<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-18840
BancFirst Ohio Corp.
(Exact name of registrant as specified in its charter)
Ohio 31-1294136
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
422 Main Street Zanesville, Ohio 43701
(Address of principal executive offices)
(Zip Code)
(614) 452-8444
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding as of May 8, 1997
----- -----------------------------
Common Stock, No Par Value 3,980,647
1
<PAGE> 2
INDEX
BANCFIRST OHIO CORP.
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
- ----------------------------- --------
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheet.................................................. 3
Consolidated Statement of Income............................................ 4
Consolidated Statement of Cash Flows........................................ 5
Notes to Consolidated Financial Statements.................................. 6-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................................... 9-20
PART II. OTHER INFORMATION
Other Information.................................................................... 21
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits on Item 601 of Regulation S-K
(b) Exhibit 27: Financial Data Schedule
(c) Reports on Form 8-K
Signatures ................................................................... 22
</TABLE>
2
<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BANCFIRST OHIO CORP.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31 DEC. 31
1997 1996
----------- -----------
ASSETS:
<S> <C> <C>
Cash and due from banks $ 19,950 $ 18,856
Federal funds sold 2,450 2,193
Securities held-to-maturity, at amortized cost (approximate
fair value of $46,240 and $47,652 in 1997 and 1996,
respectively) 46,000 46,799
Securities available-for-sale, at fair value 248,658 237,777
----------- -----------
Total securities 294,658 284,576
----------- -----------
Loans, net of unearned income 723,667 721,855
Allowance for possible loan losses (6,691) (6,599)
----------- -----------
Net loans 716,976 715,256
----------- -----------
Bank premises and equipment, net 8,084 7,962
Accrued interest receivable 7,200 6,696
Intangible assets 13,799 14,187
Other assets 5,571 7,194
----------- -----------
Total assets $ 1,068,688 $ 1,056,920
=========== ===========
LIABILITIES:
Deposits:
Non-interest-bearing deposits $ 48,847 $ 56,179
Interest-bearing deposits 684,351 676,510
----------- -----------
Total deposits 733,198 732,689
Short-term borrowings 4,500 11,650
Long-term borrowings 245,473 224,959
Accrued interest payable 2,851 2,255
Other liabilities 4,238 7,473
----------- -----------
Total liabilities 990,260 979,026
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, $10 par value, 7,500,000 shares authorized,
4,033,919 shares issued in 1997 and 1996, respectively 40,340 40,340
Capital in excess of par value 22,834 22,807
Retained earnings 17,063 15,466
Unrealized holdings gains (losses) on securities
available-for-sale, net (761) 304
Treasury stock, 54,165 and 54,420 shares, at cost, in 1997
and 1996, respectively (1,048) (1,023)
----------- -----------
Total shareholders' equity 78,428 77,894
----------- -----------
Total liabilities and shareholders' equity $ 1,068,688 $ 1,056,920
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
BANCFIRST OHIO CORP.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATE)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------
1997 1996
------- -------
<S> <C> <C>
Interest income:
Interest and fees on loans $15,512 $ 6,187
Interest and dividends on securities:
Taxable 4,618 2,537
Tax-exempt 332 329
Other interest income 189 88
------- -------
Total interest income 20,651 9,141
------- -------
Interest expense:
Time deposits, $100 and over 1,873 710
Other deposits 6,059 2,668
Long-term borrowings 3,589 838
Short-term borrowings 37 192
------- -------
Total interest expense 11,558 4,408
------- -------
Net interest income 9,093 4,733
Provision for possible loan losses 298 292
------- -------
Net interest income after
provision for possible loan losses 8,795 4,441
------- -------
Other income:
Trust and custodian fees 422 375
Customer service fees 463 411
Gain on sale of loans 491 596
Other 164 180
Investment securities gains, net 22 2
------- -------
Total other income 1,562 1,564
------- -------
Other expense:
Salaries and employee benefits 3,523 1,887
Net occupancy expense 531 205
Amortization of intangibles 396 7
Other 1,936 1,288
------- -------
Total other expense 6,386 3,387
------- -------
Income before income taxes 3,971 2,618
Provision for Federal income taxes 1,339 763
