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As filed with the Securities and Exchange Commission on May 5, 1995
Registration No. 33-58493
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
NATIONAL CITY BANCSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INDIANA 6710 35-1632155
(State or Other Jurisdiction (Primary Standard Industrial (IRS Employer
of Incorporation or Classification Code Identification
Organization) Number) No.)
227 MAIN STREET
P.O. BOX 868
EVANSVILLE, IN 47708
(812) 464-9800
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
MR. ROBERT A. KEIL COPIES OF COMMUNICATIONS TO:
PRESIDENT MARTIN D. WERNER, ESQ.
NATIONAL CITY BANCSHARES, INC. WERNER & BLANK CO., L.P.A.
227 MAIN STREET 7205 W. CENTRAL AVENUE
EVANSVILLE, IN 47705-0868 TOLEDO, OH 43617
(812) 464-9800 (419) 841-8051
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
Approximate date of commencement of proposed sale of the securities to the
public:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box: [ ]
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.
Page 1 of _____ pages.
Exhibit Index on Page ____.
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NATIONAL CITY BANCSHARES, INC.
CROSS-REFERENCE SHEET
FORM S-4
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Heading in
Item of Form S-4 Prospectus and Proxy Statement
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1. Forepart of Registration Statement and Outside Front Outside Front Cover Page of
Cover Page of Prospectus Prospectus
2. Inside Front and Outside Back Cover Pages of Inside Front and Outside Back
Prospectus Cover Pages of Prospectus;
Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges, SUMMARY
and Other Information
4. Terms of the Transaction SUMMARY; PROPOSED MERGER;
INFORMATION ABOUT NCBE
COMMON STOCK; and INFORMATION
ABOUT NCBE
5. Pro Forma Financial Information PRO FORMA FINANCIAL
INFORMATION
6. Material Contracts with the Company Being Acquired SUMMARY; PROPOSED MERGERS --
Terms of the Merger;
Resales of NCBE Stock;
MEETING INFORMATION--Vote
Required;
7. Additional Information Required for Reoffering by Not Applicable
Persons and Parties Deemed to be Underwriters
8. Interests of Named Experts and Counsel EXPERTS
9. Disclosure of Commission Position on Indemnification Not Applicable
for Securities Act Liabilities
10. Information with Respect to S-3 Registrants SUMMARY; AVAILABLE
INFORMATION; INCORPORATION
BY REFERENCE; SELECTED
FINANCIAL DATA; PRO FORMA
FINANCIAL INFORMATION
11. Incorporation of Certain Information by Reference Inside Front Cover Page of Prospectus;
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE;
Summary -- Selected Financial Data; PRO
FORMA FINANCIAL INFORMATION
12. Information with Respect to S-2 or S-3 Registrants Not Applicable
</TABLE>
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Heading in
Item of Form S-4 Prospectus and Proxy Statement
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13. Incorporation of Certain Information by Reference Not Applicable
14. Information with Respect to Registrants Other Than Not Applicable
S-3 or S-2 Registrants
15. Information with Respect to S-3 Companies Not Applicable
16. Information with Respect to S-2 or S-3 Companies Not Applicable
17. Information with Respect to Companies Other Than SUMMARY -- Vote Required --
S-2 or S-3 Companies INFORMATION
ABOUT WHITE COUNTY;
18. Information if Proxies, Consents or Authorizations SUMMARY -- Meeting Information;
are to be Solicited INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE;
PROPOSED MERGER--Dissenters' Rights;
INFORMATION ABOUT NCBE
COMMON STOCK
19. Information if Proxies, Consents or Authorizations Not Applicable
are Not to be Solicited, or in an Exchange Offer
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PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
WHITE COUNTY BANK
215 E. MAIN STREET
CARMI, ILLINOIS 62821
_______________________
PROSPECTUS
NATIONAL CITY BANCSHARES, INC.
COMMON STOCK
_______________________
This Prospectus of National City Bancshares, Inc. (NCBE) relates to
the shares of common stock of NCBE issuable to the shareholders of White
County Bank (White County) upon consummation of the proposed merger of
White County Interim Bank, a newly formed subsidiary of NCBE ("New Bank") and
White County (the "Merger"). NCBE and White County have entered into a
Agreement and Plan of Reorganization dated December 12, 1994, (the
"Agreement"). The Agreement is attached as Exhibit A and incorporated herein
by reference.
THIS PROSPECTUS ALSO SERVES AS THE PROXY STATEMENT OF WHITE COUNTY FOR
ITS SPECIAL MEETING OF STOCKHOLDERS (THE "SPECIAL MEETING") TO BE HELD ON
___________, 1995. SEE "MEETING INFORMATION."
If the proposed Merger is consummated, the stockholders of White
County will receive 264,000 shares of NCBE in the aggregate for their shares of
White County Common Stock held by them on the effective date of the Merger.
In the event the weighted average high and low price for NCBE Common Stock for
the twenty (20) business days immediately preceding the effective time of the
Merger is lower than $38.00 per share or higher than $48.00 per share, either
party to the Merger may renegotiate or terminate the proposed merger
transaction.
The Merger is not intended to be taxable to White County stockholders
for federal income tax purposes, except with respect to cash received by White
County stockholders in lieu of a fractional share of NCBE Common Stock or as a
result of the exercise of statutory rights to dissent to the Merger. See
"PROPOSED MERGER--Certain Federal Income Tax Consequences" and "PROPOSED
MERGER--Rights of Dissenting Stockholders." For a more complete description
of the Agreement and terms of the Merger see "The PROPOSED MERGER."
This Proxy Statement-Prospectus and form of Proxy are first being
mailed to stockholders of White County on or about ________________, 1995.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
ANY SUCH COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
The date of this Proxy Statement-Prospectus is ____________, 1995.
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TABLE OF CONTENTS
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AVAILABLE INFORMATION 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 5
SUMMARY 6
The Companies 6
Proposed Merger 6
Meeting Information 7
Vote Required 7
Recommendations of the Boards of Directors 7
Opinion of Financial Advisor 7
Effect on White County Stockholders 7
Dissenters' Rights 8
Certain Federal Income Tax Consequences 8
Accounting Treatment 8
Effective Time of the Merger 8
Conditions to the Merger; Regulatory Approval 9
Dividends 9
Termination, Amendment and Waiver 9
Interests of Certain Persons in the Merger 9
Resales of NCBE Common Stock by Affiliates 10
Markets and Market Prices 10
Pending Acquisitions 11
Selected Financial Data 11
Comparative Per Share Data 20
MEETING INFORMATION 26
General 26
Date, Place and Time 26
Record Dates 26
Votes Required 26
Voting and Revocation of Proxies 26
Solicitation of Proxies 27
PROPOSED MERGER 27
Background and Reasons for the Merger 27
Recommendations of the White County Board of Directors 28
Terms of the Merger 28
Effective Time of the Merger 29
Surrender of White County Certificates 29
Conditions to the Merger 29
Regulatory Approval 30
Conduct of Business Pending the Merger 31
Dividends 31
Termination, Amendment and Waiver 31
Management and Operations After the Merger 31
Interests of Certain Persons in the Merger 32
Effect on Employee Benefit Plans 32
Certain Federal Income Tax Consequences 32
Accounting Treatment 33
Expenses 34
Resale of NCBE Common Stock 34
Dissenters' Rights 34
PRO FORMA FINANCIAL DATA 34
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NCBE COMMON STOCK 39
General 40
Dividends 40
Preemptive Rights 40
Voting 40
Cumulative Voting 40
Liquidation 40
Liability of Directors; Indemnification 40
Antitakeover Provisions 41
INFORMATION ABOUT NCBE 42
General 42
Competition 43
Certain Regulatory Considerations 43
Principal Holders of NCBE Common Stock 48
INFORMATION ABOUT WHITE COUNTY 48
General 48
Properties 48
Litigation 48
Voting, Principal Stockholders and Management Information 48
Certain Relationships and Related Transactions 49
Competition 49
Employees 50
Financial Statements 50
White County Management's Discussion and Analysis of Financial Condition
and Results of Operations for the three years ended December 31, 1994 50
COMPARISON OF SHAREHOLDER RIGHTS
General
Voting Rights; Director Qualifications
Other Provisions
COMMISSION OF SHAREHOLDER RIGHTS
General
Voting Rights, Director Qualifications
Other Provisions
LEGAL OPINIONS 57
EXPERTS 57
WHITE COUNTY FINANCIAL STATEMENTS F-6
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TABLE OF CONTENTS (CON'T)
EXHIBIT A
Agreement and Plan of Reorganization dated December 12, 1994
EXHIBIT B
Dissenters' Rights Statute
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION TO OR MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS AND, IF GIVEN
OR MADE, THE INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO PURCHASE THE SECURITIES OFFERED
HEREBY, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTIONS OR TO OR FROM ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN OFFER OR
PROXY IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES TO WHICH THIS PROXY
STATEMENT-PROSPECTUS RELATES SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF WHITE COUNTY OR
NCBE SINCE THE DATE OF THIS PROXY STATEMENT-PROSPECTUS.
AVAILABLE INFORMATION
NCBE is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located
at Room 1400, 75 Park Place, New York, New York 10007, and at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials can also be obtained from the public reference section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
NCBE has filed with the Commission a Registration Statement on Form
S-4 (together with any amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the NCBE Common Stock to be issued pursuant to the Merger described herein.
This Proxy Statement-Prospectus does not contain all the information set forth
in the Registration Statement and the exhibits thereto, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
Such additional information may be obtained from the Commission's principal
office in Washington, D.C. Statements contained in this Proxy
Statement-Prospectus or in any document incorporated herein by reference as to
the contents of any contract or other document referred to herein or therein
are not necessarily complete, and in each instance where reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement or other document, each such statement is qualified in
all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. DOCUMENTS RELATING TO
NCBE, EXCLUDING EXHIBITS UNLESS SPECIFICALLY INCORPORATED THEREIN, ARE
AVAILABLE WITHOUT CHARGE UPON REQUEST TO HAROLD A. MANN, SECRETARY, NATIONAL
CITY BANCSHARES, INC., 227 MAIN STREET, P.O. BOX 868, EVANSVILLE, INDIANA,
47705-0868 (TELEPHONE (812) 464-9675). TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUESTS SHOULD BE MADE PRIOR TO____________, 1995.
The following documents previously filed with the Commission by NCBE
(Commission File No. 0-13585) are incorporated herein by reference:
(i) NCBE's Annual Report on Form 10-K for the year ended December 31, 1994;
(ii) NCBE's Current Report on Form 8-K dated January 5, 1995 and April 13,
1995.
All documents filed with the Commission by NCBE pursuant to Section 13
(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the Special Meetings shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of such filing. Any statement
contained herein or in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for the
purposes hereof to the extent that a statement contained herein or any other
subsequently filed document which also is, or is deemed to be, incorporated
herein by reference modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed to constitute a part hereof,
except as so modified or superseded.
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SUMMARY
The following summary is not intended to be a complete description of
the proposed Merger and is qualified in all respects by the more detailed
information contained in this Proxy Statement-Prospectus, the Exhibits hereto
and the documents incorporated by reference. As used in this Proxy
Statement-Prospectus, the terms NCBE and White County refer to such
corporations, respectively, and where the context requires, such corporations
and their respective subsidiaries on a consolidated basis. All information
concerning NCBE included in this Proxy Statement-Prospectus has been provided
by NCBE; all information concerning White County included in this Proxy
Statement-Prospectus has been provided by White County.
THE COMPANIES
National City Bancshares, Inc. NCBE, an Indiana corporation whose
common stock is listed on the NASDAQ/National Market System ("NASDAQ/NMS"), is
a multibank holding company organized in 1985. The principal assets of NCBE
are its investments in The National City Bank of Evansville, Evansville,
Indiana; The Peoples National Bank of Grayville, Grayville, Illinois; The
Farmers and Merchants Bank, Fort Branch, Indiana; First Kentucky Bank, Sturgis,
Kentucky; Lincolnland Bank, Dale, Indiana; The State Bank of Washington,
Washington, Indiana; The Spurgeon State Bank, Spurgeon, Indiana; Pike County
Bank, Petersburg, Indiana; and The Bank of Mitchell, Mitchell, Indiana. The
existing banking subsidiaries of NCBE are sometimes collectively referred to
herein as the "NCBE Banks." NCBE's principal offices are located at 227 Main
Street, Evansville, Indiana 47708 (telephone (812) 464-9800). For additional
information concerning NCBE see "INFORMATION ABOUT NCBE." Additional
information concerning NCBE is included in the NCBE documents incorporated
herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
Based on financial information as of December 31, 1994, upon
completion of the Merger NCBE will have approximately $796 million in
consolidated assets and approximately $93 million in consolidated equity
capital on a pro forma basis. See the pro forma financial information for the
combined company under "Pro Forma Financial Data." In addition, NCBE executed
a definitive Merger Agreement to acquire United Financial Bancorp, Inc.,
Vincennes, Indiana, ("United") on December 28, 1994, and a definitive Agreement
and Plan of Reorganization to acquire First National Bank of Paoli, Paoli,
Indiana on April 11, 1995. United is a thrift holding company with
consolidated assets of $110 million, and Paoli is a national banking
association with assets of $17 million, as of December 31, 1994, See
"INFORMATION ABOUT NCBE - Pending Acquisitions."
White County Bank. White County, an Illinois banking corporation, is
an Illinois state chartered commercial bank that was organized in 1904. White
County's principal offices are located at 215 E. Main Street, Carmi, Illinois
62821, (telephone (618) 382-4114).
Based upon financial information as of December 31, 1994, White County
had total assets of approximately $65 million and total equity of approximately
$6.7 million.
White County Interim Bank. White County Interim Bank ("New Bank") is
a newly formed Illinois state chartered commercial banking corporation formed
by and controlled by NCBE. New Bank is being formed for the sole purpose of
facilitating the acquisition of White County by NCBE. New Bank has its main
office at 215 E. Main Street, Carmi, Illinois 62821.
PROPOSED MERGER
White County and NCBE have entered into an Agreement and Plan of
Reorganization (the "Agreement"), dated as of December 12, 1994, providing,
among other things, for the merger of New Bank with and into White County (the
"Merger"). See "The Proposed Merger." Upon consummation of the Merger, all of
the outstanding shares of White County Common Stock will be converted, in the
aggregate, into 264,000 shares of NCBE Common Stock. Based upon the total
number of issued and outstanding shares of White County Common Stock as of the
Record Date, each share of White County Common Stock will be converted into the
right to receive 27.5 shares of NCBE Common Stock at the effective date of the
Merger. This results in an exchange ratio of 27.5:1, hereinafter the "Exchange
Ratio." In the event that the weighted average (based upon the number of
shares traded) high and low prices for NCBE Common Stock, as reported by the
NASDAQ/NMS for the twenty (20) business days immediately preceding the
effective time of the Merger is higher than $48.00 per share or lower than
$38.00 per share, either party to the Merger, may renegotiate or terminate the
Merger.
No fractional shares of NCBE Common Stock will be issued in the Merger
and NCBE will pay cash, without interest, for any fractional share interests
resulting from the exchange ratio in accordance with the terms of the
Agreement. See
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"PROPOSED MERGER--Terms of the Merger." Each outstanding share of NCBE Common
Stock will not change by reason of the Merger.
MEETING INFORMATION
White County Special Meeting. The Special Meeting of White
County's stockholders to consider and vote on the Agreement (the "Special
Meeting") will be held on_________1995, at ___ AM/PM., local time, at the main
office of White County Bank, 215 E. Main Street, Carmi, Illinois 62821. Only
holders of record of White County Common Stock at the close of business on
__________, 1995 (the "Record Date"), will be entitled to vote at the White
County Special Meeting. At the Record Date there were outstanding and entitled
to vote 9,600 shares of White County Common Stock.
For additional information relating the to the White County Special
Meeting, see "MEETING INFORMATION."
VOTE REQUIRED
White County. Approval of the Agreement by the White County
stockholders requires the affirmative vote, in person or by proxy, of the
holders of record of at least a two-thirds (2/3) of the outstanding shares of
White County Common Stock. As of the Record Date there were 9,600 shares of
White County Common Stock outstanding and therefore a vote of 6,400 shares is
required to approve the Agreement. Each share of White County Common Stock is
entitled to one vote.
As of the Record Date, directors and executive officers of White
County and their affiliates owned beneficially approximately 39.6% of the shares
of White County Common Stock outstanding on such date. Directors and executive
officers of White County have agreed to vote their shares of White County
Common Stock in favor of the Merger.
As of the NCBE Record Date, directors and executive officers of NCBE
and their affiliates did not own, beneficially, any shares of White County
Common Stock.
NCBE. Approval of the Agreement and the issuance of NCBE Common Stock
in the Merger by NCBE stockholders is not required.
White County Interim Bank. NCBE owns all of the outstanding shares of
stock of New Bank (except for a nominal number of shares issued to directors of
the New Bank as legally required qualifying shares) and intends to vote such
shares in favor of the Agreement. Therefore, approval of the Agreement by the
New Bank is assured.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
The respective Boards of Directors of White County and NCBE have each
approved the Agreement. The Board of Directors of NCBE has also authorized the
issuance of a sufficient number of shares of NCBE Common Stock in the Merger.
Each Board believes that the Merger is in the best interests of the
stockholders of its respective company. THE BOARD OF DIRECTORS OF WHITE COUNTY
UNANIMOUSLY RECOMMENDS A VOTE FOR THE AGREEMENT. See "PROPOSED MERGER--Reasons
for the Merger; Recommendations of the White County Board of Directors."
OPINION OF FINANCIAL ADVISOR
White County did not retain a financial advisor with respect to the
Merger.
EFFECT ON WHITE COUNTY STOCKHOLDERS
Subject to certain limitations and dissenters' rights provided by law,
each of the 9,600 outstanding shares of White County Common Stock will be
converted in the Merger into shares of NCBE Common Stock as provided for in the
Agreement, see "PROPOSED MERGER--Terms of the Merger." Thereafter, the
rights of White County stockholders and will be governed by Indiana law and the
Articles of Incorporation, as amended, and Bylaws of NCBE. See "COMPARISON OF
SHAREHOLDER RIGHTS."
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DISSENTERS' RIGHTS
Under the provisions of Illinois law, holders of White County Common
Stock who dissent to the Merger will have a statutory right to receive payment
of the fair value of their shares in cash in accordance with Chapter 205 of the
Illinois Banking Act ("IBA"), Section 5/29. To perfect this right, a White
County shareholder must not vote his shares in favor of the Merger at the
Special Meeting (this may be done by marking the proxy to vote against the
Merger, or to abstain from voting thereon or by not voting at all) and must
take such other action as is required by the provisions of the IBA. Such
actions include delivering written notice of objection prior to the vote on the
Merger at the Special Meeting. See "PROPOSED MERGER -- Rights of Dissenting
Stockholders" and Exhibit B to this Proxy Statement-Prospectus, which contains
the complete text of the applicable provisions of the IBA. If the holders of
more than 10% of White County Common Stock should exercise their dissenters'
rights, the Merger may not qualify as a pooling of interests for
accounting and financial reporting purposes. One of the conditions to
consummation of the Merger is that the Merger qualifies for pooling of
interests accounting treatment.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is expected to qualify for federal income tax purposes as a
tax-free reorganization. It is a condition to consummation of the Merger that
NCBE and White County each receive an opinion of counsel that the Merger will
qualify as a tax-free reorganization. Werner & Blank Co., L.P.A. special
counsel to NCBE has issued such opinion for the benefit of NCBE, White County
and their respective stockholders. Such opinion will not be binding on the
Internal Revenue Service.
Stockholders of White County will generally recognize no gain or loss
for federal income tax purposes on the exchange of their White County Common
Stock for NCBE Common Stock except to the extent they receive cash as a result
of the exercise of their statutory rights to dissent to the Merger and cash
received in exchange for any fractional share interest resulting from the
exchange ratio. See "PROPOSED MERGER - Certain Federal Income Tax
Consequences."
WHITE COUNTY STOCKHOLDERS SHOULD READ CAREFULLY THE DISCUSSION SET
FORTH UNDER "PROPOSED MERGER - CERTAIN FEDERAL INCOME TAX CONSEQUENCES" AND ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC CONSEQUENCES TO THEM
OF THE MERGER UNDER FEDERAL, STATE, AND LOCAL AND ANY OTHER APPLICABLE TAX
LAWS.
ACCOUNTING TREATMENT
NCBE anticipates that the Merger will be accounted for as a pooling of
interests. See "PROPOSED MERGER - Accounting Treatment."
EFFECTIVE TIME OF THE MERGER
The Agreement provides that the Merger will take place not later than
the first business day of the first or second calendar month after the: (i)
approval of the Merger by the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board"), the Federal Deposit Insurance Corporation (FDIC)
and the Illinois Commissioner of Banks and Trust Companies ("Illinois
Commissioner") and expiration of the statutory 30-day waiting period after the
Federal Reserve Board's approval, and (ii) approval of the Merger by the
stockholders of White County unless another time is agreed upon in writing by
the parties. Although there can be no assurance, the Merger is expected to be
consummated during the second quarter of 1995.
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CONDITIONS TO THE MERGER; REGULATORY APPROVAL
The Merger is conditioned upon approval by the stockholders of White
County and by the Federal Reserve Board, the FDIC and the Illinois Commissioner
and upon satisfaction of other terms and conditions, including receipt of
assurance that the Merger will constitute tax-free reorganizations and the
treatment of the Merger as a pooling of interests for accounting purposes. See
"PROPOSED MERGER--Conditions to the Merger."
NCBE has prepared applications and submitted them for filing with: (i)
the Federal Reserve Board under the provisions of the Federal Bank Holding
Company Act on January 30, 1995; (ii) the FDIC under the provisions of the
Federal Bank Merger Act on January 11, 1995; (iii) the Illinois Commissioner as
to the formation of New Bank and the Merger on January 11, 1995; and (iv) the
Illinois Commissioner and as to the acquisition of White County by NCBE under
the provisions of the Illinois Bank Holding Company Act ("IBHCA") on February
10, 1995. No assurance can be given as to the various regulatory approvals
required in order to consummate the Merger will be received. See "PROPOSED
MERGER--Regulatory Approval."
DIVIDENDS
Under the Agreement, White County is allowed to declare regular
quarterly cash dividends at rates and at times consistent with past practice.
The Agreement also provides that White County and NCBE will cooperate with each
other to coordinate the record and payment dates of their dividends for the
calendar quarter in which the Merger occurs so that the White County
stockholders receive a quarterly dividend from either their corporation or
NCBE, but not from both with respect to such calendar quarter. See "PROPOSED
MERGER-Dividends."
TERMINATION, AMENDMENT AND WAIVER
The Merger may be terminated, among other reasons, (i) by mutual
consent of the Boards of Directors of NCBE and White County at any time before
the Merger takes place, (ii) by either NCBE or White County with respect to the
Merger if (a) the Merger has not taken place by June 30, 1995, (b) NCBE does
not receive all required regulatory approvals, (c) any suit, action or
proceeding is pending or overtly threatened seeking to prevent or inhibit the
Merger, (d) if any warranty or representation made by the other party is
discovered to have been untrue in any material respect, or (e) the other party
commits one or more material breaches of the Agreement or (iii) by either party
to the Agreement if the weighted average (based upon the number of shares
traded) of the high and low price per share of NCBE Common Stock for the twenty
(20) business day period before the effective date of the respective Merger, is
less than $38.00 per share or higher than $48.00 per share. See "PROPOSED
MERGER - Termination, Amendment and Waiver."
NCBE and White County may amend, modify or waive certain terms and
conditions of the Agreement. See "PROPOSED MERGER - Termination, Amendment and
Waiver."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In the Agreement NCBE has agreed to cause the election as Directors
of White County all those persons serving in such capacity immediately prior to
the Merger, plus an additional member to be determined by NCBE following the
effective time of the White County Merger.
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RESALES OF NCBE COMMON STOCK BY AFFILIATES
No restrictions on the sale or transfer of the shares of NCBE Common
Stock issued pursuant to the Merger will be imposed solely as a result of the
Merger, other than restrictions on the transfer of such shares issued to any
White County shareholder who may be deemed to be an "affiliate" of White County
for purposes of Rule 145 under the Securities Act. Directors, executive
officers and 10% stockholders are generally deemed to be affiliates for
purposes of Rule 145.
Resales of NCBE Common Stock issued to "affiliates" of White County
have not been registered under applicable securities laws in connection with
the Merger. Such shares may only be sold (a) under a separate registration by
the affiliates for distribution (which NCBE has not agreed to provide), (b)
pursuant to Rule 145 under the Securities Act, or (c) pursuant to another
exemption from registration requirements under the Securities Act. For NCBE to
be able to account for the Merger as a pooling of interests, pursuant to SEC
requirements, certain additional restrictions will be placed on affiliates of
White County with respect to dispositions of NCBE Common Stock and White County
Common Stock during the period beginning 30 days before the Merger and ending
when the results for 30 days of post-merger combined operations have been
published regarding the Merger.
MARKETS AND MARKET PRICES
White County
There is no established public trading market for shares of White
County Common Stock and shares of White County Common Stock are traded in very
limited quantities in private transactions. Since there are no market makers
for shares of White County Common Stock and there is no recognized exchange on
which shares of White County Common Stock are traded, there is no published
source of prices relating to transactions in White County Common Stock with the
result that management of White County is not directly informed of trades or
prices of shares of White County Common Stock.
White County has paid annual dividends of $17, $20 and $20 per share
on White County Common Stock in each of the years ended December 31, 1992, 1993
and 1994, respectively. As of December 31, 1992, 1993 and 1994, there were
9,600 shares of White County Common Stock outstanding.
NCBE Markets and Market Prices and Equivalent Per Share Data
Shares of NCBE Common Stock are traded in the over-the-counter market
and are listed in NASDAQ/NMS under the symbol NCBE. The following table sets
forth the last reported sale price per share of NCBE Common Stock on the dates
indicated.
The equivalent per share price of White County Common Stock at each
specified date represents the closing price of a share of NCBE Common Stock on
such date multiplied by the Exchange Ratio of approximately 27.5 for 1.
10
<PAGE> 14
<TABLE>
<CAPTION>
EQUIVALENT PER SHARE INFORMATION
--------------------------------
NCBE WHITE COUNTY
MARKET VALUE PER SHARE AT: COMMON STOCK COMMON STOCK
-------------------------- ------------ ------------
Per Share Equivalent
--------- -----------
Per share
---------
<S> <C> <C>
March 31, 1992 $29 1/2 $811.25
June 30, 1992 $27 5/8 $759.69
September 30, 1992 $28 1/8 $773.44
December 31, 1992 $29 1/2 $811.25
March 31, 1993 $33 1/4 $914.38
June 30, 1993 $36 $990.00
September 30, 1993 37 1/5 $1,031.25
December 31, 1993 37 $1,017.50
March 31, 1994 36 1/2 $1,003.75
June 30, 1994 39 3/4 $1,093.13
September 30, 1994 43 1/2 $1,196.25
December 31, 1994 46 1/4 $1,271.88
</TABLE>
On August 18, 1994, the date immediately preceding the public
announcement of the Merger, the reported last sales price of NCBE Common Stock
was $43 per share. There were no reported sales of White County Common Stock
on that date. Stockholders are advised to obtain current market quotations for
NCBE Common Stock. No assurance can be given as to the market price of NCBE
Common Stock or White County Common Stock at, or, in the case of NCBE Common
Stock, after the Effective Time of the Merger.
On February 28, 1995, there were approximately 1,615 holders of record
of NCBE Common Stock, 59 holders of record of White County Common Stock.
PENDING ACQUISITIONS
On December 28, 1994, NCBE executed a definitive Merger Agreement (the
"United Merger Agreement") to acquire United Financial Bancorp, Inc.,
Vincennes, Indiana ("United"). United is a thrift holding company which owns
United Federal Savings Bank of Vincennes, a federal stock savings and loan
association. As of December 31, 1994, United had consolidated assets of
$110,172,000 and consolidated stockholders equity of $11,828,000. Pursuant to
the United Merger Agreement NCBE will acquire United in a tax free exchange of
stock. United will be merged with and into NCBE with NCBE as the surviving
corporation. Stockholders of United will receive NCBE shares based upon an
exchange ratio determined by dividing $44.40 by the Average Price of NCBE
Common Stock as defined under the United Merger Agreement. The Average Price
of NCBE Common Stock is computed by reference to weighted average (based upon
the number of shares traded) for the 20 business days immediately preceding the
effective time of the merger, provided that in the event the Average Price of
NCBE Common Stock is less than $40.50 or greater than $49.50, the number of
shares of NCBE shall be based upon $40.50 or $49.50, respectively. The maximum
number of shares of NCBE issuable pursuant to the United Merger Agreement is
512,420 and the minimum number of shares issuable is 419,252.
On April 11, 1995, NCBE executed a definitive Agreement and Plan of
Reorganization with First National Bank of Paoli, Paoli, Indiana (the "Paoli
Agreement"). Paoli will be merged with NCBE's affiliate bank located in
Mitchell, Indiana (the "Paoli Merger") and will thereafter be operated as a
branch office of The Bank of Mitchell. Pursuant to the terms of the Paoli
Agreement stockholders of Paoli will exchange all of the outstanding shares of
capital stock of Paoli for 60,606 shares of NCBE and $623,004 in cash. Paoli
is a national banking association with assets of $ 16 million and total
stockholders equity of $1.1 million as of December 31, 1994. It is expected
that the Paoli Merger will be accounted for as a purchase and completed during
the second quarter of 1995.
SELECTED FINANCIAL DATA
The following unaudited table presents selected historical financial
information and selected pro forma combined financial information for NCBE and
White County. This information should be read in conjunction with the
historical and pro forma financial statements and notes thereto included
elsewhere in or incorporated by reference to this Prospectus and Proxy
Statement. The pro forma combined financial information gives effect to the
Merger. The pro forma combined financial information may not be indicative of
the results that actually would have occurred if the Merger been in effect on
the dates indicated or which may be attained in the future. The pro forma
combined financial information has been prepared on the assumption that the
Merger will be accounted for under the pooling of interests method of
accounting and also sets forth information regarding the United Merger and the
Paoli Merger.
11
<PAGE> 15
SELECTED FINANCIAL DATA
HISTORICAL
NATIONAL CITY BANCSHARES, INC.
(in thousands)
<TABLE>
<CAPTION>
___________________Year Ended December 31,_________________________
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
NATIONAL CITY BANCSHARES, INC. (Historical)
Income Statement Data:
Net Interest Income $27,097 $27,724 $28,773 $28,974 $30,681
Provisions for Loan Losses 1,515 2,324 1,234 654 (5)
Noninterest Income 4,164 4,728 5,229 5,532 4,465
Noninterest Expense 19,721 20,439 20,841 21,522 21,397
Net Income 7,022 7,030 8,200 8,374 9,063
Balance Sheet Data (period end):
Assets 789,595 765,451 731,080 717,139 731,764
Deposits 675,173 649,959 624,843 606,648 615,968
Loans, Net 406,635 401,035 412,317 431,230 479,798
Long-term Debt 6,139 2,888 1,161 541 0
Shareholders' Equity 69,175 74,139 79,772 85,901 86,119
Capital Ratios:
Equity to Assets Ratio 8.76% 9.69% 10.91% 11.98% 11.77%
Tier 1 Risk-based Capital Ratio 14.87% 15.70% 17.67% 18.52% 17.07%
Total Risk-based Capital Ratio 15.86% 16.71% 18.62% 19.36% 17.82%
Other Ratio:
Allowance for Loan Losses to
Nonperforming Loans 59.56% 50.18% 67.69% 164.25% 272.95%
Allowance for Loan Losses $4,431 $4,639 $4,186 $3,791 $3,794
Nonperforming Loans 7,440 9,244 6,184 2,308 1,390
</TABLE>
12
<PAGE> 16
SELECTED FINANCIAL DATA
HISTORICAL
WHITE COUNTY BANK
(in thousands)
<TABLE>
<CAPTION>
________________________Year Ended December 31,_____________________
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
WHITE COUNTY BANK (Historical)
Income Statement Data:
Net Interest Income $2,137 $2,228 $2,630 $2,443 $2,238
Provisions for Loan Losses 322 206 0 (120) 0
Noninterest Income 127 198 166 144 (148)
Noninterest Expense 1,679 1,745 1,769 1,854 1,840
Net Income 172 388 838 663 215
Balance Sheet Data (period end):
Assets 66,948 66,957 66,779 65,745 64,679
Deposits 60,641 60,567 59,723 58,355 57,595
Loans, Net 22,980 22,199 19,953 19,592 21,822
Shareholders' Equity 5,540 5,851 6,526 6,997 6,688
Capital Ratios:
Equity to Assets Ratio 8.28% 8.74% 9.77% 10.64% 10.34%
Tier 1 Risk-based Capital Ratio 20.31% 21.89% 25.94% 27.91% 25.70%
Total Risk-based Capital Ratio 21.98% 23.76% 28.41% 30.19% 28.37%
Other Ratio:
Allowance for Loan Losses to
Nonperforming Loans 18.05% 27.74% 66.21% 150.53% 166.82%
Allowance for Loan Losses $456 $501 $623 $572 $729
Nonperforming Loans 2,526 1,806 941 380 437
</TABLE>
13
<PAGE> 17
SELECTED FINANCIAL DATA
HISTORICAL
UNITED FINANCIAL BANCORP, INC.
