<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials (1)
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CHARTER ONE FINANCIAL, INC.
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(Name of Registrant as Specified In Its Charter)
CHARTER ONE FINANCIAL, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box)(2):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
(1) Personal solicitation materials filed pursuant to Section 240.14a-6(c).
(2) No Fee required.
<PAGE> 2
(SLIDE 1)
[CHARTER ONE LOGO]*
CHARTER ONE FINANCIAL, INC.
* Logo consists primarily of map of the United States with one large star and
horizontal stripes. Map also contains the phrase "FIRST IN THE UNITED STATES."
<PAGE> 3
(Slide 2)
COFI PROFILE (6/30/95)
Total Assets: $6.3 Billion
Total Deposits: $4.4 Billion
Market Cap: $550 Million
Shares Outstanding: 23.0 Million
Equity to Assets: 6.48%
Locations: 94
Rank: Largest Thrift in Ohio
7th Largest Federally Insured
Institution in Ohio
<PAGE> 4
(Slide 3)
COFI SIGNIFICANT RATIOS
<TABLE>
<CAPTION>
6 MONTHS
6-30-95
CATEGORY ANNUALIZED 1994 1993 1992
-------- ---------- ---- ---- ----
<S> <C> <C> <C> <C>
R.O.E.* 8.54% 17.92% 18.07% 18.70%
R.O.A.* 1.15% 1.18% 1.23% 1.01%
Equity to Assets 6.48% 6.02% 7.09% 5.93%
Efficiency Ratio 49.32% 50.49% 51.14% 57.40%
Non-Perf. Assets .47% .62% .89% 1.04%
P/E 8.0x 6.5x 7.4x 9.1x
Book Value $18.27 $16.35 $16.41 $13.36
Tangible Book Value $17.58 $16.14 $16.36 $13.36
</TABLE>
* Prior to Cumulative Effect of
FASB 109 for the Twelve
Months Ended December 31,
1993
<PAGE> 5
(SLIDE 4)
COFI: Proven Merger
Track Record
<TABLE>
<S> <C>
15 since 1980, Driver of:
Superior ROE* 18.31%
Superior ROA* 1.14%
EPS Growth compounded annually** 19.4%
</TABLE>
*Average 1/1/92-6/30/95
**12/31/88-6/30/95
<PAGE> 6
(SLIDE 5)
COFI EARNINGS GROWTH
(narrative summary of graphic information)
Slide contains a graph illustrating the earnings growth of COFI.
Earnings per share calculations are prior to the cumulative effect of change in
accounting principle and extraordinary items. The graph shows earnings per
share of (i) $.90 in 1988; (ii) $1.14 in 1989; (iii) $1.24 in 1990; (iv) $2.10
in 1991; (v) $2.20 in 1992; (vi) $2.67 in 1993; (vii) $2.92 in 1994; and (viii)
$1.56 for the six months ended June 30, 1995. The graph demonstrates a growth
rate of 19.4% compounded annually. The graph also reflects the acquisitions of
(i) First Akron, in 1989; (ii) Western, in 1989; (iii) Broadview, in 1990;
(iv) Civic, in 1991; (v) Toledo, in 1991; (vi) First American, in 1992; and
(vii) Women's Federal, in 1993.
<PAGE> 7
(SLIDE 6)
COFI: DIVIDENDS PER SHARE
(Declared and Paid)
(narrative summary of graphic information)
Slide contains a graph illustrating the growth in dividends per share
of COFI. The graph shows dividends per share of (i) $.21 in 1989; (ii) $.25 in
1990; (iii) $.28 in 1991; (iv) $.31 in 1992; (v) $.42 in 1993; (vi) $.59 in
1994; (vii) $.76 in 1995 (based on annualized August 1995 dividend).
<PAGE> 8
(SLIDE 7)
COFI EFFICIENCY RATIO
(narrative summary of graphic information)
Slide contains a graph illustrating the declining efficiency ratio
(other expenses divided by net interest income and other income, not including
gain on sale) of COFI. The graph shows efficiency ratios of (i) 71% in 1988;
(ii) 70% in 1989; (iii) 66% in 1990; (iv) 60% in 1991; (v) 57% in 1992; (vi)
51% in 1993; (vii) 50% in 1994; and (viii) 49% for the six months ended June
30, 1995. The graph also reflects the acquisitions of (i) First Akron, in
1989; (ii) Western, in 1989; (iii) Broadview, in 1990; (iv) Civic, in 1991;
(v) Toledo, in 1991; (vi) First American, in 1992; and (vii) Women's Federal,
in 1993.
<PAGE> 9
(SLIDE 8)
(narrative summary of graphic information)
Slide contains a map of Michigan and Ohio showing locations of COFI
and FFOM branch offices. Branch office locations are surrounded by an ellipse
with the words "IMPACT" in the ellipse. The FFOM and COFI logos are included
at the upper left and lower right corners of the slide, respectively.
