<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended September 30, 1997 Commission file number: 0-13166
CoBancorp Inc.
(Exact name of registrant as specified in its charter)
Ohio 34-1465382
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1530 West River Road North, Elyria, Ohio 44035
(Address of principal executive offices) (Zip Code)
(440) 329-8000
Registrant's telephone number, including area code
Not applicable
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter periods that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
As of September 30, 1997, there were 3,453,824 outstanding common shares, with
no par value, of the Registrant.
<PAGE> 2
INDEX
COBANCORP INC. AND SUBSIDIARIES
<TABLE>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Page
Consolidated balance sheets -- September 30, 1997 and December 31, 1996 3
Consolidated statements of income -- Three months and nine months ended
September 30, 1997 and 1996. 4
Consolidated statements of cash flows -- Nine months ended September
30, 1997 and 1996 5
Notes to consolidated financial statements -- September 30, 1997 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION 13
SIGNATURES 14
EXHIBITS 15
</TABLE>
<PAGE> 3
COBANCORP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1997 1996
------------------- --------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 31,809,568 $ 30,555,396
Investment securities available-for-sale 116,446,541 162,460,918
Investment securities held-to-maturity 22,067,717 26,324,836
(market value $22,429,771 and $26,847,437)
Federal funds sold 38,300,000 4,300,000
Loans 420,832,262 340,454,390
Less allowance for loan losses 4,384,579 4,091,592
------------- -------------
Net loans 416,447,683 336,362,798
Bank premises and equipment, net 19,658,262 18,787,316
Accrued income and prepaid expenses 5,683,673 4,840,787
Other assets 15,772,299 15,285,663
------------- -------------
TOTAL ASSETS $ 666,185,743 $ 598,917,714
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits
Demand-noninterest bearing $ 84,366,512 $ 82,842,548
Demand-interest bearing 72,342,732 63,196,979
Savings and other time 423,807,154 368,706,984
------------- -------------
Total deposits 580,516,398 514,746,511
Short-term funds 19,137,153 25,520,820
Other liabilities 8,437,446 4,005,766
------------- -------------
TOTAL LIABILITIES 608,090,997 544,273,097
Shareholders' equity
Capital stock, no par value
5,000,000 shares authorized
3,453,824 shares issued and outstanding 5,975,066 5,975,066
Capital surplus 18,553,553 18,553,553
Retained earnings 32,738,955 30,296,473
Net unrealized gains (losses) on available-for-sale
investment securities (net of income tax) 827,172 (180,475)
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 58,094,746 54,644,617
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 666,185,743 $ 598,917,714
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
COBANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans (including fees)
Taxable $ 10,050,871 $ 7,707,210 $ 28,039,545 $ 22,530,741
Tax-exempt 31,669 35,815 98,505 88,469
Investment securities
Taxable 1,419,006 2,313,507 5,124,560 6,519,094
Tax-exempt 749,457 800,155 2,303,313 2,730,830
Federal funds sold 223,917 36,393 286,079 324,006
------------ ------------ ------------ ------------
TOTAL INTEREST INCOME 12,474,920 10,893,080 35,852,002 32,193,140
INTEREST EXPENSE
Deposits 4,974,090 4,062,533 13,679,697 12,208,000
Short-term borrowed funds 116,014 165,448 490,928 484,987
------------ ------------ ------------ ------------
TOTAL INTEREST EXPENSE 5,090,104 4,227,981 14,170,625 12,692,987
------------ ------------ ------------ ------------
NET INTEREST INCOME 7,384,816 6,665,099 21,681,377 19,500,153
PROVISION FOR LOAN LOSSES 0 0 150,000 100,000
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 7,384,816 6,665,099 21,531,377 19,400,153
OTHER INCOME
Service charges on deposit accounts 743,828 756,742 2,215,227 2,179,387
Trust fees 413,751 359,000 1,241,252 1,061,000
Other 840,833 361,688 2,018,394 1,295,310
Securities gains (losses) 64,203 (5,304) 238,319 294,290
------------ ------------ ------------ ------------
TOTAL OTHER INCOME 2,062,615 1,472,126 5,713,192 4,829,987
OTHER EXPENSES
Salaries, wages and benefits 3,170,489 2,806,366 9,237,766 8,247,753
Occupancy--net 709,316 460,922 1,937,506 1,324,414
Furniture and equipment 315,810 234,000 879,805 702,000
Taxes, other than income and payroll 167,689 143,127 492,945 504,046
Data processing 984,260 521,321 2,488,860 1,549,178
Supplies, printing and postage 351,625 269,089 1,053,362 1,144,118
Outside services 381,484 247,811 1,041,965 834,719
Telephone 192,806 172,425 596,398 456,186
Amortization of intangibles 234,202 204,624 610,877 544,790
Other 1,229,345 1,485,624 3,495,237 4,000,211
------------ ------------ ------------ ------------
TOTAL OTHER EXPENSES 7,737,026 6,545,309 21,834,721 19,307,415
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 1,710,405 1,591,916 5,409,848 4,922,725
INCOME TAX EXPENSE 400,198 282,716 1,136,835 693,716
------------ ------------ ------------ ------------
NET INCOME $ 1,310,207 $ 1,309,200 $ 4,273,013 $ 4,229,009
============ ============ ============ ============
NET INCOME PER SHARE $ 0.38 $ 0.38 $ 1.24 $ 1.23
DIVIDENDS PER SHARE $ 0.18 $ 0.16 $ 0.53 $ 0.47
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
COBANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
1997 1996
------------------ --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 4,273,013 $ 4,229,009
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 150,000 100,000
Provision for depreciation and amortization 1,895,853 1,570,565
Accretion of discounts on purchased loans (16,763) (61,850)
Amortization of premiums less accretion of
discounts on held-to-maturity investment securities 103,805 140,487
Amortization of premiums less accretion of
discounts on available-for-sale investment securities (381) 8,680
Realized securities (gains) on available-for-sale securities (238,320) (294,290)
Realized (gains) on sale of loans (687,633) 0
Realized (gains) on sale of fixed assets (14,930) 0
Decrease (increase) in interest receivable 79,210 (737,324)
Increase in interest payable 67,566 718,906
Decrease (increase) in other assets 160,880 (7,069,207)
Increase in other liabilities 1,525,806 173,513
------------- -------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 7,298,106 (1,221,511)
INVESTING AND LENDING ACTIVITIES
Proceeds from sales of available-for-sale
investment securities 54,600,611 53,017,230
Maturities of available-for-sale investment securities 4,153,314 1,423,808
Maturities of held-to-maturity investment securities 6,673,885 8,928,643
Purchases of available-for-sale investment securities (10,274,053) (103,067,893)
