency and the Federal Reserve Bank of Cleveland could take
various actions or mandate that we take specified actions, including the
following:
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o They could continue to monitor our operations as they are currently
doing and allow us more time to improve our capital position.
o They could assume a more active supervisory role and require us to
implement changes in our business model or management.
o They could assume complete control of the management of Belmont and
the Bank and seek to identify a strategic buyer to purchase our assets
or liquidate our assets.
If the Comptroller of the Currency and Federal Reserve Bank of Cleveland
assume complete or significantly greater control of our operations or mandate a
sale of all of our assets, it is likely that such actions could have an adverse
effect on the value of our shares. If we receive subscriptions to purchase fewer
shares than are required to enable us to achieve a 6% Tier 1 leverage ratio, we
intend to seek to determine the steps the Comptroller of the Currency and
Federal Reserve Bank of Cleveland are likely to take before accepting any
subscriptions.
If We Continue to Incur Significant Loan Losses, Our Share Value Will Likely
Decline and We Will Need Additional Capital to Meet Capital Requirements
As discussed in our SEC filings and subsequent news releases, we have
recognized significant loan losses and have created significant reserves for
loan losses since the fourth quarter of 1998, principally as a result of a large
commercial borrower ceasing operations in April 1999 and certain irregularities
with regard to consumer loans to customers of that borrower. Belmont has
continued to experience losses in 1999 as it has established additional loan
loss provisions. As of October 31, 1999, we had loan loss reserves of $10
million and intend to reserve an additional $850,000 for the fourth quarter of
1999. Based upon our extensive review of our loan portfolio, with the assistance
of Durfee & Root, certified public accountants, and Crowe, Chizek and Company
LLP, the independent accountants we recently engaged to serve as our auditors,
we believe that we have appropriately reserved for loan losses. However, we can
offer no assurance that we will not incur loan losses in the immediate future in
excess of the amounts reserved. If we continue to incur significant loan losses,
it is likely that investor confidence in Belmont will be diminished and that the
market price of our shares will decline. In addition, if these loan losses are
significant, we will need to raise more capital than presently anticipated in
order to meet capital requirements of the Office of the Comptroller of the
Currency and the Federal Reserve Bank of Cleveland. See ?Risk Factors--If We Do
Not Raise Funds Sufficient to Maintain an Adequate Capital Position, We Will
Need to Take Steps Either to Sell the Bank or Seek Alternative Sources of
Financing? and ?Recent Developments.?
We have made Significant Loans in Particular Industries, which Heightens our
Risk of Loan Losses
Banks and financial institutions that lend too heavily in a particular
industry are exposed to the risk of substantial loan losses if that industry
should suffer economic hardship. We have lent heavily in particular industries,
principally the amusement industry. The loans and credit facilities we have made
available to the amusement industry totaled $19.8 million, or 10.7% of our total
loans, at September 30, 1999. William Wallace, formerly the executive vice
president and chief operating officer of the Bank, directed the loans in this
industry due to his belief that this industry was under served by the banking
industry and that higher yields were available on loans made to borrowers in
this industry.
The table set forth below depicts, as of September 30, 1999, the Bank's
lending on an industry-by-industry basis where the loan balance and borrower's
available credit exceed 25% of our total capital. Our total capital consists
principally of shareholders' equity less goodwill, a portion of deferred tax
assets, debt instruments and a portion of the allowance for possible loan
losses. As of September 30, 1999, our total capital was $16.4 million. Except
for the amusement industry loans, we exceeded this 25% level as a result of the
recent reduction of our capital. We are taking steps to further diversify our
loan portfolio and otherwise lower these percentages by seeking to raise capital
in this offering, but we may not be successful in meeting these objectives. See
"Risk Factors--If We Do Not Raise Funds Sufficient to Maintain an Adequate
Capital Position, We Will Need to Take Steps Either to Sell the Bank or Seek
Alternative Sources of Financing."
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Loan Balance and Percent of
Industry Available Credit Total Capital
Amusement Industry 19,782,000 120.5%
Services - Hotel/Motel 7,071,000 43.1%
Commercial Office Buildings and Rentals 6,729,000 41.0%
Commercial Apartments and Rentals 6,729,000 41.0%
Automobile Retailers 5,530,000 33.7%
General Building Contracting 5,426,000 33.1%
Commercial Construction Contracting 5,057,000 30.8%
We Face Intense Competition in Our Market Area Which May Reduce Our Customer
Base
Bank holding companies and their subsidiary banks are subject to vigorous
and intense competition from other banking institutions and from various
financial institutions and other "nonbank" or non-regulated companies or firms
that engage in similar activities. We compete for deposits with other commercial
banks, savings banks, savings and loan associations, insurance companies and
credit unions, as well as issuers of commercial paper and other securities,
including shares in mutual funds. In making loans, we compete with other
commercial banks, savings banks, savings and loan associations, consumer finance
companies, credit unions, insurance companies, leasing companies and other
nonbank lenders. Because of our current need to increase our capital we may be
unable to compete for some loans which we would normally like to make.
We compete not only with financial institutions in Eastern Ohio and
Northern West Virginia but also with a number of large out-of-state and foreign
banks, bank holding companies and other financial and nonbank institutions. Some
of these institutions are engaged in national and international operations and
have more assets and personnel than us. In addition, some of our competitors are
not subject to the extensive bank regulatory structure and restrictive policies
which apply to us.
The principal factors in successfully competing for deposits are convenient
office locations, flexible hours, competitive interest rates and services, while
those relating to loans are competitive interest rates, the range of lending
services offered and lending fees. We believe that the local character of our
business and our community bank management philosophy enables us to compete
successfully in our market area. We anticipate, however, that competition will
continue to increase in the years ahead.
Additional Sales of Capital Stock in the Future Could Dilute Our Stockholders'
Ownership Interests
Our shares of capital stock eligible for future sale could have a dilutive
effect on the market for our common stock and could adversely affect the market
price. Our charter authorizes the issuance of up to 17,800,000 shares of common
stock and 90,000 shares of preferred stock. On both the record date of the
rights offering, January 21, 2000, and the date of this prospectus , we had
5,236,534 shares of common stock and 16,500 shares of preferred stock
outstanding. Assuming all 5,000,000 shares offered in this offering are sold,
7,563,466 shares of common stock will be available for future issuance. In order
to improve our capital position we may have to attract new investors in the
future by the sale of stock at a lower price than the current offering price.
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Our Charter Contains Anti-takeover Provisions which Could Discourage
Acquisitions and Adversely Affect the Price of Our Stock
Our Articles of Incorporation contain provisions which may have the effect
of discouraging or impeding a tender offer, proxy contest or similar
transactions involving control of Belmont, including transactions in which our
stockholders might otherwise receive a premium for their shares above
then-current market prices or other transactions they may deem to be in their
best interest.
Ohio Statutory Law Contains Provisions which Could Discourage Acquisitions and
Adversely Affect the Price of our Stock
Certain provisions of the Ohio Revised Code which are applicable to us may
have the effect of discouraging or impeding a tender offer, proxy contest or
similar transactions involving control of Belmont, including transactions in
which our stockholders might otherwise receive a premium for their shares above
then-current market prices or other transactions they may deem to be in their
best interest. These provisions include permitting a company's board to consider
the interests of employees, suppliers, creditors and customers, general
community and societal factors and the long-term and short-term interests of the
company and its shareholders in deciding whether to accept or reject an offer to
purchase the company. Consequently, if we were to receive an offer to purchase
Belmont, our board could base its decision on whether to accept or reject the
offer based on factors other than maximizing shareholder value.
WHERE YOU CAN FIND MORE INFORMATION
Belmont Bancorp. files annual, quarterly and current reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any document that we file at the SEC public reference room
facility located at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
SEC's regional offices at 7 World Trade Center, 13th Floor, Suite 1300, New
York, New York 10048, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further information on
the public reference room. The SEC maintains an Internet site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding issuers, including Belmont Bancorp., that file
documents with the SEC electronically through the SEC's electronic data
gathering, analysis and retrieval system known as EDGAR. Our common stock is
traded on the Nasdaq SmallCap Market under the symbol "BLMT." Our reports, proxy
and information statements may also be reviewed at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
This prospectus is part of a registration statement filed by us with the
SEC. Because the rules and regulations of the SEC allow us to omit certain
portions of the registration statement from this prospectus, this prospectus
does not contain all the information contained in the registration statement.
You may review the registration statement and the exhibits filed with the
registration statement for further information regarding us and the securities
being sold by this prospectus. The registration statement and its exhibits may
be inspected at the public reference facilities of the SEC at the addresses
mentioned above.
INCORPORATION OF INFORMATION THAT WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" information we have filed
with the SEC. This means:
o incorporated documents are considered part of this prospectus;
o we can disclose important information to you by referring you to those
documents.
