<PAGE> 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 24, 1998
CITIZENS BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Ohio 0-8209 34-1372535
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
10 East Main Street
Salineville, Ohio 43945
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (330) 679-2328
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events
This current report on Form 8-K, including the investor materials,
contains forward-looking statements that involve risk and uncertainty. It should
be noted that a variety of factors could cause the combined company's actual
results and experience to differ materially from the anticipated results or
other expectations expressed in the combined company's forward-looking
statements.
The risks and uncertainties that may affect the operations,
performance, development, growth projections and results of the combined
company's business include, but are not limited to, the growth of the economy,
interest rate movements, timely development by the combined company of
technology enhancements for its products and operating systems, the impact of
competitive products, services and pricing, customer business requirements,
Congressional legislation, acquisition cost savings and revenue enhancements and
similar matters. Readers of this report are cautioned not to place undue
reliance on forward-looking statements which are subject to influence by the
named risk factors and unanticipated future events. Actual results, accordingly,
may differ materially from management expectations.
<PAGE> 2
On July 22, 1998, Citizens Bancshares, Inc. ("Citizens"), Mid Am, Inc.
("Mid Am") and The Ohio Bank ("Ohio Bank") announced the signing of a definitive
agreement to merge (the "Merger"). Citizens and Mid Am previously announced on
May 21, 1998 that they will combine in a merger-of-equals transaction. In
addition, on July 23, 1998, in connection with the transactions contemplated by
the Merger, Citizens and Ohio Bank entered into a stock option agreement in
which Citizens was granted the option to purchase up to 5.42% of Ohio Bank
common stock.
Under the terms of the Merger, Ohio Bank shareholders will receive
63.25 (the "Exchange Ratio") shares of Citizens common stock for each Ohio Bank
share owned as of the closing. The Merger will be a tax-free exchange of common
stock and will be accounted for as a "pooling of interests." The Merger has been
approved unanimously by the Board of Directors of each of Citizens and Ohio
Bank. The Merger is subject to approval by the shareholders of Ohio Bank and is
subject to certain regulatory approvals.
Following the Merger, Ohio Bank will become a wholly owned subsidiary
of the yet-to-be-named Citizens/Mid Am entity, an Ohio bank holding company.
Ohio Bank will maintain its headquarters in Findlay, Ohio and will operate under
the name "The Ohio Bank." After completion of the merger-of-equals transaction
between Citizens and Mid Am, and as soon as reasonably practicable after
consummation of the Merger and the receipt of all necessary regulatory
approvals, two Mid Am affiliate banks, specifically American Community Bank,
N.A. ("Americom") and Amerifirst Bank, N.A. ("Amerifirst"), will be merged into
Ohio Bank, and five branch offices of Mid American National Bank & Trust Company
("Mid Am Bank") will be transferred to Ohio Bank. In addition, one of Mid Am's
affiliates, First National Bank Northwest Ohio ("First National"), will be
merged into Mid Am Bank. Members of the Board of Directors of First National
will join the board of Mid Am Bank.
The Board of Directors of Ohio Bank will consist of members of the Ohio
Bank board, as well as members of the boards of Americom and Amerifirst. Ohio
Bank will also gain three Board seats on the new Citizens/Mid Am bank holding
company.
Item 7. Exhibits.
99.1 Text of Press Release, dated July 22, 1998, issued by Citizens, Mid Am
and Ohio Bank.
99.2 Investor presentation materials used by Citizens, Mid Am and Ohio Bank
on July 22, 1998 related to the proposed Merger.
-2-
<PAGE> 3
SIGNATURE
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.
CITIZENS BANCSHARES, INC.
By: /s/ Marty E. Adams
-----------------------------------
Name: Marty E. Adams
Title: President and
Chief Executive Officer
Date: July 24, 1998
-3-
<PAGE> 1
Exhibit 99.1
FOR IMMEDIATE RELEASE
THE OHIO BANK TO AFFILIATE WITH
CITIZENS BANCSHARES, INC. AND MID AM, INC.
July 22, 1998, Citizens Bancshares, Inc., (Salineville, Ohio NASDAQ:
CICS ("Citizens") and Mid Am, Inc., (Bowling Green, Ohio, NASDAQ: MIAM) ("Mid
Am") and The Ohio Bank, Findlay, Ohio ("Ohio Bank") announced today the signing
of a definitive agreement to merge. Citizens and Mid Am had previously
announced on May 21, 1998, a merger of equals transaction to create a bank with
assets approximating $4 billion. Ohio Bank represents a significant addition
that will result in the company being the 7th largest bank headquartered in
Ohio.
Under the terms of the agreement, Ohio Bank shareholders will receive
63.25 shares of Citizens common stock for each Ohio Bank share owned as of the
closing. Based on the closing price of Citizens common stock on July 20, 1998,
the exchange ratio represents an aggregate value of approximately $191 million.