------- -------
Net income $ 2,632 $ 1,855
======= =======
Net income per common share $ 0.66 $ 0.62
======= =======
Weighted average common shares outstanding 3,981 2,972
======= =======
Cash dividends per common share $ 0.26 $ 0.25
======= =======
Total cash dividends paid $ 1,035 $ 743
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
BANCFIRST OHIO CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
--------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,632 $ 1,855
Adjustments to reconcile net income to net cash provided
by operations:
Depreciation and amortization 1,017 483
Provision for possible loan losses 298 292
Gain on sale of assets (513) (598)
Increase in interest receivable (504) (377)
Decrease in other assets 1,786 3,576
Increase in interest payable 596 176
Decrease in other liabilities (1,735) (397)
FHLB stock dividend (234) (74)
-------- --------
Net cash provided by operating activities 3,343 4,936
-------- --------
Cash flows from investing activities:
(Increase) decrease in federal funds sold and short term investments (845) 487
Proceeds from maturities of securities held-to-maturity 769 94
Proceeds from maturities and sales of securities available-for-sale 20,995 9,550
Purchase of securities held-to-maturity -- (487)
Purchase of securities available-for-sale (32,801) (10,838)
Increase in loans, net (5,402) (14,212)
Decrease in payable related to acquisition of County Savings Bank (1,500) --
Purchase of loans (7,374) --
Purchases of equipment and other assets (420) (329)
Proceeds from sale of loans 11,339 5,673
-------- --------
Net cash used in investing activities (15,239) (10,062)
-------- --------
Cash flows from financing activities:
Decrease in short-term borrowings (7,150) (2,500)
Increase (decrease) in other long-term borrowings 20,514 (104)
Net increase in deposits 659 7,691
Cash dividends paid (1,035) (743)
Reissuance of treasury stock, net 2 44
-------- --------
Net cash provided by financing activities 12,990 4,388
-------- --------
Net increase (decrease) in cash and due from banks 1,094 (738)
Cash and due from banks, beginning of period 18,856 14,102
-------- --------
Cash and due from banks, end of period $ 19,950 $ 13,364
======== ========
Supplemental cash flow disclosures:
Income taxes paid $ -- $ 50
======== ========
Interest paid $ 11,112 $ 4,232
======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements
5
<PAGE> 6
BANCFIRST OHIO CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
The consolidated financial statements for interim periods are unaudited;
however, in the opinion of management of BancFirst Ohio Corp. ("Company"), the
accompanying consolidated financial statements contain all material adjustments
(consisting of only normal recurring adjustments) necessary to present fairly
the financial position and results of operations and cash flows for the periods
presented. The unaudited financial statements are presented in accordance with
the requirements of Form 10-Q and do not include all disclosures normally
required by generally accepted accounting principles. Reference should be made
to the Company's consolidated financial statements and notes thereto included in
the Company's annual report on Form 10-K for the year ended December 31, 1996
for additional disclosures, including a summary of the Company's accounting
policies. The results of operations for the three month period ended March 31,
1997 are not necessarily indicative of the results to be expected for the full
year. Certain reclassifications have been made to the 1996 consolidated
financial statements to conform to the 1997 presentation.
1) BASIS OF PRESENTATION:
The consolidated financial statements include the accounts of the
Company and each of its wholly owned subsidiaries. All significant
intercompany transactions and accounts have been eliminated in
consolidation.
On August 14, 1996, the Company acquired County Savings Bank ("County")
in a transaction accounted for under the purchase method of accounting
for business combinations. Accordingly, the Company's consolidated
financial statements include the operating results of County from the
date of acquisition. At the time of acquisition, County had
approximately $554 million in total assets, $411 million in loans and
$365 million in total deposits. The Company also recorded goodwill and
other intangible assets of $14.5 million as a result of the application
of purchase accounting. Funding for the acquisition was provided by
proceeds from the issuance of 1 million shares of common stock, $15
million of bank borrowings and approximately $7 million of available
cash.