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We incorporate by reference the documents listed below, all of which were
filed under SEC file number 0-12724:
o Our amended annual report on Form 10-K/A for the year ended December
31, 1998 filed with the SEC on January 27, 2000.
o Our quarterly reports on Form 10-Q for the three month periods ended
March 31, 1999 and June 30, 1999 and September 30, 1999.
o Our amended quarterly report on Form 10-Q/A for the three month period
ended September 30, 1999 filed with the SEC on January 27, 2000.
o Our current reports on Forms 8-K filed, March 22, 1999, April 28,
1999, May 21, 1999, June 14, 1999, August 11, 1999, October 14, 1999,
October 18, 1999 and October 20, 1999.
Copies of our amended annual report on Form 10-K/A for the year ended
December 31, 1998 and the amended quarterly report on Form 10-Q/A for the
quarter ended September 30, 1999 are being delivered to you with this
prospectus.
You may request a copy of any filings referred to above, including exhibits
which are specifically incorporated by reference in those filings, at no cost,
by contacting us orally or in writing at the following address:
Jane R. Marsh
Corporate Secretary
Belmont Bancorp.
154 W. Main Street, P.O. Box 249
St. Clairsville, OH 43950
(740) 695-3323
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making an offer of
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any supplement is accurate as of any
date other than the date on the front of those documents because our financial
condition and results may have changed since that date.
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RECENT DEVELOPMENTS
Consent Order
In August 1999, the Bank received the written report of the recent
examination of the Bank by the Office of the Comptroller of the Currency, the
Bank's principal federal regulatory agency. At the same time, the Bank entered
into a consent order with the Comptroller of the Currency relating to the
results of the examination, which contains certain required actions and certain
restrictions.
The consent order requires the Bank to:
o formulate new plans, policies, procedures and programs relating to
long-term strategy, organizational structure, management, loans, loan loss
reserves, overdrafts, loan interest accrual and non-accrual loans, loan
diversification, internal audit and periodic loan review by certain dates
o implement and follow those plans, policies, procedures and programs
o review and evaluate certain groups of loans and correct deficiencies
o properly document commercial extensions of credit
o comply with law and regulations relating to lending
o retain the services of a qualified independent certified public accounting
firm acceptable to the Comptroller of the Currency
o appoint a compliance committee from among the independent members of the
board and report monthly to the Comptroller of the Currency on progress in
complying with the consent order.
o achieve a specified minimum level of capital March 31, 2000 and thereafter
maintain it.
The Bank has:
o formulated new plans policies, procedures and programs
o implemented and followed the new plans, policies, procedures and programs
o reviewed and evaluated such groups of loans and corrected such deficiencies
with respect to
o reviewed existing documentation and obtained additional documentation,
where necessary
o complied with the laws and regulations relating to lending
o in October, 1999, with the approval of the Comptroller of the Currency,
retained the services of Crowe, Chizek and Company LLP
o has appointed a compliance committee and has filed its monthly reports with
the Comptroller of the Currency
o taken or intends to take all appropriate steps, including this common stock
offering, to meet the minimum capital requirement. At December 31, 1999,
the Bank's estimated Tier 1 capital of $12.0 million was approximately $8.6
million less than the required amount. See "Risk Factors--We Must Improve
our Capital Position." In addition to raising capital, we may improve the
ratio of the Bank's Tier 1 capital to adjusted total assets through the
sale of assets and repayment of a funding source such as borrowings. In
October 1999, the Bank sold approximately $38 million in investment
securities and used approximately $33 million of the proceeds to repay
borrowings from the Federal Home Loan Bank of Cincinnati.
Although losses and prepayment penalties
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associated with the transactions totaled $1.1 million, the capital
required to support the Bank's assets based on the terms of the
consent order was reduced by approximately $2.0 million. The Bank's
estimated Tier 1 capital to adjusted total assets was 3.7% at December
31, 1999. We are contemplating further asset reductions.
Federal Reserve Bank Agreement
In August 1999, we also entered into an agreement with the Federal Reserve
Bank of Cleveland, under authority given it by the Board of Governors of the
Federal Reserve System, the federal regulatory agency for Belmont. As with the
consent of the Comptroller of the Currency, the Federal Reserve agreement
necessitates certain actions and restrictions.
We are required to:
o submit to the Federal Reserve an acceptable plan for maintaining
adequate capital at the Bank
o comply with the plan
o submit annual cash flow projections
o ensure that the Bank complies fully with the consent order with the
Comptroller of the Currency
o report quarterly on progress in complying with the Federal Reserve
agreement
We have:
o submitted an acceptable plan to the Federal Reserve
o complied with the plan
o submitted annual cash flow projections
o monitored compliance by the Bank with the consent order
o reported quarterly on our progress
Without prior Federal Reserve approval, the agreement prohibits us from:
o paying dividends
o incurring debt
o redeeming stock
o receiving dividends from the Bank, imposing charges on the Bank
o engaging in any transaction with the Bank in violation of federal law
We have taken to date, and intend to continue to take, all appropriate
steps to comply with the Federal Reserve requirements.
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The Schwartz Homes Loans and Resignation of Senior Management
Following the March 15, 1999, resignation of William Wallace as executive
vice president and chief operating officer of the Bank, the board of directors
became aware of irregularities in the Bank's loan portfolio relating to loans
made to Schwartz Homes, Inc., a retailer of mobile homes based in New
Philadelphia, Ohio, Steven D. Schwartz, the president of Schwartz Homes, and
retail customers of Schwartz Homes. On April 12, 1999, Mr. Wallace submitted his
resignation as a director of Belmont and the Bank. The board's concerns over
this matter eventually led to the resignation on June 8, 1999 of J. Vincent
Ciroli, Jr. as president and chief executive officer of Belmont and Bank. In
resigning, Mr. Ciroli maintained that he had no knowledge of the Schwartz Homes
matter or any other matters causing a loss to the Bank, but, in light of the
board's concerns, advised it that the bond between management and the board had
been broken. On July 12, 1999, the board removed Mr. Ciroli as a director of the
Bank.
At the direction of Mr. Wallace, commencing in November 1996, the Bank
began lending substantial amounts of money to Schwartz Homes and Steven D.
Schwartz and, commencing in February 1997, to retail customers of Schwartz Homes
under recourse agreements with Schwartz Homes. At March 31, 1999, the Bank had
$1.6 million in principal amount of loans outstanding to Schwartz Homes, $1.9
million in principal amount of a loan outstanding to Steven D. Schwartz and $6.7
million in principal amount of loans outstanding to retail customers of Schwartz
Homes.
On June 2, 1999 other creditors of Schwartz Homes placed it in involuntary
bankruptcy. On December 30, 1999, a commercial building partially securing the
Steven D. Schwartz loan was sold in a foreclosure sale for $1.2 million,
resulting in a loss to the Bank on this loan, including a loan loss provision
taken by the Bank in a prior period, of $700,000.
Under the recourse agreements with Schwartz Homes for loans ostensibly made
for the benefit of its customers, Schwartz Homes agreed to repay any loans not
repaid by retail customers. Schwartz Homes apparently used the funds advanced by
the Bank to fund its own operations or for other improper purposes, without the
knowledge of the Bank's board. In many instances, Schwartz Homes failed to
perform on the retail sales contracts it entered into with its customers even
though the Bank had provided the funds to Schwartz Homes for this purpose. In
addition, Schwartz Homes often failed to repay the floor-plan lenders on homes
purchased, which has further impacted the Bank's collateral position with
respect to the homes.
On October 12, 1999, the Bank filed cross claims and counterclaims in an
action pending in the Court of Common Pleas of Tuscarawas County, Ohio in a case
captioned Greentree Financial Servicing Corporation, et al. v. Schwartz Homes,
Inc. The Bank alleged that it had been the victim of an elaborate fraud that has
resulted in more than $22 million in losses to the Bank. The Bank believes that
the fraud occurred because significant information about the consumer loans and
the financial condition of Schwartz Homes was not disclosed to the Bank's board
of directors and that affirmative misrepresentations were made to its board of
directors. In addition, the Bank believes that Schwartz Homes entered into the
recourse agreements without any intention of repaying the loans and employees of
Schwartz Homes deceived the Bank with false documents and misrepresentations.
See also "Recent Developments--Additional Legal Proceedings."