<PAGE> 10
(Slide 9)
IMPACT
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Proforma Merged COFI Profile (6/30/95)
Total Assets: $12.9 Billion
Total Deposits: $6.9 Billion
Market Cap: $1.3 Billion
Equity to Assets: 6.4%
Locations: 157
Rank: 5th Largest Market
Cap Thrift in U.S.
<PAGE> 11
(SLIDE 10)
IMPACT
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Transaction Overview: Organization
Name: Charter One Financial, Inc.
Nasdaq/NMS: COFI
Headquarters: Cleveland, Ohio
Management: Charles John Koch, Chief Executive Officer (COFI)
Richard W. Neu, Chief Financial Officer (FFOM)
Mark D. Grossi, Chief Retail Banking Officer(COFI)
John D. Koch, Chief Lending and Credit Officer (COFI)
Anthony V. Sisto, Michigan Division President
Board Composition: 50%-50% (16 members total)
Charles John Koch, Chairman (COFI)
Jerome L. Schostak, Vice Chairman (FFOM)
<PAGE> 12
(SLIDE 11)
IMPACT
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Transaction Highlights
Benefits to COFI: Adds S.E. Michigan households
Expansion of proven retail strategy
Access to low cost retail funding base
Leverage COFI operating capacity and systems
for improved efficiency
Benefits to FFOM: Accelerates retail strategy
Allows better utilization of distribution
system
Retains capital management flexibility
Energizes earnings momentum
Shared Benefits: Enhanced earnings growth opportunities
Enhanced market share
Enhanced capital ratio
<PAGE> 13
(SLIDE 12)
IMPACT RESULT
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Proforma Market Capitalization
Dollars in Millions (August 31, 1995)
<TABLE>
<CAPTION>
Largest Publicly Traded Thrifts Market Capitalization
------------------------------- ---------------------
<S> <C>
(1) Great Western Financial $3,154.2
(2) Golden West Financial 2,797.0
(3) H.F. Ahmanson 2,781.3
(4) Washington Mutual 1,608.1
(5) COFI (proforma) 1,355.6
(6) GP Financial Corp. 1,306.4
(7) Dime Bancorp 1,318.7
(8) Standard Federal 1,229.6
(9) TCF Financial 971.2
(10) Washington Federal 921.0
</TABLE>
<PAGE> 14
(SLIDE 13)
IMPACT
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Strategic Plan
* Reposition FFOM balance sheet
- To reduce interest rate risk
- To simplify asset/liability composition
* Maintain one holding company/one bank concept
* Expand retail banking focus in Michigan
* Expand lending programs in Michigan
* Maintain low cost operating advantage
<PAGE> 15
(SLIDE 14)
IMPACT
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Credit Risk Ratios (6/30/95)
<TABLE>
<CAPTION>
Pro-forma
COFI FFOM Combination
---- ---- -----------
<S> <C> <C> <C>
Non-performing Assets to
Total Assets 0.47% 0.29% 0.42%
Allowance for Loan Losses
to Non-performing Loans 171.37% 131.24% 151.67%
Allowance for Loan Losses
to Average Loans 1.01% 0.90% 0.96%
</TABLE>
<PAGE> 16
(SLIDE 15)
IMPACT
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1995: Transition Year for FFOM
1994: 1st Quarter balance sheet restructuring
1995: * $1.2 billion of interest rate swaps mature
* MBS cashflow redeployed into liquidity
* Refocus on retail banking and lending
....This merger accelerates the transition....