The transaction is structured as a tax-free exchange of stock, will be accounted
for as a "pooling of interests", and is expected to close by December 31, 1998.
Management anticipates that the acquisition will be accretive to the combined
company's earnings per share by the end of the first year of combined
operations.
It is currently expected that a one-time, pre-tax restructuring charge
of approximately $5 million will be incurred in the fourth quarter of 1998 in
connection with the acquisition. As a result of the efficiencies gained in the
transaction, annualized pre-tax cost savings of approximately $4 million are
anticipated in direct relation to the Ohio Bank transaction.
Following the affiliation, Ohio Bank will become a wholly owned
subsidiary of the yet-to-be-named Citizens/Mid Am, an Ohio bank holding
company. The bank will maintain its headquarters in Findlay, Ohio, and will
operate under the name The Ohio Bank. In addition, two Mid Am affiliate banks,
specifically American Community Bank, N.A., based in Lima ("Americom") and
Amerifirst Bank, N.A., headquartered in Xenia ("Amerifirst") will become part of
Ohio Bank as will five branch offices of Mid American National Bank & Trust
Company, which are located in Ohio Bank's market. The resulting Findlay-based
Ohio Bank will have assets of about $1.2 billion.
<PAGE> 2
Jack W. Donaldson, President and Chief Executive Officer of Ohio Bank,
views the merger as a "natural evolution of Ohio Bank." "We will continue to
employ the community bank concept of exceptional service from exceptional people
with the added resources of a larger institution," Donaldson said. He added, "it
is a great opportunity for our 250 plus employees and we are happy that the Ohio
Bank name will survive and that our loyal customers will enjoy increased product
offerings and services, which will accompany our positive growth".
Richard R. Hollington, Jr., will continue to serve as Chairman of Ohio
Bank, and Jack W. Donaldson will continue as President and Chief Executive
Officer.
The Board of Directors of Ohio Bank will consist of members of the
Ohio Bank board and members of the boards of Americom and Amerifirst.
Additionally, Ohio Bank will gain three Board seats on the new holding company,
one of which will participate on the Board's Executive Committee.
"We are extremely fortunate to have the opportunity to forge a
partnership with The Ohio Bank, which is by all measures an outstanding
organization," stated Marty E. Adams, President and CEO of Citizens. "Over the
111 years of its presence in Findlay, The Ohio Bank has established itself as a
market leader and a responsible corporate citizen, and we look forward to the
continuation of their proud heritage together," he continued.
Concurrently, Mid Am, Inc.'s Bryan-based bank, First National Bank
Northwest Ohio ("First National"), will be merged into Mid Am Bank. Members of
the Board of Directors of First National will join the board of Mid Am Bank,
ensuring representation from First National's important market area.
"The combination of Americom and Amerifirst into The Ohio Bank and the
joining of First National with Mid Am Bank represents an exciting new stage in
the course of our company's growth," commented David R. Francisco, President
and COO of Mid Am. "We will continue to be deeply committed to the communities
of Lima, Xenia and Bryan through a continued operational presence and local
banking center boards."
Ohio bank is a full service commercial bank with over $600 million in
assets, $53 million in shareholder equity, 18 branches and 250 employees. Ohio
Bank has the number one market share in Hancock and Putnam counties, its
principal market area.
-2-
<PAGE> 3
Citizens is a $1.8 billion bank holding company and the parent of
Freedom Financial Life Insurance Company; Freedom Express, Inc.; The citizens
Banking Company, which has 48 banking locations in six Ohio counties and one
location in Hancock County, West Virginia; and Century National Bank, which has
12 banking locations in two Pennsylvania counties.
Mid Am is a diversified financial services holding company
head-quartered in Bowling Green, Ohio. The Company's banking affiliates
include Mid American National Bank and Trust Company, Toledo, Ohio; First
National Bank Northwest Ohio, Bryan, Ohio; American Community Bank, N.A., Lima,
Ohio; Amerifirst Bank, N.A., Xenia, Ohio; and Adrian State Bank, Adrian,
Michigan. The Company's financial service affiliates include Mid Am Recovery
Services, Inc., Clearwater, Florida; MFI Investment Corp., Bryan, Ohio; Mid Am
Credit Corp., Columbus, Ohio; Mid Am Private Trust, N.A., Cincinnati, Ohio; Mid
Am Financial Services, Inc., Carmel, Indiana; Simplicity Mortgage Consultants,
Marion, Indiana; Mid Am Title Insurance Agency, Inc., Adrian, Michigan; and Mid
Am Information Services, Inc., Bowling Green, Ohio.
CONTACTS
RICHARD R. HOLLINGTON, III MARTY E. ADAMS DAVID R. FRANCISCO
Chief Operating Officer President and CEO President and COO
The Ohio Bank Citizens Bancshares, Inc. Mid Am, Inc.