For the fourth quarter of 1998 and the first three quarters of 1999, the
Bank charged-off $18.9 million of indirect consumer loans and direct commercial
loans related to Schwartz Homes and the loan to Steven D. Schwartz, as detailed
in the following table, in addition to establishing loan loss reserves allocated
to these loans totaling $3.7 million through September 30, 1999:
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Consumer Commercial
Net Charge Offs Net Charge Offs Total
4th quarter-1998 $11,227,000 $ 0 $11,227,000
1st quarter-1999 2,460,000 1,955,000 4,415,000
2nd quarter-1999 (53,000) 696,000 643,000
3rd-quarter-1999 816,000 1,766,000 2,582,000
As a result of the losses incurred by the Bank and Belmont related to the
commercial and consumer loans related to Schwartz Homes, we entered into a
consent order with the Office of the Comptroller of the Currency and agreement
with the Federal Reserve Bank of Cleveland, as described above under "--Consent
Order" and "--Federal Reserve Agreement" which require that we take specified
actions. We are seeking to raise additional capital through this offering,
principally to restore the capital lost through these charge-offs, and may be
required to take other actions if we do not raise sufficient capital. See "Risk
Factors--If We Do Not Raise Funds Sufficient to Maintain an Adequate Capital
Position, We Will Need to Take Steps Either to Sell the Bank or Seek Alternative
Sources of Financing."
We have Taken Measures to Address Operational and Financial Issues
In response to the developments in the Schwartz Homes matter, the board of
directors of Belmont and the Bank took the following measures:
o Appointed W. Quay Mull II as interim chief executive officer and
retained the services of FiCap Strategic Partners, LLC to provide
interim management services to Belmont and the Bank and assist the
board in employing a new president.
o Conducted a wide-ranging search to recruit a new president for the
Bank, identified and interviewed a series of candidates and recruited
Wilbur R. Roat to serve as the president and chief executive officer
of the Bank and Belmont. Mr. Roat joined the Bank in this capacity in
December 1999. See "--Appointment of Wilbur R. Roat as President and
Chief Executive Officer," below.
o Promoted Stephen K. Kilpatrick to senior vice president, with
responsibility for all lending operations of the Bank except retail
services. Mr. Kilpatrick joined the Bank in April 1999.
o Retained the law firm of Doepken Keevican & Weiss to pursue all
avenues of recovery against Steven D. Schwartz, William Wallace and
others to recover the losses incurred from the Schwartz Homes loan
relationship.
o Retained the services of Crowe, Chizek and Company LLP to provide
external audit, internal audit and loan review functions for the Bank
and Belmont and dismissed the Bank's and Belmont's previous auditors
and providers of loan review services.
o Undertook an extensive review of the Bank's loan portfolio, with the
assistance of Durfee & Root, certified public accountants, and Crowe,
Chizek and Company LLP, the independent accountants we recently
engaged to serve as our auditors.
o Caused FiCap to initiate a thorough review and assessment of all of
the Bank's operations, personnel, policies and procedures, with
particular emphasis on the Bank's loan portfolio.
o Used the results of FiCap's review and assessment to strengthen
procedures and internal controls, reassign or terminate employees
where appropriate and strengthen the operational foundation of the
Bank.
o Implemented plans to protect the Bank's liquidity and to raise
additional capital, including through
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this offering.
o Reduced the total assets of the Bank through the sale of assets and
repayment of funding sources, as more fully described above under
"Recent Developments--Consent Order." We are contemplating further
asset reductions.
o Developed a strategic plan for the Bank for the next five years.
o As described above under "--The Schwartz Homes Loans and Resignation
of Senior Management," removed Mr. Ciroli as a director of the Bank.
o Filed a claim under the Bank's fidelity bond insurance policy issued
by Progressive Casualty Insurance Company to recover the losses
incurred in connection with the Schwartz Homes loan relationship.
o As described above under "--The Schwartz Homes Loans and Resignation
of Senior Management," instituted legal proceedings against Steven D.
Schwartz, William Wallace and others to recover the losses incurred
from the irregular Schwartz Homes loan relationship.
o Prosecuted workout and collection actions against commercial borrowers
with troubled loan relationships.
o Assisted the Bank's and Belmont's regulators in understanding the
issues before the Bank and developed a collaborative relationship with
these regulators, the Federal Bureau of Investigation and other law
enforcement authorities in order to address the issues before the Bank
promptly and effectively.
Appointment of Wilbur R. Roat as President and Chief Executive Officer
In December 1999, each of the Bank and Belmont appointed Wilbur R. Roat to
serve as a director and president and chief executive officer. Prior to joining
the Bank, Mr. Roat, age 52, served as the president and chief executive officer
of First Lehigh Bank from September 1994 until February 1999. From March 1992 to
September 1994, he served as the president and chief executive officer of St.
Edmond's Savings and Loan.
The Bank and Belmont entered into an employment agreement with Mr. Roat
which provides for his engagement as the president and chief executive officer
for a term of three years, subject to renewal, at an annual base salary of
$160,000. The agreement contemplates that a bonus of from $20,000 to $25,000
will be paid in 2001 if Mr. Roat is successful in improving the Bank's loan
portfolio. The parties have also agreed to adopt a mutually acceptable bonus
plan which provides for the payment of an annual bonus to Mr. Roat in subsequent
years based on specified criteria. The agreement also provides that options to
purchase from between 50,000 and 75,000 shares of Belmont's common stock will be
issued to him at an exercise price equal to the market price of Belmont?s stock
when granted with vesting over a four year period, subject to acceleration upon
a change of control. If, prior to a change of control, Belmont terminates or
fails to renew the agreement without cause, Mr. Roat will be entitled to
continuation of his compensation and benefits for the remaining term, if any,
and for a six month severance period. If Belmont terminates or fails to renew
the agreement without cause within two years following a change of control or if
Mr. Roat voluntarily terminates his employment within six month following a
change of control, he will be entitled to receive payment of an amount equal to
299% of his annualized base salary and most recent bonus.
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Estimate of Results for the Fourth Quarter of 1999
Despite the measures we have taken to address operational and financial
issues, we expect to report a loss per common share in the range of $0.45 to
$0.50 for the fourth quarter of 1999. Three factors contributed to this loss
estimate. First, approximately $1.1 million in losses were recognized in
connection with the sale of approximately $38 million in investment securities
in October 1999. Second, the loan loss provision for the fourth quarter of 1999
is estimated at $850,000 for reserves and credit downgrades on a variety of
loans unrelated to Schwartz Homes. Third, we established a $1 million valuation
allowance for deferred tax assets, thereby reducing tax benefits for the fourth
quarter by $1 million. Based upon this loss estimate, the book value of our
stock would be between $2.02 to $2.07 per share of common stock at December 31,
1999.
Additional Legal Proceedings
Progressive Casualty Insurance Company sold to us a directors and officers
liability policy providing for $3 million of coverage and a separate financial
institution fidelity bond in the face amount of $4.75 million. In May 1999, we
filed a claim under the fidelity bond policy to recover the losses incurred in
connection with the Schwartz Homes loan relationship. We have also claimed
coverage under the directors and officers liability policy. Progressive declined
to honor our claims and, in December 1999, filed an action in the United States
District Court for the Southern District of Ohio, Eastern Division asking the
court to issue a declaratory judgment declaring that Progressive is not liable
under either the directors and officers liability policy or the fidelity bond
policy. Alternatively, Progressive has asked the court, if it finds Progressive
to be liable under these policies, to determine whether the Bank or other
parties who have sued the Bank in separate actions are entitled to the insurance
proceeds. Progressive has deposited with the court bonds in the aggregate amount
of $7.75 million to satisfy any liabilities it might have with respect to the
pending claims. We intend to vigorously seek recoveries under the insurance
policies sold to us by Progressive.
In January 2000, Eric Cenkner and other persons who purchased or sought to
purchase homes through the Schwartz Homes homebuilder loan program filed a class
action lawsuit against us and our former chief operating officer, William
Wallace, in the United States District Court for the Northern District of Ohio.
The named plaintiffs are purporting to act on behalf of persons who purchased or
sought to purchase homes through the Schwartz homebuilder loan program. The
complaint alleges that the class members have been harmed by the participation
of us and Mr. Wallace in the Schwartz Homes homebuilder loan program. The suit
seeks damages due to alleged violations of federal and state RICO statutes and
federal usury laws, breaches of contract and fiduciary duties, concealment and
nondisclosure. In the complaint, the plaintiffs based their factual allegations
on our own factual allegations in a separate case we brought against Mr. Wallace
and Steven Schwartz, the president of Schwartz Homes. We intend to vigorously
defend this action.
FORWARD-LOOKING STATEMENTS
We have made statements in this prospectus and in the documents
incorporated herein that are forward-looking statements. You can identify these
statements by forward-looking words such as "may," "will," ?intend,? "expect,"
"anticipate," "believe," "estimate," and "continue" or similar words.
Forward-looking statements may also use different phrases. Forward-looking
statements address, among other things, (1) our expectations; (2) projections of
our future results of operations or of our financial condition; or (3) other
"forward looking" information.
We believe it is important to communicate our expectations to our
investors. However, events may occur that we are not able to predict accurately
or which we do not fully control that could cause actual results to differ
materially from those expressed or implied by our forward-looking statements,
including:
o our inability to raise or maintain adequate levels of capital, as
required by the Office of the Comptroller of the Currency or the
Federal Reserve Bank of Cleveland.