<PAGE> 17
(SLIDE 16)
IMPACT
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Balance Sheet Repositioning
* Eliminate remaining $850 million of interest rate swaps
* Sell $2 billion of fixed-rate assets
* Repay $2 billion of short-term liabilities
* Repositioning & transaction charges of up to $87 million after-tax
<PAGE> 18
(SLIDE 17)
IMPACT
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Proforma Combination Highlights (6/30/95)
Assets
($ millions)
<TABLE>
<CAPTION>
Pro-Form
COFI FFOM Adjustments Combined
---- ---- ----------- --------
<S> <C> <C> <C> <C>
Loans $3,700 $2,900 $(400) $6,200
Mortgage-Backed
Securities 2,000 4,300 (900) 5,400
Liquidity 320 1,020 (700) 640
Total Assets 6,300 8,500 (1,900) 12,900
<CAPTION>
Liabilities & Equity
<S> <C> <C> <C> <C>
Retail Deposits $4,400 $2,900 (400) $6,900
Borrowings 1,400 5,000 (1,500) 4,900
Equity 410 481 (67) 824
</TABLE>
(SLIDE 18)
IMPACT
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Risk Profile of Combined Company
* Outstanding asset quality (NPA ratio: 0.42%)
* Dramatic reduction of borrowings and interest rate derivatives
* Capital in excess of 6%
* No meaningful goodwill or intangible assets
* Efficiency ratio 50%
<PAGE> 19
(SLIDE 18)
IMPACT
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Risk Profile of Combined Company
* Outstanding asset quality (NPA ratio: 0.42%)
* Dramatic reduction of borrowings and interest rate derivatives
* Capital in excess of 6%
* No meaningful goodwill or intangible assets
* Efficiency ratio 50%
<PAGE> 20
(SLIDE 19)
IMPACT
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Proforma Earnings ($000)
<TABLE>
<CAPTION>
$ Net Income $ Per Share
------------ -----------
<S> <C> <C> <C> <C>
2nd Quarter 1995 Annualized
COFI Core Earnings $72,700 $3.16
2nd Quarter 1995 Annualized
FFOM Core Earnings 45,200 ---
Benefit of 1995 FFOM Swap
Roll Off 22,000 ---
------- -----
Combined Earnings* 139,900 3.05
======= =====
After-Tax Synergy Savings 7,300 to 9,800 0.16 to 0.21
Balance Sheet Repositioning 4,200 to 6,500 0.09 to 0.14
-------- -------- ----- -----
$151,400 $156,200 $3.30 $3.40
======== ======== ===== =====
</TABLE>
4.4% to 7.6%
(% change from
COFI Standalone)
*Based on 45.9 million shares at 1.2 exchange ratio
<PAGE> 21
(SLIDE 20)
IMPACT
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Identified Expense Reductions
9% of Combined G&A
Estimated total $15 million (3/4 to be realized in 1996)
Consolidate Reduce
----------- ------
* Branch operations support * Professional services
* Data processing functions * FDIC insurance expense
* Financial functions
* Human resources
* Holding company/
administrative expense
* Loan servicing
<PAGE> 22
(SLIDE 21)
IMPACT
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Proforma Retail Deposit Mix
(6/30/95)
(narrative summary of graphic information)
Slide contains a pie chart displaying the components of the proforma retail
deposit mix as of June 30, 1995, which were the following: (i) retail
certificates, 62.5%; (ii) passbook accounts, 15.4%; (iii) money market
accounts, 12.2%; and (iv) checking accounts, 9.2%. At June 30, 1995, FFOM had
$2.5 billion in deposits with a weighted average cost of 4.17%, and COFI had
$4.4 billion in deposits with a weighted average cost of 4.80%.
<PAGE> 23
(SLIDE 22)
COFI RECURRING CHECKING ACCOUNT FEES
(narrative summary of graphic information)
Slide contains a graph illustrating the annual growth in recurring checking
account fees. The graph shows fees of (dollars in millions) (i) $7.3 in 1992;
(ii) $9.7 in 1993; (iii) $13.3 in 1994; and (iv) $15.1 for the six months ended
June 30, 1995 (annualized).
<PAGE> 24
(SLIDE 23)
COFI LOAN/LEASE BALANCES
(narrative summary of graphic information)
Slide contains a graph illustrating the quarterly growth in loan/lease balances
of COFI. The graph shows loan/lease balances of (dollars in billions) (i)
$3.24 as of June 30, 1993; (ii) $3.27 as of September 30, 1993; (iii) $3.30 as
of December 31, 1993; (iv) $3.41 as of March 31, 1994; (v) $3.56 as of June 30,
1994; (vi) $3.61 as of September 30, 1994; (vii) $3.64 as of December 31, 1994;
(viii) $3.75 as of March 31, 1995; and (ix) $3.95 as of June 30, 1995. The
graph demonstrates an annualized growth rate of 10.5% since March 31, 1995.
<PAGE> 25
(SLIDE 24)
IMPACT
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Enhanced Revenue Opportunities
Expand with COFI products
* Consumer loan products
* Construction lending products
* Residential lending products
* Transaction accounts
Introduce COFI products
* High performance checking programs
* Commercial mortgage lending
* Corporate and industrial lending
* Equipment leasing
* Tax deferred annuities sales
* Mutual funds sales
Maximize
* Capital flexibility
<PAGE> 26
(SLIDE 25)
IMPACT
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Future Earnings Drivers
* Incremental loan growth $250 million/year
* Incremental fee revenue $4 to 5 million/year
* Redeployment of excess capital $150-200 million*
* as of 12/31/95, in excess of well-capitalized designation
<PAGE> 27
(Slide 26)
RECENT DEVELOPMENTS
- Supervisory Goodwill Litigation
- BIF/SAIF Issue
<PAGE> 28
(SLIDE 27)
IMPACT
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Impact of the Combination
* Accretive in 1996
* Significant future earnings opportunities
* Substantial resultant capital
* Outstanding asset quality