The following summarizes the pro-forma results of operations for the
three months ended March 31, 1997 and 1996 as if County had been
acquired at the beginning of such period:
<TABLE>
<CAPTION>
MARCH 31,
1997 1996
---- ----
<S> <C> <C>
Net Interest income $9,093 $8,206
Net Income $2,632 $2,443
Net Income per share $ .66 $ .62
</TABLE>
6
<PAGE> 7
2) INVESTMENT SECURITIES:
The amortized cost and estimated fair value of investment securities
are as follows:
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31,1996
-------------- ----------------
SECURITIES HELD-TO-MATURITY COST FAIR VALUE COST FAIR VALUE
- --------------------------- ---- ---------- ---- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Other U.S. government agencies $ 2,084 $ 2,094 $ 1,999 $ 2,000
State and political subdivisions 6,262 6,295 6,266 6,375
Mortgage-backed and related securities 34,864 35,061 35,690 36,431
Other 2,790 2,790 2,844 2,846
-------- -------- -------- --------
$ 46,000 $ 46,240 $ 46,799 $ 47,652
======== ======== ======== ========
SECURITIES AVAILABLE-FOR-SALE
- -----------------------------
U.S. treasury securities $ 11,268 $ 11,315 $ 11,775 $ 11,881
Other U.S. government agencies 14,803 14,566 12,446 12,428
State and political subdivisions 16,113 16,096 16,090 16,301
Mortgage-backed and related securities 191,090 190,153 182,509 182,672
Other 16,537 16,528 14,495 14,495
-------- -------- -------- --------
$249,811 $248,658 $237,315 $237,777
======== ======== ======== ========
</TABLE>
3) LOANS AND LEASES BY CATEGORIES:
<TABLE>
<CAPTION>
MARCH 31 DEC. 31
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Commercial, financial and agricultural $303,745 $299,630
Real estate - mortgage 332,168 337,911
Real estate - construction 8,901 7,716
Consumer installment 78,853 76,598
-------- --------
Total $723,667 $721,855
======== ========
</TABLE>
4) LONG-TERM BORROWINGS
Long-term borrowings as of March 31, 1997 and December 31, 1996 were as
follows:
<TABLE>
<CAPTION>
MARCH 31 DEC. 31
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Term reverse repurchase agreement (5.95%) due 1997 $ 5,000 $ 5,000
Term reverse repurchase agreement (6.05%) due 1998 5,000 5,000
Federal Home Loan Bank Advances 220,473 199,959
Term debt with a financial institution (LIBOR + 1.35%) 15,000 15,000
-------- --------
Total $245,473 $224,959
======== ========
</TABLE>
7
<PAGE> 8
Minimum annual retirements on long-term borrowings for the next five
years consisted of the following:
<TABLE>
<CAPTION>
MARCH 31,1997 DECEMBER 31, 1996
------------- -----------------
(IN THOUSANDS)
MATURITY (PERIOD AVERAGE AVERAGE
ENDING DECEMBER 31) RATE AMOUNT RATE AMOUNT
- ------------------- ---- ------ ---- ------
<S> <C> <C> <C> <C>
1996 5.69% $ 180,365 6.42% $ 169,851
1997 5.93% 19,734 5.93% 17,734
1998 6.20% 17,266 6.24% 14,266
1999 6.50% 5,051 6.76% 3,051
2000 6.47% 6,088 6.75% 3,088
2001 and thereafter 6.87% 16,969 6.64% 16,969
--------- --------
Total 5.86% $ 245,473 6.39% $224,959
========= ========
</TABLE>
Federal Home Loan Bank ("FHLB") advances must be secured by eligible
collateral as specified by the FHLB. Accordingly, the Company has a
blanket pledge of its first mortgage loan portfolio as collateral for
the advances outstanding, with a required minimum ratio of collateral
to advances of 150%. Additionally, the stock of the FHLB owned by the
Company (book value at March 31, 1997 of $14.7 million) is pledged as
collateral for these borrowings.
The Company has no commitments to borrow additional funds from the FHLB
as of March 31, 1997.
5) NEW ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1997, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities".
This statement provides accounting and reporting standards for loan
securitizations based on control of the underlying assets. It also
provides accounting and implementation guidance for other transfers,
including partial transfers of loans, servicing of financial assets,
repurchase agreements, securities lending and extinguishements of
liabilities. The effective date of certain provisions has been
deferred by the Financial Accounting Standards Board until 1998.
Adoption of this statement had no impact on the Company's March 31,
1997 financial statements.
SFAS No. 128 "Earnings Per Share" was issued in February 1997 and is
effective for financial statements issued for periods after December
15, 1997. The statement specifies the computation, presentation and
disclosure requirements for earning per share for entities with
publcly held common stock. The impact of the statement on earnings
per share is not expected to be material.
6) SUBSEQUENT EVENT
On April 17, 1997, the Company's shareholders approved proposals to
the Company's Articles of Incorporation to increase the number of
authorized shares of common stock to 20,000,000 from 7,500,000 and to
eliminate par value per share of common stock. These changes to the
Company's Articles of Incorporation will have no effect on the
existing capital of the Company.