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o our need to further reduce our total assets through the sale of assets
and the repayment of funding sources, which could impair our ability
to generate earnings in future periods.
o our need to recognize loan losses or create additional loan loss
reserves due to additional problem loans.
o unforeseen adverse conditions in our borrowers' businesses or
financial condition.
o changes in general economic and business conditions and in the banking
industry in particular.
o changes in banking regulations.
o other factors discussed under "Risk Factors."
USE OF PROCEEDS
We intend to use the net proceeds of the offering to increase the Bank's
capitalization. We have not entered into agreements with any selling agents, but
we may elect to do so and pay commissions at prevailing rates. In this event,
the net proceeds of the offering available for our use would be reduced by the
amount of any commissions paid to selling agents.
DETERMINATION OF OFFERING PRICE
We considered several factors in setting the per share offering price of
the shares. Our shares are traded on the Nasdaq SmallCap market. In determining
the per share offering price, we took into account the prices at which recent
trades have taken place in our shares. We also took into account the current
financial position of the Bank and our need to raise capital by March 31, 2000
in order to satisfy the requirements of the Office of the Comptroller of the
Currency and the Federal Reserve Bank of Cleveland. Additionally, we considered
our perception as to the current demand for our stock and the stock prices
relative to book value at which similarly situated institutions are trading. In
determining the per share offering price, we were advised by our investment
banker, Danielson Associates, Inc. As of February 3, 2000, the closing price of
the shares was $5.25 per share.
DILUTION
Shareholders who do not purchase all of the shares offered to them in the
rights offering will experience dilution in ownership. As described under
"Recent Developments--Estimate of Results for the Fourth Quarter of 1999," we
estimate our book value to be between $2.02 and $2.07 per share of common stock
at December 31, 1999. We are offering our shares at a price of $2.00 per share,
which is below our estimated book value.
PLAN OF DISTRIBUTION
The Rights Offering
The Offering. We are offering to our shareholders of record, as of the
close of business on January 21, 2000, which is our record date, the right to
subscribe for 5,000,000 shares at a price of $2.00 per share. Shareholders will
have the right to purchase 0.95 shares for each share owned on the record date
in this rights offering. We will not issue fractional shares. We will round
rights to the closest whole share.
The Rights. The rights are not transferable, except that the assignment
by a record or nominee owner of shares to the beneficial owner will be permitted
to the extent allowable under applicable state securities laws. Each
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right evidences the total number of shares to which the shareholder is entitled
to subscribe for in the rights offering. A shareholder who does not participate
in the rights offering will experience ownership dilution. See "Risk
Factors--Dilution." Officers and directors of Belmont, in their capacity as
shareholders, will have the same right to purchase shares in the rights offering
as other shareholders.
Dates of Offering. The rights offering will begin on February 7, 2000 and
continue until March 17, 2000, subject to our right to extend the rights
offering for up to 30 additional days.
How to Subscribe. You may subscribe to purchase shares by completing and
signing the rights subscription agreement which accompanies this prospectus and
mailing or delivering it to the escrow agent, together with payment in full for
all shares subscribed for. To be accepted, we must receive your subscription
before the expiration of the rights offering. You must pay the full subscription
price when you return the rights subscription agreement. In the event that
payment is less than that required to purchase the number of shares subscribed
for, we will issue only the number of shares for which payment is received.
Rights subscription agreements should be mailed, and checks made payable, to:
Firstar Trust Company, escrow agent
425 Walnut Street
ML CN-WN-06CT
Cincinnati, Ohio 45202
Attention: Brian George
If you wish to subscribe for more shares than you are entitled to purchase
in the rights offering, you may do so by completing the subscription agreement
for the ancillary offering. In the event that you subscribe for more shares than
permitted in the rights offering, we may either refund the excess or treat it as
a subscription for shares in the ancillary offering. See "Plan of
Distribution--Ancillary Offering." If the rights offering is oversubscribed,
subscription will be reduced pro rata to the maximum number of shares offered
hereby.
If you have any questions about this offering, please call (740) 699-4699
and leave a detailed message. Our representative will return your call within
one business day.
Ancillary Offering
The Offering. We are also offering to our existing shareholders, depositors
and other persons shares of our common stock, subject to shares remaining
available for purchase upon completion of the rights offering. We will allow all
shareholders who subscribe for shares in the rights offering to participate in
the ancillary offering except for shareholders who reside in states in which we
cannot register the shares for sale in the ancillary offering or obtain an
exemption from registration without unreasonable burden or expense. Generally,
it is our intention to accept subscriptions for shares in the ancillary offering
in the order received. Each subscriber must purchase a minimum of 500 shares in
this ancillary offering.
Dates of Offering. This ancillary offering will begin on February 7, 2000
and continue until March 28, 2000, subject to our right to extend the rights
offering for up to 45 additional days.
How to Subscribe. You may subscribe to purchase shares by completing and
signing the subscription agreement for the ancillary offering which accompanies
this prospectus and mailing or delivering it to the escrow agent, together with
payment in full for all shares subscribed for. To be accepted, we must receive
your subscription before the expiration of the offering. You must pay the full
subscription price when you return the subscription agreement. In the event that
payment is less than that required to purchase the number of shares subscribed
for, we will issue only the number of shares for which payment is received.
Subscription agreements should be mailed, and checks made payable, to:
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<PAGE>
Firstar Trust Company, escrow agent
425 Walnut Street
ML CN-WN-06CT
Cincinnati, Ohio 45202
Attention: Brian George
If you have any questions about this offering, please call (740) 699-4699
and leave a detailed message. Our representative will return your call within
one business day.
Purchase of Shares by Directors
In order to evidence their confidence in Belmont and encourage
participation in the offering through their example, in November 1999, 10 of our
12 directors purchased a total of $1.65 million of our stock. This stock is
convertible into common stock at the same price as the shares offered in this
offering. All of this convertible stock will be converted into common stock
unless all or substantially all of the shares offered in the offering are sold.
In that event, we may redeem for the original issuance price the shares of
convertible. The shares of common stock issued upon conversion of this
convertible stock will not be part of this offering and will be treated as
"restricted securities" as that term is defined in Rule 144 under the Securities
Act of 1933.
Best Efforts Offering
We will offer the shares on a best efforts basis. We intend to offer and
sell shares directly. None of our directors, officers or employees who assist us
in this process will receive any additional compensation for their efforts. We
expect to promote the offering through word of mouth to our shareholders,
depositors and others with whom we do business or have relationships. Although
we have no present plans to do so, we may also enter into agreements with
selling agents to offer and sell our shares. If we do engage selling agents, we
expect to pay selling commissions to them at prevailing rates.
Delivery of Share Certificates
As soon as practicable following the successful completion of the offering,
we will mail certificates for shares to subscribers whose subscriptions have
been accepted.
Escrow of Funds and Acceptance of Subscriptions
We will deposit all subscription funds received in a non-interest bearing
escrow account with Firstar Trust Company, as escrow agent. All funds received
will be held in the escrow account until the offering is completed. In addition
to any particular subscriptions we do not accept because they are incomplete or
otherwise not properly submitted, we may elect to accept or reject all of the
subscriptions in the rights offering and any or all of the subscriptions in the
ancillary offering. We will accept subscriptions in the ancillary offering only
if the rights offering is not fully subscribed for. If the ancillary offering is
over-subscribed, generally, it is our intention to accept subscriptions for
shares in the ancillary offering in the order received. If we decline to accept
any subscriptions, the escrow agent will promptly return the escrowed funds
directly to the subscribers following the termination of the offering.
Federal Income Taxes
We believe that the following discussion addresses all material tax
consequences involved in an investment in the shares of common stock. You are
urged, however, to discuss your personal tax situation with your own tax
advisors. We have received an opinion of Doepken Keevican & Weiss Professional
Corporation, to the effect that, for federal income tax purposes:
(1) neither the receipt nor the exercise of the rights will result in
taxable income to the shareholders;
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<PAGE>
(2) no deductible loss will be realized if the rights are allowed to
expire without exercise;
(3) the tax basis of the shares of common stock acquired upon the exercise
of the rights or in the ancillary offering will be the subscription
price; and
(4) there is no allocation of an existing shareholder's tax basis in
current shares held by the shareholder to the right, whether or not
the rights are exercised, because (based upon the limited time period
in which shareholder has the option to exercise a right and the fact
that the purchase price per share paid upon the exercise of a right is
the same as the per share price of the shares sold in the ancillary
offering) we have determined that such value is zero.