(in thousands)
<TABLE>
<CAPTION>
Twelve Months Ended December 31,____________________________________
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
UNITED FINANCIAL BANCORP, INC.
(Historical)
Income Statement Data:
Net Interest Income $2,485 $2,954 $3,110 $3,010 $3,089
Provisions for Loan Losses 162 380 93 47 22
Noninterest Income 398 429 605 801 652
Noninterest Expense 2,305 2,370 2,416 2,501 2,887
Net Income 292 279 727 890 402
Balance Sheet Data (period end):
Assets 117,078 114,049 116,165 115,056 110,172
Deposits 104,957 102,480 99,967 95,730 90,744
Loans, Net 78,146 75,487 63,614 60,291 69,103
Long-term Debt 1,000 1,000 3,000 3,000 3,000
Shareholders' Equity 6,058 6,355 11,205 11,559 11,828
Capital Ratios:
Equity to Assets Ratio 5.17% 5.57% 9.65% 10.05% 10.74%
Tier 1 Risk-based Capital Ratio 9.58% 10.90% 21.24% 22.00% 21.47%
Total Risk-based Capital Ratio 9.94% 11.54% 22.07% 22.75% 22.15%
Other Ratio:
Allowance for Loan Losses to
Nonperforming Loans 46.14% 109.12% 384.07% N/A 2506.67%
Allowance for Loan Losses $227 $371 $434 $393 $376
Nonperforming Loans 492 340 113 0 15
</TABLE>
14
<PAGE> 18
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
HISTORICAL
FIRST NATIONAL BANK OF PAOLI
______________Year Ended December 31,_______________
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
FIRST NATIONAL BANK OF PAOLI. (Historical)
Income Statement Data:
Net Interest Income $452 $504 $558 $614 $687
Provisions for Loan Losses 18 8 30 15 6
Noninterest Income 44 53 106 86 100
Noninterest Expense 334 362 439 473 517
Net Income 136 172 179 155 182
Balance Sheet Data (period end):
Assets 11,695 12,618 13,899 15,596 16,529
Deposits 10,818 11,633 12,777 14,356 15,173
Loans, Net 6,265 7,175 8,414 9,911 9,822
Shareholders' Equity 746 860 986 1,088 1,184
Capital Ratios:
Equity to Assets Ratio 6.38% 6.82% 7.09% 6.98% 7.16%
Tier 1 Risk-based Capital Ratio 5.07% 5.92% 6.55% 6.62% 7.80%
Total Risk-based Capital Ratio 12.26% 11.84% 12.28% 11.72% 13.08%
Other Ratio:
Allowance for Loan Losses to
Nonperforming Loans 239.47% 351.52% 373.53% 158.33% N/A
Allowance for Loan Losses $91 $116 $127 $133 130
Nonperforming Loans 38 33 34 84 0
</TABLE>
15
<PAGE> 19
SELECTED FINANCIAL DATA
PRO FORMA COMBINED
NATIONAL CITY BANCSHARES, INC. AND WHITE COUNTY BANK
(in thousands)
<TABLE>
<CAPTION>
______________________Year Ended December 31,______________________
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
NATIONAL CITY BANCSHARES, INC.
AND WHITE COUNTY BANK(Pro Forma
Combined)
Income Statement Data:
Net Interest Income $29,234 $29,952 $31,403 $31,417 $32,919
Provisions for Loan Losses 1,837 2,530 1,234 534 (5)
Noninterest Income 4,291 4,926 5,395 5,676 4,317
Noninterest Expense 21,400 22,184 22,610 23,376 23,237
Net Income 7,194 7,418 9,038 9,037 9,278
Balance Sheet Data (period end):
Assets 856,543 832,408 797,859 782,884 796,443
Deposits 735,814 710,526 684,566 665,003 673,563
Loans, Net 429,615 423,234 432,270 450,822 501,620
Long-term Debt 6,139 2,888 1,161 541 0
Shareholders' Equity 74,715 79,990 86,298 92,898 92,807
Capital Ratios:
Equity to Assets Ratio 8.72% 9.61% 10.82% 11.87% 11.65%
Tier 1 Risk-based Capital Ratio 15.19% 16.04% 18.11% 19.01% 17.51%
Total Risk-based Capital Ratio 16.21% 17.10% 19.14% 19.93% 18.36%
Other Ratio:
Allowance for Loan Losses to
Nonperforming Loans 49.04% 46.52% 67.49% 162.31% 247.56%
Allowance for Loan Losses $4,887 $5,140 $4,809 $4,363 $4,523
Nonperforming Loans 9,966 11,050 7,125 2,688 1,827
</TABLE>
16
<PAGE> 20
SELECTED FINANCIAL DATA
PRO FORMA COMBINED
NATIONAL CITY BANCSHARES, INC. AND UNITED FINANCIAL BANCORP, INC.
(in thousands)
<TABLE>
<CAPTION>
______________________Year Ended December 31,_______________________
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
NATIONAL CITY BANCSHARES, INC.
AND UNITED FINANCIAL BANCORP, INC.
(Pro Forma Combined)
Income Statement Data:
Net Interest Income $29,582 $30,678 $31,883 $31,984 $33,770
Provisions for Loan Losses 1,677 2,704 1,327 701 17
Noninterest Income 4,562 5,157 5,834 6,333 5,117
Noninterest Expense 22,026 22,809 23,257 24,023 24,284
Net Income 7,314 7,309 8,927 9,264 9,465
Balance Sheet Data (period end):
Assets 906,673 879,500 847,245 832,195 841,936
Deposits 780,130 752,439 724,810 702,378 706,712
Loans, Net 484,781 476,522 475,931 491,521 548,901
Long-term Debt 7,139 3,888 4,161 3,541 3,000
Shareholders' Equity 75,233 80,494 90,977 97,460 97,947
Capital Ratios:
Equity to Assets Ratio 8.30% 9.15% 10.74% 11.71% 11.63%
Tier 1 Risk-based Capital Ratio 14.23% 15.16% 18.04% 18.88% 17.50%
Total Risk-based Capital Ratio 15.13% 16.13% 18.98% 19.71% 18.24%
Other Ratio:
Allowance for Loan Losses to
Nonperforming Loans 58.72% 52.27% 73.37% 181.28% 296.80%
Allowance for Loan Losses $4,658 $5,010 $4,620 $4,184 $4,170
Nonperforming Loans 7,932 9,584 6,297 2,308 1,405
</TABLE>
17
<PAGE> 21
SELECTED FINANCIAL DATA
PRO FORMA COMBINED
NATIONAL CITY BANCSHARES, INC., WHITE COUNTY BANK
AND UNITED FINANCIAL BANCORP, INC.
(in thousands)
<TABLE>
<CAPTION>
______________________Year Ended December 31,_______________________
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
NATIONAL CITY BANCSHARES, INC.,
WHITE COUNTY BANK, INC. AND
UNITED FINANCIAL BANCORP, INC.
(Pro Forma Combined)
Income Statement Data:
Net Interest Income $31,719 $32,906 $34,513 $34,427 $36,008
Provisions for Loan Losses 1,999 2,910 1,327 581 17
Noninterest Income 4,689 5,355 6,000 6,477 4,969
Noninterest Expense 23,705 24,554 25,026 25,877 26,124
Net Income 7,486 7,697 9,765 9,927 9,680
Balance Sheet Data (period end):
Assets 973,621 946,457 914,024 897,940 906,615
Deposits 840,771 813,006 784,533 760,733 764,307
Loans, Net 507,761 498,721 495,884 511,113 570,723
Long-term Debt 7,139 3,888 4,161 3,541 3,000
Shareholders' Equity 80,773 86,345 97,503 104,457 104,635
Capital Ratios:
Equity to Assets Ratio 8.30% 9.12% 10.67% 11.63% 11.54%
Tier 1 Risk-based Capital Ratio 14.53% 15.49% 18.43% 19.31% 17.88%
Total Risk-based Capital Ratio 15.48% 16.50% 19.43% 20.21% 18.71%
Other Ratio:
Allowance for Loan Losses to
Nonperforming Loans 48.90% 48.38% 72.44% 176.93% 265.96%
Allowance for Loan Losses $5,114 $5,511 $5,243 $4,756 $4,899
Nonperforming Loans 10,458 11,390 7,238 2,688 1,842
</TABLE>
18
<PAGE> 22
SELECTED FINANCIAL DATA
PRO FORMA COMBINED
NATIONAL CITY BANCSHARES, INC., WHITE COUNTY BANK
UNITED FINANCIAL BANCORP, INC. AND FIRST NATIONAL BANK OF PAOLI
(IN THOUSANDS)
12/31/94
<TABLE>
<CAPTION>
NCBE
UNITED
NCBE & WHITE COUNTY
NCBE PAOLI ADJ. PAOLI PAOLI
---- ----- ---- ------ ------------
<S> <C> <C> <C> <C> <C>
(Pro Forma Combined)
Income Statement Data:
Net Interest Income $30,681 $687 $31,368 $36,695
Provisions for Loan Losses (5) 6 1 23
Noninterest Income 4,465 100 4,565 5,069
Noninterest Expense 21,397 517 146 22,060 26,787
Net Income 9,063 182 (146) 9,099 9,716
Balance Sheet Data (period end):
Assets 731,764 16,529 1,543 749,836 924,687
Deposits 615,968 15,173 631,141 779,480
Loans, Net 479,798 9,822 489,620 580,545
Long-term Debt 0 0 0 3,000
Shareholders' Equity 86,119 1,184 1,543 88,846 107,362
Capital Ratios:
Equity to Assets Ratio 11.77% 7.16% 11.85% 11.61%
Tier 1 Risk-based Capital Ratio 17.07% 7.80% 16.89% 17.71%
Total Risk-based Capital Ratio 17.82% 13.08% 17.73% 18.43%
Other Ratio:
Allowance for Loan Losses to
Nonperforming Loans 272.95% N/A 282.30% 273.02%
Allowance for Loan Losses $3,794 $130 $3,924 $5,029
Nonperforming Loans 1,390 0 1,390 1,842
</TABLE>
19
<PAGE> 23
COMPARATIVE PER SHARE DATA
The following unaudited table sets forth certain unaudited historical
and pro forma combined per common share information for NCBE, and certain
historical and equivalent pro forma combined per common share information for
White County. The data is derived from financial statements of NCBE and White
County incorporated by reference or included elsewhere in this Prospectus and
Proxy Statement. The pro forma combined per common share information for NCBE
and the equivalent pro forma combined per common share information for White
County are stated as if White County or White County and United had always been
affiliated with NCBE, giving effect to the proposed transaction under the
pooling of interests method of accounting and assume a conversion ratio of 27.5
shares of NCBE Common Stock for each share of White County Common Stock and a
conversion ratio of .986667 shares of NCBE for each share of United, which has
been based upon a $45 Average Price (as defined by the United Merger Agreement)
per share of NCBE Common Stock. In addition to the historical infomration
presented for Paoli, information is presented on a pro forma basis for the most
recent period presented reflecting the effect of the acquisition of Paoli and
the accounting of such as a purchase. The information presented below has been
restated to reflect stock dividends and stock splits.
20
<PAGE> 24
SELECTED FINANCIAL DATA
PER SHARE DATA
HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
______________________Year Ended December 31,______________________
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
HISTORICAL PER SHARE DATA
National City Bancshares, Inc.(NCBE)
Net Income per Common Share $1.87 $1.88 $2.19 $2.24 $2.45
Cash Dividends Paid per
Common Share 0.73 0.78 0.84 0.88 0.93
Book Value per Common Share
(at period end) 18.49 19.82 21.33 22.96 23.54
White County Bank (White County)
Net Income per Common Share 17.92 40.42 87.28 69.08 22.35
Cash Dividends Paid per
Common Share 15.00 8.00 17.00 20.00 20.00
Book Value per Common Share
(at period end) 577.08 609.52 679.80 728.88 696.63
United Financial Bancorp, Inc.(United)
Net Income per Common Share N/A N/A 1.58 1.94 0.91
Cash Dividends Paid per
Common Share N/A N/A N/A 0.30 0.30
Book Value per Common Share
(at period end) N/A N/A 24.36 26.45 26.84
</TABLE>
All per share figures in the above table represent historical financial
information
21
<PAGE> 25
SELECTED FINANCIAL DATA
PER SHARE DATA
HISTORICAL FINANCIAL DATA
<TABLE>
____________Year Ended December 31,__________
1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C>
HISTORICAL PER SHARE DATA
First National Bank of Paoli (Paoli)
Net Income per Common Share $2.05 $2.55 $2.70 $2.19 $2.53
Cash Dividends Paid per
Common Share 0.00 0.00 0.00 0.00 0.00
Cash Dividends Paid per
Preferred Share 0.20 0.27 0.27 0.27 0.32
Book Value per Common Share
(at period end) 7.41 9.86 12.56 14.74 16.80
</TABLE>
22
<PAGE> 26
SELECTED FINANCIAL DATA
PER SHARE DATA
PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
________________Year Ended December 31,________________
1992 1993 1994
<S> <C> <C> <C>
Pro Forma Combined, NCBE, White County per
NCBE Share
Net Income per Common Share $2.26 $2.26 $2.34
Cash Dividends Paid per
Common Share 0.84 0.88 0.93
Book Value per Common Share
(at period end) 21.55 23.19 23.66
Equivalent Pro Forma Combined, NCBE,
and White County per White County Share
Net Income per Common Share 62.06 62.03 64.45
Cash Dividends Paid per
Common Share 23.10 24.20 25.58
Book Value per Common Share
(at period end) 592.63 637.73 650.65
Pro Forma Combined, NCBE and United per NCBE Share
Net Income per Common Share 2.12 2.20 2.28
Cash Dividends Paid per
Common Share 0.84 0.88 0.93
Book Value per Common Share
(at period end) 21.65 23.19 23.78
Equivalent Pro Forma Combined, NCBE,
and United per United Share
Net Income per Common Share 2.10 2.17 2.25
Cash Dividends Paid per
Common Share 0.83 0.87 0.92
Book Value per Common Share
(at period end) 21.36 22.88 23.46
</TABLE>
All per share figures are based upon the exchange ratio of 27.5 for 1
in connection with the Merger and .986667 for 1 in connection with
the United Merger and reflect the effect of both the Merger and the
United Merger on a pro forma basis
23
<PAGE> 27
SELECTED FINANCIAL DATA
PER SHARE DATA
PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
________________Year Ended December 31,________________
1992 1993 1994
<S> <C> <C> <C>
Pro Forma Combined, NCBE, White County
and United per NCBE Share
Net Income per Common Share $2.19 $2.22 $2.19
Cash Dividends Paid per
Common Share 0.84 0.88 0.93
Book Value per Common Share
(at period end) 21.83 23.39 23.87
Equivalent Pro Forma Combined, NCBE,
White County and United per White County Share
Net Income per Common Share 60.23 61.05 60.23
Cash Dividends Paid per
Common Share 23.10 24.20 25.58
Book Value per Common Share
(at period end) 600.33 643.23 656.43
Equivalent Pro Forma Combined, NCBE,
White County and United per United Share
Net Income per Common Share 2.16 2.19 2.16
Cash Dividends Paid per
Common Share 0.83 0.87 0.92
Book Value per Common Share
(at period end) 21.54 23.08 23.55
</TABLE>
All per share figures are based upon the exchange ratio of 27.5 for 1 in
connection with the Merger and .986667 for 1 in connection with the United
Merger and reflect the effect of both the Merger and the United Merger on a pro
forma basis
24
<PAGE> 28
<TABLE>
SELECTED FINANCIAL DATA
PER SHARE DATA
PRO FORMA FINANCIAL INFORMATION
_____________Year Ended December 31, 1994___________
<S> <C>
Pro Forma Combined, NCBE and Paoli
per NCBE Share
Net Income per Common Share $2.41
Cash Dividends Paid per
Common Share .93
Book Value per Common Share
(at period end) 23.89
Pro Forma Combined, NCBE, Paoli,
United, and White County per NCBE Share $2.15
Net Income per Common Share
Cash Dividends Paid per
Common Share .93
Book Value per Common Share
(at period end) 24.16
</TABLE>
All per share figures are based upon the exchange ratio of 27.5 for 1 in
connection with the Merger, .986667 for 1 in connection with the United Merger
and the issuance of 60,606 shares of NCBE Common Stock in the Paoli Merger and
reflect the effect of the mergers on a pro forma basis.
25
<PAGE> 29
MEETING INFORMATION
GENERAL
This Proxy Statement-Prospectus is being furnished to holders of
White County Common Stock in connection with the solicitation of proxies by the
Board of Directors of White County for use at the Special Meeting to consider
and vote upon the approval of the Agreement and to transact such other business
as may properly come before the Special Meeting or any adjournments or
postponements thereof. Each copy of this Proxy Statement-Prospectus mailed to
the holders of White County Common Stock is accompanied by a form of Proxy for
use at the Special Meeting.
This Proxy Statement-Prospectus is also furnished by NCBE to White
County stockholders as a Prospectus in connection with the issuance by NCBE of
shares of NCBE Common Stock upon consummation of the Merger in accordance with
the Agreement. This Proxy Statement-Prospectus, the attached Notice, and the
form of Proxy enclosed herewith are first being mailed to stockholders of White
County on or about _______, 1995.
DATE, PLACE AND TIME
The White County Special Meeting: The Special Meeting will be held at
the main office of White County Bank, 215 E. Main Street, Carmi, Illinois,
62821 at _______________, on ________________-,1995.
RECORD DATE
White County. The Board of Directors of White County has fixed the
close of business on _______,1995 as the Record Date for the determination of
the holders of White County Common Stock entitled to receive notice of and to
vote at the Special Meeting.
VOTE REQUIRED
White County. As of the Record Date, there were 9,600 shares of White
County Common Stock outstanding. Holders of White County Common Stock are
entitled to one vote per share. Under applicable provisions of Illinois law
and the Articles of Incorporation of White County, the affirmative vote of at
least two-thirds (2/3) of the outstanding shares of White County Common Stock
is required to approve the Agreement and therefore the affirmative vote of the
holders of at least 6,400 shares of White County Common Stock is required to
approve the Agreement.
As of the Record Date, directors and executive officers of White
County and their affiliates owned beneficially an aggregate of 3,800 shares
of White County Common Stock or approximately 39.6% of the shares of White
County Common Stock outstanding on such date. Directors and executive officers
of White County have agreed to vote their shares of White County Common Stock in
favor of the Agreement.
As of the Record Date, the White County Bank. Employees Stock Ownership
Plan (the "ESOP") owned beneficially 2,194 shares of White County Common Stock
or approximately 22.85% of White County Common Stock. The trustees of the ESOP
are Marilyn F. Coxart, R. Keith Hoskins, George G. Schanzle and James R.
Schanzle. Participants in the White County ESOP are entitled to vote shares
which have been allocated to their respective accounts. The White County ESOP
Trustees vote all unallocated shares held by the White County ESOP. As of the
Record Date there were 785 unallocated shares of White County Common Stock held
by the White County ESOP. The White County ESOP trustee has sole investment
power with respect to such shares.
VOTING AND REVOCATION OF PROXIES
Shares of White County Common Stock represented by a proxy properly
signed and received on or prior to the Special Meeting, unless subsequently
revoked, will be voted in accordance with the instructions thereon. IF A PROXY
IS SIGNED AND RETURNED WITHOUT INDICATING ANY VOTING INSTRUCTIONS, SHARES OF
WHITE COUNTY COMMON STOCK REPRESENTED BY PROXY WILL BE VOTED FOR THE AGREEMENT.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before the proxy is voted by the filing of an instrument
revoking it or of a duly executed proxy bearing a later date with the Secretary
for White County prior to or at the Special Meeting, or by voting in person at
the Special Meeting. Attendance at the Special Meeting will not in and of
itself constitute a revocation of a proxy.
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The Board of Directors of White County is not aware of any business
to be acted upon at the Special Meeting other than as described herein. If,
however, other matters properly come before the Special Meeting, or any
adjournments or postponements thereof, the person(s) appointed as proxies will
have discretion to vote or act thereon according to their best judgment.
Illinois law affords dissenters' rights to holders of White County
Common Stock who properly dissent to the Merger in accordance with statutory
procedures. See "PROPOSED MERGER--Rights of Dissenting Stockholders."
SOLICITATION OF PROXIES
In addition to solicitation by mail, directors, officers and employees
of White County who will not be specifically compensated for such services, may
solicit proxies from the stockholders of White County personally or by
telephone or telegram or other forms of communication. Brokerage houses,
nominees, fiduciaries, and other custodians will be requested to forward
soliciting materials to beneficial owners and will be reimbursed for the
reasonable expenses incurred in doing so.
It is not anticipated that anyone will be specially engaged to solicit
proxies or that special compensation will be paid for that purpose. White County
reserves the right to do so should it conclude that such efforts are needed.
White County will bear its own expenses in connection with the solicitation of
proxies for its Special Meeting. See "PROPOSED MERGER -- Expenses."
HOLDERS OF WHITE COUNTY COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN
THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO WHITE COUNTY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
PROPOSED MERGER
This section of the Proxy Statement-Prospectus describes certain
aspects of the proposed Merger. The following description does not purport to
be complete and is qualified in its entirety by reference to the Agreement
which is attached as Exhibit A to this Proxy Statement-Prospectus and is
incorporated herein by reference.
BACKGROUND AND REASONS FOR THE MERGER
White County. Illinois banking law historically prohibited multibank
holding companies and limited banks to operating within a single county. These
laws have been changed with the result that Illinois banks can merge with or
be acquired by banks or bank holding companies throughout Illinois and in some
cases outside of Illinois.
White County had enjoyed a favorable relationship with NCBE for several
years. Management of White County believed that there could be significant
advantages to an affiliation with NCBE. Accordingly, management of White
County met with management of NCBE to explore the possibility of a merger. As
a result of those discussions, NCBE submitted the proposal reflected in the
Agreement to exchange 264,000 shares of NCBE Common Stock for all the
outstanding shares of White County Common Stock in a tax-free merger. A letter
of intent providing for the White County Merger was executed on August 19,
1994, and the Agreement was executed on December 12, 1994.
In determining that the White County Merger is in the best interests
of White County and its stockholders, the White County Board of Directors
considered a number of factors, including: (a) the business earnings and
potential for future growth and prospects of White County and NCBE; (b) the
potential operational and managerial benefits that could be derived from the
Merger; (c) the consideration to be received by White County stockholders in
the merger in relation to the book value and earnings of White County; (d) the
prices paid for White County stock in the limited trades known to White County
management; (e) the prices paid in similar merger transactions; (f) the
increased dividend rate; (g) the tax-free nature of the stock-for-stock
exchange; and (h) the comparatively greater liquidity that stockholders might
enjoy by being stockholders of a larger institution whose shares are traded on
the NASDAQ/NMS.
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The Board of Directors also considered its belief that NCBE shared a
community banking philosophy that would benefit the employees, depositors and
customers of White County and the communities it serves and that the Merger
would allow White County to offer a diversity of products and services to its
customers. The Board of Directors did not assign any particular weight to each
of the factors considered.
NCBE. In the Spring of 1994, at the invitation of White County,
Senior management of NCBE engaged in discussions with management of White
County regarding a possible business combination between NCBE and White County.
Thereafter, NCBE commenced a review of publicly available information including
financial information of White County. As a result of that review, NCBE
management engaged in further discussions with White County regarding a
possible business combination.
In August of 1994, the Board of Directors of NCBE authorized NCBE
management to proceed to negotiate a letter of intent with White County.
Subsequent to entering into a letter of intent with White County regarding the
proposed Merger, NCBE conducted a comprehensive due diligence of White County
and completed negotiations for a definitive agreement. The Agreement was
executed on December 12, 1994.
The Board of Directors of NCBE concluded that the Merger would be in
the best interests of NCBE and its stockholders. Numerous factors were
considered by the Board of Directors of NCBE in approving and recommending the
terms of the Merger. These factors included information concerning the
financial condition, results of operations, and prospects of NCBE and White
County; the capital adequacy of the resulting entity; the composition of the
businesses of the two organizations in the rapidly changing banking and
financial services industry; the historical and current market prices of each
company's stock and of certain other bank holding companies whose securities
are publicly traded; the relationship of the consideration to be paid in the
Merger to such market prices and to the book value and earnings per share of
White County and the financial terms of certain other recent business
combinations in the banking industry.
The Board of Directors of NCBE believes that combining with White
County which has established banking operations in White County is a natural
and desirable extension of NCBE's market area. The Board of Directors of NCBE
also believes that the consolidation of resources by reason of the Merger will
enable the new organization to provide a wider and improved array of financial
services to customers and to achieve added flexibility in dealing with
Illinois's changing competitive environment.
RECOMMENDATION OF THE WHITE COUNTY BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF WHITE COUNTY UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF WHITE COUNTY VOTE FOR APPROVAL OF THE AGREEMENT.
TERMS OF THE MERGER
At the Effective Time (as defined below), New Bank will merge with and
into White County with the result that White County will become a wholly owned
subsidiary bank of NCBE. At the Effective Time, the directors and officers of
White County serving in such capacity immediately prior to the Effective Time
shall continue to be the directors and officers of White County. NCBE, as sole
stockholder, will add one additional person to represent its interest, to the
Board of Directors of White County.
At the Effective Time, all of the outstanding shares of White County
Common Stock will be converted, in the aggregate, into 264,000 shares of NCBE
Common Stock with the result that based upon 9,600 shares of White County
Common Stock issued and outstanding on the Record Date, each share of White
County Common Stock will be converted into the right to receive 27.5 shares of
NCBE Common Stock, subject to statutory dissenters' rights. See "PROPOSED
MERGER--Rights of Dissenting Stockholders."
If the NCBE Average Price Per Share, which is defined to mean the
weighted average (based upon the number of shares traded) of the per share high
and low prices of NCBE Common Stock as reported by the NASDAQ National Market
System (the "NASDAQ/NMS") for the 20 business days preceding the effective date
of the White County Merger, equals at least $38.00 and does not exceed $48.00,
the number of shares of NCBE Common Stock issuable in the White County Merger
will be 264,000 shares. No fractional shares of NCBE Common Stock will be
issued in the White County Merger. Rather, each holder of shares of White
County Common Stock who otherwise would have been entitled to a fraction of a
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share of NCBE Common Stock shall receive in lieu thereof cash, without
interest, in an amount determined by multiplying the fractional share interest
to which such holder would otherwise be entitled by the NCBE Average Price Per
Share.
The Agreement provides that if the NCBE Average Price Per Share for
the 20 business days preceding the effective date of the White County Merger is
less than $38.00 per share or more than $48.00 per share, the Board of
Directors of NCBE or White County may re-negotiate or terminate the Merger.
EFFECTIVE TIME OF THE MERGER
Subject to satisfaction or waiver of all other conditions, the
Merger will become effective on the first business day of the next calendar
month after the later to occur of (i) approval of the Agreement by the Federal
Reserve Board, the FDIC and the Illinois Commissioner and the expiration of any
waiting period, and (ii) approval of the Merger by the stockholders of White
County. The Merger will become effective on the first day of the second
calendar month following the events specified in (i) and (ii) above if the
last of such events occurs after the twentieth of the month. An earlier date
may be specified by NCBE or another time may be agreed upon in writing by the
parties. Upon the filing of executed Articles of Merger, with the Secretary of
State of the State of Illinois, the Merger will become effective at such time
as is specified in the Articles of Merger (the "Effective Time"). Subject to
the conditions contained in the Agreement, the Effective Time is currently
expected to occur during the second quarter of 1995.
SURRENDER OF WHITE COUNTY CERTIFICATES
As soon as practicable after the Effective Time of the Merger NCBE is
required by the Agreement to mail to each holder of record of White County
Common Stock a letter of transmittal and instructions for use in surrendering
such holder's White County stock certificates.
WHITE COUNTY STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES
UNTIL THEY RECEIVE A LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS FROM NCBE.
Upon surrender to NCBE of one or more certificates of White County
Common Stock together with a properly completed letter of transmittal, NCBE
will issue and deliver to the holder of record of White County Common Stock, a
certificate representing the number of shares of NCBE Common Stock to which the
holder is entitled and, where applicable, a check for the amount representing
any fractional share.
All NCBE Common Stock issued pursuant to the Agreement will be deemed
issued as of the Effective Time. No dividends or other distributions declared
with respect to NCBE Common Stock payable to former holders of White County
Common Stock, pursuant to the Merger and payable to the holders thereof after
the Effective Time shall be paid until such holder surrenders such holder's
White County Common Stock certificates. Subject to the effect of applicable
laws, after the surrender and exchange of such certificates, the holder of
certificates for shares of NCBE Common Stock into which the shares of White
County Common Stock shall have been converted shall be entitled to receive any
dividends or other distributions, but without any interest, which previously
became payable by NCBE with respect to the shares of White County Common Stock
represented by such certificate or certificates.
In the case of any lost, stolen or destroyed White County Common Stock
certificate NCBE will issue a new certificate representing shares of NCBE
Common Stock and a check for the cash into which a fractional share of White
County Common Stock shall have been converted only if NCBE receives: (i)
evidence to the reasonable satisfaction of NCBE that such certificate has been
lost, wrongfully taken or destroyed, (ii) such indemnity agreement as
reasonably may be requested by NCBE to save it harmless, and (iii) evidence
satisfactory to it of ownership of White County Common Stock for which the
certificate has been lost, wrongfully taken or destroyed.
After the Effective Time, there will be no further registration of
transfers on the stock transfer books of NCBE of shares of White County Common
Stock and any such shares presented to NCBE for transfer will be canceled and
exchanged for certificates representing shares of NCBE Common Stock and cash in
lieu of any fractional share as provided in the Agreement.
CONDITIONS TO THE MERGER
The White County Merger will occur only if the Agreement is approved
by the requisite vote of the stockholders of White County. Consummation of the
Merger is subject to the satisfaction of certain other conditions, unless
waived to
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the extent waiver is permitted by applicable law. Such conditions include, but
are not limited to, the following: (i) the receipt of all necessary regulatory
approvals, including the approval of the Federal Reserve Board, FDIC and the
Illinois Commissioner; (ii) the effectiveness of the Registration Statement
registering the shares of NCBE to be issued in the Merger, and the absence of a
stop order suspending such effectiveness or proceedings seeking a stop order;
(iii) the absence of a temporary restraining order, injunction or other order
of any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger; (iv) the continued accuracy of
representations and warranties by White County and NCBE regarding, among other
things, the organization of the parties, financial statements, capitalization,
pending and threatened litigation, enforceability of the Agreement and
compliance with law and tax matters; (v) the performance by White County and
NCBE in all material respects of each of the obligations required to be
performed by them under the Agreement; (vi) the receipt of NCBE of executed
letter agreements from affiliates of White County relating to securities laws
matters; (vii) the receipt by White County and NCBE and the continuing
effectiveness of opinions of counsel as to certain federal income tax
consequences of the respective Merger; (viii) the receipt of all consents or
approvals from third parties required under agreements for consummation of the
Merger other than those agreements for which failure to obtain such consents or
approval would not have a material adverse effect on White County; (ix) the
receipt by NCBE of assurances, satisfactory to it, to the effect that the
Merger qualify for pooling of interests accounting treatment; (x) the absence
of any material adverse change since June 30, 1994, in the financial condition,
results of operation or business of White County and NCBE in each case,
together with their respective subsidiaries taken as a whole; (xi) the absence
of any material action, suit or proceeding commenced against White County and
NCBE with respect to the Merger seeking to restrain, enjoin, prevent, change or
rescind the transaction contemplated by the Agreements or questioning the
validity or legality of any such transaction; and (xii) the receipt by White
County and NCBE of opinions of counsel as provided in the Agreement.