Purchase of Jefferson Savings, net of cash received (5,531,007) 0
Net decrease (increase) in credit card receivables 3,547,394 (6,863)
Net (increase) in longer-term loans (26,396,991) (13,121,572)
Purchases of premises and equipment,
net of retirements (1,528,013) (5,698,034)
------------- -------------
NET CASH PROVIDED BY (USED IN) INVESTING AND LENDING ACTIVITIES 25,245,102 (58,524,681)
DEPOSIT AND FINANCING ACTIVITIES
Net (decrease) increase in demand deposits and savings accounts (10,362,509) 50,645,513
Net increase in certificates of deposit 24,582,719 12,639,160
Net (decrease) increase in short-term funds (10,383,666) 1,305,031
Increase in borrowings 1,050,872 0
Repayment of borrowings (345,924) 0
Cash dividends (1,830,527) (1,620,165)
------------- -------------
NET CASH PROVIDED BY DEPOSIT AND FINANCING ACTIVITIES 2,710,965 62,969,539
------------- -------------
Increase In Cash and Cash Equivalents 35,254,173 3,223,347
Cash and cash equivalents at beginning of period 34,855,395 29,511,296
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 70,109,568 $ 32,734,643
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
COBANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1997
NOTE A -- ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the
accounts of CoBancorp Inc. (the "Corporation") and its wholly-owned
subsidiaries, PREMIERBank & Trust ("Premier") and Jefferson Savings Bank
("Jefferson"). All material intercompany accounts and transactions have been
eliminated.
BASIS OF PRESENTATION: The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. It is the opinion of management that all adjustments necessary for a
fair presentation have been made and that all adjustments were of a normal
recurring nature.
CASH EQUIVALENTS: For purpose of the Statements of Cash Flows, cash equivalents
include amounts due from banks and federal funds sold. Generally, federal funds
are purchased and sold for periods of less than thirty days.
RECLASSIFICATIONS: Certain amounts in the 1996 consolidated financial statements
have been reclassified to conform to the 1997 presentation.
NOTE B -- ACQUISITION
On February 27, 1997, the Corporation acquired all of the outstanding shares of
Jefferson, an Ohio-chartered savings association located in Jefferson, Ohio, for
cash in the amount of $6,733,000, with additional consideration of $649,000
attributable to certain favorable tax benefits (confirmed by an I.R.S. Private
Letter Ruling dated May 31, 1996). The transaction was accounted for under the
purchase method of accounting. The purchase price allocation, which may be
revised, resulted in a write-up of assets to estimated fair value of
approximately $2,432,000. This amount included approximately $965,000 which was
assigned to goodwill. Jefferson's results of operations are included in the
Corporation's consolidated results of operations since the date of acquisition.
Pro forma results of operations have not been presented because the effect of
the acquisition is not material to the consolidated results of operations.
Jefferson, with assets of approximately $62 million as of September 30, 1997,
operates four branch locations; three in Madison County, Ohio and one in Lorain
County, Ohio. Jefferson remains a separate savings association subsidiary of the
Corporation.
<PAGE> 7
COBANCORP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1997
NOTE C -- LOANS
The Corporation applies the provisions of FASB Statement No. 114, "Accounting by
Creditors for Impairment of a Loan" (as amended by FASB Statement No. 118). At
September 30, 1997, there were two loans aggregating $15,600 which were
classified as doubtful for which present value analyses were performed according
to the guidelines set forth by FASB Statement 114. The Corporation's standard
reserve methodology provided for a greater reserve amount than required by FASB
Statement 114. At December 31, 1996, there were no loans for which the
Corporation was required to establish a valuation allowance under Statement 114
criteria.
NOTE D -- EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share," which is required to be adopted on December 31, 1997.
At that time, the Corporation will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating basic earnings per share, the dilutive effect
of stock options will be excluded. The impact on basic and fully diluted
earnings per share is not expected to be material.
NOTE E -- REPORTING COMPREHENSIVE INCOME AND DISCLOSING SEGMENT
INFORMATION
In June 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income" and Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information," both of which will be
effective for fiscal years beginning after December 15, 1997. The Corporation
will adopt Statement No. 130 and Statement No. 131 as of January 1, 1998. The
impact of adopting these Statements is not expected to be material.
NOTE F -- SUBSEQUENT EVENT
On November 3, 1997, the Corporation entered into a definitive agreement to be
acquired by FirstMerit Corporation (FMER). Under the terms of the agreement,
each share of CoBancorp Inc. stock will be exchanged for $44.50 in cash or for
shares of common stock of FirstMerit with a market value per share of $44.50.
The shareholders of CoBancorp may elect to exchange their common stock for
either common stock of FirstMerit, or $44.50 in cash, provided that no less than
30 percent and no more than 49 percent of the total transaction will be paid in
cash. The acquisition is expected to be completed during the second quarter of
1998, subject to approval by CoBancorp Inc.'s shareholders and regulatory
authorities.
<PAGE> 8
COBANCORP INC. AND SUBSIDIARIES
SEPTEMBER 30, 1997
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion focuses on information about CoBancorp Inc.'s financial
condition and results of operations which is not otherwise apparent from the
consolidated financial statements attached. In connection with any forward
looking statements made by the Registrant, the following disclosure is made:
Actual results could differ materially from any such forward looking statements
for a variety of factors including sharp and/or rapid changes in interest rates,
significant changes in the economy, or significant changes in accounting, tax or
regulatory practices or requirements.
EARNINGS RESULTS Net income remained relatively constant with a slight increase
over the prior year. For the first nine months of 1997, net income was
$4,273,000, compared to $4,229,000 for the same period in 1996. Earnings per
share were $1.24 for the first nine months of 1997 and $1.23 for the same period
in 1996. For the third quarter, net income was $1,310,000 or $0.38 per share
compared to $1,309,000 or $0.38 per share in the prior year. The changes
affecting net income are explained in detail in the following sections.