TRANSACTIONS WITH DIRECTORS AND OFFICERS
Certain Directors and Executive Officers and their associates were
customers of and had transactions with the Bank in the ordinary course of the
Bank's business during 1998 and 1999. From time to time the law firms of
Phillips, Gardill, Kaiser & Altmeyer, of which Charles J. Kaiser, Jr. is a
partner, Sommer, Liberati & Hoffman, of which Keith A. Sommer is a partner, and
Doepken Keevican & Weiss Professional Corporation, of which James F. Bauerle is
a member, have rendered legal services to the Corporation and the Bank. Messrs.
Kaiser and Sommer are directors of both Belmont and the Bank. Mr. Bauerle served
as a senior vice president of the Bank from June 1999 to December 1999. It is
contemplated that these firms will be retained to perform additional legal
services during the current year. Mr. Bauerle and David G. Brewick, who served
as interim president of Belmont and the Bank from June 1999 to December 1999,
are principals of FiCap Strategic Partners LLC, which has served as our advisor.
Since January 1, 1998 through September 30, 1999, we have paid advisory fees of
$817,275 plus expenses of $63,419 to FiCap. On June 9, 1999, we also agreed to
grant to FiCap, for its services, two year options to purchase 50,000 shares of
our Common Stock at $10.84, the average daily price for our shares during June
and July 1999. In addition, Doepken Keevican & Weiss received legal fees as
described under "Legal Opinions."
DESCRIPTION OF CAPITAL STOCK
General
We are authorized to issue 17,800,000 shares of common stock and 90,000
shares of preferred stock. On both the record date of the rights offering,
January 21, 2000, and the date of this prospectus , we had 5,236,534 shares of
common stock and 16,500 shares of preferred stock outstanding.
Preferred Stock
In order to evidence their confidence in Belmont and encourage
participation in the offering through their example, in November 1999, 10 of our
12 directors purchased 16,500 shares for $100 per share, representing a total of
$1.65 million, of a new Series A Convertible Preferred Stock. The directors who
purchased this stock are W. Quay Mull II, Charles J. Kaiser, Jr., John H.
Goodman III, Terrence Lee, Dana Lewis, James Miller, Charles Wilson, Thomas
Olszowy, Keith Sommer and Mary Holloway Haning. This convertible stock has no
preferential dividend rights or other preferences except for a nominal
liquidation preference of $.0001 per share, representing less than $10.00 in the
aggregate for all $1.65 million of this convertible stock. The convertible stock
also will have no special voting rights. The holders of this convertible stock
will have one vote per share and the shares are voted not as a separate class
but together with the common stock.
All of this convertible stock will be converted into common stock at a
price of $2.00 per share unless all or substantially all of the shares offered
in the offering are sold. In that event, we may redeem for the original issuance
price the shares of convertible stock. The shares of common stock issued upon
conversion will not be registered as part of this offering and will be treated
as "restricted securities" as that term is defined in Rule 144 under the
Securities Act of 1933.
24
<PAGE>
Our board of directors, without further action by the stockholders, is
authorized to issue an aggregate of 90,000 shares of preferred stock. We have no
plans to issue any other series of preferred stock. Our board of directors may
issue preferred stock with dividend rates, redemption prices, preferences on
liquidation or dissolution, conversion rights, voting rights and any other
preferences, which rights and preferences could adversely affect the voting
power of the holders of common stock. The issuance of preferred stock, while
providing desirable flexibility in connection with possible acquisitions or
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or could discourage or delay a third party from
acquiring, control.
Common Stock
Holders of common stock are entitled to one vote for each share held of
record on all matters on which stockholders may vote. Holders of common stock
are entitled to receive, as, when and if declared by the board of directors from
time to time, such dividends and other distributions in cash, stock or property
from our assets or funds legally available for such purposes subject to any
dividend or liquidation preferences that may be attributable to any preferred
stock outstanding from time to time.
Classification of Board of Directors
Our board of directors has been classified by dividing the directors into
three classes. One class of directors is elected each year for a term of three
years, so that the term of office of one class of directors expires each year.
Cumulative Voting
Our shareholders have cumulative voting rights pursuant to Ohio law. We
may, as permitted by Section 1701.69 of the Ohio Revised Code, propose to
shareholders that our charter be amended to delete the right to vote
cumulatively in the election of directors. If we propose such an amendment to
shareholders, all shareholders would be entitled to notice of the proposed
amendment as provided by law and such an amendment would be subject to other
requirements as to the number of shares which could be voted against the
proposed amendment. The adoption of such amendment would require the affirmative
vote of the holders of a majority of the stock entitled to vote in the election
of directors.
A shareholder voting cumulatively may cast the number of shares he owns
times the number of directors to be elected in favor of one nominee or allocate
such votes among the nominees as he determines.
Transfer Agent and Registrar
The transfer agent and registrar for our shares is Registrar and Transfer
Company, 10 Commerce Drive, Cranford, New Jersey 07016.
Liquidation Rights
In the event of liquidation, holders of our capital stock are entitled to
certain rights as to assets distributable to shareholders on a pro rata basis,
after satisfaction of our debts.
No Preemptive Rights
Holders of our capital stock have no preemptive right to subscribe for or
to purchase any additional securities which may be issued by us. Preemptive
rights permit a shareholder to subscribe to a sufficient number of shares so as
to maintain their relative pro rata ownership upon the issuance of additional
shares by a corporation, except in certain circumstances.
25
<PAGE>
Dissenters Rights
Our shareholders have dissenters' rights in connection with certain mergers
and consolidations pursuant to Ohio law.
Right of Redemption
We are specifically empowered by our charter to buy our shares of
outstanding capital stock from our shareholders.
Dividend Rights
Dividends may be paid on our capital stock as declared by our board of
directors out of funds legally available therefor. Dividends may not exceed our
surplus, as defined by the Ohio Business Corporation Act, and may not be
declared if we are insolvent or would thereby be made insolvent. See "Risk
Factors, Dividends."
Assessability
When issued, our capital stock is fully paid and nonassessable.
Antitakeover Provisions
Some Important Charter Provisions
1. Our charter provides for a classified board of directors as described
above.
2. Our charter requires the approval of the holders at least 75% of our
voting stock to approve the merger or consolidation with or the sale of the
assets or business to, any other corporation unless the transaction receives the
prior approval of 60% of our board of directors.
3. Our charter provides that if an acquiring person becomes the owner of
more than 50% of our voting stock as a result of a tender offer, we shall be
obligated to offer to purchase the remaining shareholders' shares at the highest
price paid by the acquiring person.
These provisions may have the effect of deterring hostile takeovers or
delaying changes in our management. The availability of the authorized and
unissued shares of Belmont to be issued into friendly hands with the purpose of
diluting a potential acquiror's ownership of Belmont may also be determined to
have an antitakeover effect. Our charter and code of regulations currently
contain no other provisions that were intended to be or could fairly be
considered as antitakeover in nature or effect. Our board of directors has no
present intention to amend the charter to add any antitakeover provision.
Some Important Ohio Statutory Provisions
We are subject to certain provisions of Ohio law that may discourage or
render more difficult an unsolicited takeover:
Chapter 1704 of the Ohio Revised Code prohibits certain mergers, sales of
assets, issuances or purchases of securities, liquidation or dissolution, or
reclassifications of the then-outstanding shares of an Ohio corporation
involving, or for the benefit of, certain beneficial holders of stock
representing 10% or more of the voting power of the corporation (a "10%
shareholder"), unless:
o the transaction is approved by the directors prior to the time that
the 10% shareholder became a 10% shareholder (a "shareholder
acquisition date");
26
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o the acquisition of 10% of the voting power is approved by the
directors prior to the shareholder acquisition date; or
o the transaction involves a 10% shareholder that has been such for at
least three years and the transaction is either approved by holders of
two-thirds of the voting power of the corporation and the holders of a
majority of the voting power not owned by 10% shareholders, or certain
minimum price and form of consideration requirements are met.
The Control Share Act provides that the acquisition of shares entitling the
holder to exercise voting power in certain ranges (one-fifth or more, one-third
or more, or a majority) can be made only with the prior authorization of:
o the holders of at least a majority of the total voting power; and
o the holders of at least a majority of the total voting power held by
shareholders other than the proposed acquiror, officers of the
corporation elected or appointed by the directors, and directors of
the corporation who are also employees and excluding certain shares
that are transferred after the announcement of the proposed
acquisition and prior to the vote with respect to the proposed
acquisition. The Control Share Act does not specify a remedy for
violation of the Act. However, in at least one situation, a court has
set aside an acquisition made in violation of the Control Share Act.
The Profit Disgorgement Act provides Ohio corporations, or in certain
circumstances the shareholders of an Ohio corporation, a cause of action to
recover profits realized under certain circumstances by persons who dispose of
securities of a corporation within 18 months of proposing to acquire such
corporation.