419/424-2027, Ext. 2107 330/679-2328, Ext. 2801 419/327-6305
*******
The information contained in this press release contains
forward-looking statements regarding expected future financial performance which
are not historical facts and which involve risks and uncertainties. Actual
results and performance could differ materially from those contemplated by these
forward-looking statements.
-3-
<PAGE> 4
THE CITIZENS BANKING COMPANY, INC. & MID AM, INC. & OHIO BANK, INC.
PRO FORMA BRANCH LOCATIONS
[Map Of Ohio Counties With Pro Forma Branch Locations]
------------------------------
PRO FORMA BRANCH LOCATIONS
--------------------------
__ Mid Am, Inc.
__ Ohio Bank, Inc.
__ Citizens Bancshares, Inc.
------------------------------
<PAGE> 1
Exhibit 99.2
================================================================================
Citizens Bancshares, Inc.
&
Ohio Bank
SYNOPSIS OF MERGER
JULY 22, 1998
================================================================================
This current report on Form 8-K, including the investor materials filed as
an exhibit hereto, contains forward-looking statements that involve risk and
uncertainty. It should be noted that a variety of factors could cause the
combined company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the combined company's
forward-looking statements.
The risks and uncertainties that may affect the operations, performance,
development, growth projections and results of the combined company's business
include, but are not limited to, the growth of the economy, interest rate
movements, timely development by the combined company of technology enhancements
for its products and operating systems, the impact of competitive products,
services and pricing, customer based requirements, Congressional legislation,
acquisition cost savings and revenue enhancements and similar matters. Readers
of this report are cautioned not to place undue reliance on forward-looking
statements which are subject to influence by the named risk factors and
unanticipated future events. Actual results, accordingly, may differ materially
from management expectations.
<PAGE> 2
TRANSACTION DESCRIPTION - TERM SHEET
================================================================================
<TABLE>
<S> <C>
STRUCTURE: Ohio Bank will be merged into an interim bank formed by Citizens
in a stock-for-stock transaction and will become affiliated with the
yet-to-be-named Citizens/Mid Am entity
Tax-free exchange of common stock accounted for as a
"pooling of interests"
EXCHANGE RATIO: Fixed Exchange ratio of 63.25 Citizens shares for each share
of Ohio Bank
PRO FORMA DILUTED SHARES OUTSTANDING 41.5 million
PRO FORMA HOLDING CO. Combined assets: $4.6 billion
Combined market capitalization: $1.5 billion
FRANCHISE REORGANIZATION Current Mid Am affiliates American Community Bank and Amerifirst Bank
as well as five Mid Am bank branches will be merged into Ohio Bank
EXPECTED CLOSING Fourth quarter 1998, subject to regulatory and shareholder approval
</TABLE>
<PAGE> 3
MERGER BENEFITS
================================================================================
* Acquisition creates a $4.6B asset size Ohio-based commercial banking
franchise with approximately $1.5B in market capitalization
* Pre-tax cost savings of approximately $4.0mm will result in accretion
to Citizens/Mid Am previously projected 1999 EPS of approximately
$2.00
* Ohio Bank provides market overlap with Mid Am (leading market share in
Putnam and Hancock counties)
* Accelerates realization of non-bank revenue diversification strategy
due to larger customer base
<PAGE> 4
PRO FORMA CITIZENS BANCSHARES, INC.
BRANCH LOCATIONS
[MAP OF OHIO COUNTIES WITH BRANCH LOCATIONS]
BRANCH LOCATIONS:
-----------------
__ Citizens Bancshares, Inc. with Mid Am
__ Ohio Bank
<PAGE> 5
- --------------------------------------------------------------------------------
THE OHIO BANK
(dollar values in thousands except share data)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
BALANCE SHEET ITEMS (AS OF 3/31/98):
------------------------------------------------------------
Total Assets - $590,722
Total Deposits - $530,981
Total Equity - $50,601
[MAP OF OHIO COUNTIES WITH MARKET SHARE RANKS]
INCOME STATEMENT ITEMS (AS OF 3/31/98):
------------------------------------------------------------
ROAA (LQA)- 1.18%
ROAE (LQA)- 13.58%
Efficiency Ratio (Mar. Qtr.)- 62.08%
Diluted EPS (LQA) - $82.17
MARKET SHARE RANK
- ------------------------------------------------------------
<S> <C>
1. Hancock, OH - #1 5. Franklin, OH - #11 TRANSACTION PRICING INFORMATION:
2. Putnam, OH - #1 6. Cuyahoga, OH - #22 ------------------------------------------------------------
3. Wyandot, OH - #6
4. Seneca, OH - #10 Deal Price (63.25 Exchange)- $2,205.84
Deal Value - $191 mm
Deal Price/Tan. Book Value - 392%
Deal Price/LQA EPS - 27.81x
BRANCH DETAIL
- ------------------------------------------------------------
<S> <C>
# of Offices 18
Avg. Deposits per Office - $29,499
</TABLE>
<PAGE> 6
- -------------------------------------------------------------------------------
CITIZENS BANCSHARES, INC.