NET INTEREST INCOME The net interest margin on a fully taxable-equivalent basis
was 5.27 percent for the first nine months of 1997, compared to 5.14 percent for
the same period one year ago. Net interest income for the first nine months of
1997 amounted to $22,919,000, up significantly from $20,951,000 for the
comparable period in 1996. Third quarter net interest income was $7,787,000 and
$7,096,000 in 1997 and 1996, respectively. These amounts reflect net interest
income adjusted to a fully taxable-equivalent basis by recognizing the tax
effect of interest earned on tax-exempt securities and loans.
The increase in fully-taxable equivalent net interest income of $1,968,000, or
9.4 percent, is due primarily to an increase in interest-earning assets over the
same period in 1996. This increase was offset by an increase in interest-bearing
liabilities. The Corporation also benefited from an increase in the overall
yield on earning assets, however the cost of interest-bearing liabilities also
increased slightly.
Average interest-earning assets were $575,982,000 and $539,982,000 for the first
nine months of 1997 and 1996, respectively. Average interest-bearing liabilities
for the same periods were $500,752,000 and $463,792,000, respectively.
The following table sets forth for the periods indicated a summary of the
changes in interest income and interest expense on a fully taxable-equivalent
basis resulting from changes in volume and changes in rates for the major
components of interest-earning assets and interest-bearing liabilities:
<PAGE> 9
SUMMARY OF NET INTEREST INCOME CHANGES
AND AVERAGE BALANCE SHEETS
(RATE/VOLUME VARIANCE)
NINE MONTHS ENDED 9/30/97 VS.9/30/96
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
|
1997 1996 | CHANGE IN
---------------------- ---------------------- | INTEREST INCOME/EXPENSE DUE TO
AVERAGE AVERAGE AVERAGE AVERAGE ------------------------------------
BALANCE RATE BALANCE RATE | VOLUME RATE BOTH TOTAL
------- ---- ------- ---- ------ ---- ---- -----
|
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Taxable securities $101,815 6.71% $134,565 6.46% | (1,606) 254 (42) (1,394)
Nontaxable securities 58,054 8.01% 70,371 7.84% | (737) 92 (3) (648)
Federal funds sold & s/t funds 7,179 5.26% 7,171 5.94% | (1) (37) 0 (38)
Taxable loans: |
Real estate loans 184,630 8.11% 143,250 7.98% | 2,439 135 71 2,645
Commercial loans 167,998 9.52% 136,220 9.43% | 2,207 87 46 2,340
Installment loans 51,132 9.98% 41,747 10.24% | 707 (80) (17) 610
Overdrafts 720 0.00% 1,174 0.00% | 0 0 0 0
Checkmate loans 223 17.49% 193 16.58% | 4 1 0 5
Credit card loans 2,040 56.62% 2,835 44.97% | (271) 247 (66) (90)
Nontaxable loans: |
Industrial Revenue Bonds (IRBs) 2,190 9.09% 2,456 7.29% | (15) 33 (3) 15
----------- ------------ ----------- ------- ---------- ---------
TOTAL INTEREST-EARNING ASSETS 575,982 8.56% 539,982 8.27% | 2,727 732 (14) 3,445
|
Noninterest-earning assets: |
Cash and due from banks 30,514 27,933 |
Bank premises and equipment 20,353 14,014 |
Other assets 21,009 19,954 |
Less allowance for loan losses (4,482) (6,000) |
----------- ------------ |
Total noninterest-earning assets 67,394 55,901 |
----------- ------------ |
|
TOTAL ASSETS $643,376 $595,883 |
=========== ============ |
|
|
Interest-bearing transaction accts: |
NOW/Advantage 50 $69,474 1.59% $63,101 1.83% | 84 (111) (10) (37)
Savings accounts: |
Savings 137,491 2.21% 140,601 2.25% | (61) (40) 1 (100)
IMMAs 18,800 1.99% 22,910 2.02% | (63) (5) 0 (68)
Money Market Index accounts 16,252 4.95% 12,292 4.76% | 139 18 6 163
Time deposits: |
Christmas/vacation club 1,035 3.96% 1,205 3.90% | (5) 1 (1) (5)
CD under $100,000 163,927 5.48% 133,074 5.37% | 1,219 109 25 1,353
CD over $100,000 (regular) 14,933 5.32% 13,046 5.30% | 73 1 0 74
CD over $100,000 (public funds) 21,320 5.52% 20,626 5.32% | 25 30 1 56
IRAs 35,063 5.64% 35,827 5.37% | (36) 74 (2) 36
Short-term borrowings: |
Repurchase agreements 1,996 4.99% 3,024 4.73% | (37) 6 (3) (34)
Fed funds purchased 3,297 5.70% 2,181 5.41% | 45 5 2 52
Notes payable TT&L 2,280 5.44% 1,952 5.17% | 12 4 1 17
Sweep 14,884 1.61% 13,953 1.97% | 13 (37) (6) (30)
----------- ------------ | ----------- ------- ---------- ----------
TOTAL INTEREST-BEARING LIBILITIES 500,752 3.78% 463,792 3.64% | 1,408 55 14 1,477
----------- ------- ---------- ---------
|
Noninterest-bearing liabilities: |
Demand deposits 80,182 77,090 |
Other liabilities 6,303 4,479 |
Shareholders equity 56,139 50,522 |
----------- ------------
TOTAL LIABILITIES AND |
SHAREHOLDERS' EQUITY $643,376 $595,883 |
=========== ============
|
NET INTEREST INCOME 5.27% 5.14% | $ 1,319 $677 ($28) $ 1,968
========= ===== ========= =========
|
|
YTD FTE net interest income (current year) $22,919
YTD FTE net interest income (prior year) 20,951
-----------
Change in FTE net interest income $1,968
===========
</TABLE>
Note: Jefferson's average balances and income are included for seven months in
1997. Presented on a fully taxable-equivalent basis, using year-to-date average
balances.