A provision of the Ohio General Corporation Law provides that in addition
to the interests of the shareholders, our directors may consider:
1. the interests of the corporation's employees, suppliers, creditors and
customers;
2. the economy of the state and nation;
3. community and societal considerations; and
4. the long-term as well as short-term interests of the corporation and
its shareholders, including the possibility that these interests may
be best served by the continued independence of the corporation.
Reports
Our common stock is registered under Section 12(g) of the Securities and
Exchange Act of 1934, and we file periodic reports with the SEC as required by
the Act. After the offering, we will continue to file periodic reports with the
SEC.
LEGAL OPINIONS
The validity of the shares offered hereby will be passed upon for us by
Doepken Keevican & Weiss Professional Corporation, Pittsburgh, Pennsylvania. In
addition, Doepken Keevican & Weiss has given its opinion that the statements
made under "Plan of Distribution - Federal Income Taxes" are correct as to
matters of law. James F. Bauerle, a member of Doepken Keevican & Weiss, formerly
served as a senior vice president of the Bank. From January 1, 1998 through
September 30, 1999, we have paid legal fees of $515,499 to Doepken Keevican &
Weiss. Mr. Bauerle is also a principal of FiCap Strategic Partners LLC, which
serves as an advisor to the Bank and us, and Doepken Keevican & Weiss holds an
equity interest in FiCap. Since January 1, 1998
27
<PAGE>
through September 30, 1999, we have paid advisory fees of $817,275 plus expenses
of $63,419 to FiCap. On June 9, 1999, we also agreed to grant to FiCap, for its
services, two year options to purchase 50,000 shares of our Common Stock at
$10.84, the average daily price for our shares during June and July 1999.
28
<PAGE>
Annex A
SUBSCRIPTION AGREEMENT
for the Rights Offering of Belmont Bancorp.
Use this Form if you are an existing shareholder of Belmont Bancorp. and
wish to purchase all or any portion of the Shares you are entitled to purchase
as shown below. You may also subscribe to purchase additional shares in the
Ancillary Offering. If you wish to purchase more shares than the number you are
eligible to purchase in the Rights Offering, you must also fill out and return
the Subscription Agreement for the Ancillary Offering.
Firstar Trust Company
425 Walnut Street
ML CN-WN-06CT
Cincinnati, Ohio 45202
Attention: Brian George
Ladies and Gentlemen:
The undersigned hereby subscribes for and agrees to purchase the number of
shares of common stock, par value $0.25 (the "Shares"), of Belmont Bancorp., an
Ohio corporation ("Belmont") indicated below. The undersigned has executed and
delivered this Subscription Agreement in connection with Belmont's offering of
Shares described in the Prospectus dated February 4, 2000 which accompanies this
Subscription Agreement, as it may be supplemented.
The undersigned agrees to purchase the Shares subscribed for herein for the
purchase price of $2.00 per share and has delivered to our escrow agent, Firstar
Trust Company, with this Subscription Agreement a check made payable to "Firstar
Trust Company, escrow agent" in an amount equal to the aggregate purchase price
of all Shares for which the undersigned desires to subscribe.
The undersigned acknowledges receipt of a copy of (1) our Prospectus, (2)
our Amended Annual Report on Form 10-K/A for the year ended December 31, 1998
and (3) our Amended Quarterly Report on Form 10-Q/A for the three months ended
September 30, 1999.
The undersigned acknowledges that Belmont may accept or decline to accept
the undersigned's subscription, in whole or in part. Belmont's decision to
accept or decline the subscription will be made at the time the Rights Offering
and the Ancillary Offering are completed.
---------------------------------------
Number of Shares owned on record date,
January 21, 2000. (See the mailing label
attached hereto.)
________________ Shares ($_______________)
subscribed for (up to 0.95 X number of
Shares owned by you on the record date and
total subscription price at $2.00 per Share)
---------------------------------------
How Shares are to be held if this is a
co-investment, e.g., as joint tenants
(with right of survivorship) or tenants-in-
common
---------------------------------------
Social Security or Tax I.D. number(s)
----------------------------------------
Please print name(s) of subscriber(s)
----------------------------------------
Signature of subscriber
----------------------------------------
Signature of co-subscriber
----------------------------------------
Address
----------------------------------------
Date
A-1
<PAGE>
Annex B
SUBSCRIPTION AGREEMENT
for the Ancillary Offering of Belmont Bancorp.
Use this Form if: (1) you are an existing shareholder of Belmont Bancorp.
and wish to purchase more shares of Belmont than you are permitted under the
Rights Offering, or (2) you are not an existing shareholder of Belmont.
Firstar Trust Company
425 Walnut Street
ML CN-WN-06CT
Cincinnati, Ohio 45202
Attention: Brian George
Ladies and Gentlemen:
The undersigned hereby subscribes for and agrees to purchase the number of
shares of common stock, par value $0.25 (the "Shares"), of Belmont Bancorp., an
Ohio corporation ("Belmont"), indicated below. The undersigned has executed and
delivered this Subscription Agreement in connection with Belmont's offering of
Shares described in the Prospectus dated February 4, 2000 which accompanies this
Subscription Agreement, as it may be supplemented.
The undersigned agrees to purchase the Shares subscribed for herein for the
purchase price of $2.00 per share and has delivered to our escrow agent, Firstar
Trust Company, with this Subscription Agreement a check made payable to "Firstar
Trust Company, escrow agent" in an amount equal to the aggregate purchase price
of all Shares for which the undersigned desires to subscribe.
The undersigned acknowledges receipt of a copy of (1) our Prospectus, (2)
our Amended Annual Report on Form 10-K/A for the year ended December 31, 1998,
and (3) our Amended Quarterly Report on Form 10-Q/A for the three months ended
September 30, 1999.
The undersigned acknowledges that Belmont may accept or decline the
undersigned's subscription. Generally, it is our intention to accept
subscriptions for shares in the Ancillary Offering in the order received.
Belmont's decision to accept or decline the subscription will be made at the
time the Rights Offering and the Ancillary Offering are completed.
______________ Shares ($_______________)
subscribed for (minimum of 500 Shares and
total subscription price at $2.00 per Share)
- -----------------------------------------------
How Shares are to be held if this is a
co- investment, e.g., as joint tenants
(with right of survivorship) or tenants-in-
common
- -----------------------------------------------
Social Security or Tax I.D. number(s)
- -----------------------------------------------
Please print name(s) of subscriber(s)
- -----------------------------------------------
Signature of subscriber
- -----------------------------------------------
Signature of co-subscriber
- -----------------------------------------------
- -----------------------------------------------
Address
- -----------------------------------------------
Date
<PAGE>
Belmont Bancorp.
5,000,000 shares of Common Stock
TABLE OF CONTENTS
Prospectus Summary ..................................................... 8
Risk Factors ........................................................... 10
Where You Can Find More Information .................................... 13
Incorporation of Information That We File With the SEC ................. 13
Recent Developments .................................................... 15
Forward-Looking Statements ............................................. 20
Use of Proceeds ........................................................ 21
Determination of Offering Price ........................................ 21
Dilution ............................................................... 21
Plan of Distribution ................................................... 21
Transactions With Directors and Officers ............................... 24
Description of Capital Stock ........................................... 24
Legal Opinions ......................................................... 27
Rights Offering Subscription Agreement ................................. A-1
Ancillary Offering Subscription Agreement .............................. B-1
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Filing Fee .............................................. $ 2,780
Printing and Mailing Fees and Expenses ...................... 50,000*
Legal Fees and Expenses ..................................... 100,000*
Accounting Fees and Expenses ................................ 25,000*
Miscellaneous ............................................... 22,220*
Total ................................................. 200,000
--------
- ----------
*Estimate
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Ohio General Corporation Law ("OGCL") provides that Ohio corporations
may indemnify an individual made a party to any threatened, pending, or
completed action, suit or proceeding whether civil, criminal, administrative or
investigative, because the individual is or was a director, officer, employee or
agent of the corporation, against liability incurred in the proceeding if the
person: (i) acted in good faith and (ii) the individual believes his conduct was
in the corporation's best interest or was not opposed to the corporation's best
interest.
The OGCL further provides that a corporation shall indemnify an individual
who was fully successful on the merits or otherwise in any proceeding to which
the director, officer, employee or agent was a party because the individual was
or is a director, officer, employee or agent of the corporation, for reasonable
expenses incurred by the director in connection with the proceeding. The OGCL
also provides that a corporation may purchase and maintain insurance on behalf
of the individual who is or was a director, officer, employee or agent of the
corporation or who, while a director, officer, employee or agent of the
corporation is or was serving at the request of the corporation as a director,
officer, partner, trustee, employer or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprises, against liability asserted against or incurred by the individual in
that capacity or arising from the individual's status as a director, officer,
employee, or agent.
