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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: May 7, 1998
SECOND BANCORP, INCORPORATED
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(Exact name of registrant as specified in its charter)
Ohio 0-15624 34-1547453
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(State of incorporation) (Commission (IRS Employer
File Number) Identification No.)
108 Main Avenue S.W., Warren, Ohio 44482-1311
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 330-841-0123
ITEM 5. OTHER EVENTS
On May 4, 1998, the Company issued the following press release:
FOR IMMEDIATE RELEASE -- MAY 4, 1998
N E W S R E L E A S E
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Christopher Stanitz P. Scott Carson
Executive Vice President and President and Chief Executive Officer
Secretary Trumbull Financial Corporation
Second Bancorp, Inc. 105 High Street, NE
108 Main Avenue, SW Warren, OH 44482
Warren, OH 44482 (330) 373-1800
(330) 841-0234
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SECOND BANCORP AND TRUMBULL FINANCIAL
SIGN DEFINITIVE MERGER AGREEMENT
WARREN, OHIO--SECOND BANCORP, INCORPORATED (Nasdaq, "SECD") and
Trumbull Financial Corporation jointly announced today the signing of a
definitive agreement for the acquisition of Trumbull Financial by Second
Bancorp. Trumbull Financial's wholly-owned subsidiary, The Trumbull Savings and
Loan Company, will be merged into Second National Bank, a wholly-owned
subsidiary of Second Bancorp.
Under the terms of the agreement, Second Bancorp will exchange 3.78
shares of its common stock for each of the 869,364 outstanding shares of
Trumbull Financial. Based on the closing price of Second Bancorp on May 1, 1998
of $37.25, the transaction would be valued at approximately $122.4 million, or
$140.81 per share of Trumbull Financial. The merger, which will be accounted for
as a pooling of interests, is expected to be consummated in the fourth quarter,
pending Trumbull Financial and Second Bancorp shareholder approval, regulatory
approval and other customary conditions of closing. The transaction is expected
to be a tax-free reorganization for federal income tax purposes.
Trumbull Savings has five banking offices in Trumbull County, Ohio and
two offices in Jefferson County, Ohio. It also has an approved branch
application for Twinsburg in Summit County, Ohio. At March 31, 1998, Trumbull
Financial had total assets of $525.1 million, deposits of $382.8 million and
shareholders' equity of $38.1 million. Trumbull Financial reported net income of
$2.0 million for the six-month period ended March 31, 1998 with an annualized
return on average assets of 0.78% and a return on average equity of 10.49%.
Alan G. Brant, Chairman and President of Second Bancorp, stated, "This
affiliation is consistent with our previously stated growth plans to become a
leader in regional community banking and is a logical and attractive opportunity
for Second Bancorp. We are impressed with the way in which the management and
Board of Directors has operated Trumbull Savings and served its communities over
the years. Trumbull Savings is a great community savings bank with a strong
reputation for providing exceptional customer service. It is a natural fit with
our existing Trumbull County franchise and allows us to expand into Jefferson
County. We look forward to welcoming the Trumbull Savings customers and
employees."
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Brant continued, "We believe this transaction will help assure that
predominantly locally owned and operated community banking will continue to
flourish in the Mahoning Valley and Northeastern Ohio. Second Bancorp will
benefit from Trumbull's high liquidity levels and its attractive funding base.
We expect to be able to enhance Trumbull Financial's net interest margin and
gain operating efficiencies. We expect the transaction to be accretive to Second
Bancorp's earnings per share in the first full year and we expect this
transaction to enhance our efficiency ratio and our return on equity."
P. Scott Carson, President and Chief Executive Officer of Trumbull
Financial, commented, "In Second Bancorp we found local community bankers of a
like business philosophy who are both intensely focused on satisfying customers'
financial needs and maintaining strong commitments to the communities they
serve. Also, Second has demonstrated an outstanding track record in building
shareholder value. We have built a strong franchise and are excited to be
affiliating with Second Bancorp. Having Second Bancorp stock will enhance the
liquidity for our shareholders and our customers can expect us to offer
additional banking products and services."
Second Bancorp estimates that the synergies of the transaction will
produce annual cost savings equal to approximately 36% of Trumbull Financial's
operating expenses, or approximately $3.3 million, pre-tax. Second Bancorp
expects the effect of the merger on Trumbull Financial's workforce to be very
minimal and believes that normal attrition at both companies should absorb staff
overlaps.