If the holders of more than approximately 10% of White County Common
Stock should exercise their dissenters' rights, the Merger may not qualify as a
pooling of interests for accounting purposes. In the event the Merger did not
qualify for pooling accounting treatment the Merger would not be consummated
without a resolicitation of the vote of stockholders of White County. In such
an event, the revised pro forma financial information would be materially
different than those presented elsewhere herein. See "PROPOSED MERGER--Rights
of Dissenting Stockholders."
In addition, unless waived, each party's obligation to consummate the
Merger is subject to performance by the other party of its obligations under
the respective Agreement and the receipt of certain certificates from the other
party.
REGULATORY APPROVAL
The Merger is subject to prior approval by the Federal Reserve Board
under the Bank Holding Company Act of 1956, as amended ("BHC Act"), which
requires that the Federal Reserve Board take into consideration the financial
and managerial resources and future prospects of the respective institutions
and the convenience and needs of the communities to be served. The BHC Act
prohibits the Federal Reserve Board from approving the Merger if it would
result in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the business of banking in any part of
the United States, or if its effect in any section of the country may be
substantially to lessen competition or to tend to create a monopoly, or if it
would in any other manner be a restraint of trade, unless the Federal Reserve
Board finds that the anti-competitive effects of the Merger are clearly
outweighed in the public interest by the probable effect of the transaction in
meeting the convenience and needs of the communities to be served. The Federal
Reserve Board has the authority to deny an application if it concludes that the
combined organization would have an inadequate capital position.
Under the BHC Act, the Merger may not be consummated until the 30th
day following the date of Federal Reserve Board approval, during which time the
United States Department of Justice may challenge the Merger on antitrust
grounds. The commencement of an antitrust action would stay the effectiveness
of the Federal Reserve Board's approval unless a court specifically orders
otherwise. The BHC Act provides for the publication of notice and public
comment on the application and authorizes the regulatory agency to permit
interested parties to intervene in the proceedings.
NCBE filed an application with the Federal Reserve Bank of St. Louis
(the "Federal Reserve Bank") on January 30, 1995 seeking approval of the
Merger. While there can be no assurance as to whether the Federal Reserve
Board will approve the proposed Merger nor when the Federal Reserve Board will
act on the application, neither NCBE nor White County are aware of any reason
such application will not be approved.
In addition, the Merger is subject to approval by the FDIC under the
provisions of 18(c) of the Federal Deposit Insurance Act and the
Illinois Commissioner under the provisions of IBA as well as the IBHCA.
Applications
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seeking approval for the formation of New Bank, to Merge New Bank with and into
White County and NCBE's acquisition of White County have been filed with the
FDIC and the Illinois Commissioner. While there can be no assurance of whether
the Illinois Commissioner or the FDIC will approve the applications filed,
neither NCBE nor White County are aware of any reason why such applications
would be denied.
The approvals of the Federal Reserve Board, FDIC and the Illinois
Commissioner are not to be interpreted as the opinion of these regulatory
authorities that Merger is favorable to the stockholders of White County from a
financial point of view or that those regulatory authorities have considered
the adequacy of the terms of the Merger. An approval by such regulatory
authorities in no way constitutes an endorsement or a recommendation of the
Merger by the Federal Reserve Board or the Illinois Commissioner.
There can be no assurance that the Department of Justice will not
challenge the Merger or if such a challenge is made, as to the result thereof.
Other than required compliance with certain federal and state
securities laws by NCBE in connection with its issuance of shares of NCBE
Common Stock in connection with the Merger with which NCBE will comply, NCBE
and White are not aware of any other governmental approvals or actions that are
required for consummation of the Merger except as described above. Should any
other approval or action be required, it is presently contemplated that such
approval or action would be sought. There can be no assurance that any such
approval or action, if needed, could be obtained and, if such approvals or
actions are obtained, there can be no assurance as to the timing thereof.
CONDUCT OF BUSINESS PENDING THE MERGER
Under the Agreement White County and NCBE are generally obligated to
(and to cause their respective subsidiaries to) operate their respective
businesses only in the usual and ordinary course consistent with past
practices; use reasonable efforts to keep in force current insurance coverage;
refrain from any change in their methods of accounting or certain other
policies and refrain from taking any action that would adversely affect or
delay regulatory approval of the Agreement; give the other party and its
representatives access to information concerning its affairs as may be
reasonably requested; and with respect to White County refrain from paying cash
dividends except in amounts and on dates consistent with past practice.
DIVIDENDS
Under the Agreement, White County may pay regular cash dividends at
dates and in amounts consistent with past practices and not to exceed the per
share rate paid in the prior calendar year. The Agreement provides that White
County and NCBE shall cooperate with each other to coordinate the record and
payment dates of their dividends for the quarter in which the Effective Time
occurs so that the White County stockholders receive a quarterly dividend from
either their respective institutions or NCBE but not from both with respect to
such quarter.
TERMINATION, AMENDMENT AND WAIVER
The Agreement may be terminated at any time prior to the Effective
Time whether before or after approval of the matters presented by the
stockholders of White County: (i) by mutual consent of the Boards of Directors
of White County and NCBE; (ii) by either party to the Merger if all required
regulatory approvals are not received; (iii) by the Board of Directors of
either party if there has been a material breach of any representation,
warranty, covenant or agreement by the other party which is not cured after 15
days' written notice; or (iv) by the Board of Directors of either party if the
Merger is not consummated before June 30, 1995.
The Agreement may not be amended except in writing signed on behalf of
both parties, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the parties. At any time
prior to the Effective Time, either party to the Agreement may, to the extent
legally allowed, extend the time for performance of any of the obligations of
the other party, waive any inaccuracies in representations and warranties of
the other and waive compliance with any of the agreements or conditions of the
Agreement.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
As a result of the Merger, White County will become a wholly owned
subsidiary banking corporation of NCBE. NCBE expects to continue to operate
White County at its present location. Immediately after the Effective Time of
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Merger, the Board of Directors of White County shall be comprised of all those
persons serving as a director of White County immediately prior to the
Effective Time of the Merger, plus one additional person to be added to the
Board of Directors of White County by NCBE.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
As of the Record Date, executive officers and directors of White County
are or may be deemed to be the beneficial owners of less than 1% of the
outstanding shares of NCBE Common Stock and executive officers and directors of
NCBE beneficially own no shares of White County Common Stock.
EFFECT ON EMPLOYEE BENEFIT PLANS
White County. The Agreement provides that each employee of White
County will be eligible to participate in the employee benefit plans of NCBE
subject to the rights of NCBE to amend or terminate any such plans in its
discretion. With regard to the Employee's Savings and Profit Sharing Plan of
National City Bancshares, Inc., employees of White County will be given credit
for their years of service with White County in determining eligibility and
vesting. For purposes of the Plan for Pensions of National City Bancshares,
Inc. employees of White County will be treated as new employees for purposes of
eligibility and vesting.
The ESOP will be terminated after the effective date of the Merger.
After the Merger but prior to the final distribution of benefits to
participants, NCBE Common Stock will be exchanged for the shares of White
County Common Stock held by the ESOP. A portion of the NCBE Common Stock will
be sold and the proceeds used to repay the loan owed by the ESOP. The
remaining NCBE Common Stock will be allocated to the ESOP participants and
distributed to them as soon as practicable after the effective date of the
Merger. The disposition of the ESOP is subject to a determination by the ESOP
fiduciaries that these procedures are fair to the participants and consistent
with the requirements of the Internal Revenue Code and the Employee Retirement
Income Security Act of 1974, as amended.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary description of the anticipated federal
income tax consequences of the Merger to holders of NCBE Common Stock and White
County Common Stock and to NCBE and White County. The summary is not a
complete description of the federal income tax consequences of the Merger.
Each shareholder's individual circumstances may affect the tax consequences of
the Merger to such shareholder.
Neither NCBE nor White County has requested or will receive an advance
ruling from the Internal Revenue Service (the "Service") as to the tax
consequences of the Merger. With respect to the Merger, NCBE and White County
have received an opinion from special counsel to NCBE, Werner & Blank Co.,
L.P.A. This tax opinion is based upon certain representations made by NCBE and
White County and upon the current law and the current judicial and
administrative interpretations thereof. This opinion will not be binding on
the Service or any court. Consequently, there can be no assurance that the tax
consequences set forth below will continue as described herein, nor can any
assurance be given that the issues discussed below will not be challenged by
the Service, or, if so challenged, will be decided favorably to the parties to
the Merger or their stockholders.
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Subject to the foregoing, the opinions of Werner & Blank Co., L.P.A.,
are substantially as follows:
(i) Since the merger of New Bank with and into White County
qualifies as a statutory merger under Illinois law, the Merger will
qualify as a "reorganization" within the meaning of Section
368(a)(1)(A) and (a)(2)(E) of the Internal Revenue Code of 1986, as
amended (the "Code");
(ii) No gain or loss will be recognized by White County or
NCBE upon merger of New Bank with and into White County;
(iii) No gain or loss will be recognized by the White
County stockholders who exchange, pursuant to the Merger, their shares
of White County Common Stock solely for shares of NCBE Common Stock;
(iv) The federal income tax basis of the NCBE Common Stock to
be received by the White County stockholders in the Merger, including
fractional share interests, will be the same as the federal income tax
basis of such White County Common Stock surrendered therefor;
(v) The holding period of the NCBE Common Stock to be
received by the White County stockholders in the Merger will include
the period during which the White County Common Stock surrendered was
held as a capital asset on the Effective Date of the Merger;
(vi) The payment of cash in lieu of fractional share
interests of NCBE Common Stock will be treated as if the fractional
shares were distributed as part of the Merger and then were redeemed
by NCBE. These cash payments will be treated as having been received
as distributions in full payment in exchange for the stock redeemed as
provided in Section 302(a) of the Code; and
(vii) Where a White County shareholder dissents to the
Merger, and such shareholder receives solely cash in exchange for his
or her White County Common Stock, such cash will be treated as having
been received by such shareholder as a distribution in redemption of
his or her shares subject to the provisions and limitations of Section
302 of the Code.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE HAS NOT BEEN
VERIFIED WITH THE INTERNAL REVENUE SERVICE AND IS BASED UPON THE FEDERAL
INTERNAL REVENUE CODE AS IN EFFECT ON THE DATE OF THIS PROXY
STATEMENT-PROSPECTUS WITHOUT CONSIDERATION OF ANY STATE LAWS OR THE PARTICULAR
FACTS OR CIRCUMSTANCES OF ANY WHITE COUNTY SHAREHOLDER.
ACCOUNTING TREATMENT
The Agreement provides that consummation of the Merger is conditioned
upon the receipt by NCBE of assurances, satisfactory to it, that the Merger
qualifies for accounting treatment as a pooling of interests if consummated in
accordance with the Agreement. Under the pooling of interests method of
accounting, the historical basis of the assets and liabilities of NCBE and
White County will be combined at the Effective Time and carried forward at
their previously recorded amounts, and the stockholders' equity accounts of
White County and NCBE's will be consolidated on NCBE's balance sheet. Income
and other financial statements of NCBE issued after consummation of the Merger
will be restated retroactively to reflect the consolidated operations of NCBE
and White County as if the Merger had taken place prior to the periods covered
by such financial statements.
Additionally, in order for the Merger to be accounted for under the
pooling of interests method of accounting, NCBE must, prior to consummation of
the proposed Merger dispose of certain "tainted treasury shares" purchased by it
during 1994. NCBE expects to dispose of such shares and account for the Merger
as a pooling.
For the Merger to qualify as a pooling of interests for accounting
purposes, substantially all (90% or more) of the outstanding White County
Common Stock must be exchanged for NCBE Common Stock. All parties have agreed
not to take any action which would disqualify the Merger from pooling of
interests treatment by NCBE. If the holders of more than 10% of White County
Common Stock should exercise their dissenters' rights, the respective Merger
would not qualify as a pooling of interests for accounting purposes. See
"PROPOSED MERGER--Rights of Dissenting Stockholders."
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EXPENSES
The Agreement provides that whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Agreement
and the transactions contemplated therein shall be paid by the party incurring
such expense.
RESALE OF NCBE COMMON STOCK
The shares of NCBE Common Stock to be issued in the Merger to holders
of White County Common Stock have been registered under the Securities Act and
may be freely traded by holders of White County Common Stock who, at the
Effective Time, are not "affiliates" of White County (and who are not
affiliates of NCBE at the time of the proposed resale). Directors, executive
officers and 10% stockholders of White County are generally deemed to be
affiliates under the Securities Act. Pursuant to the Agreement, NCBE must have
received from each affiliate of White County a written undertaking to the
effect that (a) he or she will not sell or dispose of NCBE Common Stock
acquired in the Merger other than in accordance with the Securities Act, except
under (i) a separate registration statement for distribution (which NCBE has
not agreed to provide), or (ii) Rule 145 promulgated thereunder by the SEC, or
(iii) some other exemption from registration; and (b) he or she will not
otherwise dispose of the NCBE Common Stock or otherwise reduce his or her
market risk relative to the NCBE Common Stock within 30 days prior to the
Effective Time of the Merger or prior to the publication by NCBE of an earnings
statement covering at least 30 days of combined operations after the Effective
Time.
DISSENTERS' RIGHTS
Any shareholder of White County who does not vote in favor of the
Merger may elect to receive payment of the fair value of his or her shares in
cash in accordance with Chapter 205 of the IBA, Section 5/29 ("Dissenters
Statute"). Any holder of White County Common Stock contemplating the exercise
of his right of dissent is urged to review carefully the provisions of
Dissenters' Statute attached as Exhibit B to the Proxy Statement. Set forth
below, to be read in conjunction with the full text of Dissenters' Statute, is
a summary of the principal steps to be taken if the right of dissent is to be
exercised.
EACH STEP MUST BE TAKEN IN STRICT COMPLIANCE WITH THE APPLICABLE
PROVISIONS OF THE DISSENTERS' STATUTE IN ORDER FOR HOLDERS OF SHARES OF WHITE
COUNTY COMMON STOCK TO PERFECT DISSENTERS' RIGHTS.
Any stockholder may dissent and will be entitled to payment of the value of his
or her shares of White County in accordance with the Dissenters Statute. To
preserve his or her right, a dissenting stockholder must file a written
objection with White County prior to or at the time of the Special Meeting and
shall not vote in favor of the Agreement. In addition, a dissenting
stockholder must make demand on the continuing bank (White County) within 20
days after receiving written notice of the date the Merger became effective for
payment of the fair value of his or her shares of White County and otherwise
follow the requirements of the Dissenters Statute. Any stockholder
contemplating dissenting should consult an attorney to insure that the
statutory conditions are all satisfied.
PRO FORMA FINANCIAL DATA
The following unaudited Pro Forma Combined Condensed Balance Sheet as
of December 31, 1994, and the Pro Forma Combined Condensed Statements of Income
for each of the years in the three-year period ended December 31, 1994, give
effect to the Merger based on the historical consolidated financial statements
of NCBE and White County under the assumptions and adjustments set forth in the
accompanying notes to the pro forma financial statements.
The Pro Forma Condensed Balance Sheet assumes the Merger was
consummated on December 31, 1994, and the Pro Forma Condensed Statements of
Income assume that the White County Merger was consummated on January 1 of each
period presented. The pro forma statements may not be indicative of the
results that actually would have occurred if the Merger had been in effect on
the dates indicated or which may be obtained in the future. The pro forma
financial statements should be read in conjunction with NCBE's historical
financial statements and the related notes thereto incorporated by reference
herein and White County's historical financial statements and the related notes
thereto included elsewhere in this Proxy Statement-Prospectus. Additionally,
certain Pro Forma financial statements included herein reflect the effect of
NCBE's acquisition of United Financial Bancorp, Inc., and Paoli. See
"INFORMATION ABOUT NCBE-Pending Acquisitions."
34
<PAGE> 38
PRO FORMA COMBINED CONDENSED BALANCE SHEET
(UNAUDITED)
DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
NCBE and
White County
Pro Forma Pro Forma
NCBE White County Adjustments Combined United
---- ------------ ----------- -------- ------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 36,343 $ 2,336 $ 38,679 $ 2,700
Federal funds sold 2,550 2,550 500
Interest bearing deposits in other
banks 5,116 5,116 7,790
Investment securities 184,519 36,385 220,904 26,371
Loans 483,592 22,551 506,143 69,479
Less allowance for loan losses (3,794) (729) (4,523) (376)
------- ------ ------- ------
Net loans 479,798 21,822 0 501,620 69,103
Premises and equipment, net 10,504 376 10,880 1,609
Goodwill 1,174 1,174
Other assets 14,310 1,210 15,520 2,099
------- ------ ------- ------
Total assets 731,764 64,679 0 796,443 110,172
======= ====== == ======= =======
LIABILITIES
Noninterest-bearing deposits 85,340 6,896 92,236 2,013
Interest-bearing deposits 530,628 50,700 581,328 88,731
------- ------ ------- ------
Total deposits 615,968 57,595 0 673,563 90,744
Federal funds purchased and
securities sold under agreements
to repurchase 21,610 21,610 3,519
Notes payable 2,675 2,675 3,000
Other liabilities 5,392 396 5,788 1,081
------- ------ ------- -------
Total liabilities 645,645 57,991 0 703,636 98,344
------- ------ -- ------- -------
STOCKHOLDERS' EQUITY
Preferred stock 0 0 0 0
Common stock 12,194 960 (80) 13,074 5
Capital surplus 33,113 1,540 80 34,733 4,188
Retained earnings 43,008 4,520 47,528 8,104
Debt of ESOP guaranteed 0
Shares held in the treasury (389)
Shares held by management
retention plan (14)
Net unrealized loss on
marketable securities (2,196) (332) (2,528) (66)
------- ------ ------- -------
Total stockholders' equity 86,119 6,688 0 92,807 11,828
Total liabilities and
stockholders' equity $731,764 $64,679 0 $796,443 $110,172
======== ======= == ======== ========
</TABLE>
<TABLE>
<CAPTION> NCBE,
NCBE, White County,
NCBE and White County NCBE and United and
United and United Paoli Paoli
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forms Pro Forma
Adjustments Combined Combined Paoli Adjustments Combined Combined
----------- -------- -------- ----- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 39,043 $ 41,379 $ 768 $(623) $ 36,488 $ 41,524
Federal funds sold 500 3,050 625 625 3,675
Interest bearing deposits in other
banks 12,906 12,906 898 6,014 13,804
Investment securities 210,890 247,275 4,000 (85) 188,434 251,190
Loans 553,071 575,622 9,952 493,544 585,574
Less allowance for loan losses (4,170) (4,899) (130) (3,924) (5,029)
------- ------- ------ ------- -------
Net loans 0 548,901 570,723 9,822 489,620 580,545
Premises and equipment, net 12,113 12,489 252 60 10,816 12,801
Goodwill 1,174 1,174 2,191 3,365 3,365
Other assets 16,409 17,619 164 - 14,474 17,783
------- ------- ------ ------ ------- -------
Total assets 0 841,936 906,615 16,529 1,543 749,836 924,687
== ======= ======= ====== ====== ======= =======
LIABILITIES
Noninterest-bearing deposits 87,353 94,248 2,041 87,381 96,289
Interest-bearing deposits 619,359 670,059 13,132 543,760 683,191
------- ------- ------ ------- -------
Total deposits 0 706,712 764,307 15,173 631,141 779,480
Federal funds purchased and
securities sold under agreements
to repurchase 25,129 25,129 0 21,610 25,129
Notes payable 5,675 5,675 0 2,675 5,675
Other liabilities 6,473 6,869 172 5,564 7,041
------- ------- ------ ------- -------
Total liabilities 0 743,989 801,980 15,345 660,990 817,325
-- ------- ------- ------ ------- -------
STOCKHOLDERS' EQUITY
Preferred stock 0 0 0 400 (400) 0 0
Common stock 1,532 13,731 14,611 47 155 12,396 14,813
Capital surplus (1,935) 35,366 36,986 853 1,672 35,638 39,511
Retained earnings 51,112 55,632 (116) 116 43,008 55,632
Debt of ESOP guaranteed 0 0 0 0 0
Shares held in the treasury 389 0 0 0 0 0
Shares held by management
retention plan 14 0 0 0 0 0
Net unrealized loss on
marketable securities - (2,262) (2,594) 0 -- (2,196) (2,594)
-- ------- ------- ------ ------ -------- --------
Total stockholders' equity 0 97,947 104,635 1,184 1,543 88,646 107,362
-- ------- ------- ------ ------ -------- --------
Total liabilities and
stockholders' equity 0 $841,936 $906,615 $16,529 $1,543 $749,836 $924,687
== ======== ======== ======= ====== ======== ========
</TABLE>
35
<PAGE> 39
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1992
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NCBE and
White County
Pro Forma Pro Forma
NCBE White County Adjustments Combined United
---- ------------ ----------- -------- ------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans 37,922 2,190 40,112 6,628
Interest on deposits 1,915 3 1,918 714
Interest on federal funds sold 1,423 67 1,490 84
Interest on investment securities 12,993 2,688 15,681 1,623
------ ----- ------ -----
Total interest income 54,253 4,948 0 59,201 9,049
INTEREST EXPENSE:
Interest on deposits 24,355 2,318 26,673 5,624
Interest on borrowings 1,125 0 1,125 315
------ ----- ------ -----
Total interest expense 25,480 2,318 0 27,798 5,939
------ ----- ------ -----
NET INTEREST INCOME 28,773 2,630 0 31,403 3,110
Provision for loan losses 1,234 0 1,234 93
------ ----- ------ -----
Net interest income after
provision for loan losses 27,539 2,630 0 30,169 3,017
Other noninterest income 5,229 166 5,395 605
Other noninterest expense 20,841 1,769 22,610 2,416
------ ----- ------ -----
Income before income taxes and
cumulative effect of change in
accounting principle 11,927 1,027 0 12,954 1,206
Income taxes 3,727 189 3,916 479
------ ----- ------ -----
NET INCOME 8,200 838 0 9,038 727
====== ===== ==== ====== =====
Net income per common share 2.19 87.28 1.58
Pro forma net income per common
share 2.26
AVERAGE SHARES OUTSTANDING 3,741,124 9,600 4,005,124 460,000
CONVERSION RATIO 27.5
====
</TABLE>
<TABLE>
<Caption
NCBE,
NCBE and WhiteCounty
United and United
Pro Forma Pro Forma Pro Forma
Adjustments Combined Combined
----------- -------- --------
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans 44,550 46,740
Interest on deposits 2,629 2,632
Interest on federal funds sold 1,507 1,574
Interest on investment securities 14,616 17,304
------ ------
Total interest income 0 63,302 68,250
INTEREST EXPENSE:
Interest on deposits 29,979 32,297
Interest on borrowings 1,440 1,440
------ ------
Total interest expense 0 31,419 33,737
------ ------
NET INTEREST INCOME 0 31,883 34,513
Provision for loan losses 1,327 1,327
------ ------
Net interest income after
provision for loan losses 0 30,556 33,186
Other noninterest income 5,834 6,000
Other noninterest expense 23,257 25,026
------ ------
Income before income taxes and
cumulative effect of change in
accounting principle 0 13,133 14,160
Income taxes 4,206 4,395
NET INCOME 0 8,927 9,765
=== ======= =======
Net income per common share
Pro forma net income per common
share 2.12 2.19
AVERAGE SHARES OUTSTANDING 4,202,302 4,466,302
CONVERSION RATIO 0.986667
========
</TABLE>
36
<PAGE> 40
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1993
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NCBE and
White County
Pro Forma Pro Forma
NCBE White County Adjustments Combined United
---- ------------ ----------- -------- ------
<S> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans 36,320 1,822 38,142 5,364
Interest on deposits 1,003 1,003 628
Interest on federal funds sold 915 45 960 93
Interest on investment securities 10,250 2,417 12,667 1,719
------ ----- ------ -----
Total interest income 48,488 4,284 0 52,772 7,804
INTEREST EXPENSE:
Interest on deposits 19,009 1,841 20,850 4,408
Interest on borrowings 505 0 505 386
------ ----- ------ -----
Total interest expense 19,514 1,841 0 21,355 4,794
------ ----- --- ------ -----
NET INTEREST INCOME 28,974 2,443 0 31,417 3,010
Provision for loan losses 654 (120) 534 47
------ ----- ------ -----
Net interest income after
provision for loan losses 28,320 2,563 0 30,883 2,963
Noninterest income 5,532 144 5,676 801
Noninterest expense 21,522 1,854 23,376 2,501
------ ----- ------ -----
Income before income taxes and
cumulative effect of change in
accounting principle 12,330 853 0 13,183 1,263
Income taxes 3,956 242 4,198 453
------ ----- ------ -----
Income before cumulative effect of
change in accounting principle 8,374 611 0 8,985 810
Cumulative effect on prior years
of change in accounting principal 0 52 52 80
------ ----- ------ -----
NET INCOME 8,374 663 0 9,037 890
====== ===== === ====== =====
Income before cumulative effect of
change in accounting principle per
common share 2.24 63.65 1.76
Net income per common share 2.24 69.08 1.94
Pro forma income before cumulative
effect of change in accounting
principle per common share 2.24
Pro forma net income per common
share 2.26
AVERAGE SHARES OUTSTANDING 3,742,427 9,600 4,006,427 459,370
CONVERSION RATIO 27.5
====
</TABLE>
<TABLE>
<CAPTION>
NCBE,
NCBE and White County
United and United
Pro Forma Pro Forma Pro Forma
Adjustments Combined Combined
----------- -------- --------
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans 41,684 43,506
Interest on deposits 1,631 1,631
Interest on federal funds sold 1,008 1,053
Interest on investment securities 11,969 14,386
------ ------
Total interest income 0 56,292 60,576
INTEREST EXPENSE:
Interest on deposits 23,417 25,258
Interest on borrowings 891 891
------ ------
Total interest expense 0 24,308 26,149
------ ------
NET INTEREST INCOME 0 31,984 34,427
Provision for loan & lease losses 701 581
------ ------
Net interest income after
provision for loan losses 0 31,283 33,846
Other noninterest income 6,333 6,477
Other noninterest expense 24,023 25,877
------ ------
Income before income taxes and
cumulative effect of change in
accounting principle 0 13,593 14,446
Income taxes 4,409 4,651
------ ------
Income before cumulative effect of
change in accounting principle 0 9,184 9,795
Cumulative effect on prior years
of change in accounting principal 80 132
------ ------
NET INCOME 0 9,264 9,927
====== ======
Income before cumulative effect of
change in accounting principle per
common share
Net income per common share
Pro forma income before cumulative
effect of change in accounting
principle per common share 2.18 2.19
Pro forma net income per common 2.20 2.22
share
AVERAGE SHARES OUTSTANDING 4,203,605 4,467,605
CONVERSION RATIO 0.986667
========
</TABLE>
37
<PAGE> 41
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
(UNAUDITED)
YEAR ENDED DECEMBER 31, 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NCBE and
White County
Pro Forma Pro Forma Pro Forma
NCBE White County Adjustments Combined United Adjustments
---- ------------ ----------- -------- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $38,110 $1,804 $39,914 $5,183
Interest on deposits 392 392 841
Interest on federal funds sold 355 49 404 119
Interest on investment securities 10,374 2,212 12,586 1,329
------ ----- ------ -----
Total interest income 49,231 4,065 0 53,296 7,472 0
INTEREST EXPENSE:
Interest on deposits 17,838 1,827 19,665 3,984
Interest on borrowings 712 0 712 399
------ ----- ------ -----
Total interest expense 18,550 1,827 0 20,377 4,383 0
NET INTEREST INCOME 30,681 2,238 0 32,919 3,089 0
Provision for loan & lease losses (5) (5) 22
Net interest income after
provision for loan losses 30,686 2,238 0 32,924 3,067 0
Noninterest income 4,465 (148) 4,317 652
Noninterest expense 21,397 1,840 23,237 2,887
Income before income taxes and
cumulative effect of change in
accounting principle 13,754 250 0 14,004 832 0
Income taxes 4,691 35 4,726 430
------ ----- ------ ----- ---
NET INCOME 9,063 215 0 9,278 402 0
====== ===== === ====== =====
NET INCOME ASSIGNED TO
PREFERRED STOCKHOLDERS
NET INCOME FOR COMMON
STOCKHOLDERS $9,063 $215 0 $9,278 $402 0
====== ===== === ====== ===== ===
Net income per common share 2.45 22.35 0.91
Pro forma net income per common
share 2.34
AVERAGE SHARES OUTSTANDING 3,694,650 9,600 $3,958,650 439,690
CONVERSION RATIO FOR COMMON STOCK 27.5
====
CONVERSION RATIO FOR PREFERRED STOCK
<CAPTION>
NCBE,
NCBE, White County,
NCBE and White County NCBE and United and
United and United Paoli Paoli
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma
Combined Combined Paoli Adjustments Combined Combined
-------- -------- ----- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $43,293 $45,097 $933 $39,043 $46,030
Interest on deposits 1,233 1,233 75 467 1,308
Interest on federal funds sold 474 523 41 396 564
Interest on investment securities 11,703 13,915 155 10,529 14,070
------ ------ --- ------ ------
Total interest income 56,703 60,768 1,204 0 50,435 61,972
INTEREST EXPENSE:
Interest on deposits 21,822 23,649 517 18,355 24,166
Interest on borrowings 1,111 1,111 0 712 1,111
------ ------ -- --- -----
Total interest expense 22,933 24,760 517 0 19,067 25,277
NET INTEREST INCOME 33,770 36,008 687 0 31,368 36,695
Provision for loan & lease losses 17 17 6 1 23
Net interest income after
provision for loan losses 33,753 35,991 681 0 31,367 36,672
Other income 5,117 4,969 100 4,565 5,069
Other expense 24,284 26,124 517 146 22,060 26,787
Income before income taxes and
cumulative effect of change in
accounting principle 14,586 14,836 264 (146) 13,872 14,954
Income taxes 5,121 5,156 82 4,773 5,238
------ ------ --- ----- ------ ------
NET INCOME 9,465 9,680 182 (146) 9,099 9,716
====== ====== ==== ===== ====== ======
NET INCOME ASSIGNED TO
PERFERRED STOCKHOLDERS 64 64 64
==== ====== ======
NET INCOME FOR COMMON
STOCKHOLDERS $9,465 $9,680 $118 $(146) $9,035 $9,652
====== ====== ==== ===== ====== ======
Income before cumulative effect of
change in accounting principle per
common share $2.53
Net income per common share 2.53
Pro forma income before cumulative
effect of change in accounting
principle per common share $ 2.28 $ 2.19 $2.41 $2.15
Pro forma net income per common
share 2.28 2.19 2.41 2.15
AVERAGE SHARES OUTSTANDING 4,155,828 4,419,828 46,667 3,755,256 4,480,434
CONVERSION RATIO FOR COMMON
STOCK 0.986667 3.3
======== ===
CONVERSION RATIO FOR
PREFERRED STOCK
</TABLE>
38
<PAGE> 42
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. The "Pro Forma Combined" balance sheet information gives effect to the
Merger and the probable merger with United, as if it had been consummated
on January 1 of each year with respect to the Pro Forma Statements of
Income. The Pro Forma information reflects the Merger accounted for as a
pooling of interests transaction whereby the historical cost basis of
assets, liabilities and equity is retained for financial statement
purposes.