The Bylaws of Belmont Bancorp. (the "Registrant") provide that the
Registrant shall indemnify a director, officer, employee or agent of the
Registrant to the extent permitted by the OGCL. Such indemnification, unless
ordered by a court, shall only be provided if the Registrant determines that
such indemnification is proper in the circumstances because the indemnified
person has met the applicable standard of conduct as set forth in the OGCL. Such
determination may be made by either:
(1) a majority of a quorum of directors not party to the proceedings; or
(2) if such quorum is not obtainable, or if the majority vote described in
(i) above so directs, in a written opinion by independent legal
counsel; or
(3) by the shareholders; or
(4) by the court in which such proceeding was brought.
The Registrant will maintain a directors' and officers' liability insurance
policy, including bank reimbursement, for the purpose of providing
indemnification to its directors and officers in the event of such a threatened,
pending or completed action.
The Registrant also has agreed to indemnify FiCap Strategic Partners, LLC
("FiCap") and Doepken Keevican & Weiss Professional Corporation ("DKW") against
claims arising out of FiCap's engagement by the Registrant.
II-1
<PAGE>
James F. Bauerle, a member of DKW and formerly an officer of the Registrant, and
David G. Brewick and Gregory W. Doner, formerly officers of the Registrant, are
principals of FiCap.
ITEM 16. EXHIBITS
Exhibit Number Description
4.1 -- Charter (1)
4.2 -- Bylaws as currently in effect (1)
4.3 -- Charter Amendment regarding Series A Preferred Stock (5)
5 -- Opinion of Doepken Keevican & Weiss Professional Corporation (4)
8 -- Opinion of Doepken Keevican & Weiss Professional Corporation (Tax
Matters) (2)
10.1 -- Letter Agreements with FiCap Strategic Partners, LLC (1)
10.2 -- Deferred Compensation Plan and Trust for J. Vincent Ciroli, Jr.,
William Wallace and Jane R. Marsh (1)
10.3 -- Executive Incentive Cash Agreement for J. Vincent Ciroli, Jr.,
William Wallace and Jane R. Marsh (1)
10.4 -- Executive Phantom Stock Agreement for J. Vincent Ciroli, Jr.,
William Wallace and Jane R. Marsh (1)
10.5 -- Supplemental Retirement Plan for J. Vincent Ciroli, Jr., William
Wallace and Jane R. Marsh (1)
10.6 -- Employment Agreement dated December 13, 1999 among Wilbur R.
Roat, the Registrant and Belmont National Bank (6)
13.1 -- Registrant's Annual Report on Form 10-K for the year ended
December 31, 1999 filed with the SEC on April 14, 2000 (3)
23.1 -- Consent of Doepken Keevican & Weiss Professional Corporation
(included in Exhibits 5 and 8)
23.2 -- Consent of S.R. Snodgrass A.C. (7)
23.3 -- Consent of Crowe, Chizek and Company LLP (7)
99.1 -- Form of Escrow Agreement between the Registrant and Firstar Bank,
as escrow agent (7)
99.2 -- Subscription Agreement for Belmont Bancorp. directors (5)
- ----------
(1) Filed as an exhibit to the original registration statement filed November
16, 1999.
(2) Filed as an exhibit to Amendment No. 1 to the registration statement filed
on January 12, 2000.
(3) Incorporated herein by reference.
(4) Filed as an exhibit to Amendment No. 2 to the registration statement filed
on January 27, 2000.
(5) Filed as an exhibit to Amendment No. 3 to the registration statement filed
on February 3, 2000.
(6) Filed as an exhibit to the Annual Report on Form 10-K for the Registrant
for the year ended December 31, 1999.
(7) Filed herewith.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement.
II-2
<PAGE>
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the Calculation
of Registration Fee table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(4) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
of expenses incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, in the City of St.
Clairsville, State of Ohio on April 19, 2000.
BELMONT BANCORP.
/s/ Wilbur R. Roat
--------------------------------------------
By: Wilbur R. Roat
Title: President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ W. Quay Mull II
- ----------------------------------
W. Quay Mull II Chairman of the Board, April 19, 2000
and Director
/s/ Wilbur R. Roat
- ----------------------------------
Wilbur R. Roat President and Chief April 19, 2000
Executive Officer
(principal executive officer)
/s/ Jane R. Marsh
- ----------------------------------
Jane R. Marsh Secretary April 19, 2000
(principal financial
and accounting officer)
- ----------------------------------
J. Vincent Ciroli, Jr. Director
/s/ Mary L. Holloway Haning
- ----------------------------------
Mary L. Holloway Haning Director April 19, 2000
/s/ Charles J. Kaiser, Jr.
- ----------------------------------
Charles J. Kaiser, Jr. Director April 19, 2000
/s/ John H. Goodman II
- ----------------------------------
John H. Goodman II Director April 19, 2000
/s/ Dana J. Lewis
- ----------------------------------
Dana J. Lewis Director April 19, 2000
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ James R. Miller
- ----------------------------------
James R. Miller Director April 19, 2000
/s/ Terrence A. Lee
- ----------------------------------
Terrence A. Lee Director April 19, 2000
/s/ Thomas P. Olszowy
- ----------------------------------
Thomas P. Olszowy Director April 19, 2000
/s/ Keith A. Sommer
- ----------------------------------
Keith A. Sommer Director April 19, 2000
- ----------------------------------
Charles A. Wilson, Jr. Director
</TABLE>
II-5
Exhibit 23.2
SNODGRASS
Certified Public Accountants and Consultants
Board of Directors
Belmont Bancorp
We consent to incorporation by reference in the registration statement of
Belmont Bancorp. on Form S-2 (Registration No 333-91035) of our report dated May
19, 1999 on our audits of the consolidated financial statements of BELMONT
BANCORP and subsidiaries as of December 31, 1998 and for the years ended
December 31, 1998, and 1997, which report is included in the Annual Report on
Form 10-K of Belmont Bancorp. for the year ended December 31, 1999.
/s/ S. R. SNODGRASS, A.C.
Wheeling, West Virginia
April 19, 2000
II-6
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Post-Effective
Amendment No. 1 to the Registration Statement No. 333-91035 on Form S-2 of
Belmont Bancorp. of our report dated March 2, 2000, except for Notes 2, 3, 20
and 24 which date is April 13, 2000, on the consolidated financial statements of
Belmont Bancorp. as of December 31, 1999 and for the year then ended; which
report is included in the Annual Report on Form 10-K of Belmont Bancorp. for the
year ended December 31, 1999.
Crowe, Chizek and Company LLP
Columbus, Ohio
April 19, 2000
II-7
Exhibit 99.2
ESCROW AGREEMENT
ESCROW AGREEMENT made this 19th day of April, 2000 by and between Belmont
Bancorp. ("Belmont"), an Ohio Corporation, and Firstar Bank, N.A., a national
banking association ("Bank").
WHEREAS, Belmont has offered to sell up to 5,000,000 newly issued shares
("Shares") of its common stock, at an offering price of $2.00 per share, which
Shares are registered under a Form S-2 Registration Statement (Registration No.
333-91035) filed under the Securities Act of 1933, as amended, in an offering
(the "Offering") which commenced on or about February 7, 2000; and
WHEREAS, the parties entered into an Escrow Agreement dated as of February
7, 2000 (the "Original Agreement") under which the Bank served as escrow agent
for the Offering through the date of its conclusion on April 14, 2000; and
WHEREAS, Belmont now desires to re-open the ancillary portion of the
Offering (as described in Belmont's Prospectus) on terms which will permit
subscriptions to be accepted and offering proceeds released on a weekly basis,
from and after the date Belmont's Post-Effective Amendment No. 1 on Form S-2 is
declared effective by the SEC until May 26, 2000, subject to extension for up to
90 additional days; and
WHEREAS, the Prospectus provides that Belmont will deposit all subscription
funds received in a non-interest bearing escrow account with Bank, as escrow
agent; Belmont may elect to accept or reject any or all of the subscriptions in
the Offering; and
WHEREAS, the parties wish to provide for the terms of a deposit account to
be established by Belmont with Bank for the deposit of subscriptions and the
terms of withdrawal thereof.
NOW, THEREFORE, in consideration of the mutual promises herein made and for
other good and valuable consideration, the parties hereto hereby agree as
follows:
FIRST: Belmont shall deliver a certificate signed by it to Bank setting
forth the effective date of the re-opening of the Offering, immediately after
such effective date.
SECOND: All funds received from subscribers for the Shares will be
delivered by Belmont to Bank at 425 Walnut Street, ML CN-WN-06CT, Cincinnati,
Ohio 45202, Attention: Brian George, for deposit into a special non-interest
bearing account (the "Account"), together with the name, address, social
security number of each such subscriber, and the name(s) in which the Shares are
to be registered. Belmont agrees that where Shares are to be paid for by check,
Belmont will deposit such check into the Account within one business day
following receipt by Belmont of a subscription.