8
<PAGE> 9
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BANCFIRST OHIO CORP.
For a comprehensive understanding of the Company's financial condition and
performance, this discussion should be considered in conjunction with the
Company's Consolidated Financial Statements, accompanying notes, and other
information contained elsewhere herein.
This discussion contains forward-looking statements under the Private Securities
Litigation Reform Act of 1995 that involves risks and uncertainties. Although
the Company believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be
inaccurate, and therefore, there can be no assurance that the forward-looking
statements included herein will prove to be accurate. Factors that could cause
actual results to differ from the results discussed in the forward-looking
statements include, but are not limited to: economic conditions (both generally
and more specifically in the markets in which the Company and its Banking
Subsidiaries operate); competition for the Company's customers from other
providers of financial services; government legislation and regulation (which
changes from time to time and over which the Company has no control); changes in
interest rates; material unforeseen changes in the liquidity, results of
operations, or other financial position of the Company's customers; delays in,
customers' reactions to, and other unforeseen complications with respect to the
implementation of the Company's planned integration of County; and other risks
detailed in the Company's filings with the Securities and Exchange Commission,
all of which are difficult to predict and many of which are beyond the control
of the Company.
9
<PAGE> 10
BANCFIRST OHIO CORP.
SELECTED FINANCIAL DATA:
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AT OR FOR THE THREE MONTHS
ENDED MARCH 31,
1997 (1) 1996
------------- -------------
<S> <C> <C>
STATEMENT OF INCOME DATA:
Interest income $ 20,651 $ 9,141
Interest expense 11,558 4,408
---------- --------
Net interest income 9,093 4,733
Provision for possible loan losses 298 292
Non-interest income 1,562 1,564
Non-interest expense 6,386 3,387
---------- --------
Income before income taxes 3,971 2,618
Provision for Federal income taxes 1,339 763
---------- --------
Net income $ 2,632 $ 1,855
========== ========
PER SHARE DATA:
Net income $ 0.66 $ 0.62
Dividends 0.26 0.25
Book value 19.71 16.89
Tangible book value 16.24 16.86
BALANCE SHEET DATA:
Total assets $1,068,688 $481,490
Loans 723,667 277,715
Allowance for possible loan losses 6,691 3,406
Securities 294,658 178,195
Deposits 733,198 356,236
Borrowings 249,973 71,531
Shareholders' equity 78,428 50,205
PERFORMANCE RATIOS (3):
Return on average assets 0.99% 1.52%
Return on average equity 13.56 14.93
Net interest margin 3.65 4.28
Interest rate spread 3.21 3.97
Non-interest income to average assets 0.59 1.30
Non-interest expense to average assets 2.26 2.83
Efficiency ratio (2) 55.34 53.69
ASSET QUALITY RATIOS:
Non-performing loans to total loans 0.41% 0.48%
Non-performing assets to total assets 0.32 0.28
Allowance for possible loan losses to total loans 0.92 1.23
Allowance for possible loan losses to non-performing loans 227.4 254.4
Net charge-offs to average loans (3) 0.12 0.28
CAPITAL RATIOS:
Shareholders' equity to total assets 7.34% 10.43%
Tier 1 capital to total assets 6.16% 10.41
Tier 1 capital to risk-weighted assets 11.27% 16.96
</TABLE>
(1) The Company's acquisition of County in August 1996 significantly affects
the comparability of the Company's results of operations for prior periods.
(2) The efficiency ratio is equal to non-interest expense (excluding
amortization expense) divided by net interest income on a fully tax
equivalent basis plus non-interest income excluding gains on sales of
securities.
(3) Ratios are stated on an annualized basis.
10
<PAGE> 11
OVERVIEW
The reported results of the Company primarily reflect the operations of
the Company's bank and thrift subsidiaries. The Company's results of operations
are dependent on a variety of factors, including the general interest rate
environment, competitive conditions in the industry, governmental policies and
regulations and conditions in the markets for financial assets. Like most
financial institutions, the primary contributor to the Company's income is net
interest income, which is defined as the difference between the interest the
Company earns on interest-earning assets, such as loans and securities, and the
interest the Company pays on interest-bearing liabilities, such as deposits and
borrowings. The Company's operations are also affected by non-interest income,
such as checking account and trust fees and gains from sales of loans. The
Company's principal operating expenses, aside from interest expense, consist of
salaries and employee benefits, occupancy costs, federal deposit insurance
assessments, and other general and administrative expenses.