<PAGE> 10
NONINTEREST INCOME Total noninterest income, exclusive of securities gains,
increased $939,000 or 20.7 percent for the first nine months of 1997 when
compared to the same period in 1996. The third quarter of 1997 represented an
increase of $521,000 or 35.3 percent over the prior year. Jefferson contributed
approximately $140,000 of noninterest income, exclusive of securities gains,
since it was acquired on February 28, 1997. Income from trust activities
increased to $1,241,000 for the nine months ended September 30, 1997, up 17
percent from the prior year. In June of 1997, Premier sold its credit card
portfolio (approximately $2,605,000 of loans) and realized a gain of
approximately $400,000. Security transactions resulted in net gains of $238,000
and $294,000 in the first three quarters of 1997 and 1996, respectively. The
comparable amounts for the third quarter were a net gain of $64,000 in 1997 and
a net loss of $5,000 in 1996, respectively. During the third quarter of 1997,
Premier sold approximately $20 million of its fixed and variable rate mortgage
loans and realized a gain of approximately $271,000. Premier elected to retain
servicing rights to these mortgage loans and recorded a mortgage servicing asset
of approximately $240,000 under the guidelines set forth by the Financial
Accounting Standards Board in Statement Number 125. Amortization of this
mortgage servicing asset will be recognized over the average remaining life of
the pools of loans sold. During the third quarter of 1997, Premier also sold its
office building located at 124 Middle Avenue, Elyria, Ohio, and accounted for
the transaction as a sales-leaseback agreement. A gain of approximately
$1,009,000 is being recognized on the installment basis over the life of the
five year lease.
NONINTEREST EXPENSE For the first nine months of 1997, salaries, wages and
benefits expense increased $990,000 over the same period for 1996. In the third
quarter of 1997, the increase was $364,000, of which approximately 41% was a
result of the Jefferson acquisition, while the remainder is a combination of
added staff for new offices and normal salary adjustments. The increase in
occupancy and furniture and equipment expenses of $2,026,000 over the previous
year was due to the addition of several Premier branches during the later half
of 1996, the acquisition of Jefferson in early 1997 and the opening of an
additional Jefferson facility during the third quarter of 1997.
LOANS AND ALLOWANCE FOR LOAN LOSSES In determining the adequacy of the allowance
for loan losses, management evaluates past loan loss experience, present and
anticipated economic conditions and the credit worthiness of its borrowers. The
allowance for loan losses is increased by provisions charged against income and
recoveries of loans previously charged off. The allowance is decreased by loans
that are determined uncollectable by management and charged against the
allowance.
Potential problem loans are those loans which are on the Corporation's "watch
list." These loans are, or could become, nonperforming. This "watch list" is
reviewed monthly and adjusted for changing conditions. Loans on the watch list
at September 30, 1997, totaled $7.5 million, or 1.7 percent of total outstanding
loans.
At September 30, 1997, there were two loans aggregating $15,600 which were
classified as doubtful for which present value analyses were performed according
to the guidelines set forth by FASB Statement 114. The Corporation's standard
reserve methodology provided for a greater reserve amount than required by FASB
Statement 114. At December 31, 1996, there were no loans for which the
Corporation was required to establish a valuation allowance under Statement 114
criteria.
<PAGE> 11
At September 30, 1997, the allowance for loan losses as a percentage of loans
was 1.04 percent compared to 1.20 percent at December 31, 1996. The provision
for loan losses was $150,000 in the nine months ended September 30, 1997, and
$100,000 for the nine months ended September 30, 1996.
The following table contains information relative to the Corporation's loan loss
experience for the nine months ended September 30, 1997, and the year ended
December 31, 1996 (in thousands of dollars).
<TABLE>
<CAPTION>
Nine months ended Year ended
September 30, 1997 December 31, 1996
----------------- ----------------------
<S> <C> <C>
Allowance for loan losses at beginning of period $ 4,092 $ 5,850
Jefferson allowance acquired 501
Loans charged off:
Real estate 1 21
Installment 445 446
Credit card and other 66 86
Commercial and collateral 150 163
------- -------
662 716
Recoveries on loans charged off:
Real estate 144 5
Installment 145 311
Credit card and other 29 23
Commercial and collateral 46 395
------- -------
364 733
Net charge-offs (recoveries) 308 (17)
Provision for loan losses 150 (1,775)
======= =======
Allowance for loan losses at end of period
$ 4,385 $ 4,092
======= =======
Ratio of allowance for loan losses to total
loans at end of period 1.04% 1.20%
======= =======
</TABLE>
During the fourth quarter of 1996, the Corporation, based on significant
continued improvement in overall asset quality, and recoveries exceeding
charge-offs for the past three years, returned $1,775,000 of the allowance for
loan losses to income.
<PAGE> 12
NONPERFORMING LOANS Nonaccrual loans at September 30, 1997, totaled $2,973,000,
compared to $1,707,000 at December 31, 1996. This increase includes $1,256,000
in nonaccruing loans attributable to Jefferson. The category of accruing loans
past due 90 days or more totaled $35,000 at September 30, 1997 and $85,000 at
December 31, 1996. Additionally, there was $62,000 in other real estate owned.
The balance in the allowance for loan losses was $4,385,000 at September 30,
1997 compared to $4,092,000 at December 31, 1996.
Loans other than installment loans on which interest and/or principal is 90 days
or more past due are placed on nonaccrual status and any previously accrued but
uncollected interest is reversed from income. Such loans remain on a cash basis
for recognition of income until both interest and principal are current.
Installment loans past due greater than 120 days are charged off and previously
accrued but uncollected interest is reversed from income.
The following table summarizes nonaccrual and past due loans (in thousands of
dollars).
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ ------------------
<S> <C> <C>
Accruing loans past due 90 days or more as
to principal or interest:
Loans secured by real estate $ 0 $ 0
Commercial and industrial 0 0
Loans to individuals 35 85
------ ------
$ 35 $ 85
====== ======
Nonaccrual loans:
Loans secured by real estate $2,518 $1,537
Commercial and industrial 379 170
Loans to individuals 76 0
------ ------
$2,973 $1,707
====== ======
</TABLE>
CAPITAL At September 30 1997, Premier's and CoBancorp's risk-based capital
ratios based on Federal Reserve Board guidelines were as follows:
<TABLE>
<CAPTION>
Well
PremierBank CoBancorp capitalized
& Trust Inc. minimums
----------- ---------- ------------
<S> <C> <C> <C>
Tier 1 "core" capital to risk-weighted assets 10.86% 12.00% 6.00%
Total capital to risk-weighted assets 11.86% 13.03% 10.00%
Tier 1 leverage ratio 7.22% 7.80% 5.00%
</TABLE>
These ratios substantially exceed the minimums which are in effect for banks and
bank holding companies, and also exceed the percentages required to be
considered "well-capitalized".