THIRD: Bank will hold all funds received by it pursuant to the terms of
this Agreement in the Account. Funds may be withdrawn from the Account and
disbursed only as follows:
A. Not more often than weekly, Belmont shall deliver to the Bank a
certificate (the "Closing Certificate") stating which of the subscriptions in
the Offering have been accepted or rejected.
II-8
<PAGE>
B. The Bank shall deliver to Belmont, without interest, all funds received
by it for subscriptions in the Offering (not previously released to Belmont or
returned to subscribers) which Belmont shall have certified as being accepted
and shall return to subscribers, without interest, all funds received by it for
subscriptions which Belmont shall have certified as not being accepted.
C. Bank shall copy and forward all Subscription Agreements to Belmont
daily.
FOURTH: No interest shall accrue on any collected funds held in the
Account.
FIFTH:
A. Bank is acting solely as depository of the funds and not as a trustee or
fiduciary under this Agreement. Bank is not a party to, nor has it reviewed or
approved any agreement other than this Agreement, nor any other matters of
background related to this Agreement.
B. Bank shall not be liable for any damages, or have any obligations other
than the duties prescribed herein in carrying out or executing the purposes and
intent of this Agreement; provided, however, that nothing herein contained shall
relieve Bank from liability arising out of its own willful misconduct or gross
negligence. Bank's duties and obligations under this Agreement shall be entirely
administrative and not discretionary.
C. Bank shall not be liable to any party hereto or to any third party as a
result of any action or omission taken or made by Bank, except for liability
arising out of Bank's own willful misconduct or gross negligence. Belmont will,
at its expense, indemnify Bank, hold Bank harmless, and reimburse Bank, and its
officers, directors, employees and representatives from, against and for, any
and all liabilities, costs, fees and expenses (including reasonable attorney's
fees) Bank or any of them may suffer or incur by reason the execution and
performance of this Agreement by Bank, including any litigation relating to this
Agreement instituted by or against Bank, to which it is a party or in which Bank
or any of its officers, directors, employees or representatives are required to
appear as a witness. If any legal questions arise concerning Bank's duties and
obligations hereunder, Bank may consult its counsel at Belmont's expense and
rely without liability upon written opinions given to it by such counsel.
D. Bank shall be protected in acting upon any written notice, request,
waiver, consent, authorization, or other paper or document which Bank, in good
faith, believes to be genuine and what it purports to be.
E. Bank shall not be bound in any way by any contract or agreement between
the other parties hereto, whether or not it has knowledge of any such contract
or agreement or of its terms or conditions.
F. This Agreement shall be terminated upon withdrawal and disbursement of
all of funds held in the Account, except that Articles FIFTH and SEVENTH shall
survive termination of this Agreement.
G. Notwithstanding anything to the contrary contained in this Agreement, it
is agreed that Bank shall in no case or event be liable for the failure of any
of the conditions of this Agreement or damage caused by the exercise of its
discretion in any particular manner, or for any reason, except gross negligence
or willful misconduct with reference to the Account, and Bank shall not be
liable or responsible for its failure to ascertain the terms or conditions, or
to comply with any of the provisions, of any agreement, contract or other
document delivered to it or referred to herein, nor shall Bank be liable or
responsible for forgeries or false personation.
II-9
<PAGE>
H. If any controversy arises between the parties hereto or with any third
person with respect to the subject matter of this Agreement, its terms or
conditions, Bank shall not be required to determine the same or take any action
in the premises, but Bank may await the settlement of any such controversy by
final appropriate legal proceedings or otherwise as Bank may require, or Bank
may institute legal proceedings to determine any controversy, and in any such
event Bank shall not be liable for interest or damages.
I. It is agreed that Bank's duties are only such as are herein specifically
provided, being purely ministerial in nature, and that Bank shall incur no
liability whatsoever except for its willful misconduct or gross negligence.
J. Bank may, but shall not be required to, institute legal proceedings of
any kind. Bank shall have no responsibility for the genuineness or validity of
any document or other item deposited with it, and Bank shall be fully protected
in acting in accordance with any written instructions given to it hereunder and
believed by it to have been signed or given by the proper parties.
K. Bank undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against Bank.
L. No provision of this Agreement shall require Bank to expend or risk its
own funds or otherwise incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of its rights or powers, if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
M. Bank may consult with counsel and the written advice of such counsel or
any opinion of counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
N. Bank shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture or other
paper or document, but Bank in its discretion may make such further inquiry or
investigation into such facts or matters as it may see fit.
O. The recitals contained herein shall be taken as the statements of
Belmont, and Bank assumes no responsibility for their correctness. Bank makes no
representations as to the validity or sufficiency of this Agreement. Bank shall
not be accountable for the use or application by Belmont of the proceeds of the
Offering.
SIXTH: Notwithstanding anything to the contrary contained in this
Agreement, Bank (a) may resign from its duties under this Agreement by giving 30
days' prior written notice of such resignation to the other parties hereto and
(b) may be discharged from its duties under this Agreement upon the receipt from
each of the other parties hereto of 30 days' prior written notice of such
discharge. Upon the resignation or discharge of Bank, Belmont shall retain a
substitute financial institution to perform the functions theretofore performed
by Bank under this Escrow Agreement.
SEVENTH: A. Belmont agrees to pay to Bank reasonable expenses, including
counsel fees, incurred in acting hereunder.
II-10
<PAGE>
B. It is understood that fees (if any) and usual charges agreed upon for
Bank's services hereunder shall be considered compensation for its ordinary
services as contemplated by this Agreement and in the event the conditions of
this Agreement are not promptly fulfilled or that Bank renders any service
hereunder not provided for in this Agreement, or that there is any modification
hereof, or that any controversy arises hereunder or that Bank institutes, is
made a party to, or intervenes in, any litigation pertaining to this Agreement
or the subject matter thereof, Bank and its legal counsel shall be reasonably
compensated for such extraordinary services and reimbursed for all costs and
expenses occasioned by such default, delay, controversy or litigation and Bank
shall have the right to retain all documents and/or other things of value at any
time held by it hereunder until such compensation, fees, costs and expenses
shall be paid. Belmont hereby promises to pay the foregoing sums upon demand.
EIGHTH: If, after the receipt by Bank of any check or instrument of any
party hereto, Bank shall inform Belmont that such check or instrument has been
entered for collection by it hereunder and is uncollectible and payment of the
funds represented by such check or instrument has been made pursuant to the
terms of this Agreement, then Belmont shall immediately reimburse Bank for such
payment, and Bank shall deliver the returned check or instrument to Belmont
provided, however, that nothing contained herein shall require Bank to invest or
pay out funds which it has reason to believe are uncollectible.
NINTH: All distributions by Bank to subscribers pursuant to this Agreement
shall be made by check, payable to the order of each respective subscriber and
shall be mailed directly to the subscribers by first class mail. All payments by
Bank to Belmont shall be made in immediately available funds, if and to the
extent that the funds on deposit with Bank are immediately available at the time
of such payment.
TENTH: The rights and obligations of each party under this Agreement may
not be assigned without the prior written consent of all other parties. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns.
ELEVENTH: This Agreement contains all the terms agreed upon by the parties
with respect to the subject matter hereof. This Agreement may be amended only by
a written instrument signed by the party against whom enforcement of any waiver,
change, modification, extension or discharge is sought.
TWELFTH: All notices, communications and instructions required or desired
to be given under the Escrow Agreement shall be in writing and shall be deemed
to be fully given if sent by certified mail, return receipt requested, to the
following addresses:
To: Firstar Bank, N.A.
Firstar Bank, N.A.
425 Walnut Street
ML CN-WN-06CT
Cincinnati, OH 45202
Attention: Brian George
II-11
<PAGE>
To: Belmont Bancorp.
Belmont Bancorp.
154 W. Main Street
P.O. Box 249
St. Clairsville, OH 43950
Attention: Wilbur R. Roat, President and
Chief Executive Officer
or to such other address and to the attention of such other person as any of the
above may have furnished to the other parties by certified mail, return receipt
requested.
THIRTEENTH: Belmont shall deliver to Bank a certificate of the secretary of
Belmont as (a) the authority of certain officers thereof to act on behalf of
Belmont in connection with this Agreement and (b) the incumbency and signatures
of such officers, and Bank may act in reliance on such certificate upon the
instructions or directions given to it in accordance with the terms of this
Agreement by Belmont, through a person authorized so to act in such certificate.
FOURTEENTH: This Agreement shall be deemed to be an agreement made under
the laws of the State of Ohio and for all purposes shall be construed and
enforced in accordance with and governed by the laws of such State.
FIFTEENTH: This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, and all such
counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Belmont Bancorp.
By:
-----------------------------
Title:
Firstar Bank, N.A.
By:
-----------------------------
Title:
II-12