ACQUISITIONS
On August 14, 1996, the Company acquired County in a transaction
accounted for under the purchase method of accounting for business combinations.
Accordingly, the Company's consolidated financial statements include the
operating results of County from the date of acquisition. At the time of
acquisition, County had approximately $554 million in total assets, $411 million
in loans and $365 million in total deposits. The Company also reported goodwill
and other intangible assets of $14.5 million as a result of the application of
purchase accounting. Funding for the acquisition was provided by proceeds from
the issuance of 1 million shares of common stock, $15 million of bank borrowings
and approximately $7 million of available cash.
AVERAGE BALANCES AND YIELDS
The following table presents, for each of the periods indicated, the
total dollar amount of interest income from average interest-earning assets and
the resultant yields, as well as the interest expense on average
interest-bearing liabilities, expressed both in dollars and percentage rates,
and the net interest margin. Net interest margin is calculated on a fully tax
equivalent basis ("FTE"), and refers to net interest income divided by total
interest-earning assets and is influenced by the level and relative mix of
interest-earning assets and interest-bearing liabilities. FTE income includes
tax exempt income, restated to a pre-tax equivalent, based on the statutory
federal income tax rate. All average balances are daily average balances.
Non-accruing loans are included in average loan balances.
11
<PAGE> 12
<TABLE>
<CAPTION>
Three Months Ended March 31,
.................1997................ ..................1996................
(Dollars in thousands)
Average Income / Yield / Average Income / Yield /
Balance Expense Rate (1) Balance Expense Rate (1)
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Securities:
Taxable $ 276,194 $ 4,766 7.00% $ 149,413 $ 2,537 6.81%
Tax-exempt 25,286 502 8.05 27,572 487 7.08
---------- ---------- ---------- ----------
Total securities 301,480 5,268 7.09 176,985 3,024 6.85
Loans (2):
Commercial 308,432 7,269 9.56 114,108 2,776 9.76
Real estate 340,769 6,522 7.76 109,023 2,163 7.96
Consumer 76,300 1,743 9.26 53,451 1,276 9.58
---------- ---------- ---------- ----------
Total loans 725,501 15,534 8.68 276,582 6,215 9.01
Federal funds sold 3,598 41 4.62 6,918 88 5.10
---------- ---------- ---------- ----------
Total earning assets (3) 1,030,579 20,843 8.20% 460,485 9,327 8.15%
---------- ---- ---------- ----
Non-interest earning assets 44,243 20,400
---------- ----------
Total assets $1,074,822 $ 480,885
========== ==========
Interest-bearing deposits:
Demand and savings deposits $ 204,400 $ 1,333 2.64% $ 155,712 $ 1,090 2.81%
Time deposits 482,783 6,601 5.55 163,054 2,288 5.63
---------- ---------- ---------- ----------
Total deposits 687,183 7,934 4.68 318,766 3,378 4.25
Borrowings 251,108 3,625 5.85 69,279 1,030 5.96
---------- ---------- ---------- ----------
Total interest-bearing liabilities 938,291 11,559 5.00 388,045 4,408 4.56
---------- ---- ---------- ----
Non interest-bearing deposits 47,383 38,041
---------- ----------
Subtotal 985,674 426,086
Accrued expenses and other liabilities 10,427 4,949
---------- ----------
Total liabilities 996,101 431,035
Shareholders' equity 78,721 49,850
---------- --------
Total liabilities and shareholders' equity 1,074,822 $480.885
========== ========
Net interest income and
interest rate spread (4) $ 9,284 3.21% $ 4,919 3.59%
========== ==== ========== ====
Net interest margin (5) 3.65% 4.28%
==== ====
Average interest-earning assets to
average interest-bearing liabilities 109.8% 118.7%
</TABLE>
(1) Calculated on an annualized basis.
(2) Non-accrual loans are included in the average loan balances.
(3) Interest income is computed on a fully tax equivalent (FTE) basis, using a
tax rate of 34%.
(4) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(5) The net interest margin represents net interest income as a percentage of
average interest-earning assets.