<PAGE> 13
At September 30, 1997, Jefferson Savings' regulatory capital ratios based on the
Office of Thrift Supervision requirements were as follows:
<TABLE>
<CAPTION>
Well-
Jefferson Required capitalized
Savings Minimums Minimums
--------- --------- ------------
<S> <C> <C> <C>
Tangible Capital 9.68% 1.50% n/a
Tier 1 "core" capital to risk-weighted assets 17.63% n/a 6.00%
Core Capital 8.18% 3.00% 5.00%
Risk-based capital to risk weighted assets 18.77% 8.00% 10.00%
</TABLE>
PART II. OTHER INFORMATION
Except as set forth below, the items of Part II are inapplicable or the answers
thereto are negative and, accordingly, no reference is made to said items in
this report.
Item 4--Submission of matters to a vote of security holders
None
Item 6--Exhibits and Reports on Form 8-K
(a) Exhibits:
10q Second Amendment to Employment Agreement Dated June
16, 1997 among CoBancorp Inc., PremierBank & Trust
and Timothy W. Esson
10r Severance Agreement Due to Change in Control of
CoBancorp Inc. Dated June 16, 1997 among CoBancorp
Inc., PremierBank & Trust, Jefferson Savings Bank and
James R. Bryden
11 Earnings per Share
27 Financial Data Schedule
(b) The registrant was not required to file any reports on Form
8-K during the quarter ended September 30, 1997.
<PAGE> 14
COBANCORP INC. AND SUBSIDIARIES
SEPTEMBER 30, 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COBANCORP INC.
(Registrant)
/s/ Timothy W. Esson
Timothy W. Esson
Executive Vice President and
Chief Financial Officer
November 14, 1997
<PAGE> 1
EXHIBIT 10q
SECOND AMENDMENT
TO
EMPLOYMENT AGREEMENT
This SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (the "Amendment") is made and
entered into this l6th day of June 1997 by and among CoBancorp Inc. (the
"Holding Company") and its wholly owned subsidiary PremierBank & Trust (the
"Bank,)" an Ohio-chartered, FDIC-insured bank with its main office at the
Corporate Center, 1530 West River Road, North, Elyria, Ohio, and Timothy W.
Esson (the "Executive") in order to memorialize the intent of the parties hereto
(the "Parties") to make a certain amendment to the Employment Agreement dated
December 31, 1993, by and among the Parties (the "Agreement"). Unless otherwise
defined herein, initially capitalized terms shall have the meanings ascribed to
them in the Agreement.
WHEREAS, the Executive serves in the position of President of the Bank and
satisfactorily performed his duties in such capacity;
WHEREAS, the Board of Directors of the Bank and the Holding Company wish to
assure the Bank of continuity of management and the continued services of the
Executive;
NOW, THEREFORE, in consideration of the performance of the responsibilities of
the Executive and upon the other terms and conditions hereinafter provided, the
Parties agree to this Amendment:
SECTION 10(a) OF THE AGREEMENT, CHANGE IN CONTROL, shall be amended and restated
in its entirety as follows:
a) If during the term of this Agreement there is a change in control of the
Holding Company, in connection with which the Executive's employment is
involuntarily terminated within two (2) years after the change in control
other than for cause or pursuant to Paragraphs 7(e) through 7(i) or 9, the
Executive shall be entitled to a termination or severance payment. This
payment shall also be made in the case of the Executive's voluntary
termination of employment for Good Reason (as defined in Paragraph 11,
which shall not be considered a voluntary termination pursuant to Paragraph
7(e) in connection with, or within one (1) year after, a Change in Control
of the Holding Company. Such voluntary termination of employment for Good
Reason in connection with, or within one (1) year after, a Change in
Control of the Holding Company shall not constitute a termination under
Paragraph 7(b) hereof. The amount of this severance payment shall be a cash
sum equal to two hundred ninety-nine percent
<PAGE> 2
(299%) of the Executive's then current annual Base Salary at the time of
such termination.
Except as expressly modified or amended herein, all provisions of the Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment to the Agreement on
the day and year first hereinabove written.
COBANCORP INC.
/s/ John S. Kreighbaum
-----------------------------------
John S. Kreighbaum
Chairman, President and
Chief Executive Officer
PREMIERBANK & TRUST
/s/ John S. Kreighbaum
------------------------------------
John S. Kreighbaum
Chairman and Chief Executive Officer
/s/ Timothy W. Esson
-------------------------------------
Timothy W. Esson (the "Executive")
<PAGE> 1
Exhibit 10r
SEVERANCE AGREEMENT DUE TO CHANGE IN CONTROL
OF COBANCORP INC.
This AGREEMENT is made and entered into this 16th day of June, 1997, by
and among CoBancorp Inc. (the "Corporation"), a corporation organized under the
laws of the State of Ohio, with its main office in Elyria, Ohio, PremierBank &
Trust (the "Bank"), an Ohio-chartered, FDIC-insured member bank with its main
offices in Elyria, Ohio, Jefferson Savings Bank, an Ohio-chartered savings
association, and James R. Bryden (the "Executive"). Any reference to the "Board
of Directors" herein shall mean the Board of Directors of the Corporation. Any
reference to "FDIC" herein shall mean the Federal Deposit Insurance Corporation.
Any reference to "FRB" shall mean the Board of Governors of the Federal Reserve
System and any reference to "Superintendent" herein shall mean the
Superintendent of the Ohio Division of Financial Institutions.
WHEREAS, the Executive has heretofore served in the position of Regional
President of the Bank and continues to serve as Regional president of the Bank;
and
WHEREAS, the Executive has served in the position of President of
Jefferson Savings Bank since February 28, 1997 and continues to serve as
President of Jefferson Savings Bank;
NOW THEREFORE, in consideration of the performance of the
responsibilities of the Executive and upon the other terms and conditions
hereinafter provided, the parties hereto agree as follows:
1. NO EMPLOYMENT CONTRACT
The parties hereto acknowledge and agree that this Agreement is not a
management or employment agreement and that none of the terms and conditions
contained herein shall be effective until such time as there is a Change in
Control as hereinafter defined
<PAGE> 2
in this Agreement. Prior to a Change in Control, the Executive agrees and
acknowledges that he is an employee-at-will of the Bank and Jefferson Savings
Bank.