2. The conversion of outstanding shares of NCBE Common Stock is reflected
using the exchange ratio of 27.50 shares of NCBE Common Stock for each
existing share of White County Common Stock and .986667 shares of NCBE
Common Stock for each existing shares of United Common Stock. The Paoli
Merger, for the periods indicated, is reflected on the basis of 60,606
shares of NCBE Common Stock, issued in connection with the Paoli Merger
and the payment of $623,004 in cash. This results in outstanding shares
of NCBE Common Stock on a pro forma basis as of December 31, 1994, as
follows:
Pro forma giving effect to the Merger 264,000 shares
Pro forma giving effect to the United Merger 461,178 shares
Pro forma giving effect to the Merger and United Merger 725,178 shares
Pro forma giving effect to the Paoli Merger 60,606 shares
Pro forma giving effect to the Merger, the United Merger and the Paoli
Merger 785,784
As provided for in the Agreement, the aggregate number of shares of
NCBE Common Stock issuable in the Merger is 264,000. In connection with
the Merger, in the event the Average Price of NCBE Common Stock is less
than $38.00 or more than $48.00, either party to the Merger may elect to
terminate the Merger or renegotiate. In connection with the United
Merger the aggregate number of shares issuable is determined by reference
to the Average Price of NCBE Common Stock. For these purposes, the
"Average Price" shall mean the weighted average (based upon the number of
shares traded) of the high and low price of NCBE Common Stock as reported
by the NASDAQ National Market System for the 20 business days immediately
preceding the effective date of the United Merger. The United Merger
provides for an exchange of NCBE Common Stock valued at $44.40 utilizing
the Average Price of NCBE Common Stock. The minimum number of shares of
NCBE Common Stock issuable in the United Merger is 419,253 and the
maximum number of shares is 512,420. For purposes of the Pro Forma
financial statements presented herein, the number of shares issuable in
the transaction has been based upon a $45 average price. In connection
with the Paoli Merger the Paoli Agreement calls for the issuance of 60,606
shares of NCBE Common Stock and the payment of $623,004 in cash.
DESCRIPTION AND COMPARISON OF NCBE COMMON STOCK
AND WHITE COUNTY COMMON STOCK
GENERAL
NCBE is an Indiana corporation governed by and subject to the Indiana
Business Corporation Law ("IBCL"). White County is an Illinois state chartered
commercial bank governed by and subject to the provisions of IBA. If the
proposed Merger is consummated, stockholders of White County who receive NCBE
Common Stock will become stockholders of NCBE and, as such, their rights as
stockholders will be governed by the IBCL and by NCBE's Articles, Bylaws and
other corporate documents. The rights of holders of shares of White County
Common Stock differ in certain respects from the rights of holders of NCBE
Common Stock. A summary of the material differences between the respective
rights of White County from that of NCBE stockholders is set forth below.
As of the date of the Agreement NCBE was authorized to issue 5,000,000
shares of $3.33 1/3 par value common stock ("NCBE Common Stock"). As of
February 28, 1995, NCBE had 3,658,650 shares of NCBE Common Stock issued and
outstanding, which left 1,341,350 shares available for future issuance. NCBE
expects to issue approximately 461,178 shares to stockholders of United
in connection with the United Merger, 60,606 shares to stockholders of Paoli in
connection with the Paoli Merger and 264,000 shares to stockholders of White
County in connection with the Merger. Stockholders of NCBE approved an
amendment to NCBE's Articles of Incorporation at the Annual Meeting of
Stockholders held in April of 1995, to increase the number of authorized shares
to 10,000,000 and to eliminate the reference to "par value" thereby converting
all shares to no par value. The amendment to NCBE's Articles of Incorporation
will have no effect on the determination of the number of shares of NCBE Common
Stock issuable in the Merger, the United Merger or the Paoli Merger.
The authorized Common Stock of White County consists of 9,600 shares
of Common Stock, $100.00 par value per share, all of which are issued and
outstanding as of the White County Record Date. White County has no other
class of securities authorized in its Articles of Incorporation.
NCBE Common Stock is traded on the national over-the-counter market
under the symbol "NCBE" and is quoted on the National Association Securities
Dealers Automated Quotations System ("NASDAQ") National Market System.
Currently four (4) brokerage firms provide a primary market in NCBE Common
Stock. Trading volume in NCBE Common Stock for the twelve months ended
December 31, 1994, was 425,000 shares. White County Common Stock is not traded
on any exchange or in the over-the-counter market, and there are no market
makers for White County Common Stock.
39
<PAGE> 43
While there are a substantial number of similarities between the NCBE
Common Stock and the White County Common Stock, the rights of stockholders of
White County will be different after the Effective Date of the Merger.
Stockholders will be affected by differences in the Articles of Incorporation
and Bylaws of NCBE and White County and differences resulting from the fact
NCBE's securities are registered under Section 12(g) of the Securities Exchange
Act of 1934. Listed below are the more important attributes of the NCBE Common
Stock and the differences, if any from the White County Common Stock.
DIVIDENDS
Holders of NCBE Common Stock are entitled to dividends out of funds
legally available therefor, as governed by the IBCL, and if declared by the
Board of Directors. The amount and timing of dividend on NCBE Common Stock is
subject to the earnings of its subsidiaries and the amounts available for
payment of dividends by such subsidiaries under various state and federal
banking laws and regulations. Generally, dividends from NCBE's banking
subsidiaries as well as dividends on White County Common Stock are restricted
to net profits of the current year plus the preceding two years less dividends
paid.
PREEMPTIVE RIGHTS
Pursuant to the IBCL, stockholders of NCBE do not have the preemptive
right to subscribe to additional shares of common stock when issued by NCBE.
Similarly, stockholders of White County currently do not have preemptive rights
pursuant to the IBA. Preemptive rights permit a stockholder to purchase their
pro rata share of any offering by the company, subject to certain exceptions
and limitation as provided by law.
VOTING
On all matters to properly come before stockholders, each share of
stock of NCBE and White County entitles the holder thereof to one vote, except,
for the right to vote cumulatively in the election of Directors, and except,
with respect to NCBE only, for the effect of certain "super vote" requirements
regarding business combinations contained in the Articles of Incorporation of
NCBE (see "Cumulative Voting" and "Antitakeover Provisions"). The affirmative
vote of the holders of a majority of the outstanding NCBE Common Stock is
required to amend the Articles of Incorporation of NCBE, except the amendment
of Article IX, Section 6 which provision requires an eighty percent (80%) vote
in certain business combination transactions, which amendment requires the
affirmative vote of the holders of eighty percent (80%) of NCBE Common
Stock. The affirmative vote by the holders of two-thirds (66 2/3%) of the
outstanding White County Common Stock is required to amend the White County
Articles of Incorporation.
CUMULATIVE VOTING
Stockholders of NCBE and White County have the right to vote
cumulatively in the election of Directors. In cumulative voting, a shareholder
may cumulate a number of votes equal to the number of directors to be elected
times the number of shares held by the shareholder and cast all of such votes
for one nominee for director, or allocate such votes among the nominees as the
shareholder sees fit. Cumulative voting rights afford stockholders controlling
a minority stock position the opportunity to have representation on the Board
of Directors.
LIQUIDATION
Holders of NCBE stock are entitled to a pro rata distribution of the
corporation's assets upon liquidation. Holders of White County are afforded
similar rights.
LIABILITY OF DIRECTORS; INDEMNIFICATION
Under their respective Articles of Incorporation NCBE and White County
may indemnify present or past directors, officers, employees or agents to the
full extent permitted by law.
Under the IBCL an Indiana corporation may indemnify an individual made
a party to a proceeding because such individual is or was a director against
liability incurred in the proceeding if the individual acted in good faith,
reasonably believed his or her conduct was in the corporation's best interest
(or in certain cases at least not opposed to the corporation's best interests)
and, in the case of any criminal proceeding, the individual had no reasonable
cause to believe the individual's conduct was unlawful. Unless limited by its
Articles of Incorporation, under the IBCL a corporation must indemnify a
director who is wholly successful, on the merits or otherwise, in the defense
of any proceeding to which the director was a party
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because the director is or was a director of the corporation against reasonable
expenses incurred by the director in connection with the proceeding.
Under the provisions of the IBA section 5/5 (19) and the Illinois
Business Corporation Act Section 8.75, directors of White County are entitled
to similar rights of indemnification.
ANTITAKEOVER PROVISIONS
Indiana Law
Under the provisions of Chapter 43 of the IBCL, any 10% shareholder of
an Indiana corporation is prohibited for a period of five years from completing
a business combination with a corporation unless, prior to the acquisition of
such 10% interest, the Board of Directors of the Corporation approved either
the acquisition of such interest or the proposed business combination.
Further, the Corporation and a 10% shareholder may not consummate a business
combination unless all provisions of the Articles of Incorporation of the
Corporation are complied with and a majority of the disinterested stockholders
approve the transaction or all stockholders receive a price per share
determined in accordance with the business combinations provision of Indiana
law.
In addition to the business combinations provision, Chapter 42 of the
IBCL also contains a control share acquisition provision which, although
different in structure from the business combinations provision may have a
similar effect of discouraging or making more difficult a hostile takeover of
an Indiana corporation. Chapter 42 of the IBCL (commonly known as the "Indiana
Control Share Acquisitions Statute"), restricts the voting rights of certain
shares ("control shares") that, except for Chapter 42 of the IBCL would have
voting power, of an issuing public corporation that, when added to all other
shares of such corporation owned by a person, would entitle that person,
immediately after the acquisition of such shares, to exercise or direct the
exercise of the voting power of such corporation in the election of directors
within any of the following ranges of voting power: (a) one-fifth or more but
less than one-third of all voting power; (b) one-third or more but less than a
majority of all voting power; and (c) a majority or more of all voting power (a
"control share acquisition"). The voting rights of such control shares are
restricted to those rights granted by a resolution approved by the holders of a
majority of the outstanding voting shares, excluding the voting shares owned by
the acquiring shareholder and certain other "interested shares," including
shares owned by officers of the issuing corporation and employees of the
issuing corporation that are also directors of the issuing corporation. This
provision may also have the effect of discouraging premium bids for outstanding
shares.
NCBE Articles of Incorporation
NCBE's Articles of Incorporation contain two provisions which can be
characterized as antitakeover in nature. These provisions are summarized
below:
Supermajority Vote Requirement Provision
The affirmative vote of at least eighty percent (80%) of the
outstanding capital stock of NCBE is required to effectuate a merger or
consolidation of NCBE with another corporation, or an acquisition of NCBE by
another corporation without the approval of NCBE's Board of Directors.
Advantages. This provision of NCBE's Articles of Incorporation is
designed primarily to discourage or make more difficult a takeover
attempt or acquisition which the Board of Directors of NCBE does not
feel is in the best interests of the stockholders of NCBE. Under
Indiana corporation law, approval by the simple majority of the
outstanding capital stock of NCBE would be required to approve a
merger, consolidation, or acquisition of NCBE by another corporation
which has the approval of the Board of Directors of NCBE. The Board
of Directors and management of NCBE feel that the provisions requiring
an increased percentage of shareholder approval of a Merger,
consolidations, or acquisition of NCBE by another corporation, which
NCBE's Board of Directors has not approved, is in the interest of
stockholders because it will require broader shareholder consent and,
therefore, increase discussion and understanding of any such proposal.
Disadvantages. It must be noted that another effect would be that
management may obtain a veto power over a Merger regardless of whether
the transaction is desired by or beneficial to a majority of the
stockholders and would assist management in retaining their present
positions. Another effect would be to give the holders of a minority
of the shares a veto power regarding a merger, consolidation, or
acquisition which the Board of Directors has not
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approved. Further, the Supermajority Vote Requirement Provision may
have the practical effect of providing management of NCBE with the
ability to veto certain merger or consolidation transactions, based
solely on the difficulty in obtaining eighty percent (80%) share
representation at the shareholder meeting called to vote upon the
proposed merger or consolidation. For the 1994, 1993 and 1992 annual
meetings of NCBE 77.37%, 70.41%, and 73.09%, of the outstanding
shares were represented in person or by proxy at the respective annual
meetings. Based upon the exchange rate applicable to the Merger,
assuming average of the maximum and minimum NCBE shares issuable in
the Merger, had the transaction been consummated at February 28, 1995
the executive officers and directors of NCBE and White County as a
group, would have the power to vote approximately 12.6% of the
outstanding shares of NCBE on a pro forma basis.
Classified Board Provision
NCBE currently has in operation, a rotating election system for
electing its Board of Directors. All of the Directors of White County are
elected by their stockholders annually for a term of one year. NCBE directors
are elected to a designated class and shall serve until the expiration of the
term for which they are elected, and until their successors have been duly
elected and qualified. Each of the three (3) classes has a three (3) year
term.
Advantages. The rotating system for Directors is applicable to
every election of NCBE directors rather than only to an election
involving an attempt to take over NCBE. As a result of this rotating
election provision for Directors, acquisition of control of NCBE's
Board of Directors will take two years, since only one-third of NCBE's
Board is elected each year to a three-year term.
Disadvantages. As a result of the rotating board system, it will be
more difficult for stockholders to change the majority of directors,
even when the reason for the change may be the performance of the
present directors.
The availability of authorized and unissued shares for future issuance
by NCBE may be deemed to have an antitakeover effect. As of the date
of this proxy statement/prospectus, NCBE had _________ authorized
shares available for future issuance. NCBE's Articles of
Incorporation and Bylaws currently contain no other provisions that
were intended to be or could fairly be considered as antitakeover in
nature or effect. The authorized and unissued shares are available
for issuance free of stockholders' preemptive rights and thereby could
be issued into "friendly hands" to dilute the ownership of an
individual or corporation that has acquired shares of NCBE and intends
to conduct an acquisition of NCBE that is deemed to be undesirable by
the Board of Directors of NCBE. These provisions are not the result
of management's knowledge of any effort to obtain control of NCBE by
any means. Further, the Board of Directors has no intention to amend
the Articles of Incorporation or Bylaws to add any additional
antitakeover provisions.
INFORMATION ABOUT NCBE
GENERAL
NCBE, through its affiliates, operates offices in Vanderburgh,
Warrick, Gibson, Spencer, Lawrence, Pike, and Daviess Counties in Indiana,
Webster and Union Counties in Kentucky, and White County in Illinois. NCBE is
a multi-bank holding company which, as of the date hereof, owned all the
outstanding common stock of The National City Bank of Evansville, Evansville,
Indiana ("National City Bank"); The Peoples National Bank of Grayville,
Grayville, Illinois ("Grayville"); The Farmers and Merchants Bank, Fort Branch,
Indiana ("Farmers"); First Kentucky Bank, Sturgis, Kentucky ("First");
Lincolnland Bank, Dale, Indiana ("Lincolnland"); The State Bank of Washington,
Washington, Indiana ("Washington"); The Spurgeon State Bank, Spurgeon, Indiana
("Spurgeon"); Pike County Bank, Petersburg, Indiana ("Pike County"); and The
Bank of Mitchell, Mitchell, Indiana ("Mitchell") (hereinafter sometimes
referred to collectively as the "NCBE Banks"). In addition NCBE operates a
non-banking subsidiary engaged in leasing activities; NCBE Leasing Corp.
National City Bank operates nine (9) branches in Indiana, First Kentucky Bank,
(hereinafter referred to as "First") operates a main office and branchs in
Sturgis, Morganfield and Poole, Kentucky. Lincolnland Bank operates four (4)
branches in Spencer County, Indiana. Mitchell operates a main office and a
branch in Mitchell and Bedford, Indiana. Spurgeon operates a branch in Arthur,
Indiana. Washington operates a branch in Odon, Indiana. The remaining NCBE
Banks operate a main office location and no branch locations. At December 31,
1994, NCBE and its subsidiaries had consolidated total assets of approximately
$731 million, consolidated total deposits of approximately $616 million and
consolidated total equity of approximately $86 million.
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NCBE, through its banking affiliates offers a broad range of banking
services to the commercial, industrial and consumer market segments which it
serves. Services include commercial, real estate and personal loans, checking,
savings and time deposits and other customer services such as safe deposit
facilities. NCBE does not have any foreign operations, assets or investments.
NCBE's lead bank, National City Bank was chartered as a national
banking association in 1922 under the name, The National City Bank of
Evansville. National City Bank is regulated by the Office of the Comptroller
of the Currency ("OCC") and its deposits are insured by the Federal Deposit
Insurance Corporation to the extent permitted by law and, as a subsidiary of
NCBE, is regulated by the Federal Reserve Board. Each of NCBE's other banking
affiliates is also subject to supervision and regulation by the Federal Reserve
Board as well as being subject to supervision and regulation, either by its
state regulatory agency responsible for state chartered banks or by the Office
of the Comptroller of the Currency for national banks. Farmers, First,
Lincolnland, Washington, Spurgeon, Pike County, and Mitchell are additionally
subject to supervision and regulation by the Federal Deposit Insurance
Corporation ("FDIC") as state nonmember banks.
THIS PROXY STATEMENT/PROSPECTUS, AS MAILED TO STOCKHOLDERS OF WHITE
COUNTY IS ACCOMPANIED BY NCBE'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR
ENDED DECEMBER 31, 1994 (THE "NCBE 1994 ANNUAL REPORT"). ADDITIONAL
INFORMATION CONCERNING NCBE IS CONTAINED IN DOCUMENTS INCORPORATED IN THIS
PROXY STATEMENT BY REFERENCE. THESE DOCUMENTS, INCLUDING THE NCBE 1994 ANNUAL
REPORT, ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO HAROLD A. MANN,
NATIONAL CITY BANCSHARES, INC., 227 MAIN STREET, P.O. BOX 868, EVANSVILLE, IN
47705-0868. IN ORDER TO ASSURE TIMELY DELIVERY OF THESE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY _____________, 1995.
COMPETITION
The commercial banking and trust business in the market areas served
by the NCBE Banks is very competitive. NCBE and the NCBE Banks are all in
competition with commercial banks located in their own service areas. Some
competitors of NCBE and its banks are substantially larger than any one of the
NCBE Banks. In addition to local bank competition, the NCBE Banks compete with
larger commercial banks located in metropolitan areas, savings banks, savings
and loan associations, credit unions, finance companies and other financial
institutions for loans and deposits.
CERTAIN REGULATORY CONSIDERATIONS
The following is a summary of certain statutes and regulations
affecting NCBE and its subsidiaries. This summary is qualified in its entirety
by such statutes and regulations.
NCBE
NCBE is a registered bank holding company under the BHC Act as
amended, and as such is subject to regulation by the Federal Reserve Board. A
bank holding company is required to file with the Federal Reserve Board
quarterly reports and other information regarding its business operations and
those of its subsidiaries. A bank holding company and its subsidiary banks are
also subject to examination by the Federal Reserve Board.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve Board before acquiring substantially all the
assets of any bank or bank holding company or ownership or control of any
voting shares of any bank or bank holding company, if, after such acquisition,
it would own or control, directly or indirectly, more than five percent (5%) of
the voting shares of such bank or bank holding company. Bank holding companies
are also prohibited from acquiring shares of any bank located outside the state
in which the operations of the bank holding company's banking subsidiaries are
principally conducted unless such an acquisition is specifically authorized by
a statute of the state in which the bank whose shares are to be acquired is
located. However, the BHC Act does not place territorial restrictions on the
activities of nonbank subsidiaries of a bank holding company.
In approving acquisitions by bank holding companies of companies
engaged in banking-related activities, the Federal Reserve Board considers
whether the performance of any such activity by a subsidiary of the holding
company reasonably can be expected to produce benefits to the public, such as
greater convenience, increased competition, or gains in efficiency, which
outweigh possible adverse effects, such as over concentration of resources,
decrease of competition, conflicts of interest, or unsound banking practices.
Bank holding companies are restricted in, and subject to, limitations
regarding transactions with subsidiaries and other affiliates.
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In addition, bank holding companies and their subsidiaries are
prohibited from engaging in certain "tie in" arrangements in connection with
any extensions of credit, leases, sales of property, or furnishing of services.
NCBE Subsidiaries
NCBE operates two national banks, including National City Bank and
Grayville. As national banks these banks are supervised and regulated by OCC,
and subject to laws and regulations applicable to national banks.
In addition to its national bank subsidiaries, NCBE operates six (6)
Indiana state chartered banks (Farmers, Lincolnland, Washington, Spurgeon, Pike
County and Mitchell) and a Kentucky state chartered bank (First). As state
banks, Farmers, Lincolnland, Washington, Spurgeon, Pike County, Mitchell and
First are supervised and regulated by their state banking supervisor and the
FDIC as their primary federal banking regulatory agency.
Capital
The Federal Reserve Board, OCC, and FDIC require banks and holding
companies to maintain minimum capital ratios.
The Federal Reserve Board has adopted final "risk-adjusted" capital
guidelines for bank holding companies. The new guidelines became fully
implemented as of December 31, 1992. The OCC and FDIC have adopted
substantially similar risk-based capital guidelines. These ratios involve a
mathematical process of assigning various risk weights to different classes of
assets, then evaluating the sum of the risk-weighted balance sheet structure
against NCBE's capital base. The rules set the minimum guidelines for the
ratio of capital to risk-weighted assets (including certain off-balance sheet
activities, such as standby letters of credit) at 8%. At least half of the
total capital is to be composed of common equity, retained earnings, and a
limited amount of perpetual preferred stock less certain goodwill items ("Tier
1 Capital"). The remainder may consist of a limited amount of subordinated
debt, other preferred stock, or a limited amount of loan loss reserves. At
December 31, NCBE's consolidated risk-adjusted Tier 1 Capital and total
capital, as defined by the regulatory agencies based on the fully phased in
1992 guidelines, were 17.1% and 17.8% of risk-weighted assets, respectively,
well above the 4% and 8% minimum standards mandated by the regulatory agencies.
In addition, the federal banking regulatory agencies have adopted
leverage capital guidelines for banks and bank holding companies. Under these
guidelines, banks and bank holding companies must maintain a minimum ratio of
three percent (3%) Tier 1 Capital (as defined for purposes of the year-end 1992
risk-based capital guidelines) to total assets. The Federal Reserve Board has
indicated, however, that banking organizations that are experiencing or
anticipating significant growth, are expected to maintain capital ratios well
in excess of the minimum levels. As of December 31, 1994, NCBE's core
leverage ratio was 11.8%, well above the regulatory minimum.
Regulatory authorities may increase such minimum requirements for all
banks and bank holding companies or for specified banks or bank holding
companies. Increases in the minimum required ratios could adversely affect
NCBE and the NCBE Banks, including their ability to pay dividends.
Additional Regulation
NCBE Banks are also subject to federal regulation as to such matters
as required reserves, limitation as to the nature and amount of its loans and
investments, regulatory approval of any merger or consolidation, issuance or
retirement of their own securities, limitations upon the payment of dividends
and other aspects of banking operations. In addition, the activities and
operations of NCBE Banks are subject to a number of additional detailed,
complex and sometimes overlapping laws and regulations. These include state
usury and consumer credit laws, state laws relating to fiduciaries, the Federal
Truth-in-Lending Act and Regulation Z, the Federal Equal Credit Opportunity Act
and Regulation B, the Fair Credit Reporting Act, the Truth in Savings Act, the
Community Reinvestment Act, anti-redlining legislation and antitrust laws.
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Dividend Regulation
The ability of NCBE to obtain funds for the payment of dividends and
for other cash requirements is largely dependent on the amount of dividends
which may be declared by the NCBE Banks. Generally, NCBE Banks may not declare
a dividend, without the approval of the appropriate federal and state
regulatory agencies, if the total of dividends declared by such subsidiary bank
in a calendar year exceeds the total of its net profits for that year combined
with its retained profits of the preceding two years.
Government Policies and Legislation
The policies of regulatory authorities, including the OCC, Federal
Reserve Board, FDIC and the Depository Institutions Deregulation Committee,
have had a significant effect on the operating results of commercial banks in
the past and are expected to do so in the future. An important function of the
Federal Reserve System is to regulate aggregate national credit and money
supply through such means as open market dealings in securities, establishment
of the discount rate on member bank borrowings, and changes in reserve
requirements against member bank deposits. Policies of these agencies may be
influenced by many factors, including inflation, unemployment, short-term and
long-term changes in the international trade balance and fiscal policies of the
United States government.
The United States Congress has periodically considered and adopted
legislation which has resulted in further deregulation of both banks and other
financial institutions, including mutual funds, securities brokerage firms and
investment banking firms. No assurance can be given as to whether any
additional legislation will be adopted or as to the effect such legislation
would have on the business of NCBE or the NCBE Banks.
In addition to the relaxation or elimination of geographic
restrictions on banks and bank holding companies, a number of regulatory and
legislative initiatives have the potential for eliminating many of the product
line barriers presently separating the services offered by commercial banks
from those offered by nonbanking institutions. For example, Congress recently
has considered legislation which would expand the scope of permissible business
activities for bank holding companies (and in some cases banks) to include
securities underwriting, insurance services and various real estate related
activities as well as allowing interstate branching.
Deposit Insurance.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") was enacted in 1991. Among other things, FDICIA, requires federal
bank regulatory authorities to take "prompt corrective action" with respect to
banks that do not meet minimum capital requirements. For these purposes,
FDICIA establishes five capital tiers: well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized, and critically
undercapitalized.
The Federal Reserve Board, the OCC and the FDIC have adopted
regulations to implement the prompt corrective action provisions of FDICIA,
effective December 19, 1992. Among other things, the regulations define the
relevant capital measures for the five capital categories. An institution is
deemed to be "well capitalized" if it has a total risk-based capital ratio
(total capital to risk-weighted assets) of 10% or greater, a Tier 1 risk-based
capital ratio (Tier 1 Capital to risk-weighted assets) of 6% or greater, and a
Tier 1 leverage capital ratio (Tier 1 Capital to total assets) of 5% or
greater, and is not subject to a regulatory order, agreement or directive to
meet and maintain a specific capital level for any capital measure. An
institution is deemed to be "adequately capitalized" if it has a total
risk-based capital ratio of 8% or greater, a Tier 1 risk-based capital of 4% or
greater, and (generally) a Tier 1 leverage capital ratio of 4% or greater, and
the institution does not meet the definition of a "well capitalized"
institution. An institution is deemed to be "critically undercapitalized" if
it has a ratio of tangible equity (as defined in the regulations) to total
assets that is equal to or less than 2%. "Undercapitalized" banks are subject
to growth limitations and are required to submit a capital restoration plan.
If an "undercapitalized" bank fails to submit an acceptable plan, it is treated
as if it is significantly undercapitalized. "Significantly undercapitalized"
banks may be subject to a number of requirements and restrictions, including
orders to sell sufficient voting stock to become adequately capitalized,
requirements to reduce total assets, and cessation of receipt of deposits from
correspondent banks. "Critically undercapitalized" institutions may not,
beginning 60 days after becoming "critically undercapitalized," make any
payment of principal or interest on their subordinated debt.
NCBE and each of the NCBE Banks currently exceed the regulatory
definition of a "well capitalized" financial institution.
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As an FDIC-insured institution, each of the NCBE Banks is required to
pay deposit insurance premium assessments to the FDIC. Pursuant to FDICIA, the
FDIC adopted a transitional risk-based assessment system, effective January
1, 1993, under which all insured depository institutions are placed into one of
nine categories and assessed insurance premiums, ranging from .23% to .31% of
deposits, based upon their level of capital and supervisory evaluation.
Institutions classified as well-capitalized (as defined by the FDIC) and
considered healthy pay the lowest premium while institutions that are less than
adequately capitalized (as defined by the FDIC) and considered of substantial
supervisory concern pay the highest premium. Risk classification of all insured
institutions is made by the FDIC for each semiannual assessment period.
On June 17,1993, the FDIC issued regulations establishing a permanent
risk-based assessment system. These regulations took effect October 1, 1993,
and were first used to determine assessments for the assessment period
commencing January 1, 1994. Although the FDIC previously requested comments on
whether the range of risk-based premiums should be expanded so that
institutions posing the least risk to the deposit insurance funds would pay
less than .23% of deposits and institutions posing the highest risk would pay
more than .31% of deposits, the FDIC did not change the premium range and the
permanent risk-based assessment system adopted by the FDIC is substantially the
same as the transitional system. During 1994, the NCBE Banks were assessed at
the rate of .23% of deposits under the transitional assessment system.
The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institution has
engaged or is engaging in unsafe or unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, order, or any condition imposed in writing by, or written agreement
with, the FDIC. The FDIC may also suspend deposit insurance temporarily during
the hearing process for a permanent termination of insurance if the institution
has no tangible capital. Management of NCBE is not aware of any activity or
condition that could result in termination of the deposit insurance of the NCBE
Banks.
Recent Legislation
On September 29, 1994, the Reigle/Neal Interstate Banking and
Branching Efficiency Act of 1994 (the "Interstate Act") was signed into law.
This Interstate Act effectively permits nationwide banking. The Interstate Act
provides that one year after enactment, adequately capitalized and adequately
managed bank holding companies may acquire banks in any state, even in those
jurisdictions that currently bar acquisitions by out-of-state institutions,
subject to deposit concentration limits. The deposit concentration limits
provide that regulatory approval by the Federal Reserve Board may not be
granted for a proposed interstate acquisition if after the acquisition, the
acquiror on a consolidated basis would control more than 10% of the total
deposits nationwide or would control more than 30% of deposits in the state
where the acquiring institution is located. The deposit concentration state
limit does not apply for initial acquisitions in a state and in every case, may
be waived by the state regulatory authority. Interstate acquisitions are
subject to compliance with the Community Reinvestment Act ("CRA"). States are
permitted to impose age requirements not to exceed five years on target banks
for interstate acquisitions. States are not allowed to opt-out of interstate
banking.
Branching between states may be accomplished either by merging
separate banks located in different states into one legal entity, or by
establishing de novo branches in another state. Consolidation of banks is not
permitted until June 1, 1997, provided that the state has not passed legislation
"opting-out" of interstate branching. If a state opts-out prior to June 1,
1997, then banks located in that state may not participate in interstate
branching. A state may opt-in to interstate branching by bank consolidation or
by de novo branching by passing appropriate legislation earlier than June 1,
1997. Interstate branching is also subject to a 30% statewide deposit
concentration limit on a consolidated basis, and a 10% nationwide deposit
concentration limit. The laws of the host state regarding community
reinvestment, fair lending, consumer protection (including usury limits) and
establishment of branches shall apply to the interstate branches.
De novo branching by an out-of-state bank is not permitted unless the
host state expressly permits de novo branching by banks from out-of-state. The
establishment of an initial de novo branch in a state is subject to the same
conditions as apply to initial acquisition of a bank in the host state other
than the deposit concentration limits.
Effective one year after enactment, the Interstate Act permits bank
subsidiaries of a bank holding company to act as agents for affiliated
depository institutions in receiving deposits, renewing time deposits, closing
loans, servicing loans and receiving payments on loans and other obligations. A
bank acting as agent for an affiliate shall not be considered a branch of the
affiliate. Any agency relationship between affiliates must be on terms that are
consistent with safe and sound banking practices. The authority for an agency
relationship for receiving deposits includes the taking of deposits for an
existing account but is not meant to include the opening or origination of new
deposit accounts. Subject to certain conditions, insured savings associations
which were affiliated with banks as of June 1, 1994, may act as agents for such
banks. An affiliate bank or savings association may not conduct any activity as
an agent which such institution is prohibited from conducting as principal. If
an
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interstate bank decides to close a branch located in a low- or moderate-income
area, it must comply with additional branch closing notice requirements. The
appropriate regulatory agency is authorized to consult with community
organizations to explore options to maintain banking services in the affected
community where the branch is to be closed.
To ensure that interstate branching does not result in taking deposits
without regard to a community's credit needs, the regulatory agencies are
directed to implement regulations prohibiting interstate branches from being
used as "deposit production offices." The regulations to implement its
provisions are due by June 1, 1997. The regulations must include a provision to
the effect that if loans made by an interstate branch are less than fifty
percent of the average of all depository institutions in the state, then the
regulator must review the loan portfolio of the branch. If the regulator
determines that the branch is not meeting the credit needs of the community, it
has the authority to close the branch and to prohibit the bank from opening new
branches in that state.