(dollar values in thousands except share data)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
BALANCE SHEET ITEMS (AS OF 3/31/98):
---------------------------------------------
[Map of Market Share Rank] Total Assets - $1,785,682
Total Deposits - $1,401,967
Total Equity - $157,578
INCOME STATEMENT ITEMS (AS OF 3/31/98):
---------------------------------------------
ROAA (LQA) - 1.54%
ROAE (LQA) - 17.45%
Efficiency Ratio (Mar. Qtr) - 49.90%
Diluted EPS (LQA) - $1.56
MARKET SHARE RANK
(TOTAL COUNTY DEPOSITS
greater than $900mm)
- -------------------------------
1. Jefferson, OH - #1
2. Columbiana, OH - #1 MARKET INFORMATION:
3. Beaver, PA - #3 --------------------------------------------
4. Belmont, OH - #7
5. Stark, OH - #7 Stock Price (Close 7/20/98) - $36.38
6. Mahoning, OH - #8 Market Capitalization - $645,260
7. Butler, PA - #16 Price/Tangible Book Value - $405.97%
Price/LQA EPS - 23.32X
BRANCH DETAIL:
- -------------------------------
# of Offices - 62
Avg. Deposits per
Office - $23,366
</TABLE>
<PAGE> 7
- -------------------------------------------------------------------------------
MID AM, INC.
(dollar values in thousands except share data)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
BALANCE SHEET ITEMS (AS OF 3/31/98):
---------------------------------------------
[Map of Market Share Rank] Total Assets - $2,239,113
Total Deposits - $1,781,482
Total Equity - $163,231
INCOME STATEMENT ITEMS (AS OF 3/31/98):
---------------------------------------------
ROAA (LQA) - 1.34%
ROAE (LQA) - 17.62%
Efficiency Ratio (Mar. Qtr) - 70.28%
Diluted EPS (LQA) - $1.24
MARKET SHARE RANK
(TOTAL COUNTY DEPOSITS
greater than $900mm)
- -------------------------------
1. Wood, OH - #1
2. Greene, OH - #5 MARKET INFORMATION:
3. Lenawee, MI - #6 --------------------------------------------
4. Allen, OH - #6
5. Lucas, OH - #8 Stock Price (Close 7/20/98) - $27.25
6. Warren, OH - #20 Market Capitalization - $636,379
7. Montgomery, OH - #17 Price/Tangible Book Value - $414.13%
Price/LQA EPS - 22.0X
BRANCH DETAIL:
- -------------------------------
# of Offices - 84
Avg. Deposits per
Office - $23,441
</TABLE>
<PAGE> 8
CONTRIBUTION ANALYSIS
===============================================================================
Citizens' Financials Include Century Acquisition (Pooling Accounting)
<TABLE>
Citizens* Mid Am Ohio Bank
Quarter Ended Quarter Ended Quarter Ended Pro Forma
Assets 31-Mar-98 31-Mar-98 31-Mar-98 31-Mar-98
- ----------- ------------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Securities 534,198 460,738 164,822 1,159,758
Loans, Net 1,128,046 1,591,468 407,763 3,127,277
Intangibles 8,701 8,586 4,042 21,329
Other Assets 114,737 178,321 14,095 307,153
- --------------------------- ---------- ----------- ---------- ---------
Total Assets $1,785,682 $2,239,113 $590,722 4,615,517
=========================== ========== =========== ========== =========
Liabilities
- -----------
Deposits 1,401,967 1,781,482 530,981 3,714,430
Borrowings 210,821 269,400 3,322 483,543
Other Liabilities 15,316 25,000 5,818 46,134
- --------------------------- ---------- ----------- ---------- ---------
Total Liabilities $1,628,104 $2,075,882 $540,121 4,244,107
=========================== ========== =========== ========== =========
Total Shareholders' Equity $157,578 $163,231 $50,601 371,419
- --------------------------- ---------- ----------- ---------- ---------
Total Liabilities & Equity $1,785,682 $2,239,113 $590,722 4,615,517
=========================== ========== =========== ========== =========
Net Income (Mar. Qtr. Annualized) 27,520 29,772 6,584 63,876
=========================== ========== =========== ========== =========
Net Income (Last Twelve Months) 24,238 28,757 6,319 59,314
=========================== ========== =========== ========== =========
<FN>
- ------------------------------------------------
*Earnings Exclude One-Time Deal Related Expenses
</TABLE>