2. TERM OF AGREEMENT
The initial term of this Agreement shall be for a period of three (3)
years commencing January 1, 1997 (hereafter referred to as the "Anniversary
Date"). Commencing on the first Anniversary Date of this Agreement, and
continuing at each Anniversary Date thereafter, the Agreement shall
automatically renew for one (1) additional year beyond the then effective
expiration date only upon a determination and resolution of the Board of
Directors that the performance of the Executive has met the requirements and
standards of the Board and that such term shall be extended (if the Board of
Directors determines not to extend the term, it shall promptly so notify the
Executive, with such election by the Board not to extend the term not to
otherwise affect the then term of this Agreement). Reference herein to the term
of this Agreement shall refer both to such initial term and such extended terms.
Unless sooner terminated as set forth herein, this contract shall terminate when
the Executive reaches age sixty-five (65).
3. TERMINATION FOR CAUSE
(a) The Executive shall have no right to receive severance or other
benefits under this Agreement for any period after the date of termination for
Cause. For purposes of this Agreement, termination by the Corporation, the Bank
or Jefferson Savings Bank for "Cause" shall mean only the following events:
(i) personal dishonesty;
(ii) incompetence;
(iii) material breach of any provision of this Agreement;
2
<PAGE> 3
(iv) breach of a fiduciary duty involving personal gain or profit;
(v) intentional failure to perform stated duties;
(vi) a willful and material breach of the policies and procedures for
the operation of the Bank or Jefferson Savings Bank provided to
the Executive by formal action of the Board of Directors;
(vii) willful violation of any law, rule, regulation (other than a law,
rule or regulation relating to a traffic violation or similar
offense) or final cease-and-desist order; or
(viii) willful misconduct.
(b)(i) For purposes of Paragraph 3(a)(ii), "incompetence" shall mean the
Executive's performance of his duties as measured against the then
prevailing standards in the Ohio banking industry.
(ii) For purposes of Paragraph 3(a)(vii) and 3(a)(viii), no act, or
failure to act, on the Executive's part shall be considered
"willful" unless he has acted, or failed to act, with an absence
of good faith and without a reasonable belief that his action or
failure to act was in the best interest of the Bank or Jefferson
Savings Bank.
(iii) For purposes of Paragraph 3(a)(vii), a cease-and-desist order
shall not become final until consent by the Corporation, the Bank
or Jefferson Savings Bank, as the case may be, to such order, or
the exhaustion or lapse of all (administrative and judicial)
appeal rights in relation thereto.
3
<PAGE> 4
4. VOLUNTARY TERMINATION OF AGREEMENT
This Agreement may be terminated by the Executive at any time upon
ninety (90) days' written notice to the Bank, Jefferson Savings Bank or the
Corporation or upon such shorter period as may be agreed upon between the
Executive and the Board of Directors.
5. GOVERNMENTAL TERMINATION OF AGREEMENT
(a) If the Executive is removed from office and/or permanently
prohibited from participating in the conduct of the Bank's, Jefferson Savings
Bank's or the Corporation's affairs by an order issued under Section 8(e) of
the Federal Deposit Insurance Act, 12 U.S.C. Section 1818(e), or the Ohio
Revised Code, all obligations of the Bank, Jefferson Savings Bank and the
Corporation under this Agreement shall terminate as of the effective date of
the order.
(b) If the Bank or Jefferson Savings Bank is declared insolvent by the
Superintendent, all obligations under this Agreement shall terminate.
(c) All obligations under this Agreement may be terminated by the FDIC
at the time the FDIC enters into an agreement to provide assistance to or on
behalf of the Bank or Jefferson Savings Bank under the authority contained in
Section 13(c) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1823(c).
(d) If the Executive is suspended and/or temporarily prohibited from
participating in the conduct of the Bank's or Jefferson Savings Bank's affairs
by a notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit
Insurance Act, 12 U.S.C. Section 1818(e)(3) or (g)(1), the Corporation's,
Jefferson Savings Bank's and the Bank's obligations under subparagraphs 6(a),
(b) and (c) of this Agreement shall be suspended as the date of service,
unless stayed by appropriate proceedings.
(e) If the charges in the notice referenced in subparagraph 5(d) are
dismissed, the Board of Directors may in its discretion:
4
<PAGE> 5
(i) pay the Executive all or part of the severance benefits while its
contract obligations were suspended, and
(ii) reinstate (in whole or in part) any of its obligations which were
suspended as required in subparagraph (d) above.
6. CHANGE IN CONTROL
(a) If, during the term of this Agreement, there is a Change in Control
of the Corporation, the Executive shall be entitled to termination or severance
payment in the event the Executive's employment with the Bank, Jefferson Savings
Bank or the Corporation is involuntarily terminated, in connection with or
within one (1) year after the Change in Control, other than for Cause or
pursuant to Paragraphs 4 or 5. This payment shall also be made in the case of
the Executive's voluntary termination of employment for Good Reason (as defined
in Paragraph 7) in connection with, or within one (1) year after, a Change in
Control of the Corporation. Such voluntary termination of employment for Good
Reason in connection with, or within one (1) year after, a Change in Control of
the Corporation shall not constitute a termination for Cause or a voluntary
termination subject to Paragraph 4 of this Agreement. The amount of this
severance payment shall be the benefits specified in Paragraph 8 of this
Agreement.