When the interstate banking provisions become effective in one year,
NCBE will have enhanced opportunities to acquire banks in any state subject to
approval by the appropriate federal and state regulatory agencies. When the
interstate branching provisions become effective in June 1997, NCBE will have
the opportunity to consolidate its affiliate banks to create one legal entity
with branches in more than one state should management decide to do so, or to
establish branches in different states, subject to any state opt-out
provisions. The agency authority permitting NCBE affiliate banks to act as
agents for each other in accepting deposits or servicing loans should make it
more convenient for customers of one NCBE bank to transact their banking
business at an NCBE affiliate in another state provided that operations are in
place to facilitate these out of state transactions.
On November 18, 1993, the FDIC, together with the Federal Reserve, the
OCC and the Office of Thrift Supervision (the "OTS"), published for comment
proposed rules implementing the FDICIA requirement that the federal banking
agencies establish operational and managerial standards to promote the safety
and soundness of federally insured depository institutions. The proposal would
establish standards for internal controls, information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, and compensation, fees and benefits. In general, the standards set
forth in the proposal consist of the goals to be achieved in each area, and
each institution would be responsible for establishing its own procedures to
achieve those goals. Additionally, the proposal would establish a maximum
permissible ratio of classified assets to capital and a minimum required
earnings ratio. If an institution failed to comply with any of the standards
set forth in the proposal, the institution would be required to submit to its
primary federal regulator a plan for achieving and maintaining compliance.
Failure to submit an acceptable plan, or failure to comply with a plan that has
been accepted by the appropriate regulator, would constitute grounds for
further enforcement action. Based upon a review of the proposal, management of
the Bank believes that the proposal, if adopted in substantially the form
proposed, will not have a material adverse effect on the Bank
Proposed Legislation
Pursuant to FDICIA, on September 14, 1993, the FDIC, together with the
Federal Reserve and the Office of the Comptroller of the Currency (the "OCC"),
issued a joint proposal to amend their risk-based capital standards to take
into account interest rate risk ("IRR") exposure. The proposed rule would
generally require banks to quantify their level of IRR exposure using a
measurement system developed by the regulators that weights a bank's assets,
liabilities and off-balance sheet positions by risk factors designed to reflect
the approximate change in each instrument's value that would result from
specified changes in interest rates (a 200 basis point increase and decline in
rates under the proposal). Any bank with a level of IRR exposure in excess of a
specified threshold (1% of total assets under the proposal) would be required
to maintain additional capital against its IRR exposure. The regulators
anticipate that the IRR capital requirement will be effective as of December
31, 1994, although they indicated in the proposal that the new requirement may
be applied on an advisory basis in examinations beginning after December 31,
1993, to the extent the necessary data are available. Although it is not
presently possible to predict whether, or in what form, the proposal will be
adopted, assuming IRR capital rules were to be adopted in substantially the
form proposed, management of the Bank does not anticipate that such rules would
have a material adverse effect on the Bank's ability to maintain compliance
with applicable capital requirements.
On December 21, 1993, the FDIC, together with the Federal Reserve, the
OCC and the OTS issued proposed new regulations under the Community
Reinvestment Act ("CRA"). Under the proposal, an institution's performance in
meeting the credit needs of its entire community, including low and moderate
income areas, as required by the CRA, would generally be evaluated under three
tests: the "lending test," which would consider the extent to which the
institution makes loans in the low- and moderate-income areas of its market;
the "service test," which would consider the extent to which the institution
makes branches accessible to low- and moderate-income areas of its market and
provides other services that promote credit availability; and the "investment
test," which would consider the extent to which the institution invests in
community and
47
<PAGE> 51
economic development activities. If adopted as proposed, it is anticipated that
the new regulations may be used to evaluate CRA compliance effective April 1,
1995. Based upon a review of the proposal, management of the Bank does not
anticipate that the proposal, if adopted substantially as proposed, would
adversely affect the Bank.
In addition to the above, there have been proposed a number of
legislative and regulatory proposals designed to strengthen the federal deposit
insurance system and to improve the overall financial stability of the U.S.
banking system. It is impossible to predict whether or in what form these
proposals may be adopted in the future, and if adopted, what their effect would
be on NCBE.
PRINCIPAL HOLDER OF NCBE COMMON STOCK
The following table sets forth information concerning the number of
shares of NCBE Common Stock held as of February 28, 1995, by each shareholder
who is known to NCBE management to have been the beneficial owners of more than
five percent of the outstanding shares of NCBE Common Stock as of that date:
<TABLE>
<CAPTION>
Name and Address of Shares Beneficially Percent
Beneficial Owner(1) Owned(2) of Class(3)
- -------------------- ---------------------- -----------
<S> <C> <C>
Mr. Edgar Mulzer 219,338 6.00%
401 10th Street
Tell City, IN 47586
</TABLE>
INFORMATION ABOUT WHITE COUNTY
GENERAL
White County is an Illinois state chartered commercial bank with its
main office located in Carmi, Illinois. White County operates no branch
offices. White County provides a full range of banking services including
checking and savings accounts; certificates of deposit; individual retirement
accounts; commercial, real estate, consumer and agricultural loans; safe
deposit boxes; and trust services. White County is, however, primarily focused
on agriculture related services and lending.
PROPERTIES
White County owns no real or personal property of a material nature
other than its main office and the furniture, fixtures and equipment used in
its banking business. The main office of White County is located at 215 E.
Main Street, Carmi, Illinois. White County owns the land and buildings on
which its main office is located, free and clear of any major encumbrances.
LITIGATION
There is no pending litigation of a material nature in which White
County is a party or to which any of its property is subject. Further, there
is no material legal proceeding in which any director, executive officer,
principal shareholder or affiliate of White County, or any associate of any
such director, executive officer, principal shareholder or affiliate, is a
party or has a material interest adverse to White County. None of the ordinary
routine litigation in which White County is involved is expected to have a
material adverse effect on the financial condition, results of operations or
business of White County.
VOTING, PRINCIPAL STOCKHOLDERS AND MANAGEMENT INFORMATION
Holders of record of White County Common Stock at the close of
business on ____________1995, will be entitled to vote at the special meeting
of stockholders on ________, and any adjournment of that meeting. As of
______, there were 9,600 shares of White County Common Stock issued and
outstanding. Each share of White County Common Stock is entitled to one vote
on each matter presented for shareholder action.
The following table sets forth information concerning the number of
shares of White County Common Stock held as of the Record Date by each
shareholder who is known to White County management to have been the beneficial
owners of more than five percent of the outstanding shares of White County
Common Stock as of that date:
48
<PAGE> 52
<TABLE>
<CAPTION>
Name and Address of Shares Beneficially Percent
Beneficial Owner(1) Owned(2) of Class(3)
- -------------------- ---------------------- -----------
<S> <C> <C>
White County Bank Employees
Stock Ownership Plan Fund
P.O. Box 100
Carmi, IL 62821 2,194 22.9%
James R. Monahan Estate
c/o Richard Endicott, Attorney
222 East Main Street
Carmi, IL 62821 1,082 11.3%
</TABLE>
The following table shows certain information concerning the number of
shares of White County Common Stock held as of Record Date by each director of
White County and by all of White County's directors and executive officers as a
group:
<TABLE>
<CAPTION>
Name of Shares Beneficially Percent (%)
Beneficial Owner(1) Owned(2) of Class(3)
- -------------------- ---------------------- -----------
<S> <C> <C>
Charles H. Atteberry 133 1.4%
Franke Barbre 20 .2
Marilyn F. Cozart 174 1.8
Donald D. Drone 40 1.3
Paul D. Hayse 20 .2
R. Keith Hoskins 121 .1
James S. Ruhoff 1,414 14.7
Anne B. Russell 958 10.0
George G. Schanzle 715 7.4
James R. Schanzle 205 2.1
All directors and
executive officers
as a group (10 individuals) 3,800 39.6%
</TABLE>
(1) The number of shares shown as being beneficially owned are those
shares over which the person has either shared or sole voting or
investment power.
(2) The information contained in this column is based upon the shareholder
records of White County and information provided to White County by
the persons listed.
(3) Calculated based upon 9,600 shares of White County Common Stock issued
and outstanding on the Record Date.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors and executive officers of White County and their associates
are customers of and have had transactions with White County from time to time
in the ordinary course of business. Such transactions have been made on
substantially the same terms, including interest rates and collateral on loans,
as those prevailing at the time for comparable transactions with other persons
and did not and will not involve more than the normal risk of collectibility or
present other unfavorable features. Similar transactions may be expected to
take place in the ordinary course of business in the future.
COMPETITION
The principal market in which White County competes is White County,
Illinois. For deposits and loans, White County competes with other banks,
savings institutions, credit unions, finance companies, factoring companies,
insurance companies, governmental agencies and other financial institutions.
49
<PAGE> 53
EMPLOYEES
At _____1995, White County had __ full time equivalent employees.
White County is not a party to any collective bargaining agreement and employee
relations are considered to be excellent by White County management.
FINANCIAL STATEMENTS
Financial statements of White County, as of and for the periods ending
December 31, 1994, 1993 and 1992, are presented herein beginning on page F-1.
Such statements have not been audited by an independent certified public
accountant and are, therefore, "unaudited." Management of NCBE has determined
that it is not practicable to obtain an audit of such statements based upon a
number of factors, including time, costs, and the relative size of White County
to NCBE. White County has not recently had its financial statements audited by
an independent certified public accountant. NCBE has received assurance from
the SEC that it will not object to the lack of audited financial statements of
White County in this Proxy/Prospectus.
WHITE COUNTY MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(ALL DOLLAR AMOUNTS IN THOUSANDS)
The following financial review presents White County Management's
Discussion and Analysis of White County's Financial Condition and Earnings
Performance. This review highlights the major factors affecting results of
operations and any significant changes in financial condition for the years
ended December 31, 1994, 1993 and 1992. It should be read in conjunction with
the accompanying consolidated financial statements, notes to financial
statements and other financial statistics which are part of this Proxy
Statement-Prospectus.
Overview
Total assets of White County decreased slightly during the year ended
December 31, 1994. Total assets were $64,679 at year end 1994, a decrease of
1.62% from the previous year of $65,744 and a decrease of 1.55% over year end
1992. Similarly, deposits decreased 1.30% during 1994 from $58,352 at year end
1993 to $57,596 at year end 1994, and decreased 2.30% over year end 1992.
Stockholders' equity decreased 4.42% to $6,688 at year-end 1994 after growing
7.22% in 1993 to $6,997.
Investments
White County's holdings of short term investments (defined as federal
funds sold and interest-bearing deposits in banks) and investment securities
serve as a source of liquidity to meet depositor and borrower fund
requirements, in addition to being a significant element of interest income.
Securities decreased from $41,381 in 1993 to $36,385 in 1994. Securities
represented 56.25% of total assets of White County at December 31, 1994.
White County realized net losses on sales of available-for-sale
securities totaling $300 in 1994 and net gains on sales of investment
securities of $25 in 1993. Although White County has both the intent and
ability to hold investment securities until maturity, unforeseen changes,
including changes in economic and financial conditions as they related to White
County's overall interest rate risk, liquidity or capital adequacy may
influence management to reevaluate its investment strategies.
Loans
The loan portfolio represents the most significant earning asset of
most financial institutions and typically offers the best alternative for
obtaining the maximum interest spread above the cost of funds. The quality and
yield of the loan portfolio significantly impacts the overall economic strength
of a bank. Total loans grew 11.84% (from $20,164 to $22,551) during 1994 after
decreasing 2.01% during 1993.
The majority of the lending activity of White County is conducted with
customers located in the immediate geographical area. This area, comprised
principally of White County, Illinois, is dependent upon the agribusiness
economic sector. As such, loans to farmers and loans secured by farm land
represented 41.29% and 41.83% of the loan portfolio for 1994 and 1993,
respectively. Management's strategy is to aggressively seek opportunities to
provide credit to financially capable borrowers in the local community.
50
<PAGE> 54
White County engages in a broad spectrum of lending activities
including real estate loans, consumer installment loans, commercial and
industrial loans, and agricultural loans. At December 31, 1994 and 1993,
respectively, real estate loans (including certain agricultural loans included
above) comprised 49.07% and 48.59% of White County's loan portfolio. At
December 31, 1994 and 1993, respectively, Commercial loans comprised 16.10% and
16.34% of total loans. Personal and installment loans are made on a secured as
well as unsecured basis and comprised approximately 11.94% and 12.49% of White
County's loan portfolio at December 31, 1994 and 1993, respectively.
Agricultural loans not secured by real estate comprised 22.83% and 22.66% of
total loans. White County maintains special review procedures and monitors
closely its agricultural loan portfolio in accordance with its loan policy in
order to guard against certain risks inherent in agricultural lending including
seasonality and agricultural commodity price fluctuations.
Deposits
As with most financial institutions, the deposit base provides the
major funding source for earning assets. Total deposits showed a decrease of
1.30% for 1994, after a 2.30% decrease in 1993. The mix in deposits remained
relatively stable during 1994, with noninterest-bearing demand deposits
increasing from 10.71% of total deposits in 1993 to 11.96% in 1994.
Certificates of deposit of $100 or more dropped from 7.81% of interest
bearing deposits in 1993 to 9.04% in 1994.
Liquidity and Interest Rate Sensitivity
An asset/liability management strategy consists of two basic aspects,
maintenance of adequate liquidity and the monitoring of the interest
sensitivity position.
Liquidity management is the process by which a bank provides the
continuing flow of funds necessary to meet all its financial commitments on a
timely basis. These commitments include meeting depository withdrawals,
funding credit commitments to borrowers, repaying debt when due and paying
operating expenses and dividends. Liquidity can be provided, in part, in the
normal course of business from cash flows generated from interest and fee
income, maturing assets and new deposits.
For White County the primary sources of short-term liquidity have been
federal funds and sold securities available for sale. In addition to these
sources, short term and liquidity is provided by maturing loans and securities.
The balance between these sources and needs to fund loan demand and deposit
withdrawals is closely monitored by White County's asset/liability management
program. At December 31, 1994, White County had federal funds sold and
securities available for sale of $20,246.
Short-term investments consist of federal funds sold and securities
that will mature or reprice within one year. The ratio of short-term
investments to total assets measures the liquidity of White County over a
one-year time interval. The volatile liability dependency ratio is defined as
certificates of deposit in denominations of $100 or more, less short-term
investments, divided by loans and long-term investments. White County has a
small negative ratio which indicates the existence of excess liquidity, while a
high positive ratio would indicate a greater liquidity risk.
Interest rate sensitivity occurs when assets or liabilities are
subject to rate and yield changes within a designated time period. The rate
sensitivity position, or gap, is determined by the difference in the amount of
rate sensitive assets and rate sensitive liabilities at various maturity
intervals. The management of this gap position is required to protect the net
interest margin from adverse fluctuations in market interest rates and to
assure a greater degree of earnings stability. Provided below is various
repricing information presented in the form of an Interest Rate Sensitivity
report at December 31, 1994.
51
<PAGE> 55
<TABLE>
<CAPTION>
One-Year One to Over
or Less Five Years Five Years Total
------- ---------- ---------- -----
<S> <C> <C> <C> <C>
Earnings Assets:
Loans Gross
Fixed Rate Loans $5,728 $11,099 $4,105 $20,932
Variable Rate Loans 1,077 269 - 1,346
------ ------- ------ -------
Total Gross Loans 6,805 11,368 4,105 22,278
Investment Securities 8,642 22,178 5,565 36,385
Federal Funds Sold 2,550 - - 2,550
------ ------- ------ -------
Total Earning Assets 17,997 33,546 9,670 61,213
Rate Sensitive Liabilities:
Interest-Bearing Liabilities:
Savings, Daily Checking and Money Market
Accounts 9,143 18,942
Certificates of Deposit of $100 or more 3,983 601 4,584
Other Time Deposits 13,557 13,617 27,174
------ ------ ----- ------
Total Interest-Bearing Liabilities 26,683 14,218 9,799 50,700
Noninterest-Bearing demand - - 6,896 6,896
------ ------ ----- ------
Total Rate-Sensitive Liabilities 26,683 14,218 16,695 57,596
Maturity/Rate Sensitivity Gap ($8,686) $19,338 ($7,025)
Rate-Sensitivity Cumulative Gap (8,686) 10,642 3,617
Percent to Total Assets (13.43%) 16.45% 5.59%
</TABLE>
As shown above, White County had a $(8,686) gap for the one year and
under interval. In times of rising interest rates, this will reduce net
interest margin and thus the earnings of the corporation, as liabilities will be
repriced at higher rates while matching assets remain at their old lower rates
until maturity. Since interest rate levels are not readily predictable for any
point in time, White County attempts to match maturities of assets and
liabilities so that the gap will be as close to zero as possible.
Capital Resources
At the end of 1994, shareholder's equity totaled $6,688, a decrease of
$310, or 4.4% from 1993, because of recording a net unrealized loss on
securities available for sale of $332. The equity to asset ratio was 10.3% and
10.6% for 1994 and 1993, respectively. The dividend payout ratio for 1994 was
84.5% compared to 29.0% in 1993. This increase was due principally to reduced
1994 earnings resulting from Merger expenses and securities losses. There are
no material commitments for capital expenditures.
Guidelines for minimum capital levels have been established by the
Federal Deposit Insurance Corporation. Tier 1 (core) capital consists of
shareholders' equity less goodwill, other identifiable intangible assets, and
unrealized losses on marketable equity securities. Total capital consists of
Tier 1 capital plus allowance for loan losses. Regulatory minimum capital
levels are 3% for the leverage ratio which is defined as Tier 1 capital as a
percentage of total assets less goodwill and other identifiable intangible
assets; 4% for Tier 1 capital to risk-weighted assets; and 8% for total capital
to risk-weighted assets. White County has by far, exceeded each of these
levels. Its leverage ratio was 10.3% and 10.6%; Tier 1 capital to
risk-weighted assets was 25.7% and 27.9%; and total capital to risk-weighted
assets was 28.4% and 30.1% at the end of 1994 and 1993, respectively.
Results of Operations
Net income was $215 or $22.35 per share for 1994 as compared to $663
or $69.08 per share and $838 or $87.28 per share for 1993 and 1992,
respectively. Contributing to the decline in 1994 were net losses on the sale
of available-for-sale securities of $(300) and a decline in the net interest
income (decline of $205 or 8.39%).
52
<PAGE> 56
Net Interest Income
Net interest income, which represents the difference between total
interest income and total interest expense, is typically the primary element of
earnings for a financial institution. As described above, net interest income
declined for White County in both 1994 and 1993. The following table presents
a summary of these changes for the last two years with dollar changes allocated
to rate and volume variances. The combined rate-volume variances are included
in the total volume variance. In addition to this schedule, a three year
comparison of average balances of selected balance sheet components along with
the related amounts for interest and fees (on a tax equivalent basis) and the
resultant yield / cost for each item is presented.
[This Space Left Intentionally Blank]
53
<PAGE> 57
Changes In Net Interest Income
(Tax Equivalent Basis)
In Thousands of Dollars
<TABLE>
<CAPTION>
1994 Compared to 1993 1993 Compared to 1992
--------------------- ---------------------
Volume Rate Total Volume Rate Total
------ ---- ----- ------ ---- -----
<S> <C> <C> <C> <C> <C> <C>
Interest Income Increase (Decrease)
Interest-Bearing Deposits in Banks 0 0 0 0 (3) (3)
Taxable Securities (11) (185) (196) 116 (326) (210)
Nontaxable securities 5 (13) (8) (54) (7) (61)
Federal funds sold 0 4 4 (17) (5) (22)
Loans 69 (87) (18) (142) (226) (368)
---- ---- ---- ---- ---- ----
Total Interest Income 63 (281) (218) (97) (567) (664)
==== ==== ==== ==== ==== ====
Interest Expense Increase (Decrease)
Deposits (10) (3) (13) (40) (437) (477)
Borrowed Funds 0 0 0 0 0 0
---- ---- ---- ---- ---- ----
Total Interest Expense (10) (3) (13) (40) (437) (477)
==== ==== ==== ==== ==== ====
Net Interest Income Increase 73 (278) (205) (57) (130) (187)
==== ==== ==== ==== ==== ====
(Decrease)
</TABLE>
54
<PAGE> 58
CONDENSED AVERAGE BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
1994 1993
------------------------------------------ ------------------------------------------
AVERAGE INTEREST YIELD/ AVERAGE INTEREST YIELD/
BALANCES AND FEES COST BALANCES AND FEES COST
<S> <C> <C> <C> <C> <C> <C>
Interest-bearing deposits
in banks $0 $0 0% $0 $0 0%
Taxable Securities 40,229 2,148 5.34% 40,435 2,344 5.80%
Nontaxable securities 1,177 65 5.52% 1,090 73 6.70%
Federal funds sold 1,307 49 3.75% 1,299 45 3.46%
Loans 21,111 1,804 8.55% 20,303 1,822 8.97%
------- ------ ---- ------- ----- ----
Total earning assets $63,824 $4,066 6.37% $63,127 $4,284 6.79%
======= ====== ==== ======= ====== ====
Interest bearing
liabilities
Deposits $52,638 $1,828 3.47% $52,922 $1,841 3.48%
======= ====== ==== ======= ====== ====
<CAPTION>
1992
----------------------------------------
AVERAGE INTEREST YIELD/
BALANCES AND FEES COST
<S> <C> <C> <C>
Interest-bearing deposits
in banks $38 $3 7.89%
Taxable Securities 38,431 2,554 6.65%
Nontaxable securities 1,902 134 7.05%
Federal funds sold 1,798 67 3.73%
Loans 21,881 2,190 10.01%
------- ------ -----
Total earning assets $64,050 $4,948 7.73%
======= ====== =====
Interest bearing
liabilities
Deposits $54,059 $2,318 4.29%
======= ====== =====
</TABLE>
55
<PAGE> 59
Other Noninterest Income
Other noninterest income decreased from $144 in 1993 to $(148) in 1994.
The primary contributing factor to the decrease in 1994 was the loss on sale of
securities of $300 reported for 1994. Other noninterest income decreased by
$22 or 13.25% in 1993 over that reported for 1992.
Other Noninterest Expense
Other operating expense remained relatively stable for 1994 at $1,840, a
.76% decrease from 1993 and a 4.80% increase over 1992.
Income Taxes
The provision for income taxes decreased to $35 in 1994 from $190 in 1993
after increasing in 1993 from $189 in 1992. These changes reflected the
changes in Income before applicable income taxes during the periods.
Effective January 1, 1993, White County adopted Accounting
Standards Board Statement No. 109, "Accounting for Income Taxes," which
requires an asset and liability approach to financial accounting and reporting
for income taxes. The adoption of FAS 109 had a cumulative effect on years
prior to January 1, 1993, of $52 which is included in 1993 net income.
Summary of Loan Loss Experience
The following table summarizes the loan loss experience for the years
indicated.
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
(Dollars In Thousands)
<S> <C> <C> <C>
Allowance for loan losses:
Balance at January 1 $572 $623 $501
--- --- ---
Add Provision for loan losses -- (120) --
Add Recoveries 193 325 359
--- --- ---
765 828 860
Less Chargeoffs 36 256 237
-- --- ---
Balance at December 31 $729 $572 $623
==== ==== ====
Ratios of net chargeoffs during the year to total loans .70% (.34%) (.59%)
Ratio of provision to total loans 0% (.60%) 0%
Ratio of year-end allowance to total loans 3.23% 2.84% 3.03%
</TABLE>
The Board of Directors of White County reviews the adequacy of its
allowance for loan losses on a quarterly basis. In making its determination,
the Board reviews past due loans and nonaccrual loans, and makes specific
allocations for each of such loans. On an aggregate basis, the loan portfolio,
less those loans for which a specific reserve has already been established, is
subjected to a five-year average of the experience in the allowance for loan
losses.
56
<PAGE> 60
Nonperforming Assets
Nonperforming assets consist of nonaccrual loans, restructured loans and
other real estate held. Nonaccrual loans are loans on which interest
recognition has been suspended because of doubts as to the borrower's ability
to repay principal or interest. Loans are generally placed on nonaccrual
status after becoming ninety days past due. Loans which are current, but for
which serious doubt exists about repayment ability, may also be placed on
nonaccrual status. Restructured loans are loans where the terms have been
changed to provide reduction or deferral of principal or interest because of
the borrower's financial position. Past due loans are accruing loans that are
contractually past due ninety days or more as to interest or principal
payments. The following summarizes the nonperforming assets as of December 31:
NONPERFORMING ASSETS AT YEAR END
(In Thousands of Dollars)
<TABLE>
<CAPTION> 1994 1993
---- ----
<S> <C> <C>
Nonaccrual $276 $229
Restructured 89 146
90 Days Past Due 72 5
________________________________________________________________
Total Nonperforming Loans 437 380
Other Real Estate Owned 9 178
________________________________________________________________
Total Nonperforming Assets $446 $558
- -================================================================
</TABLE>
LEGAL OPINIONS
Certain legal matters in connection with the Merger will be passed upon for
NCBE by Werner & Blank Co., L.P.A., Toledo, Ohio and Statham, Johnson and
McCray, Evansville, Indiana and for White County by Giffin, Winning, Cohen &
Bodewes, P.C., Springfield, Illinois.
EXPERTS
The consolidated financial statements of NCBE as of December 31, 1994 and
1993 and for each of the three years in the period ended December 31, 1994
incorporated in this Proxy Statement-Prospectus by reference from NCBE Annual
Report on Form 10-K have been audited by McGladrey & Pullen, LLP and Gaither,
Koewler, Rohlfer, Luckett & Co. (now known as Gaither Rutherford & Co.,
"Gaither"), independent auditors, as stated in their report which is
incorporated herein by reference, and have been so incorporated in reliance
upon report of such firm given upon their authority as experts in accounting
and auditing. Gaither, was dismissed as NCBE's auditors on March 23, 1993.
The Board of Directors of NCBE engaged McGladrey & Pullen as NCBE's auditors as
of such date. There were no disagreements between NCBE and its former
accountants with regards to any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure.
The consolidated financial statements of White County at December 31, 1994
and 1993, and for each of the three years in the period ended December 31,
1994, included in this Proxy Statement-Prospectus have not been audited.
57
<PAGE> 61
INDEX TO FINANCIAL STATEMENTS
Page
----
Balance Sheets, December 31, 1994 and 1993 F-2
Statements of Income, Years Ended December 31, 1994,
1993 and 1992 F-3
Statements of Changes in Stockholders' Equity, Years
Ended December 31, 1994, 1993 and 1992 F-4
Statements of Cash Flows, Years Ended December 31, 1994,
1993 and 1992 F-5
Notes to Financial Statements F6 - F15
F-1
The accompanying compilation report and notes are an integral part of these
statements.
<PAGE> 62
WHITE COUNTY BANK
CARMI, ILLINOIS
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
UNAUDITED
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1993
---- ----
<S> <C> <C>
ASSETS
Cash and due from banks (Note 2) $ 2,336,407 $ 1,420,102
Investment securities (Note 3) - 41,381,069
Securities held to maturity (Note 3) 18,688,231 -
Securities available for sale (Note 3) 17,696,494 -
Federal funds sold 2,550,000 1,800,000
Loans (Note 4) 22,553,653 20,191,473
Less:
Unearned discount 2,655 27,834
Allowance for loan losses 728,507 571,746
----------- -----------
Loans, Net $21,822,491 $19,591,893
----------- -----------
Bank premises and equipment, net (Note 5) $ 375,559 $ 408,868
Deferred income taxes 163,232 -
Other assets 1,047,035 1,142,881
----------- -----------
TOTAL ASSETS $64,679,449 $65,744,813
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS:
Non-interest bearing $ 6,896,029 $ 6,253,611
Interest-bearing (Note 7) 50,699,595 52,101,056
----------- -----------
TOTAL DEPOSITS $57,595,624 $58,354,667
Other liabilities 396,157 392,887
----------- -----------
TOTAL LIABILITIES $57,991,781 $58,747,554
----------- -----------
Commitments, contingencies and credit risk (Note 9)
STOCKHOLDERS' EQUITY
Common stock, $100 par value; 9,600 shares authorized,
issued and outstanding $ 960,000 $ 960,000
Surplus 1,540,000 1,540,000
Retained earnings 4,519,830 4,497,259
Unrealized (loss) on securities available for sale, net (332,162) -
----------- -----------
TOTAL STOCKHOLDERS' EQUITY $ 6,687,668 $ 6,997,259
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $64,679,449 $65,744,813
=========== ===========
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE> 63
WHITE COUNTY BANK
CARMI, ILLINOIS
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
UNAUDITED
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 1,803,758 $ 1,821,652 $ 2,189,974
Interest on deposits with financial
institutions - - 3,000
Interest on securities:
Taxable 2,147,935 2,343,770 2,553,838
Exempt from Federal income tax 64,769 73,295 133,984
Interest on Federal funds sold 48,784 45,426 67,036
----------- ----------- -----------
TOTAL INTEREST INCOME $ 4,065,246 $ 4,284,143 $ 4,947,832
INTEREST EXPENSE:
Interest on deposits 1,827,577 1,841,477 2,318,276
----------- ----------- -----------
NET INTEREST INCOME $ 2,237,669 $ 2,442,666 $ 2,629,556
Provision for loan losses (Note 4) - (120,000) -
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES $ 2,237,669 $ 2,562,666 $ 2,629,556
----------- ----------- -----------
OTHER INCOME:
Service charges on deposit accounts $ 73,672 $ 62,476 $ 77,037
Trust income 6,002 3,286 10,193
Gain (loss) on sale of investment securities
(Note 3) (299,970) 25,307 3,819
Other income 72,480 53,392 75,198
----------- ----------- -----------
TOTAL OTHER INCOME $ (147,816) $ 144,461 $ 166,247
----------- ----------- -----------
OTHER EXPENSE:
Salaries and employee benefits $ 1,168,493 $ 1,172,907 $ 1,100,594
Occupancy expense 190,399 195,023 167,802
Other expense 481,493 486,437 500,437
----------- ----------- -----------
TOTAL OTHER EXPENSE $ 1,840,385 $ 1,854,367 $ 1,768,833
----------- ----------- -----------
INCOME BEFORE INCOME TAX EXPENSE $ 249,468 $ 852,760 $ 1,026,970
Income tax expense (Note 6) 34,897 241,764 189,095
----------- ----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE $ 214,571 $ 610,996 $ 837,875
Cumulative Effect on Prior Years of Changing to
a Different Method of Accounting for Income
Taxes (Note 6) - 52,200 -
----------- ----------- -----------
NET INCOME $ 214,571 $ 663,196 $ 837,875
=========== =========== ===========
NET INCOME PER SHARE $ 22.35 $ 69.08 $ 87.28
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE> 64
WHITE COUNTY BANK
CARMI, ILLINOIS
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
UNAUDITED
<TABLE>
<CAPTION>
NET
UNREALIZED
(LOSS) ON
SECURITIES
COMMON RETAINED AVAILABLE FOR
STOCK SURPLUS EARNINGS SALE TOTAL
------ ------- -------- ------------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1991 $960,000 $1,540,000 $3,351,388 $ - $5,851,388
Net income 837,875 - 837,875
Cash dividends declared ($17
per share) (163,200) - (163,200)
-------- ---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1992 $960,000 $1,540,000 $4,026,063 $ - $6,526,063
Net income 663,196 - 663,196
Cash dividends declared ($20
per share) (192,000) - (192,000)
-------- ---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1993 $960,000 $1,540,000 $4,497,259 $ - $6,997,259
Effect of change in accounting
principle (Note 3) - 113,860 113,860
Net income 214,571 - 214,571
Cash dividends declared ($20
per share) (192,000) - (192,000)
Change in unrealized (loss) on
securities available for sale,
net of deferred tax - (446,022) (446,022)
-------- ---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1994 $960,000 $1,540,000 $4,519,830 $ (332,162) $6,687,668
======== ========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE> 65
WHITE COUNTY BANK
CARMI, ILLINOIS
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
UNAUDITED
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest received $ 4,102,984 $ 4,448,501 $ 5,156,424
Cash paid to suppliers and employees (1,760,587) (1,783,012) (1,656,934)
Other income received 151,475 115,238 174,906
Income taxes paid (156,707) (291,511) (85,405)
Interest paid on deposits (1,812,053) (1,903,684) (2,469,952)
------------ ------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 525,112 $ 585,532 $ 1,119,039
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of other real estate and assets $ 175,852 $ 120,777 $ 114,602
Proceeds from maturities of investments - 13,847,496 18,407,289
Proceeds from maturities of held to maturity investments 14,616,177 - -
Proceeds from maturities of available for sale investments 516,126 - -
Proceeds from sales of investments - 7,318,380 880,831
Proceeds from sale of available for sale investments 9,670,160 - -
Purchase of investments - (20,520,629) (23,473,829)
Purchase of held to maturity investments (18,099,047) - -
Purchase of available for sale investments (2,504,559) - -
Net (increase) decrease in loans (2,230,598) 369,290 2,107,220
Purchase of equipment (51,875) (82,820) (52,660)
------------ ------------ ------------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES $ 2,092,236 $ 1,052,494 $ (2,016,547)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in demand and savings deposits $ (1,351,300) $ 667,749 $ 2,149,182
Net increase (decrease) in time deposits 592,257 (2,038,264) (2,991,481)
Dividends paid (192,000) (192,000) (163,200)
------------ ------------ ------------
NET CASH PROVIDED (USED) IN FINANCING ACTIVITIES $ (951,043) $ (1,562,515) $ (1,005,499)
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 1,666,305 $ 75,511 $ (1,903,007)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,220,102 3,144,591 5,047,598
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,886,407 $ 3,220,102 $ 3,144,591
============ ============ ============
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
NET INCOME $ 214,571 $ 663,196 $ 837,875
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation 79,184 73,708 67,288
Provision for loan loss - (120,000) -
Amortization and accretion of securities (5,758) (2,505) 15,024
(Gains) losses on disposal of assets 299,291 (29,223) 17,659
(Increase) decrease in other assets 97,786 134,774 192,066
Increase (decrease) in other liabilities 26,070 (157,218) (10,873)
Increase (decrease) in deferred tax (186,032) 22,800 -
------------ ------------ ------------
TOTAL ADJUSTMENTS $ 310,541 $ (77,664) $ 281,164
------------ ------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 525,112 $ 585,532 $ 1,119,039
============ ============ ============
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Other real estate acquired in settlement of loans $ 12,439 $ 277,702 $ 156,840
Unrealized loss on securities available for sale 503,276 - -
Deferred tax on unrealized loss on securities
available for sale (171,114) - -
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE> 66
WHITE COUNTY BANK
CARMI, ILLINOIS
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed by White County Bank and the methods
of applying those principles conform with generally accepted accounting
principles and with general practice in the banking industry. A
description of the significant accounting policies follows:
TRUST ASSETS
Assets held by the Bank's trust department as a fiduciary, other
than trust cash on deposit at the Bank, are not included in these
financial statements because they are not assets of the Bank.