Second Bancorp had previously announced, on April 1, 1998, the signing
of a definitive agreement to merge with Enfin, Inc. of Solon, Ohio. On a pro
forma basis, given the effect of both transactions, the combined company will
have assets of $1.5 billion, deposits of $1.1 billion, and shareholders' equity
of $122.6 million.
McDonald & Company Securities, Inc. is serving as Second Bancorp's
financial advisor and Sandler O'Neill & Partners, L.P. is serving as Trumbull
Financial's financial advisor in connection with the transaction.
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FORWARD LOOKING INFORMATION:
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This press release contains certain estimates and projections regarding the
combined company following the merger. These estimates and projections
constitute forward-looking statements (within the meaning of the Private
Securities Litigation Reform Act of 1995), which involve significant risks and
uncertainties. Actual results may differ materially from the results discussed
in these forward-looking statements. Internal and external factors that might
cause such a difference include, but are not limited to: (1) expected cost
savings from the mergers cannot be fully realized or realized within the
expected time frame; (2) revenues following mergers are lower than expected; (3)
competitive pressures among depository institutions increase significantly; (4)
costs or difficulties related to the integration; (5) changes in the interest
rate environment reduce net interest income; (6) general economic conditions
deteriorate, either nationally or in the states in which the combined company
will be doing business; and (7) legislation or regulatory changes adversely
affect the businesses in which the combined company would be engaged.
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SECOND BANCORP, INC.'S ACQUISITION OF TRUMBULL FINANCIAL CORPORATION
SUMMARY FACT SHEET
ANNOUNCEMENT DATE: May 4, 1998
DEAL STRUCTURE: Pooling of interests, tax-free exchange
Due diligence completed
Definitive agreement signed
$2.0 million break-up fee under certain circumstances
Second has received an option to purchase 19.9% of
Trumbull's shares under certain circumstances
Trumbull option to terminate transaction if
Second Bancorp's stock falls below $25.00
and under performs a selected group of bank
stocks. Second would have option to adjust
the exchange ratio if this occurs.
TERMS: 3.78 shares of Second Bancorp common for each share of
Trumbull Financial.
TIMING: Subject to normal regulatory approval and shareholder
approval by both companies. Closing expected in fourth
quarter 1998.
PRICING: Purchase price per share (a) $140.81
Price to book value (3/31/98) 321.4%
Price to LTM EPS 33.8 x
Price to 1998E EPS 31.6 x
Estimated transaction value (a) $122.4 million
Second Bancorp shares issues 3,286,195
(a) Based upon Second Bancorp's closing price on
May 1, 1998 of $37.25.
TRANSACTION RATIONALE:
- Ability to merge Trumbull Savings and Second National Bank
creating a $1.5 billion banking institution in northeast Ohio.
- Second Bancorp will have the leading market share in Trumbull
County with 23.6% of total deposits.
- Provides Second Bancorp with the ability to leverage costs of
retail banking over a larger base.
- The merger will achieve cost savings of 36% of Trumbull
Financial's operating expenses through consolidation of
staff functions, branch overlap and back-office processing.
- Second Bancorp will have the opportunity to enhance Trumbull
Financial's net interest margin through a reduction in
Trumbull Financial's liquidity levels and the introduction of
commercial loan and deposit products.
- Transaction is expected to be accretive to earnings per share
in the first full year based on cost savings alone.
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SECOND BANCORP'S ACQUISITION OF TRUMBULL FINANCIAL
PRO FORMA COMBINED FACT SHEET (UNAUDITED)
MARCH 31, 1998
($ IN THOUSANDS)
<TABLE>
<CAPTION>
SECOND TRUMBULL
BANCORP FINANCIAL PRO FORMA
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<S> <C> <C> <C>
Total assets $ 931,286 $ 525,122 $ 1,456,408
Loans receivable - net 564,987 316,851 881,838
Deposits 665,177 382,819 1,047,996
Shareholders' equity 80,977 38,082 119,059
Equity/assets 8.70% 7.25% 8.17%
Basic shares outstanding 6,830,689 869,364 10,116,884
Market capitalization ($millions) (a) $254.4 million NA $376.9 million
Number of banking offices 27 7 32
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<FN>
(a) Based upon Second Bancorp's closing price on May 1, 1998.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Second Bancorp, Incorporated
Date: May 7, 1998 /s/ David L. Kellerman
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David L. Kellerman, Treasurer
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