(b) For purposes of this Agreement, a "Change in Control of the
Corporation" shall mean:
(i) The acquisition by a person or persons acting in concert of
the power to vote twenty five percent (25%) or more of a class of
the Corporation's voting securities, or the acquisition by a
person of the power to direct the Corporation's management or
policies, if the Board of Directors or the FRB has made a
determination that
5
<PAGE> 6
such acquisition constitutes or will constitute an acquisition of
control of the Corporation for the purposes of the Bank Holding
Company Act or the Change in Bank Control Act and the regulations
thereunder;
(ii) during any period of two (2) consecutive years during the term of
this Agreement, individuals who at the beginning of such period
constitute the Board of Directors of the Corporation cease for any
reason to constitute at least a majority thereof, unless the
election of each director who was not a director at the beginning
of such period has been approved in advance by directors
representing at least two-thirds (2/3) of the directors then in
office who were directors in office at the beginning of the
period; or
(iii) the Corporation shall have merged into or consolidated with
another corporation, or merged another corporation into the
Corporation, on a basis whereby less than fifty percent (50%) of
the total voting power of the surviving corporation is represented
by shares held by former shareholders of the Corporation prior to
such merger or consolidation; or
(iv) the Corporation shall have sold substantially of its assets to
another person. The term "person" refers to an individual,
corporation, partnership, trust, association, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization or
other entity.
(c) Upon the Executive's termination of employment arising under this
Paragraph 6 within one (1) year after the occurrence of a Change in Control of
the Corporation,
6
<PAGE> 7
the Corporation will cause to be continued life, health and disability insurance
coverage substantially identical to the coverage maintained by the Bank,
Jefferson Savings Bank or the Corporation for Executive prior to his severance.
Such coverage shall cease upon the earlier of Executive's employment by another
employer or twelve (12) months from such termination.
7. GOOD REASON
For purposes of this Agreement, "Good Reason" shall mean the occurrence
after a Change in Control of any of the events or conditions described in
subparagraphs (a) through (e) hereof without the Executive's express written
consent; provided the Executive's right to terminate his employment pursuant to
this Paragraph 7 shall not be affected by his incapacity due to physical or
mental illness:
(a) A change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in the
Executive's reasonable judgment, does not represent a promotion from his status,
title, position or responsibilities as in effect immediately prior thereto; the
assignment to the Executive of any duties or responsibilities which, in the
Executive's reasonable judgment, are inconsistent with such status, title,
position or responsibilities; or any removal of the Executive from or failure to
reappoint him to any of such positions, except in connection with the
termination of his employment for (i) disability, (ii) Cause, (iii) pursuant to
Paragraphs 4 or 5, (iv) as a result of his death or (v) by the Executive other
than for Good Reason;
(b) A reduction by the Bank, Jefferson Savings Bank or the Corporation
in the Executive's base salary as in effect on the date of a Change in Control
of the Corporation;
(c) The relocation of his/her principal place of employment to a
location outside a thirty (30)-mile radius of Delaware, Ohio or requiring the
Executive to be based at any
7
<PAGE> 8
place other than Delaware, Ohio, except for reasonably required travel which is
not materially greater than such travel requirements prior to the Change in
Control;
(d) The failure by the Bank, Jefferson Savings Bank or the Corporation
to continue to provide the Executive with benefits substantially similar to
those provided to him under any of the employee benefit plans in which the
Executive becomes a participant, or the taking of any action by the Bank,
Jefferson Savings Bank or the Corporation which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of any material
fringe benefit enjoyed by him at the time of the Change in Control.
8. TERMINATION BENEFITS
Upon the occurrence of a Change in Control, followed by the voluntary or
involuntary termination of Executive's employment with the Bank or Jefferson
Savings Bank other than for Cause or pursuant to Paragraphs 4 or 5, the Bank
shall pay Executive, or in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to two (2) times the average annual salary paid to
Executive by the Bank and the Corporation during the previous year immediately
preceding Executive's termination.
9. PAYMENT OF LEGAL FEES
Reasonable legal fees and expenses paid or incurred by the Executive
pursuant to any dispute or question of interpretation relating to the Agreement
shall be paid or reimbursed by the Corporation in accordance with the following.
If the Executive, the Bank, Jefferson Savings Bank or the Corporation initiates
a proceeding and the Executive prevails, all reasonable legal fees and expenses
shall be paid by the Corporation. If the Executive initiates a proceeding and
does not prevail on his/her claim, then the Corporation shall reimburse the
Executive for all legal fees and expenses but not to exceed the sum of $25,000.
8
<PAGE> 9
10. SUCCESSOR ORGANIZATION
The obligations of the Corporation, Jefferson Savings Bank and the Bank
as set forth herein shall continue to be the obligation of any successor
organization, any organization which purchases substantially all of the
liabilities of the Corporation, Jefferson Savings Bank or the Bank, as well as
any organization which assumes substantially all of the liabilities of the
Corporation or the Bank whether by merger, consolidation, or other form of
business combination. This Agreement is personal to the Executive and the
Executive may not delegate his duties hereunder.
11. NOTICES
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered by hand
or mailed, certified or registered mail, return receipt requested, with postage
prepaid, to the following addresses or to such other address as either party may
designate by like notice.
A. If to the Corporation, to:
Chairman
CoBancorp Inc.
1530 West River Road North
Elyria, Ohio 44035
B. If to the Executive, to:
----------------------------
----------------------------
----------------------------
and to such other or additional person or persons as either party shall have
designated to the other party in writing by like notice.
9
<PAGE> 10
12. AMENDMENTS
No amendments or additions to this Agreement shall be binding unless in
writing and signed by both parties, except as herein otherwise provided.
13. PARAGRAPH HEADINGS
The paragraph headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with, the
interpretation of this Agreement.
14. SEVERABILITY
The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
15. GOVERNING LAW
This Agreement shall, except to the extent that federal law (including
any law, rule, or regulations of the FDIC) shall be deemed to apply, be governed
by and construed and enforced in accordance with the laws of Ohio.
16. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction.
17. COVENANT NOT TO COMPETE
Executive hereby agrees that he shall not, and shall cause any entity
that he controls or is affiliated with not to, for a period of two (2) years
after the date of Executive's
10
<PAGE> 11
voluntary or involuntary termination of employment for any reason, with or
without Cause, or with or without Good Reason, do any of the following:
(a) Serve as director of employee of, or consult or contract with any
federally insured depository institution (or holding company thereof) that
conducts business (whether through "brick and mortar" presence or otherwise) in
either Franklin or Delaware County, Ohio (the "Territory") or in any manner
directly or indirectly compete with the Bank within the Territory, both parties
recognizing that such geographical limitation is reasonable, does not include
all areas in which the Bank presently conducts business and will not prevent
Executive from meaningful employment opportunities elsewhere (for example,
Cuyahoga County); or
(b) Compete with the Bank in the Territory or solicit, divert or take
away any of the customers, business or patronage of the Bank or its respective
subsidiaries or affiliates; or
(c) Hire, solicit or cause to be solicited for employment by Executive
or by any third party any person who is as of the date of such solicitation, or
was within the twelve (12) month period prior to the date of such solicitation,
an employee of the Bank or of any subsidiary or affiliate of the Bank.