SECURITIES HELD TO MATURITY
Securities classified as held to maturity are those debt securities
the Bank has both the intent and ability to hold to maturity
regardless of changes in market conditions, liquidity needs or
changes in general economic conditions. These securities are
carried at cost adjusted for amortization of premium and accretion
of discount, computed by the interest method over their contractual
lives.
SECURITIES AVAILABLE FOR SALE
Securities classified as available for sale are those marketable
equity securities and debt securities that the Bank intends to hold
for an indefinite period of time, but not necessarily to maturity.
Any decision to sell a security classified as available for sale
would be based on various factors, including significant movements
in interest rates, changes in the maturity mix of the Bank's assets
and liabilities, liquidity needs, regulatory capital considerations,
and other similar factors. Securities available for sale are
carried at fair value. The difference between fair value and
amortized cost, cost adjusted for amortization of premium and
accretion of discounts, computed by the interest method over their
contractual lives, results in an unrealized gain or loss.
Unrealized gains or losses are reported as increases or decreases in
stockholders' equity, net of the related deferred tax effect.
Realized gains or losses, determined on the basis of the cost of
specific securities sold, are included in earnings.
LOANS
Unearned discount on installment loans is recognized as interest
income over the terms of the loans using the interest method.
Interest on other loans is calculated by using the simple interest
method on daily balances of the principal amount outstanding.
The Bank's policy is to discontinue the accrual of interest income
on any loan when, in the opinion of management, there is reasonable
doubt as to the timely collectibility of interest or principal.
Interest income on these loans is recognized to the extent interest
payments are received and the principal is considered fully
collectible.
F-6
<PAGE> 67
WHITE COUNTY BANK
CARMI, ILLINOIS
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is increased through a provision for
loan losses charged to operating expense and is reduced by net loan
charge-offs. Loans are charged against the allowance for loan
losses when management believes that the collectibility of the
principal is unlikely. The allowance is an amount that management
believes will be adequate to absorb losses inherent in existing
loans that may become uncollectible, based on evaluations of their
collectibility and prior loan loss experience. The evaluations take
into consideration such factors as changes in the nature and volume
of the loan portfolio, overall portfolio quality, loan
concentration, review of specific problem loans and current economic
conditions that may affect the borrowers' ability to repay. While
management uses the best information available to make its
evaluation, future adjustments to the allowance may be necessary if
there are significant changes in economic conditions. In addition,
regulatory agencies, as an integral part of their examination
process, periodically review the Bank's allowance for loan losses,
and may require the Bank to make additions to the allowance based on
their judgment about information available to them at the time of
their examinations.
OTHER REAL ESTATE OWNED
Other real estate owned represents real estate acquired through
foreclosure or receipt of deed in lieu of foreclosure.
These properties are initially recorded at the fair value of the
property at the date of foreclosure. Based on periodic evaluations
by management, carrying value is reduced to current estimated fair
value.
PREMISES AND EQUIPMENT
Premises and equipment are carried at cost less accumulated
depreciation. Depreciation is computed on the straight-line method
over the estimated useful lives of the related assets.
INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
F-7
<PAGE> 68
WHITE COUNTY BANK
CARMI, ILLINOIS
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
CASH FLOWS
For purposes of reporting cash flows, cash equivalents are considered
to consist of cash and due from banks and federal funds sold.
Generally, federal funds are sold for one-day periods.
EARNINGS PER SHARE
Earnings per share are calculated on the basis of the weighted
average number of shares of common stock outstanding during the
year.
FAIR VALUE DISCLOSURES
Financial Accounting Board Statement No. 107 (FAS 107), "Disclosures
About Fair Value of Financial Instruments," requires disclosures of
fair value information about financial instruments, whether or not
recognized in the balance sheet for which it is practicable to
estimate that value. FAS 107 excludes certain financial instruments
and all nonfinancial instruments from its disclosure requirements.
The Bank will be required to adopt FAS 107 for the year ending
December 31, 1995.
ACCOUNTING BY CREDITORS FOR THE IMPAIRMENT OF A LOAN
Financial Accounting Standards Board Statement No. 114 (FAS 114),
Accounting by Creditors for the Impairment of a Loan, as amended by
FAS 118, defines a loan as impaired if, based on current information
and events, it is probable that the Bank will not be able to collect
all amounts (principal and interest) due in accordance with the terms
of the agreement. The statement requires financial institutions to
take into account the expected loss of interest income when valuing
nonperforming loans. When a loan is considered impaired, this rule
involves the discounting of a loan's future cash flows by using the
loan's contractual interest rate adjusted for any deferred loan fees
or costs, premiums or discounts. The Bank will be required to adopt
FAS 114, as amended, for the year ending December 31, 1995.
Management believes the adoption of FAS 114, as amended, will not
have a material impact on the accompanying financial statements.
DISCLOSURES ABOUT DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE
OF FINANCIAL INSTRUMENTS
In October, 1994, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 119 (FAS 119),
Disclosures about Derivative Financial Instruments and Fair Value of
Financial Instruments. This Statement requires disclosures about
the amounts, nature and terms of derivative financial instruments
that are not subject to Statement 105, Disclosures of Information
about Financial Instruments and Off-Balance-Sheet Risk and Financial
Instruments with Concentrations of Credit Risk, because they do not
F-8
<PAGE> 69
WHITE COUNTY BANK
CARMI, ILLINOIS
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
result in off-balance-sheet risk of accounting loss. It requires
that a distinction be made between financial instruments held or
issued for trading purposes (including dealing and other trading
activities measured at fair value with gains and losses recognized
in earnings) and financial instruments held or issued for purposes
other than trading.
FAS 119 is effective for financial statements issued for fiscal
years ending after December 15, 1994, except for entities with less
than $150 million in total assets. For those entities, FAS 119 is
effective for financial statements issued for fiscal years ending
after December 15, 1995. The Bank will be required to adopt FAS
119, for the year ending December 31, 1995.
The Bank believes the adoption of FAS 119 will have no impact on the
accompanying financial statements.
NOTE 2. CASH AND DUE FROM BANKS
Aggregate cash and due from bank balances of $1,420,102 and $2,336,407
as of December 31, 1993 and December 31, 1994, respectively, were
maintained in satisfaction of Statutory Reserve Requirements of The
Federal Reserve Bank.
NOTE 3. SECURITIES
Effective January 1, 1994, the Bank adopted Financial Accounting
Standards No. 115 (FASB 115) "Accounting for Investments in Certain
Debt and Equity Securities." The adoption of FASB 115 had the effect
of increasing stockholders equity by $113,860, net of the related
deferred tax effect of $58,655. Previously the Bank's securities were
accounted for in a manner similar to securities held to maturity.
The amortized cost and fair values of securities are as follows:
<TABLE>
<CAPTION>
Held to Maturity
December 31, 1994
------------------------------------------------
Gross Gross
Amortized Fair Unrealized Unrealized
Cost Value Gain Loss
--------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
U. S. Government and agency securities $15,552,011 $14,883,000 $ 6,421 $ 675,432
Obligations of states and
political subdivisions 1,139,661 1,076,000 6,351 70,012
Collateralized mortgage obligations 1,996,559 1,875,000 - 121,559
----------- ----------- ---------- ----------
$18,688,231 $17,834,000 $ 12,772 $ 867,003
=========== =========== ========== ==========
</TABLE>
F-9
<PAGE> 70
WHITE COUNTY BANK
CARMI, ILLINOIS
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
<TABLE>
<CAPTION>
Available for Sale
December 31, 1994
------------------------------------------------
Gross Gross
Amortized Fair Unrealized Unrealized
Cost Value Gain Loss
--------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
U. S. Government and agency securities $15,512,056 $15,124,240 $ 1,886 $ 389,702
Collateralized mortgage obligations 2,620,213 2,504,754 1,120 116,579
----------- ----------- ---------- ----------
Total Debt Securities $18,132,269 $17,628,994 $ 3,006 $ 506,281
Equity securities 67,500 67,500 - -
----------- ----------- ---------- ----------
$18,199,769 $17,696,494 $ 3,006 $ 506,281
=========== =========== ========== ==========
</TABLE>
The amortized cost and fair value of investment securities are as follows:
<TABLE>
<CAPTION>
December 31, 1993
------------------------------------------------
Gross Gross
Amortized Fair Unrealized Unrealized
Cost Value Gain Loss
--------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
U. S. Government and agency securities $34,637,045 $35,022,000 $ 400,960 $ 16,005
Obligations of states and
political subdivisions 1,037,462 1,060,000 22,538 -
Collateralized mortgage obligations 5,640,062 5,645,000 23,552 18,614
----------- ----------- ---------- ----------
Total Debt Securities $41,314,569 $41,727,000 $ 447,050 $ 34,619
Equity securities 66,500 66,500 - -
----------- ----------- ---------- ----------
$41,381,069 $41,793,500 $ 447,050 $ 34,619
=========== =========== ========== ==========
</TABLE>
Securities gains and (losses) can be summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross realized gains $ 10,529 $ 48,896 $ 3,819
Gross realized losses (310,499) (23,589) -
----------- ----------- ----------
Total $ (299,970) $ 25,307 $ 3,819
=========== =========== ==========
</TABLE>
Securities pledged to secure public deposits and trust deposits are as follows:
<TABLE>
<CAPTION>
Amortized
Cost Fair Value
--------- -----------
<S> <C> <C>
December 31, 1994 $7,025,000 $6,673,700
December 31, 1993 3,549,000 3,588,300
</TABLE>
The amortized cost and fair value of debt securities at December 31, 1994 by
contractual maturity are as follows:
<TABLE>
<CAPTION>
Held to Maturity
------------------------
Amortized
Cost Fair Value
--------- -----------
<S> <C> <C>
Due in one year or less $ 3,048,780 $ 2,896,340
Due after one year through five years 12,414,400 11,793,600
Due after five years 3,225,051 3,144,060
----------- -----------
$18,688,231 $17,834,000
=========== ===========
</TABLE>
F-10
<PAGE> 71
WHITE COUNTY BANK
CARMI, ILLINOIS
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
<TABLE>
<CAPTION>
Available for Sale
------------------------
Amortized
Cost Fair Value
--------- -----------
<S> <C> <C>
Due in one year or less $ 3,017,100 $ 2,929,220
Due after one year through five years 12,285,400 11,927,600
Due after five years 2,829,769 2,772,174
----------- -----------
$18,132,269 $17,628,994
=========== ===========
</TABLE>
The maturity distribution tables exclude equity securities which have no stated
maturities.
NOTE 4. MAJOR CLASSIFICATIONS OF LOANS ARE AS FOLLOWS:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
------------ ------------
<S> <C> <C>
Commercial $ 3,631,210 $ 3,295,115
Real estate:
Commercial 668,425 525,223
Agricultural 4,163,315 3,864,421
Residential 6,233,103 5,408,302
----------- -----------
$14,696,053 $13,093,061
Agricultural 5,148,467 4,569,220
Personal 615,916 767,886
Overdrafts 16,130 11,419
Installments 2,077,087 1,749,887
----------- -----------
$22,553,653 $20,191,473
Unearned discount 2,655 27,834
----------- -----------
$22,550,998 $20,163,639
Allowance for loan losses 728,507 571,746
----------- -----------
Loans, net $21,822,491 $19,591,893
=========== ===========
</TABLE>
Nonaccrual loans at December 31, 1994 and 1993, totaled $276,000,
and $229,000, respectively.
In the normal course of business, the Bank makes loans to certain officers,
employees and directors of the Bank, and certain corporations and individuals
related to such persons. These loans were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with unrelated parties and did not involve more
than the normal risk of collectibility. The balance of these loans at December
31, 1994 and December 31, 1993, were $235,090 and $235,129, respectively.
F-11
<PAGE> 72
WHITE COUNTY BANK
CARMI, ILLINOIS
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
The changes in the allowance for loan losses for the periods ended December 31,
1994, 1993, and 1992, were as follows:
<TABLE>
<CAPTION>
December 31, December 31, December 31,
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Balance - Beginning of Year $ 571,746 $ 623,168 $ 501,438
Provision for loan losses - (120,000) -
Recoveries of loans previously
charged off 192,493 325,023 358,957
---------- ---------- ----------
$ 764,239 $ 828,191 $ 860,395
Loans charged off (35,732) (256,445) (237,227)
---------- ---------- ----------
Balance - End of Year $ 728,507 $ 571,746 $ 623,168
========== ========== ==========
</TABLE>
NOTE 5. BANKING PREMISES AND EQUIPMENT
Major classifications of these assets are summarized as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
------------ ------------
<S> <C> <C>
Land $ 64,500 $ 64,500
Banking premises 483,288 450,125
Furniture, fixtures and equipment 898,335 900,723
---------- ----------
$1,446,123 $1,415,348
Accumulated depreciation 1,070,564 1,006,480
---------- ----------
$ 375,559 $ 408,868
========== ==========
</TABLE>
Amounts charged to expense for depreciation aggregated $79,184, $73,708, and
$67,288 for the years ended December 31, 1994, 1993 and 1992, respectively.
NOTE 6. INCOME TAXES
The components of income tax expense follows:
<TABLE>
<CAPTION>
Years Ended
December 31,
----------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Federal:
Current $ 49,815 $ 218,964 $ 189,095
Deferred (14,918) 22,800 -
---------- ---------- ----------
Total $ 34,897 $ 241,764 $ 189,095
========== ========== ==========
</TABLE>
F-12
<PAGE> 73
WHITE COUNTY BANK
CARMI, ILLINOIS
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
The Bank's income tax expense differed from the statutory federal rate of 34%
as follows:
<TABLE>
<CAPTION>
Years Ended
December 31,
----------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Expected income taxes $ 84,819 $ 289,938 $ 349,170
Income tax effect of:
Tax-exempt interest (25,136) (25,360) (41,007)
Other (24,786) (22,814) (119,068)
---------- ---------- ----------
$ 34,897 $ 241,764 $ 189,095
========== ========== ==========
</TABLE>
The net deferred tax asset in the accompanying balance sheet includes the
following amounts of deferred tax assets and liabilities:
<TABLE>
<CAPTION>
December 31,
-------------------------
1994 1993
------------ -----------
<S> <C> <C>
Deferred tax liability $ (7,882) $ (22,800)
Deferred tax asset 171,114 -
---------- ----------
Net deferred tax asset (liability) $ 163,232 $ (22,800)
========== ==========
</TABLE>
The tax effects of principal temporary differences are shown in the following
table:
<TABLE>
<CAPTION>
December 31,
-------------------------
1994 1993
------------ -----------
<S> <C> <C>
Securities $ 171,114 $ -
Allowance for loan losses (40) (29,001)
Premises and equipment basis (8,049) (5,880)
Interest on nonaccrual loans 1,425 4,046
Other (1,218) 8,035
---------- ----------
$ 163,232 $ (22,800)
========== ==========
</TABLE>
The adoption of FAS 109 "Accounting for Income Taxes," as of January 1, 1993,
had the effect of a decrease of $75,000 on net income reported in 1993 before
the cumulative effect of the change in accounting principle. The cumulative
effect of the accounting change on years prior to January 1, 1993, of $52,200
is included in 1993 net income.
F-13
<PAGE> 74
WHITE COUNTY BANK
CARMI, ILLINOIS
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
NOTE 7. INTEREST-BEARING DEPOSITS
Interest-bearing deposits at December 31, 1994 and December 31, 1993, consisted
of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
------------ ------------
<S> <C> <C>
Interest-bearing transaction accounts $14,605,998 $17,035,441
Savings accounts 4,335,817 3,900,092
Time deposits:
Less than $100,000 27,173,780 27,096,523
$100,000 or more 4,584,000 4,069,000
----------- -----------
$50,699,595 $52,101,056
=========== ===========
</TABLE>
NOTE 8. EMPLOYEE STOCK OWNERSHIP PLAN
The White County Bank Employees' Stock Ownership Plan (the "Plan") covers all
full-time employees who have completed 1,000 hours of service and have attained
the minimum age of twenty-one years. Vesting in the Plan is based on years of
continuous service. A participant is 100 percent vested after seven years of
credited service.
The Plan operates as a leveraged employee stock ownership plan. The Plan owns
2,194 shares of the Company's common stock. These shares are held in trust and
are allocated to participant's accounts annually. At December 31, 1994,
1409.0025 shares were allocated to Plan participants. Principal payments are
required to be made annually through March, 2000, and interest payments are
required to be paid quarterly. The loan, with an outstanding balance of
$395,868, bears interest at 90% of prime, an effective rate of 7.65% as of
December 31, 1994.
Company contributions, when aggregated with the Plan's dividend and interest
earnings, are, at a minimum, equal to the amount required by the Plan to pay
the principal and interest on the loan, plus the sum required to purchase
allocated shares from terminated participants. The Company expenses all cash
contributions made to the Plan. Employer contributions are determined by the
board of directors and were $124,100, $123,510, and $115,621 for the years
ended December 31, 1994, 1993 and 1992, respectively.
NOTE 9. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Bank is, in the normal course of business, a party to certain
off-balance-sheet financial instruments with inherent credit risk. These
instruments, which include commitments to extend credit and standby letters of
credit, are used by the Bank to meet the financing needs of its customers.
These instruments involve, to varying degrees, credit risk in excess of the
amount recognized in the Bank's balance sheet.
Financial instruments with off-balance-sheet credit risk for which the contract
amounts represent potential risk were as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
------------ ------------
<S> <C> <C>
Commitments to extend credit $ 582,000 $ 185,000
========== ==========
Standby letters of credit $ 15,000 $ 10,000
========== ==========
</TABLE>
F-14
<PAGE> 75
WHITE COUNTY BANK
CARMI, ILLINOIS
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
The Bank's maximum exposure to credit loss under commitments to extend credit
and standby letters of credit is the equivalent of the contractual amount of
those instruments. The same credit policies are used by the Bank in granting
commitments and conditional obligations as it does for on-balance-sheet
instruments.
Commitments to extend credit are legally binding agreements to lend to a
borrower as long as the borrower performs in accordance with the terms of the
contract. Commitments generally have fixed expiration dates or other
termination clauses. As many of the commitments are expected to expire without
being drawn upon, the total commitment amount does not necessarily represent
future cash requirements. Included in commitments are the unused portions of
lines of credit.
Standby letters of credit are commitments issued by the Bank to guarantee
specific performance of a customer to a third party.
Collateral may be required for both commitments to extend credit and standby
letters of credit. The amount of collateral obtained, if deemed necessary in
accordance with the normal credit evaluation process is based upon the
creditworthiness of the customer and the credit risk associated with the
particular transaction. Collateral held varies, but may include commercial
real estate, accounts receivable, inventory, and equipment.
NOTE 10. COMMITMENTS
On December 12, 1994, the Bank entered into a definitive agreement to be
acquired by the National City Bancshares, Inc., Evansville, Indiana, subject to
regulatory approval and the shareholders of White County Bank, Carmi, Illinois,
the Bank will exchange all of its outstanding shares for 264,000 shares of
National City Bancshares, Inc., Evansville, Indiana.
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AGREEMENT AND PLAN OF REORGANIZATION
This is an AGREEMENT dated December 12, 1994, between National City
Bancshares, Inc. (hereinafter called "NCBE") and White County Bank (hereinafter
called "White County").
WITNESSETH:
NCBE is a corporation duly organized under the laws of the State of
Indiana. Its principal office is located at 227 Main Street, Evansville,
Vanderburgh County, Indiana. As of June 30, 1994, NCBE had authorized capital
stock consisting of 5,000,000 shares of common stock, par value $3.33 1/3 per
share, ("NCBE Common Stock") of which a total of 3,693,254 shares were issued
and outstanding and none were shares of treasury stock owned by NCBE. NCBE
owns all of the outstanding capital stock of The National City Bank of
Evansville, Evansville, Indiana; Poole Deposit Bank, Poole, Kentucky; The
Peoples National Bank of Grayville, Grayville, Illinois; The Farmers and
Merchants Bank, Fort Branch, Indiana; Farmers State Bank, Sturgis, Kentucky;
Lincolnland Bank, Dale, Indiana; The State Bank of Washington, Washington,
Indiana; The Spurgeon State Bank, Spurgeon, Indiana; Pike County Bank,
Petersburg, Indiana; The Bank of Mitchell (hereinafter referred to as "NCBE
Banks"); and NCBE Leasing Corp.
White County is an Illinois state banking corporation duly organized under
the laws of the State of Illinois. Its principal office is located at 215 E.
Main Street, Carmi, Illinois 61821. As of June 30, 1994, White County had
authorized capital stock consisting of 9,600 authorized shares of common stock,
$100 par value per share ("White County Common Stock"), of which 9,600 shares
were issued and outstanding and none were shares of treasury stock owned by
White County.
At least a majority of the entire Board of Directors of NCBE and at least a
majority of the entire Board of Directors of White County, respectively, have
approved the entering into of this Agreement and have authorized the execution
and delivery of this Agreement. The Boards of Directors of NCBE and White
County have determined that it is in the best interests of their
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respective corporations and Stockholders that White County become a
wholly owned subsidiary corporation of NCBE. After the execution of this
Agreement, NCBE will undertake to cause the formation of a new banking
corporation to be organized under the laws of the State of Illinois ("New
Bank"), and thereafter NCBE and White County will cause, subject to the terms
and conditions set forth in this Agreement, the merger of White County and the
New Bank, in accordance with the terms set forth in the Merger Agreement
attached hereto and designated Appendix A (the "Merger Agreement"). From and
after the time the merger of White County and New Bank shall become effective,
the "Merger" and as and when required by this Agreement and the Merger
Agreement, NCBE will issue shares of NCBE Common Stock in exchange for all of
the issued and outstanding shares of White County Common Stock.
In consideration of mutual covenants and premises herein contained,
NCBE and White County hereby make this Agreement and prescribe the terms
and conditions of the Merger and the mode of carrying the Merger into
effect as follows:
1. Formation of New Bank. As soon as practicable after the date
hereof, NCBE shall commence formation of the New Bank, all of the
outstanding shares of which will be acquired by NCBE prior to the
merger of White County and the New Bank. NCBE will proceed with
formation of the New Bank with due diligence. The New Bank will merge
with White County pursuant to the Merger Agreement. Upon consummation
of the Merger, Stockholders of White County will be entitled to receive
as consideration for their shares of White County shares of NCBE in
accordance with the provisions regarding the exchange of shares set
forth in the Merger Agreement.
2. The Merger Agreement. Promptly following the commencement of the
corporate existence of the New Bank, White County and NCBE shall enter
into, and NCBE shall cause the New Bank to enter into, the Merger
Agreement.
3. Discussions with Others. White County or its officers, directors or
agents will not solicit inquiries or proposals or initiate any
discussions or negotiations leading to any
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acquisition or purchase of all or a substantial portion of the assets or stock
of White County or any merger or consolidation of White County with any third
party without the prior written consent from NCBE, so long as this Agreement is
pending.
4. Undertakings of the Parties. NCBE and White County further
agree as follows:
(a) This Agreement and the Merger Agreement shall be submitted to
the Stockholders of White County for approval and adoption at
a special meeting of Stockholders to be called and held in
accordance with law and the Articles of Incorporation and
Bylaws of White County.
(b) NCBE and White County will cooperate in the preparation by
NCBE of the application to the Board of Governors of the
Federal Reserve System (the "Board") under the appropriate
provisions of Section 3 of the Bank Holding Company Act of
1956, as amended, and to any other state or federal regulatory
agency which may be required to facilitate the Merger. NCBE
and White County will cooperate in the preparation of proxy
and registration statements under the federal and state
securities laws so as to facilitate the exchange of shares as
contemplated by this Agreement and the Merger Agreement.
(c) Each party will assume and pay all of its fees and expenses
incurred by it incident to the negotiation, preparation and
execution of this Agreement, obtaining of the requisite
regulatory and shareholder consents and approvals and all
other acts incidental to, contemplated by or in pursuance of
this Agreement. NCBE shall promptly prepare and file at no
expense to White County: (i) any and all required regulatory
applications necessary in connection with the transactions
contemplated by this Agreement; and (ii) an S-4 Registration
Statement to be filed with the Securities and Exchange
Commission to register the shares of NCBE Common Stock to be
issued in connection with the transactions contemplated by this
Agreement. Such registration statement will not cover
resale's by any persons
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who may be considered "underwriters" under Rule 145(c) of the
Securities Act of 1933, as amended (the "1933 Act"). NCBE
will also take any action required to be taken under any
applicable state securities or "Blue Sky" laws in connection
with the Merger.
(d) All information furnished by one party to another party in
connection with this Agreement and the transactions
contemplated hereby will be kept confidential by such other
party and will be used only in connection with this Agreement
and the transactions contemplated hereby, except to the extent
that such information: (i) is already known to such other
party when received; (ii) thereafter becomes lawfully
obtainable from other sources; or (iii) is required to be
disclosed in any document filed with the Securities and
Exchange Commission, the Board, or any other governmental
agency or authority. In the event that this Agreement is
terminated, each party will return to the other party or
destroy any documents received by it from the other party that
contain any such confidential information.
(e) After (i) receipt of the Board's prior approval of NCBE's
acquisition of White County; (ii) the approval of the
Stockholders of White County; and (iii) the regulatory waiting
period(s) have expired, NCBE shall designate the date as of
which NCBE desires the Merger to become effective and the time
the Merger shall become effective shall occur at the time and
on the date so designated. However, any date so specified
shall not be later than either (a) the first of the month
immediately following the month in which the last of the
events described above (i-iii) occurs if said event occurs
before the twenty-first day of such month or (b) the first day
of the second month immediately following such month if the
last of the events described above occurs after the twentieth
day of such month.
(f) Subject to the terms and conditions of this Agreement, NCBE
and White County each agree that, subject to applicable laws
and to the fiduciary duties of its
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Directors, each will promptly take or cause to be taken all
action, and promptly do or cause to be done all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Merger and
other transactions contemplated by this Agreement.
(g) As soon as practicable following the time the Merger shall
become effective, employees of White County shall be entitled
to participate in all employee benefit plans of NCBE. For
purposes of eligibility and vesting in the NCBE Employees'
Savings and Profit Sharing Plan, employees of White County
will be given credit for their years of service as employees
of White County. For purposes of the NCBE Employees' Plan for
Pensions will be subject to all eligibility and vesting
provisions of such plan, including years of service, without
credit for service as an employee of White County.
(h) White County shall, prior to the time the Merger shall become
effective, take such actions as shall be necessary or
desirable to cause the White County Employee Stock Ownership
Plan (the "ESOP") to be terminated at or after the effective
date of Merger.
(i) NCBE undertakes to cause, immediately after the effective
date of the Merger, the continuance as Directors of White
County, all those persons serving as Directors immediately
prior to the effective time of the Merger, plus one additional
person to be named by NCBE will be added to the Board of
Directors of White County.
(j) NCBE will maintain "current public information" within the
meaning of Rule 144 for three (3) years following the
effective date.
5. Dissenting Stockholders. Holders of White County Common Stock who do
not vote their shares in favor of the Merger and otherwise comply in
all respects to perfect dissenters'
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rights, will be entitled to dissenters' or appraisal rights, if
any, pursuant to and solely upon strict compliance with, the
applicable provisions of Illinois law.
6. Tax Opinion. NCBE and White County, for the benefit of their
Stockholders shall obtain a written opinion of NCBE's counsel, Werner
& Blank Co., L.P.A., to the effect that:
(a) The statutory merger of New Bank with and into White County
will constitute a reorganization within the meaning of Section
368(a)(1)(A) and (a)(2)(E) of the Internal Revenue Code;
(b) No gain or loss will be recognized by White County or NCBE as
a consequence of the transactions herein contemplated;
(c) No gain or loss will be recognized by the Stockholders of
White County on the exchange of their shares of White County
Common Stock for shares of NCBE Common Stock (disregarding
for this purpose any cash received for fractional share
interests to which they may be entitled);
(d) The federal income tax basis of the NCBE Common Stock received
by the Stockholders of White County for their shares of White
County Common Stock will be the same as the federal income tax
basis of the White County Common Stock surrendered in exchange
therefor; and
(e) The holding period of the NCBE Common Stock received by a
shareholder of White County for shares of White County Common
Stock will include the period for which the White County
Common Stock exchanged therefor was held, provided the
exchanged White County Common Stock was held as a capital
asset by such shareholder on the date of the exchange.
7. Representations and Warranties of NCBE. NCBE represents and warrants
to White County as follows:
(a) NCBE is a corporation duly organized and validly existing
under the laws of the State of Indiana, is a registered
bank holding company under the Bank Holding
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Company Act of 1956, as amended, and is qualified to do
business in the State of Indiana, together with all other
jurisdictions where it is both required to so qualify and the
failure to so qualify would have material and adverse
consequences to NCBE. NCBE has full power and authority
(including all licenses, franchises, permits and other
governmental authorizations which are legally required) to
engage in the businesses and activities now conducted by it.
As of June 30, 1994, the authorized capital stock of NCBE
consisted of 5,000,000 shares of common stock, par value
$3.33 1/3 per share of which a total of 3,693,254
shares were issued and outstanding and no shares were held by
NCBE as treasury stock. All of said shares of capital stock
are fully paid and nonassessable and are not issued in
violation of the preemptive rights of any shareholder.
(b) NCBE has furnished to White County copies of the following
financial statements relating to NCBE and its consolidated
subsidiaries: (i) the audited Consolidated Balance Sheets of
NCBE as of December 31, 1993, and 1992, and the Consolidated
Statements of Income, Stockholders' Equity and Statements of
Cash Flows for the three years ended December 31, 1993, 1992
and 1991, together with the notes thereto; and (ii) the
unaudited Consolidated Balance Sheet of NCBE as of June 30,
1994, and the unaudited Consolidated Statements of Income and
Stockholders' equity for the period then ended. Each of the
aforementioned financial statements was prepared in accordance
with Generally Accepted Accounting Principles, consistently
applied and is true and correct in all material respects and
together present fairly the consolidated financial position
and results of operations of NCBE as of the dates and for the
periods therein set forth (subject, in the case of such
interim financial statements, to normal year-end audit
adjustments). Such financial statements do not, as of the
dates thereof, include any material asset or omit any material
liability, absolute or contingent, or other
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fact, the inclusion or omission of which renders such
financial statements, in light of the circumstances under
which they were made, misleading in any material respect.
Since December 31, 1993, there has not been any material
adverse change in the financial condition, results of
operations, business or prospects of NCBE and its subsidiaries
on a consolidated basis.
(c) The Board of Directors of NCBE has authorized execution of
this Agreement and the Merger Agreement and approved the
merger of the New Bank and White County as contemplated herein
and therein. NCBE has all requisite power and authority to
enter into this Agreement and the Merger Agreement and NCBE
has the authority to consummate the transactions contemplated
hereby. This Agreement constitutes the valid and legally
binding obligation of NCBE and this Agreement and the
consummation of the transactions contemplated herein have been
duly authorized and approved on behalf of NCBE by all
requisite corporate action. Provided the required approvals
are obtained from the Board, neither the execution and
delivery of this Agreement or the Merger Agreement nor the
consummation of the Merger will conflict with, result in the
breach of, constitute a default under or accelerate the
performance provided by the terms of any law, or any rule or
regulation of any governmental agency or authority or any
judgment, order or decree of any court or other governmental
agency to which NCBE may be subject, any contract, agreement
or instrument to which NCBE is a party or by which NCBE is
bound or committed, or the Articles of Incorporation or Bylaws
of NCBE, or constitute an event which with the lapse of time
or action by a third party, could, to the best of NCBE's
knowledge, result in the default under any of the foregoing or
result in the creation of any lien, charge or encumbrance upon
any of the assets or properties of NCBE or upon any of the
stock of NCBE, except, however, in the case of contracts,
agreements or instruments, such
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defaults, conflicts or breaches which either (i) will be cured
or waived prior to the time the Merger becomes effective, or
(ii) if not so cured or waived would not, in the aggregate,
have any material adverse effect on the financial condition,
results of operations or business of NCBE on a consolidated
basis.
(d) There is no litigation, action, suit, investigation or
proceeding pending or, to the best of the knowledge after due
inquiry of NCBE and its executive officers, threatened,
against or affecting NCBE or its subsidiaries or involving any
of their respective properties or assets, at law or in equity,
before any federal, state, municipal, local or other
governmental authority, involving a material amount which, if
resolved adversely to the interest of NCBE or its
subsidiaries, would materially affect the financial conditions
or operations of NCBE or its subsidiaries and/or its ability
to perform under this Merger Agreement, and to the best of the
knowledge and belief after due inquiry of NCBE and its
executive officers, no one has asserted and no one has
reasonable or valid grounds on which it reasonably can be
expected that anyone will assert any such claims against NCBE
or its subsidiaries based upon the wrongful action or inaction
of NCBE or its subsidiaries or any of their respective
officers, directors or employees.
(e) At the time the Merger shall become effective and on such
subsequent date when the former Stockholders of White County
surrender their White County share certificates for
cancellation, the shares of NCBE Common Stock to be received
by Stockholders of White County will have been duly authorized
and validly issued by NCBE and will be fully paid and
nonassessable.
(f) NCBE has not incurred and will not incur directly or
indirectly any liability for brokerage, finders', agents' or
investment bankers' fees or commissions in connection with
this Merger Agreement or the transactions contemplated
thereby.
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(g) The Employees' Savings and Profit Sharing Plan of National
City Bancshares, Inc. and the Plan for Pensions of National
City Bancshares, Inc. (hereinafter referred to collectively as
the "plans") which purport to be qualified plans under Section
401(a) of the Internal Revenue Code is so qualified and is in
compliance in all material respects with the applicable
requirements of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). All material notices, reports and
other filings required under applicable law to be given or
made to or with any governmental agency with respect to the
plans have been timely filed or delivered where failure to
file will result in a penalty or result in disqualification of
the plan. NCBE has no knowledge either of any circumstances
which would adversely affect the qualifications of the plans
or their compliance with the applicable requirements of ERISA,
or of any "reportable event" (as such term is defined in
Section 4043(b) of ERISA) or any "prohibited transaction" (as
such term is defined in Section 406 of ERISA and Section
4975(c) of the Internal Revenue Code) which has occurred since
the date on which said section became applicable to the plans.
With respect to those plans which are defined benefit plans
within the meaning of ERISA, such plans meet the minimum
funding standards set forth in the Internal Revenue Code and
ERISA.
(h) NCBE has delivered to White County copies of the Annual Report
on Form 10-K filed with the Securities and Exchange Commission
by NCBE for its fiscal years ended December 31, 1993, 1992,
and 1991 including exhibits and all documents incorporated by
reference therein, and the proxy materials disseminated by
NCBE to its Stockholders in connection with the 1994 Annual
Meeting of Stockholders of NCBE; such Annual Report and proxy
materials do not misstate a material fact or omit to state a
material fact necessary in order to make the statements
contained therein, in light of the circumstances under which
they are made, not misleading.
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(i) Since December 31, 1993, each of NCBE and its subsidiaries has
conducted business only in the ordinary course, and has
preserved its corporate existence, business and goodwill
intact, except for the sale by NCBE of the Ayer-Wagoner-Deal
Insurance Agency, Inc.
(j) NCBE and the NCBE Banks each have good and marketable title to
all assets and properties, whether real or personal, tangible
or intangible, including without limitation the capital stock
of the NCBE Banks and all other assets and properties
reflected in NCBE's Balance Sheet of December 31, 1993 or
acquired subsequent thereto (except to the extent that such
assets and properties have been disposed of for fair value in
the ordinary course of business since December 31, 1993)
subject to no liens, mortgages, security interests,
encumbrances, pledges or charges of any kind, except: (i)
those items that secure liabilities that are reflected in said
Balance Sheet; (ii) statutory liens for taxes not yet
delinquent; and (iii) minor defects and irregularities in
title and encumbrances which do not materially impair the use
thereof for the purposes for which they are held; and such
liens, mortgages, security interests, encumbrances and charges
are not in the aggregate, material to the assets and
properties of NCBE. NCBE or the NCBE Banks as lessee has the
contractual right under valid leases to occupy, use, possess
and control all material property leased by NCBE or the NCBE
Banks.
(k) To the best of the knowledge after due inquiry of NCBE and its
executive officers, NCBE and the NCBE Banks have complied with
all laws, regulations and orders applicable to them and to the
conduct of their businesses, including without limitation, all
statutes, rules and regulations pertaining to the conduct of
banking activities except for possible technical violations
which together with any penalty which results therefrom are or
will be of no material consequence to either NCBE or the NCBE
Banks. Neither NCBE nor any of the NCBE Banks are the
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subject of, nor a party to, any regulatory action or agreement
such as letter agreements, memorandum of understanding, cease
and desist orders or like agreements. Neither NCBE nor the
NCBE Banks are in default under, and no event has occurred
which, with the lapse of time or action by a third party,
could, to the best of NCBE's knowledge after due inquiry,
result in the default under the terms of any judgment, decree,
order, writ, rule or regulation of any governmental authority
or court, whether federal, state or local and whether at law
or in equity, where the default(s) could reasonably be
expected to have a material adverse effect on the financial
conditions, results of operations or business of NCBE or the
NCBE Banks on a consolidated basis.
(l) NCBE has duly filed all federal, state, county and local
income, excise, real and personal property and other tax
returns and reports (including, but not limited to, social
security, withholding, unemployment insurance, and sales and
use taxes) required to have been filed by NCBE up to the date
hereof. To the best of the knowledge and belief of NCBE all
such returns are true and correct in all material respects,
and NCBE has paid or, prior to the time the Merger shall
become effective, will pay all taxes, interest and penalties
shown on such return or reports or claimed (other than those
claims being contested in good faith and which have been
disclosed to White County) to be due to any federal, state,
county, local or other taxing authority, and there is, and at
the time the Merger shall become effective will be, no basis
for any additional claim or assessment which might materially
and adversely affect NCBE or the NCBE Banks, and for which an
adequate reserve has not been established. To the best of its
knowledge and belief, NCBE has paid or made adequate provision
in its financial statements or its books and records for all
taxes payable in respect of all periods ending as of the date
thereof. To the best of its knowledge and belief NCBE has, or
at the time
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the Merger shall become effective will have, no material
liability for any taxes, interest or penalties of any nature
whatsoever, except for those taxes which may have arisen up to
the time the Merger shall become effective in the ordinary
course of business and are properly accrued on the books of
NCBE as of the time the Merger shall become effective.
8. Representations and Warranties of White County. White County
represents and warrants to NCBE as follows:
(a) White County is a banking corporation duly organized and
validly existing in good standing under the laws of the State
of Illinois. White County has full power and authority
(including all licenses, franchises, permits and other
governmental authorizations which are legally required) to
engage in the businesses and activities now conducted by it.
As of the date of this Agreement, the authorized capital stock
of White County consists of 9,600 shares of common stock with
$100 par value, of which a total of 9,600 shares are issued
and outstanding and none are shares of treasury stock owned by
White County. All of said shares of capital stock are fully
paid and nonassessable and are not issued in violation of the
preemptive rights of any shareholder. There are no
outstanding options, warrants or commitments of any kind
relating to White County's capital stock except as disclosed
in the letter to NCBE of even date herewith.
(b) White County has furnished to NCBE copies of all financial
statements relating to White County, as filed with the
appropriate regulatory agencies, as of and for the years ended
December 31, 1993 and 1992. White County has furnished to
NCBE copies of all financial statements relating to White
County, as filed with the appropriate regulatory agencies, as
of and for the period ended June 30, 1994. Each of the
aforementioned financial statements is prepared in accordance
with Generally Accepted Accounting Principles or applicable
regulatory accounting
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principles applicable to White County consistently applied and
is true and correct in all material respects and together
present fairly the consolidated financial position and results
of operations of White County as of the dates and for the
periods therein set forth (subject, in the case of such
interim financial statements, to normal year-end
adjustments). White County financial statements do not, as of
the dates thereof, include any material asset or omit any
material liability, absolute or contingent, or other fact, the
inclusion or omission of which renders such financial
statements, in light of the circumstances under which they
were made, misleading in any material respect, except for
certain off balance sheet liabilities which are disclosed in
White County's letter to NCBE of even date herewith. Since
December 31, 1993, there has not been any material adverse
change in the financial condition, results of operations,
business or prospects of White County.
(c) The Board of Directors of White County has authorized
execution of this Agreement. Subject to the approval by the
Stockholders of White County, White County has all requisite
power and authority to enter in this Agreement and the Merger
Agreement. White County has the authority to consummate the
transactions contemplated hereby so that, provided all
required corporate and regulatory approvals are obtained,
neither the execution and delivery of this Agreement, the
Merger Agreement nor the consummation of the Merger will
conflict with, result in the breach of, constitute a default
under or accelerate the performance provided by the terms of
any law, or any rule or regulation of any governmental agency
or authority or any judgment, order or decree of any court or
other governmental agency to which White County may be
subject, any contract, agreement or instrument to which White
County is a party or by which White County is bound or
committed, or the Articles of Incorporation or Bylaws of White
County, or constitute an event which with the lapse of time or
action by
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a third party, could, to the best of White County's knowledge,
result in the default under any of the foregoing or result in
the creation of any lien, charge, encumbrance upon any of the
assets, property or capital stock of White County, except,
however, in the case of contracts, agreements or instruments,
such defaults, conflicts or breaches which either (i) will be
cured or waived prior to the time the Merger becomes
effective, or (ii) if not so cured or waived would not, in the
aggregate, have any material adverse effect on the financial
condition, results of operations or business of White County.
(d) Except as disclosed in White County's letter to NCBE of even
date herewith, there is no litigation, action, suit,
investigation or proceeding pending or, to the best of their
knowledge after due inquiry of White County and its executive
officers, overtly threatened, against or affecting White
County or involving any of their respective properties or
assets, at law or in equity, before any federal, state,
municipal, local or other governmental authority, involving a
material amount which, if resolved adversely to the interest
of White County, would materially affect the financial
condition or operations of White County and/or its ability to
perform under this Agreement or the Merger Agreement, and to
the best of the knowledge and belief after due inquiry of
White County and its executive officers, no one has asserted
and no one has reasonable or valid ground on which it
reasonably can be expected that anyone will assert any such
claims against White County based upon the wrongful action or
inaction of White County or its respective officers, directors
or employees.
(e) White County has good and marketable title to all assets and
properties, whether real or personal, tangible or intangible
reflected in White County's Balance Sheet of December 31, 1993
or acquired subsequent thereto (except to the extent that such
assets and properties have been disposed of for fair value in
the ordinary
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course of business since December 31, 1993) subject to no
liens, mortgages, security interests, encumbrances, pledges or
charges of any kind, except: (i) those items that secure
liabilities that are reflected in said Balance Sheet; (ii)
statutory liens for taxes not yet delinquent; and (iii) minor
defects and irregularities in title and encumbrances which do
not materially impair the use thereof for the purposes for
which they are held; and such liens, mortgages, security
interests, encumbrances and charges are not in the aggregate,
material to the assets and properties of White County. White
County as lessee has the contractual right under valid leases
to occupy, use, possess and control all material property
leased by White County.
(f) To the best of the knowledge after due inquiry of White County
and its executive officers, White County has complied with all
laws, regulations and orders applicable to it and to the
conduct of its business, including without limitation, all
statutes, rules and regulations pertaining to the conduct of
White County banking activities except for possible technical
violations which together with any penalty which results
therefrom are or will be of no material consequence to White
County. Except as disclosed in White County's letter to NCBE
of even date herewith, White County is not the subject of nor
is a party to, any regulatory actions or agreement such as
letter agreements, memorandum of understanding, cease and
desist order or like agreements. White County is not in
default under, and no event has occurred which, with the lapse
of time or action by a third party, could, to the best of
White County's knowledge after due inquiry, result in the
default under the terms of any judgment, decree, order, writ,
rule or regulation of any governmental authority or court,
whether federal, state or local and whether at law or in
equity, where the default(s) could reasonably be expected to
have a
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material adverse effect on the financial condition, results of
operations or business of White County.
(g) Except as disclosed in White County's letter to NCBE of even
date herewith, receipt of which is acknowledged by NCBE, White
County has not, since December 31, 1993 to the date hereof:
(i) issued or sold any of its capital stock or any corporate
debt securities; (ii) granted any option for the purchase of
capital stock; (iii) declared or set aside or paid any
dividend or other distribution in respect of its capital stock
except as permitted pursuant to Section 9(a) hereof or,
directly or indirectly, purchased, redeemed or otherwise
acquired any shares of such stock; (iv) incurred any
obligation or liability (absolute or contingent), except for
obligations reflected in this Agreement or the Merger
Agreement, and except for obligations or liabilities incurred
in the ordinary course of business, or mortgaged, pledged or
subjected to lien or encumbrance (other than statutory liens
for taxes not yet delinquent) any of its assets or properties;
(v) discharged or satisfied any lien or encumbrance or paid
any obligation or liability (absolute or contingent), other
than the current portion of any long term liabilities which
become due after December 31, 1993, current liabilities
included in its financial statements as of December 31, 1993,
current liabilities incurred since the date thereof in the
ordinary course of business and liabilities incurred in
carrying out the transactions contemplated by this Agreement
or the Merger Agreement; (vi) sold, exchanged or otherwise
disposed of any of its material capital assets outside the
ordinary course of business; (vii) made any extraordinary
officers' salary increase or wage increase, entered into any
employment contract with any officer or salaried employee or,
instituted any employee welfare, bonus, stock option,
profit-sharing, retirement or similar plan or arrangement;
(viii) suffered any damage, destruction or loss, whether or
not covered by insurance, materially and
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adversely affecting its business, property or assets or waived
(except for fair consideration) any rights of value which are
material in the aggregate, considering its business taken as a
whole; or (ix) entered or agreed to enter into any agreement
or arrangement granting any preferential right to purchase
any of its assets, properties or rights or requiring the
consent of any party to the transfer and assignment of any
such assets, properties or rights.
(h) Except as disclosed in White County's letter to NCBE of even
date herewith, White County is not a party to or bound by any
written or oral: (i) employment or consulting contract which
is not terminable by it on 60 days or less notice, (ii)
employee bonus (other than an annual bonus to be paid to
employees of White County for the year 1994, in amounts and on
dates consistent with past practice, which bonuses are payable
at the discretion of the White County board of directors),
deferred compensation, pension, stock bonus or purchase,
profit-sharing, retirement or stock option plan, (iii) other
employee benefit or welfare plan, or (iv) other executory
material agreements which in any case obligate White County to
make any payment(s) which in the aggregate exceed $10,000 per
year except for contracts terminable on 60 days notice. All
such pension, stock bonus or purchase, profit-sharing, defined
benefit and retirement plans set forth under the caption
"Qualified Plans" in the White County Document List
(hereinafter referred to collectively as the "plan") are
qualified plans under Section 401(a) of the Internal Revenue
Code and in compliance in all material respects with ERISA.
All material notices, reports and other filings required under
applicable law to be given or made to or with any governmental
agency with respect to the plans have been timely filed or
delivered where failure to file would result in a penalty
and/or result in disqualification of the plan. White County
has no knowledge either of any circumstances which would
adversely
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affect the qualification of the plans or their compliance with
ERISA, or of any unreported "reportable event" (as such term
is defined in Section 4043(b) of ERISA) or, except as
disclosed in White County's letter to NCBE of even date
herewith, any "prohibited transaction" (as such term is
defined in Section 406 of ERISA and Section 4975(c) of the
Internal Revenue Code) which has occurred since the date on
which said sections became applicable to the plans. The plans
meet the minimum funding standards set forth in the Internal
Revenue Code and ERISA.
(i) White County has duly filed all federal, state, county
and local income, excise, real and personal property and other
tax returns and reports (including, but not limited to, social
security, withholding, unemployment insurance, and sales and
use taxes) required to have been filed by White County up to
the date hereof. Except as set forth in White County's letter
to NCBE of even date herewith, receipt of which is
acknowledged by NCBE, to the best of the knowledge and belief
of White County all such returns are true and correct in all
material respects, and White County has paid or, prior to the
time the Merger shall become effective, will pay all taxes,
interest and penalties shown on such return or reports or
claimed together than those claims being contested in good
faith and which have been disclosed to NCBE to be due to any
federal, state, county, local or other taxing authority, and
there is, and at the time the Merger shall become effective
will be, no basis for any additional claim or assessment which
might materially and adversely affect White County and for
which an adequate reserve has not been established. To the
best of its knowledge and belief, White County has paid or
made adequate provision in its financial statements or its
books and records for all taxes payable in respect of all
periods ending as of the date thereof. To the best of its
knowledge and belief, White County has, or at the time the
Merger
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shall become effective will have, no material liability for
any taxes, interest or penalties of any nature whatsoever,
except for those taxes which may have arisen up to the time
the Merger shall become effective in the ordinary course of
business and are properly accrued on the books of White
County as of the time the Merger shall become effective.
(j) To the best of its knowledge and belief, but without having
undertaken an environmental audit, White County has no
knowledge of any underground storage tanks, any hazardous
substances, hazardous waste, pollutant or contaminant,
including, but not limited to, asbestos (except as previously
disclosed to NCBE in a letter of even date herewith), PCB's
or urea formaldehyde, having been generated, released into,
stored or deposited over, upon or below (in storage tanks or
otherwise) White County's premises or any other real property
owned or leased by White County other than other real estate
owned, for which no investigation was conducted by White
County, but for which White County has no knowledge of such,
or into any water systems on or below
the surface of the White County premises or any other real
property owned or leased by White County other than other
real estate owned, for which no investigation was conducted by
White County, but for which White County has no knowledge of
such from any source whatsoever. As used in this Agreement,
the terms "hazardous substance," "hazardous waste," pollutant"
and "contaminant" mean any substance, waste, pollutant or
contaminant included within such terms under any applicable
Federal, state or local statute or regulation.
(k) White County has in effect insurance coverage with reputable
insurers, which in respect of amounts, premiums, types and
risks insured, constitutes reasonable adequate coverage
against all risks customarily insured against companies
comparable in size and operation to White County.
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(l) Except as disclosed in White County's letter to NCBE of even
date herewith, White County has not incurred and will not
incur any liability for brokerage, finders', agents', or
investment bankers' fees or commissions in connection with
this Agreement or the Merger Agreement or the transactions
contemplated hereby and thereby.
(m) The directors of White County executing this Agreement shall
vote the shares of White County held directly by them in favor
of adoption of the Agreement.
9. Action by White County Pending Effective Time. White County agrees
that from the date of this Agreement until the time the Merger shall
become effective, except with prior written permission of NCBE:
(a) Beginning with the date hereof and until such time as
the Merger shall become effective, White County will not
declare or pay any dividends or make any distributions other
than regular cash dividends, payable at such times and in
amounts consistent with past practice and not to exceed the
per share rate paid in the prior calendar year, provided,
however, that Stockholders of White County may for any given
quarter, receive dividends attributable to that quarter only
from NCBE or White County, but not from both. If, prior to
the consummation of the Merger, White County shall declare a
stock dividend or make distributions upon or subdivide, split
up, reclassify or combine its shares of common stock in any
security convertible into its common stock, appropriate
adjustment or adjustments will be made in the foregoing per
share dividend rate.
(b) White County will not issue, sell, grant any option for, or
acquire for value any shares of its capital stock or otherwise
effect any change in connection with its capitalization.
(c) Except as otherwise set forth in or contemplated by this
Agreement or the Merger Agreement, White County will carry on
its businesses in substantially the same
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manner as heretofore, keep in full force and effect insurance
comparable in amount and scope of coverage to that now
maintained by it and use its best efforts to maintain and
preserve its business organization intact.
(d) White County will not: (i) enter into any transaction other
than in the ordinary course of business or incur or agree to
incur any obligation or liability except liabilities incurred
and obligations entered into in the ordinary course of
business; (ii) change its lending, investment, liability
management and other material White County banking policies in
any material respect; (iii) except as committed for adjustment
as of the date hereof and consistent with prior practice,
grant any general or uniform increase in the rates of pay of
employees; (iv) except as disclosed in White County's letter
to NCBE of even date herewith, incur or commit to any capital
expenditures other than in the ordinary course of business
(which in no event shall include the establishment of new
branches and such other facilities or any capital expenditures
for any purpose which exceed 1% of White County's combined
capital, surplus and undivided profit accounts as of December
31, 1993), or (v) merge into, consolidate with or sell its
assets to any other corporation or person, or permit any other
corporation to be merged or consolidated with it or acquire
all of the assets of any other corporation or person.
(e) White County will not change its method of accounting in
effect at December 31, 1993 except as required by changes in
generally accepted accounting principles and concurred in by
White County's independent auditors, or change any of its
methods of reporting income and deductions for Federal income
tax purposes from those employed in the preparation of White
County's Federal income tax returns for the taxable year
ending December 31, 1993, except for changes required by law.
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(f) White County will afford NCBE, its officers and other
authorized representatives, such access to all books, records,
tax returns, leases, contracts and documents of White County
and will furnish to NCBE such information with respect to the
assets and business of White County as NCBE may from time to
time reasonably request in connection with this Agreement or
the Merger Agreement and the transactions contemplated hereby
or thereby.
(g) White County will promptly advise NCBE in writing of all
material actions taken by the directors and Stockholders of
White County, furnish NCBE with copies of all interim
financial statements of White County as they become available,
and keep NCBE fully informed concerning all developments which
in the opinion of White County may have a material effect upon
the business, properties or condition (either financial or
otherwise) of White County.
10. Action by NCBE Pending Effective Time. NCBE agrees that from the date
of this Agreement until the time the Merger shall become effective:
(a) NCBE will carry on its business in substantially the same
manner as heretofore except as otherwise set forth in or
contemplated by this Agreement, and NCBE will keep in full
force and effect insurance comparable in amount and scope of
coverage to that now maintained by it and use its best efforts
to maintain and preserve its business organization intact.
White County acknowledges that, in the ordinary course of its
business as a bank holding company, NCBE from time-to-time,
enters into an agreement(s) to acquire by merger, stock
purchase or like means, another financial institution or its
holding company.
(b) NCBE will not change its methods of accounting in effect at
December 31, 1993, except as required by changes in generally
accepted accounting principles as concurred in by NCBE's
independent auditors, or change any of its methods of
reporting income and deductions for Federal income tax
purposes from those
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employed in the preparation of the Federal income tax returns
of NCBE Banks for the taxable year ending December 31, 1993,
except for changes required by law or take any action which
could jeopardize the tax free nature of the Merger or the
pooling of interests accounting treatment for the Merger.
(c) NCBE will promptly advise White County in writing of all
material corporate actions taken by the directors of NCBE,
furnish White County with copies of interim financial
statements of NCBE and all reports, schedules and statements
filed by or delivered to NCBE pursuant to the Securities and
Exchange Act of 1934 and the rules and regulations promulgated
thereunder, as they become available, and keep White County
fully informed concerning all developments which in the
opinion of NCBE may have a material effect upon the business,
properties or condition (either financial or otherwise) of
NCBE.
11. Conditions to Obligations of NCBE. The obligations of NCBE under this
Agreement and the Merger Agreement are subject, unless waived by NCBE,
to the satisfaction of the following conditions on or prior to the
time the Merger shall become effective:
(a) There shall not have been any material adverse change or
discovery of a condition or the occurrence of an event which
has or is likely to result in such a change, in the financial
condition, aggregate net assets, Stockholders' equity,
business or operating results of White County from December
31, 1993 to the time the Merger shall become effective.
(b) White County shall not have paid cash dividends from the date
hereof to the time the Merger shall become effective except as
permitted under this Agreement.
(c) All representations by White County contained in this
Agreement and the Merger Agreement shall be true in all
material respects at, or as of, the time the Merger shall
become effective as though such representations were made at
and as of said date, except for changes contemplated by this
Agreement or the Merger
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Agreement and except also for representations as of a
specified time other than the time the Merger shall become
effective, which shall be true in all material respects at
such specified time.
(d) NCBE shall have received the opinion of legal counsel for
White County, dated the time the Merger shall become
effective, substantially to the effect set forth in Exhibit A
hereto.
(e) White County shall have performed or satisfied in all material
respects all agreements and conditions required by this
Agreement or the Merger Agreement to be performed or satisfied
by it at or prior to the time the Merger shall become
effective.
(f) At the time the Merger shall become effective, no suit, action
or proceeding shall be pending or overtly threatened before
any court or other governmental agency by the federal or state
government in which it is sought to restrain or prohibit the
consummation of the Merger, and no other suit, action or
proceeding shall be pending or overtly threatened and no
liability or claim shall have been asserted against White
County which NCBE shall in good faith determine, with advice
of counsel: (i) has a reasonable likelihood of being
successfully prosecuted and (ii) if successfully prosecuted,
would materially and adversely affect the benefits hereunder
intended for NCBE.
(g) Prior to the time the Merger shall become effective,
NCBE shall not have been deprived of adequate opportunity to
conduct such review and examination of the business,
properties, and condition (financial or otherwise) of White
County as NCBE shall have deemed prudent, and such review and
examination shall not have disclosed matters which are
inconsistent in any material respect with any of the
representations and warranties of White County contained in
this Agreement or the Merger Agreement. Immediately prior to
the time the Merger shall become
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effective, White County shall be entitled to receive from
NCBE a statement as to whether the condition set forth
herein has been satisfied.
(h) Holders of White County Common Stock who are entitled to
exercise in the aggregate not more than 5% of the voting power
of the issued and outstanding White County Common Stock as of
the time the Merger shall become effective shall have taken
steps to perfect their rights as dissenting Stockholders
pursuant to the provisions of Section 5/29 of the Illinois
Banking Act so that if, at the time the Merger shall become
effective, holders of more than 5% of such shares shall have
taken such steps, NCBE may, at its option, refuse to
consummate the Merger.
(i) White County shall have furnished NCBE certificates, signed on
its behalf by the Chairman or President and the Secretary or
an Assistant Secretary of White County and dated the time the
Merger shall become effective, to the effect that to the best
of their knowledge, after due inquiry, the conditions
described in Paragraphs (a), (b), (c), and (f) of this Section
11 have been fully satisfied.
(j) NCBE shall have received assurances, satisfactory to it, that
the Merger will be accounted for as a pooling of interest.
12. Conditions to Obligations of White County. The obligations of White
County under this Agreement or the Merger Agreement are subject,
unless waived by White County, to the satisfaction on or prior to the
time the Merger shall become effective of the following conditions:
(a) There shall not have been any material adverse change or
discovery of a condition or the occurrence of an event which
has or is likely to result in such a change, in the financial
condition, aggregate net assets, Stockholders' equity,
business, or operating results of NCBE from December 31, 1993
to the time the Merger shall become effective.
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(b) All representations by NCBE contained in this Agreement and
the Merger Agreement shall be true in all material respects
at, or as of, the time the Merger shall become effective as
though such representations were made at and as of said date,
except for changes contemplated by this Agreement and the
Merger Agreement, and except also for representations as of a
specified time other than the time the Merger shall become
effective, which shall be true in all material respects at
such specified time.
(c) White County shall have received the opinion of Counsel for
NCBE dated the time the Merger shall become effective
substantially to the effect set forth in Exhibit B hereto.
(d) NCBE shall have performed or satisfied in all material
respects all agreements and conditions required by this
Agreement and the Merger Agreement to be performed or
satisfied by it at or prior to the time the Merger shall
become effective.
(e) At the time the Merger shall become effective, no suit, action
or proceeding shall be pending or overtly threatened before
any court or other governmental agency of the federal or state
government in which it is sought to restrain, prohibit or set
aside consummation of the Merger and no other suit, action or
proceeding shall be pending or overtly threatened and no
liability or claim shall have been asserted against NCBE which
White County shall in good faith determine, with advice of
counsel: (i) has a reasonable likelihood of being
successfully prosecuted and (ii) if successfully prosecuted,
would materially and adversely affect the benefits hereunder
intended for White County and its Stockholders.
(f) NCBE shall have furnished White County a certificate, signed
by the Chairman or President and by the Secretary or Assistant
Secretary of NCBE and dated the time the Merger shall become
effective to the effect that to the best of their knowledge
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after due inquiry the conditions described in Paragraphs (a),
(b), and (e) of this Section 12 have been fully satisfied.
13. Conditions to Obligations of All Parties. In addition to the
provisions of Sections 11 and 12 hereof, the obligations of NCBE and
White County to cause the transactions contemplated herein to be
consummated shall be subject to the satisfaction of the following
conditions on or prior to the time the Merger shall become effective:
(a) The parties hereto shall have received all necessary approvals
of governmental agencies and authorities of the transactions
contemplated by this Agreement and each of such approvals
shall remain in full force and effect at the time the Merger
shall become effective and such approvals and the transactions
contemplated thereby shall not have been contested by any
federal or state governmental authority by formal proceeding,
or contested by any other third party by formal proceeding
which the Board of Directors or the party asserting a failure
of a condition under this Section 13(a) shall in good faith
determine, with the advice of counsel: (i) has a reasonable
likelihood of being successfully prosecuted and (ii) if
successfully prosecuted, would materially and adversely affect
the benefits hereunder intended for such party. It is
understood that, if any contest as aforesaid is brought by
formal proceedings, NCBE may, but shall not be obligated to,
answer and defend such contest. NCBE shall notify White
County promptly upon receipt of all necessary governmental
approvals.