18. REASONABLENESS OF COVENANTS
The parties hereto agree that each of the covenants set forth in this
Agreement are separate, distinct and severable not only from the other of such
covenants but also from any other provisions in this Agreement. The existence of
any claim or cause of action of one party against the other party, whether based
on this Agreement or otherwise, shall not constitute a defense to the
enforcement of such covenants. The parties hereto agree that the covenants set
11
<PAGE> 12
forth in this Agreement are appropriate and reasonable as to time, geographical
area and scope of activity restrained, when considered in light of the nature
and extent of the circumstances and the business of the Bank and the nature and
extent of the parties' obligations hereunder and that the covenants do not
impose a greater restraint than is necessary to protect the good will and
business interests of the Bank.
19. PROPRIETARY INFORMATION
Executive agrees not to ever disclose or use at any time any proprietary
information of the Bank or its affiliates, whether he has that information
committed to memory or it is embodied in writing or other physical form; except
with the prior written consent of the Bank. For purposes of this Agreement, the
phrase "proprietary information of the Bank or its affiliates" means all
confidential information relating to the Bank, including information relating to
specific technical matters, such as components, devices, formulas, processes,
compilations of information, customer lists, records and other information
pertaining to the business of the Bank or its affiliates that is protected by
law and that Executive has obtained by reason of his employment by the Bank or
his performance of duties for it. Executive agrees not to make known to any
person, firm or corporation the names or addresses of any of the customers of
the Bank or any other information pertaining to them or call on, solicit or take
away, whether on behalf of Executive or any subsequent employer of Executive,
any of the Bank's customers on whom Executive called or with whom Executive
became acquainted during the course of his employment with the Bank. This
confidentiality provision is limited to the two (2) year period described in
Section 17 above.
12
<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first hereinabove written.
WITNESSES: COBANCORP INC.
/s/ Lois E. Gunning By: John S. Kreighbaum
- ------------------------- -------------------------------
John S. Kreighbaum
/s/ Linda Bryant Pavlick Chairman, President and
- -------------------------- Chief Executive Officer
WITNESSES: PREMIERBANK & TRUST
/s/ Lois E. Gunning By: John S. Kreighbaum
- -------------------------- -------------------------------
John S. Kreighbaum
/s/ Linda Bryant Pavlick Chairman and
- -------------------------- Chief Executive Officer
WITNESSES: JEFFERSON SAVINGS BANK
/s/ Marya C. Young By: /s/ Jerry M. Wolf
- -------------------------- --------------------------------
Jerry M. Wolf
/s/ Cathy Eveson Chairman
- --------------------------
WITNESSES:
/s/ Lois E. Gunning By: /s/ James R. Bryden
- -------------------------- -------------------------------
James R. Bryden
/s/ Linda Bryant Pavlick Executive
- --------------------------
<PAGE> 1
COBANCORP INC. AND SUBSIDIARIES
EXHIBIT (11)--STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended September 30 Nine Months Ended September 30
------------------------------- ------------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 3,453,824 3,447,160 3,453,824 3,447,160
Net effect of dilutive stock options--
based on the treasury stock method
using average market price 54,242 28,488 45,592 28,671
---------- ---------- ---------- ----------
Total shares 3,508,066 3,475,648 3,499,416 3,475,831
========== ========== ========== ==========
Net income $1,310,207 $1,309,200 $4,273,013 $4,229,009
========== ========== ========== ==========
Net income per share $ 0.38 $ 0.38 $ 1.24 $ 1.23
========== ========== ========== ==========
Fully diluted:
Average shares outstanding 3,453,824 3,447,160 3,453,824 3,447,160
Net effect of dilutive stock options--
based on the treasury stock method
using the higher of average market
price or ending market price 56,160 28,488 50,810 28,920
---------- ---------- ---------- ----------
Total shares 3,509,984 3,475,648 3,504,634 3,476,080
========== ========== ========== ==========
Net income $1,310,207 $1,309,200 $4,273,013 $4,229,009
========== ========== ========== ==========
Net income per share $ 0.38 $ 0.38 $ 1.24 $ 1.23
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSODIDATED BALANCE SHEETS OF COBANCORP INC. AND ITS SUBSIDIARIES AS OF
SEPTEMBER 30, 1997, AND THE RELATED STATEMENTS OF INCOME, CASH FLOWS AND
SHAREHOLDERS' EQUITY FOR THE PERIOD THEN ENDED AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000745276
<NAME> COBANCORP INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 29,811
<INT-BEARING-DEPOSITS> 1,999
<FED-FUNDS-SOLD> 38,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 116,447
<INVESTMENTS-CARRYING> 22,068
<INVESTMENTS-MARKET> 22,430
<LOANS> 420,832
<ALLOWANCE> 4,385
<TOTAL-ASSETS> 666,186
<DEPOSITS> 580,516
<SHORT-TERM> 19,137
<LIABILITIES-OTHER> 8,437
<LONG-TERM> 0
0
0
<COMMON> 5,975
<OTHER-SE> 52,120
<TOTAL-LIABILITIES-AND-EQUITY> 666,186
<INTEREST-LOAN> 28,138
<INTEREST-INVEST> 7,428
<INTEREST-OTHER> 286
<INTEREST-TOTAL> 35,852
<INTEREST-DEPOSIT> 13,680
<INTEREST-EXPENSE> 14,171
<INTEREST-INCOME-NET> 21,681
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 238
<EXPENSE-OTHER> 21,835
<INCOME-PRETAX> 5,410
<INCOME-PRE-EXTRAORDINARY> 5,140
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,273
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
<YIELD-ACTUAL> 5.27
<LOANS-NON> 2,973
<LOANS-PAST> 35
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,593
<CHARGE-OFFS> 662
<RECOVERIES> 364
<ALLOWANCE-CLOSE> 4,385
<ALLOWANCE-DOMESTIC> 4,350
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 35
</TABLE>