(b) The registration statement required to be filed by NCBE
pursuant to Section 4(c) of this Agreement shall have become
effective by an order of the Securities and Exchange
Commission, the shares of NCBE Common Stock to be exchanged in
the Merger shall have been qualified or exempted under all
applicable state securities laws, and there shall have been no
stop order issued or threatened by the Securities and Exchange
Commission that suspends or would suspend the
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effectiveness of the registration statement, and no proceeding
shall have been commenced, pending or overtly threatened for
such purpose.
(c) This Agreement and the Merger Agreement shall have been duly
adopted, ratified and confirmed by the requisite affirmative
votes of the Stockholders of White County.
(d) NCBE and White County shall have received the opinion called
for pursuant to Section 6 of this Agreement and there shall
exist as of, at or immediately prior to the time the Merger
shall become effective no facts or circumstances which would
render such opinion inapplicable in any respect to the
transactions to be consummated hereunder.
14. Nonsurvival of Representations and Warranties. The respective
representations and warranties of NCBE and White County set forth
shall survive the time the Merger shall become effective for a period
of one (1) year.
15. Governing Law. This Agreement shall be construed and interpreted
according to the applicable laws of the State of Illinois.
16. Assignment. This Agreement and the Merger Agreement and all of the
provisions hereof and thereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor the Merger Agreement
nor any of the rights, interest, or obligations hereunder or
thereunder shall be assigned by either of the parties hereto without
the prior written consent of the other party; provided, however, that
NCBE shall not engage in a transaction pursuant to which its
Stockholders exchange NCBE common stock for securities or property of
another party whether by statutory share exchange, merger,
consolidation, reorganization or the sale of substantially all the
assets of NCBE without concurrently therewith assigning to the
acquiring or surviving party, all of the obligations of NCBE under
this Agreement.
17. Satisfaction of Conditions; Termination.
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(a) NCBE agrees to use its best effort to obtain satisfaction of
the conditions insofar as they relate to NCBE, and White
County agrees to use its best efforts to obtain the
satisfaction of the conditions insofar as they relate to White
County. If any material condition to the obligations of NCBE
set forth in Section 11 or 13 is not substantially satisfied
at the time or times contemplated thereby and such condition
is not waived by NCBE, or if any material condition to the
obligations of White County set forth in Section 12 or 13 is
not substantially satisfied at the time or times contemplated
thereby and such condition is not waived by White County, or
if at any time prior to the time the Merger shall become
effective, it shall become reasonably certain that such
condition will not be substantially satisfied and such
condition is not waived by NCBE or White County, as the case
may be, either NCBE or White County may terminate this
Agreement by written notice to the other party after the
expiration of fifteen (15) days written notice to the other
party during which time such other party shall have an
opportunity to cure such defect in said condition. This
Agreement may be terminated and abandoned (either before or
after the meetings of Stockholders contemplated hereby) by
mutual written consent of NCBE and White County authorized by
their respective Boards of Directors. In the event of such
termination caused otherwise than by breach of this Agreement
by any of the parties hereto, this Agreement shall cease and
terminate, the acquisition of White County as provided herein
shall not be consummated, and neither NCBE nor White County
shall have any further liability under this Agreement of any
nature whatever, including any liability for damages. In the
event this Agreement is terminated, the duties of both parties
with respect to confidential information set forth in Sections
4(d) shall survive any such termination. In addition to the
other grounds for termination of this Agreement set forth
herein, this Agreement can be terminated by written
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notice by either party to the other, in each case authorized
by its Board of Directors, if the Merger shall not have been
consummated by June 30, 1995, or the date of such notice,
whichever is later.
(b) If termination of this Agreement shall be judicially
determined to have been caused by breach of this Agreement,
then, in addition to other remedies at law or equity for
breach of this Agreement, the party so found to have breached
this Agreement shall indemnify the other parties for their
respective costs, fees and expenses of its counsel,
accountants and other experts and advisors as well as fees and
expenses incident to negotiation, preparation and execution of
this Agreement and related actions and its Stockholders'
meetings and actions.
18. Waivers Amendments. Any of the provisions of this Agreement may be
waived at any time by the party which is, or the Stockholders of which
are, entitled to the benefit thereof, by resolution of the Board of
Directors of such party. This Agreement may be amended or modified in
whole or in part by an agreement in writing executed in the same
manner (but not necessarily by the same person) as this Agreement and
which makes reference to this Agreement, pursuant to a resolution,
adopted by the Boards of Directors of the respective parties,
provided, however, such amendment or modification may be made in this
manner by the respective Boards of Directors of NCBE and White County
at anytime prior to a favorable vote of such party's Stockholders, but
may be made after a favorable vote by the Stockholders of such party,
only if, in the opinion of its Board of Directors, such amendment or
modification will not have any material adverse effect on the benefits
intended under this Agreement for the Stockholders of such party and
will not require resolicitation of any proxies from such Stockholders.
19. Entire Agreement. This Agreement supersedes any other agreement,
whether written or oral, that may have been made or entered into by
NCBE and White County or by any officer or officers of such parties
relating to the acquisition of the business or the capital
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stock of White County by NCBE. Except for the letters specified in
this Agreement (which shall include for purposes hereof the Merger
Agreement) and of even date herewith, this Agreement constitutes the
entire agreement by the parties, and there are no agreements or
commitments except as set forth herein and therein.
20. Captions; Counterparts. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement.
This Agreement may be executed in several counterparts, each of which
shall constitute one and the same instrument.
21. Notices. All notices and other communications hereunder shall be
deemed to have been duly given if forwarded by a nationally recognized
overnight courier service. All notices and other communications
hereunder given to any party shall be communicated to the remaining
party to this Agreement by mail in the same manner as herein provided.
a) If to NCBE, to:
Mr. Robert A. Keil
President
National City Bancshares, Inc.
227 Main Street, P.O. Box 868
Evansville, Indiana 47705-0868
With copies to:
Martin D. Werner, Esq.
Werner & Blank Co., L.P.A.
7205 W. Central Avenue
Toledo, Ohio 43617
(b) If to White County, to:
Mr. George H. Schanzle
Chairman
White County Bank
215 E Main Street
Carmi, Illinois 62821
With copies to:
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Robert S. Cohen
Giffin, Winning, Cohen & Bodewes, P.C.
Suite 600 Myers Building
One West Old State Capitol Plaza
P.O. Box 2117
Springfield, IL 62705
22. Undertakings of Affiliates. NCBE shall have received undertakings in
writing from each of such persons, if any, as counsel for NCBE
believes might reasonably be considered "affiliates" of White County
within the meaning of Rule 145 of the Securities and Exchange
Commission pursuant to the Securities Act of 1933, in each case in
form and substance satisfactory to counsel for NCBE, to the effect
that so long as NCBE complies with its obligations under Section 4(j)
hereof, (i) any disposition made by such person of any share of NCBE
Common Stock received by such person pursuant to the Merger shall be
made within the limits and in accordance with the applicable
provisions of said Rule 145, as such Rule may be amended from time to
time, and (ii) such person will not sell, assign or transfer any of
such NCBE Common Stock until NCBE shall have published financial
results including the combined operations of NCBE and White County for
a period of at least 30 days following the time the Merger shall
become effective.
23. Publicity. NCBE and White County agree to consult with and obtain the
consent of the other, prior to any media release or other public
disclosures as to the matters covered by this Agreement, except as may
be required by law.
IN WITNESS WHEREOF, this Agreement has been executed the day and
year first above written.
ATTEST: National City Bancshares, Inc.
/s/ Sharon Winter By: /s/ John D. Lippert
-------------------- --------------------------
By: Sharon Winter John D. Lippert, Chairman,
Its: Cashier and Chief Executive Officer
ATTEST: White County Bank
/s/ Harold A. Mann By: /s/ George H. Schanzle
--------------------- -----------------------
By: Harold A. Mann George H. Schanzle, Chairman
Its: Secretary
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[As individuals and with respect solely to the understanding made in Section
8(m) of this Agreement.]
/s/ R. Keith Hoskins /s/ Donald D. Drone
- --------------------------- --------------------------
/s/ James R. Schanzle /s/ Paul D. Hayse
- --------------------------- --------------------------
/s/ Charles H. Atteberry /s/ Dr. Frank Barbre
- --------------------------- --------------------------
/s/ George H. Schanzle
- --------------------------- --------------------------
/s/ James S. Ruhoff
- --------------------------- --------------------------
/s/ Anne B. Russell
- --------------------------- --------------------------
A-34
<PAGE> 110
APPENDIX A
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") dated as of __________, 1995, is
by and between White County Interim Bank, Carmi, Illinois ("New Bank"), an
Illinois state banking corporation and wholly owned subsidiary of National City
Bancshares, Inc., Evansville, Indiana, an Indiana corporation ("NCBE") and
White County Bank, Carmi, Illinois ("White County"), an Illinois state banking
corporation and is joined in by NCBE.
WITNESSETH:
WHEREAS, the Board of Directors of the New Bank and the Board of Directors
of White County have determined that it is in the best interests of the New
Bank and White County to merge New Bank with and into White County in
accordance with the provisions of the laws of the State of Illinois and the
Federal Deposit Insurance Act (the "Merger"); and
WHEREAS, the Board of Directors of White County and the Board of Directors
of New Bank have each adopted a resolution approving this Agreement and have
directed that the Merger Agreement be submitted to the shareholders of White
County and New Bank entitled to vote in respect thereof for adoption and
approval;
NOW, THEREFORE, the parties hereto, subject to the terms and conditions
contained herein, agrees as follows:
ARTICLE I
Constituent Corporations
White County and New Bank shall be the constituent banking corporations with
respect to the Merger.
ARTICLE II
Merger
Effective as of the time of the filing of this Agreement with the
Commissioner of Banks and Trust Companies for the State of Illinois (the
"Effective Time"), New Bank shall be merged into White County and White County
shall be the surviving banking corporation (the "Surviving Corporation"), which
after the effective time of the Merger shall be known as "White County Bank."
ARTICLE III
Articles of Incorporation, Etc.
A-35
<PAGE> 111
1. At the Effective Time, the Charter and Bylaws of White County shall
constitute the Articles of Incorporation Bylaws of the Surviving
Corporation.
2. The Surviving Corporation's main office shall be located at 215 E.
Main Street, Carmi, Illinois, until otherwise changed in accordance
with law.
3. Attached hereto as Exhibit A is a complete list of the Stockholders
of White County as of the date of this Merger Agreement.
4. Attached hereto as Exhibit B is a complete list of the Stockholders of
the New Bank as of the date of this Merger Agreement.
5. Attached hereto as Exhibit C is a detailed pro forma financial
Statement, based upon financial information as of _____________199_,
showing the assets and liabilities of the Surviving Corporation after
the Merger.
6. At the Effective Time, the directors of White County then holding
office shall constitute the directors of the Surviving Corporation,
subject to the Surviving Corporation's Articles of Incorporation and
Bylaws and applicable law as to the term and removal of directors.
ARTICLE IV
Manner of Converting and Exchanging Stock and Capital Structure
1. Subject to the provisions of this Article IV, the manner of converting
and exchanging the shares of the constituent corporation's stock at
the Effective Time shall be as follows.
Conversion and Exchange of Shares.
(a) At the time the Merger shall become effective;
(i) All of the outstanding shares of White County Common
Stock shall, (subject to statutory dissenters rights
as provided by Section 29 of the Illinois Banking
Act; 205 ILCS 5/29, a copy of which is attached
hereto as Exhibit D), be exchanged, pro rata, for
264,000 shares, in the aggregate, of NCBE Common
Stock (or cash for fractional shares), provided
however that in the event that the per share weighted
average (based upon the number of shares traded) high
and low price of NCBE Common Stock, as reported by
the NASDAQ National Market System for the ten
business days immediately proceeding the effective
date the Merger, is lower than $38.00 or higher than
$48.00 per share, (adjusted for any and all stock
dividends and stock splits between the date hereof
and the effective time of the Merger), either party
hereto may elect to renegotiate the provisions hereof
relating to the number of shares of NCBE Common Stock
issuable
A-36
<PAGE> 112
in the Merger or to terminate the Merger Agreement
and the transactions contemplated hereby.
(ii) The shares of White County Common Stock issued and
outstanding immediately prior to the time the Merger
shall become effective shall continue to be issued
and outstanding shares of the Surviving Corporation
and shall be held by NCBE.
(iii) The shares of New Bank held issued and outstanding
immediately prior to the effective time of the Merger
and held by NCBE shall be deemed canceled.
(b) No fractional shares or scrip representing fractional shares
of NCBE Common Stock will be issued by NCBE in connection with
the Merger, but in lieu thereof, any holder of White County
Common Stock entitled to such a fractional share shall, upon
surrender of the certificate or certificates formerly
representing such White County Common Stock, be paid cash,
without interest, by NCBE for such fractional share(s). The
cash paid for fractional shares shall be based upon the
closing bid price of NCBE on the day the Merger shall become
effective or the trading day immediately preceding the day the
Merger shall become effective if such day shall not be a
trading day.
(c) As soon as practicable after the time the Merger shall become
effective, and subject to the provisions set forth above
relating to the fractional shares, NCBE, or an Exchange Agent
designated thereby, will distribute to the former holders of
White County Common Stock in exchange for and upon surrender
for cancellation by such holders of a certificate or
certificates formerly representing shares of White County
Common Stock the certificate(s) for shares of NCBE Common
Stock in accordance with the provisions regarding the exchange
of shares of White County Common Stock set forth in paragraph
1(a)(i) of this Merger Agreement. Each certificate formerly
representing White County Common Stock (other than
certificates representing shares of White County Common Stock
subject to the rights of dissenting shareholders) shall be
deemed for all purposes to evidence the ownership of the
number of whole shares of NCBE Common Stock and cash for
fractional share interests in NCBE Common Stock into which
such shares have been converted. Certificates representing
shares of White County Common Stock held by a stockholder of
White County, shall be aggregated together in determining the
number of fractional shares for which such shareholder shall
receive cash as provided for herein. Until surrender of the
certificate or certificates formerly representing shares of
White County Common Stock, the holder thereof shall not be
entitled to receive any dividend or other payment or
distribution payable to holders of NCBE Common Stock. Upon
such surrender (or in lieu of surrender other provisions
reasonably satisfactory to NCBE as are made as set forth in
the next following paragraph), there shall be paid to the
person entitled thereto the aggregate amount of dividends or
other
A-37
<PAGE> 113
payments or distributions (in each case without interest)
which became payable after the time the Merger shall become
effective on the whole shares of NCBE Common Stock represented
by the certificates issued upon such surrender and exchange or
in accordance with such other provisions, as the case may be.
After the time the Merger shall become effective, the holders
of certificates formerly representing shares of White County
Common Stock shall cease to have rights with respect to such
shares except such rights, if any, as a holder of certificates
formerly representing shares of White County Common Stock may
have as dissenting shareholders pursuant to Illinois Banking
Act and except as aforesaid, their sole rights shall be to
exchange said certificates for certificates for shares of NCBE
Common Stock in accordance with this Merger Agreement.
Certificates formerly representing shares of White County
Common Stock surrendered for cancellation by each shareholder
entitled to exchange shares of White County Common Stock for
shares of NCBE Common Stock by reason of the Merger shall be
accompanied by such appropriate instruments of transfer as
NCBE may reasonably require, provided, however, that if there
be delivered to NCBE by any person who is unable to produce
any such certificate formerly representing shares of White
County Common Stock for transfer (i) evidence to the
reasonable satisfaction of NCBE that any such certificate has
been lost, wrongfully taken or destroyed, and (ii) such
indemnity agreement as reasonably may be requested by NCBE to
save it harmless, and (iii) evidence to the reasonable
satisfaction of NCBE that such person is the owner of the
shares theretofore represented by each certificate claimed by
him to be lost, wrongfully taken or destroyed and that he is
the person who would be entitled to present each such
certificate and to receive shares of NCBE Common Stock
pursuant to this Merger Agreement, then NCBE, in the absence
of actual notice to it that any shares theretofore represented
by any such certificate have been acquired by a bona fide
purchaser, shall deliver to such person the certificate(s)
representing shares of NCBE Common Stock which such person
would have been entitled to receive upon surrender of each
such lost, wrongfully taken or destroyed certificate
representing shares of White County Common Stock.
2. After the Effective Time, there shall be no transfers of the stock
transfer books of New Bank of any certificates representing shares of
New Bank Common Stock. After the Effective Time, upon presentation to
the Surviving Corporation of certificates formerly representing
capital stock of New Bank, such certificates shall be canceled.
3. The Resulting Corporation shall have a capital structure equal to the
following:
(a) Common stock of $958,000, consisting of 9,600 shares of $100
par value all of which will be issued and outstanding
immediately following the Effective Time of the Merger; and
(b) Surplus of $1,540,000; and
A-38
<PAGE> 114
(c) Undivided profits, including capital reserves, of $4,603,000,
adjusted for all earnings and losses between June 30, 1994,
and the Effective Time of the Merger.
ARTICLE V
Effect of Merger
From and after the Effective Time, the Surviving Corporation shall have all
of the rights, interests, privileges, powers, immunities and franchises (public
and private) of each of the constituent corporations, and all property (real,
personal and mixed), all debts due on whatever account, and all other choses in
action, of each of the constituent corporations. All interests of or belonging
to or due to either of the constituent corporations shall thereupon be deemed
to be transferred to and vested in the Surviving Corporation without act or
deed and no title to any real estate or any interest therein vested in either
of the constituent corporations shall revert or be in any way impaired because
of the Merger.
ARTICLE VI
Surviving Corporation
From and after the Effective Time, the Surviving Corporation shall be
responsible for all obligations of each of the constituent corporations and
each claim existing and each action or proceeding pending by or against either
of the constituent corporations may be prosecuted as if the Merger had not
taken place, and the Surviving Corporation may be substituted in the place of
such constituent corporation. No right of any creditor of either constituent
corporation and no lien upon the property of either constituent corporation
shall be impaired by the Merger.
ARTICLE VII
Further Documents
If at any time the Surviving Corporation shall consider or be advised that
any further assignments, conveyances or assurances in law are necessary or
desirable to vest, perfect or confirm of record in the Surviving Corporation
the title to any property or rights of the constituent corporations, or
otherwise to carry out the provisions hereof, the persons who were the proper
officers and directors of the constituent corporations immediately prior to the
Effective Time (or their successors in office) shall execute and deliver any
and all proper deeds, assignments and assurances in law, and do all things
necessary or proper, to vest, perfect or confirm title to such property or
rights in the Surviving Corporation, including, but not limited to, filing with
each court or other public tribunal, agency or officer by which White County or
New Bank have been appointed in the capacity of fiduciary or agent, and in the
court file of each estate, suit or proceeding in which any of them has been
acting, a statement setting forth the information required by law or otherwise
to carry out the provisions hereof.
A-39
<PAGE> 115
ARTICLE VIII
Termination
Notwithstanding the adoption and approval of this Agreement and the Merger
by the shareholders of White County and New Bank, this Agreement and the Merger
may be terminated:
(a) At any time prior to the Effective Time, by the mutual consent
of the Boards of Directors of White County and New Bank; or
(b) This Merger Agreement shall automatically terminate in the
event of the termination of the Agreement and Plan of
Reorganization dated December 12, 1994 by and between White
County and NCBE to which it relates.
A-40
<PAGE> 116
(c) At any time prior to the Effective Time, by White County or
New Bank if there shall have been a final judicial
determination (as to which all periods for appeal shall have
expired and no appeal shall be pending) that any material
provision of this Agreement or of the Merger is illegal,
invalid or unenforceable;
In the event that this Agreement is terminated pursuant to this Article
VIII, the Merger provided for herein shall be abandoned automatically and
without any further act or deed by the parties hereto.
ARTICLE IX
Conditions to Consummation of the Merger
The Merger is subject to the approval of all required regulatory
authorities, including but not limited to the Commissioner of Banks and Trust
Companies for the State of Illinois and to the approval of the stockholders of
New Bank and White County in accordance with the Illinois Banking Act. Each of
the merging banks agree to pay all examination expenses of the Illinois
Commissioner of Banks and Trust Companies incurred in connection with the
Merger, whether approved or disapproved.
The consummation of the Merger pursuant to this Merger Agreement and the
obligations of the parties hereto is subject to the satisfaction of the
provisions and conditions of the Agreement and Plan of Reorganization by and
between White County and NCBE dated December 12, 1994.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and attested to on their behalf by the following directors and
officers thereunto duly authorized as of the day and year first written above.
White County Bank: White County Interim Bank
By: By:
----------------------------- -----------------------------
George H. Schanzle, President Robert A. Keil, President
Attest: Attest:
-------------------------- -------------------------
by: by:
-------------------------- -------------------------
its: its:
-------------------------- -------------------------
A-41
<PAGE> 117
I, __________________, the duly appointed and incumbent Cashier of White
County State Bank, hereby certify that the Merger Agreement between White
County Bank and White County Interim Bank dated ______________, 1995, was
adopted and approved by the shareholders of White County Bank on ___________,
1995.
________________________________
I, __________________________, the duly appointed and incumbent Cashier of
White County Interim Bank, hereby certify that the Merger Agreement between
White County Bank and White County Interim Bank, dated ___________, 1995, was
adopted and approved by the unanimous written consent of the sole shareholder
of White County Interim Bank dated _________________, 1995.
________________________________
Joined in by National City Bancshares, Inc.
- -----------------------------------
by
----------------------------------
its
---------------------------------
A-42
<PAGE> 118
EXHIBIT B
ILLINOIS BANKING ACT
DISSENTERS' RIGHTS
Dissenting stockholders. If a stockholder of a state bank which is a
party to a merger other than a merger which is to result in a national bank,
shall file with such bank prior to or at the meeting of stockholders at which
the plan of merger is submitted to a vote, a written objection to such plan or
merger, and shall not vote in favor thereof, and such stockholder, within 20
days after receiving written notice of the date the merger became effective,
shall make written demand on the continuing bank for payment of the fair value
of his shares as of the day prior to the date on which the vote was taken
approving the merger, the continuing bank shall pay to such stockholder, upon
surrender of his certificate or certificates representing said stock, the fair
value thereof. Such demand shall state the number of the shares owned by such
dissenting stockholder. The continuing bank shall provide written notice of
the effective date of the merger to all shareholders who have filed written
objections in order that such dissenting shareholders may know when they must
file written demand if they choose to do so. Any stockholder failing to make
demand within the 20-day period shall be conclusively presumed to have
consented to the merger and shall be bound by the terms thereof. If within 30
days after the date on which such merger was effected the value of such shares
is agreed upon between the dissenting stockholders and the continuing bank,
payment therefor shall be made within 90 days after the date on which such
merger was effected, upon the surrender of his certificate or certificates
representing said shares. Upon payment of the agreed value the dissenting
stockholder shall cease to have any interest in such shares or in the
continuing bank. If within such period of 30 days the stockholder and the
continuing bank do not so agree, then the dissenting stockholder may, within 60
days after the expiration of the 30-day period, file a complaint in the circuit
court asking for a finding and determination of the fair value of such shares,
and shall be entitled to judgment against the continuing bank for the amount of
such fair value as of the day prior to the date on which such vote was taken
approving such merger with interest thereon to the date of such judgment. The
practice, procedure and judgment shall be governed by the Civil Practice Laws
of this State. The judgment shall be payable only upon and simultaneously
with the surrender to the continuing bank of the certificate or certificates
representing said shares. Upon the payment of the judgment, the dissenting
stockholder shall cease to have any interest in such shares or in the
continuing bank. Such shares of stock may be held and disposed of by the
continuing bank. Unless the dissenting stockholder shall file such complaint
within the time herein limited, such stockholder and all persons claiming under
him shall be conclusively presumed to have approved and ratified the merger,
and shall be bound by the terms thereof. The right of a dissenting
stockholder to be paid the fair value of his shares of stock as herein provided
shall cease if and when the continuing bank shall abandon the merger.
B-1
<PAGE> 119
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Chapter 37 of the Indiana General Corporation Law provides that Indiana
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.
Chapter 37 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. Chapter 37 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
status as a director, officer, employee, or agent.
Registrant maintains 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.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENTS
The exhibits filed pursuant to this Item 21 immediately follow the Exhibit
Index. The following is a description of the applicable exhibits required for
Form S-4 provided by Item 601 of Regulation S-K.
Exhibit Number Description
- -------------- -----------
(1) Not Applicable.
(2) The Merger Agreement by and between National City Bancshares,
Inc. and White County Bank dated December 12, 1994, is attached
hereto as Exhibit 1.
Part II page 1
<PAGE> 120
Exhibit Number Description
- -------------- -----------
(3) Articles of Incorporation and Bylaws.
A. A copy of the Amended Articles of Incorporation (as amended)
of the Registrant was filed with the Commission as an
exhibit to the Registrant's Registration Statement on Form
S-4, File Number 33-69050 effective November 5, 1993.
B. A copy of the Bylaws of the Registrant as currently in
effect was filed with the Commission as an exhibit to
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994 filed in March, 1995.
(4) Instruments defining the rights of security holders, including
indentures.
A. Instruments defining the rights of security holders are
included in the Articles of Incorporation and Bylaws.
(5) Opinion of Werner & Blank Co., L.P.A., regarding National City
Bancshares, Inc. Common Stock, and Consent
(6) Not Applicable.
(7) Not Applicable.
(8) Opinion of Werner & Blank Co., L.P.A., regarding certain tax
matters, and Consent.
(9) Not Applicable.
(10) Material Contracts, None.
(11) Not Applicable.
(12) Not Applicable.
(13) Registrant's Annual Report to security holders for the year
ended December 31, 1994.
(14) Not Applicable.
(15) Not Applicable
(16) Not Applicable.
Part II page 2
<PAGE> 121
Exhibit Number Description
- -------------- -----------
(21) List of the subsidiaries of the Registrant and their
jurisdictions of incorporation or organization as of December
31, 1994 is presented in Registrant's Annual Report on form
10-K incorporated herein by reference.
(22) None.
(23) Consents of Experts and Counsel.
A. Consent of Gaither, Rutherford & Co.
B. Consent of McGladrey & Pullen LLP
C. Consent of Geo S. Olive & Co., LLP.
D. Consent of Werner & Blank Co., L.P.A. (the consent is
contained in that firm's opinions filed as Exhibits (5)
and (8)).
(24) Power of Attorney.
(25) Not Applicable.
(26) Not Applicable.
(27) Not Applicable.
(28) Not Applicable.
(29) Not Applicable.
(99) Additional Exhibits.
A. Form of Letter to Shareholders of White County Bank,
Carmi, Illinois.
B. Form of Proxy to be delivered to Shareholders of
White County Bank, Carmi, Illinois.
Part II page 3
<PAGE> 122
ITEM 22. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes as follows:
(a) The undersigned 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
the 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 the Registration
Statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to the
information set forth in the 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) 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.
(b) The undersigned Registrant hereby undertakes 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 that is incorporated by reference in this
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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to officers,
directors, 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
Part II page 4
<PAGE> 123
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 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 that matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question of 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.
B. The undersigned Registrant hereby undertakes to respond to requests
for information that are incorporated by reference into the
Prospectus/Proxy Statement pursuant to Items 4, 10(b), 11, or 13 of
this form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in the documents
filed subsequent to the Effective Date of this Registration Statement
through the date of responding to the request.
C. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject
of and included in this Registration Statement when it became
effective.
Part II page 5
<PAGE> 124
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 for filing on Form S-4 and has duly caused this
Amendment to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Evansville, State of Indiana, this 3rd day of May,
1995.
National City Bancshares, Inc.
/s/ John D. Lippert
------------------------------------
John D. Lippert
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 3rd day of May, 1995.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ John D. Lippert
- -------------------
John D. Lippert Chairman and Chief Executive Officer
and Director (Principal Executive Officer)
/s/ Robert A. Keil
- ------------------
Robert A. Keil President and Director
/s/ Harold A. Mann
- ------------------
Harold A. Mann Secretary/Treasurer
(Principal Accounting Officer)
Donald. B. Cox* Director
Michail F. Elliott* Director
Mrs. N. Keith Emge* Director
Michael D. Gallagher* Director
Donald G. Harris* Director
Robert H. Hartmann* Director
</TABLE>
Part II page 6
<PAGE> 125
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
C. Mark Hubbard* Director
Edgar P. Hughes* Director
R. Eugene Johnson* Director
John Lee Newman* Director
Ronald G. Reherman* Director
Laurence R. Steenberg* Director
C. Wayne Worthington* Director
George A. Wright* Director
</TABLE>
*By: /s/ John D. Lippert
--------------------
John D. Lippert
Attorney-in-Fact
Part II page 7
<PAGE> 126
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Page #
- ----------- ------
<S> <C> <C>
5.0 Opinion of Werner & Blank Co., L.P.A. regarding
National City Bancshares, Inc.; Common Stock and Consent *
8 Opinion of Werner & Blank Co., L.P.A., Attorneys,
regarding certain tax matters and Consent *
13.0 Registrant's Annual Report to Security Holders for the
year ended December 31, 1994 *
23.A Consent of Gaither Rutherford & Co. -
23.B. Consent of McGladrey & Pullen .
23.C. Consent of Geo S. Olive -
24.0 Power of Attorney *
99.A Form of Letter to Shareholders White County Bank *
99.B Form of Notice of Special Meeting of
Shareholders White County Bank *
99.C Form of Proxy to be delivered
to shareholders White County Bank *
</TABLE>
*Previously filed*
Part II page 8
<PAGE> 1
EXHIBIT 23.A
GAITHER RUTHERFORD & CO., LLP LETTERHEAD
As independent certified public accountants, we hereby consent to (1) the
inclusion in this Form S-4 of our Report (Gaither Koewler Rohlfer Luckett & Co.
as predecessor to Gaither Rutherford & Co., LLP) dated January 13, 1993, on the
consolidated financial statements of National City Bancshares, Inc. 1992 for
the year ended December 31, 1992, and (2) the incorporation of our report
included in this Form S-4 into the Corporation's previously filed Registration
Statement Commission File No. 0-13585.
As independent certified public accountants, we hereby consent to the inclusion
in this Form S-4 of our report (Gaither Koewler Rohlfer Luckett & Co. as
predecessor to Gaither Rutherford & Co., LLP) dated January 22, 1993, on the
consolidated financial statements of Lincolnland Bancorp, Inc. for the year
ended December 13, 1992.
Gaither Rutherford & Co., LLP
/s/ Gaither Rutherford & Co., LLP
Certified Public Accountants
Evansville, Indiana
May 3, 1995
<PAGE> 1
EXHIBIT 23.B
CONSENT OF MCGLADREY & PULLEN, LLP
As independent public accountants, we hereby consent to the use in the
Registration Statement on Form S-4 and Amendment 1 to the Registration
Statement relating to the proposed merger of a subsidiary of National City
Bancshares, Inc. with and into White County Bank, Carmi, Illinois of our report
dated January 18, 1995, which appears on page 15 of the annual report to
stockholders of National City Bancshares, Inc. We also consent to the
reference to our Firm under the caption of "Expert" in the registration
statement and Amendment 1 of the registration statement.
/s/ McGladrey & Pullen, LLP
Champaign, Illinois
May 3, 1995
<PAGE> 1
EXHIBIT 23.C
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in Form S-4 of National City
Bancshares, Inc., regarding the registration of common stock of National City
Bancshares, Inc., to be issued to the stockholders of White County Bank, Carmi,
Illinois , of our report dated February 19, 1993, on the consolidated
statements of income, changes in stockholders' equity and cash flows of Sure
Financial Corporation for the year ended December 31, 1992, from Form S-4
(33-69050) of National City Bancshares, Inc., effective November 5, 1993.
/s/ Geo. S. Olive & Co., LLP
Indianapolis, Indiana
May 3, 1995