12
<PAGE> 13
RATE AND VOLUME VARIANCES
Net interest income may also be analyzed by segregating the volume and rate
components of interest income and interest expense. The following table
discloses the dollar changes in the Company's net interest income attributable
to changes in levels of interest-earning assets or interest-bearing liabilities
(volume), changes in average yields on interest-earning assets and average rates
on interest-bearing liabilities (rate) and the combined volume and rate effects
(total). For the purposes of this table, the change in interest due to both rate
and volume has been allocated to volume and rate change in proportion to the
relationship of the dollar amounts of the change in each. In general, this table
provides an analysis of the effect on income of balance sheet changes which
occurred during the periods and the changes in interest rate levels.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 VS. 1996
(IN THOUSANDS)
INCREASE (DECREASE)
-------------------
VOLUME RATE TOTAL
-------- -------- --------
<S> <C> <C> <C>
Interest-earning assets:
Securities:
Taxable $ 2,115 $ 114 $ 2,229
Non-taxable (42) 57 15
-------- -------- --------
Total securities 2,073 171 2,244
-------- -------- --------
Loans:
Commercial 4,666 (173) 4,493
Real estate 4,543 (184) 4,359
Consumer 531 (64) 467
-------- -------- --------
Total loans 9,740 (421) 9,319
-------- -------- --------
Federal funds sold (43) (4) (47)
-------- -------- --------
Total interest-earning assets (1) 11,770 (254) 11,516
-------- -------- --------
Interest-bearing liabilities:
Deposits:
Demand and savings deposits 331 (88) 243
Time deposits 4,431 (118) 4,313
-------- -------- --------
Total interest-bearing deposits 4,762 (206) 4,556
Borrowings 2,673 (78) 2,595
-------- -------- --------
Total interest-bearing liabilities 7,435 (284) 7,151
-------- -------- --------
Net interest income $ 4,335 $ 30 $ 4,365
======== ======== ========
</TABLE>
(1) Computed on a fully tax-equivalent basis, assuming a tax rate of 34%.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
1996
Net Income. Net income for the three months ended March 31, 1997
increased 41.9% to $2.6 million, compared to net income of $1.9 million for the
three months ended March 31, 1996. Earnings per share in the first quarter of
1997 equaled $0.66, compared to $0.62 for the same period in 1996. Net interest
income increased 92.1% in the three months ended March 31, 1997, as compared to
the same period in 1996 while the provision for possible loan losses and
non-interest expense increased 2.1% and 88.5%, respectively. Non-interest income
was basically unchanged from the comparative period. The Company's net interest
margin decreased to 3.65% for the first quarter of 1997, compared to 4.28% for
the same period in 1996, reflecting the lower net interest margin on County's
interest-earning assets. Increases in non-interest income resulting
13
<PAGE> 14
from the inclusion of County's operating results and higher levels of fee income
were offset by lower gains on sales of the guaranteed portion of SBA loans and
lower net servicing fee income associated with such loans due to increased
amortization of capitalized servicing fee assets. Non-interest expense increased
due to the inclusion of County's operating expenses, amortization of intangibles
resulting from the County acquisition and higher costs associated with the
expansion of trust and other operating activities. The Company's return on
average assets and return on average equity were .99% and 13.56%, respectively,
in the first quarter of 1997, compared to 1.52% and 14.93%, respectively, in the
first quarter of 1996.
Interest Income. Total interest income increased 125.9% to $20.7
million for the three months ended March 31, 1997, compared to $9.1 million for
the first quarter of 1996. This increase resulted from a $570.1 million, or
123.8%, increase in average interest-earning assets between the two periods. The
average balance of loans increased $448.9 million, or 162.3%. These increases
resulted primarily from the acquisition of County which contributed $544.4
million of the increase in average earning assets and $427.9 million of the
increase in average loans. The increase in average assets of $25.7 million from
internal growth was consistent with the Company's growth strategies to maximize
returns on shareholders' equity.
The weighted average yield on interest-earning assets increased
slightly to 8.20% during the three months ended March 31, 1997, compared to
8.15% during the same three month period in 1996. The Company's yield on average
loans decreased from 9.01% during the three months ended March 31, 1996 to 8.68%
during the three months ended March 31, 1997. This resulted primarily from a
slightly lower yield on County's loan portfolio due to a higher portion of such
loans consisting of lower yielding residential mortgage loans. The impact of
this decrease in yield was partially offset by additional accretion of discounts
on SBA loans totaling $155,000 resulting from prepayments. Yields on the
investment portfolio increased from 6.85% during the first quarter of 1996 to
7.09% during the first quarter of 1997 primarily as a result of increased yields
on adjustable rate securities and purchases of higher yielding mortgage-backed
securities during the fourth quarter of 1996 and first quarter of 1997.
Interest Expense. Total interest expense increased 162.2% to $11.6
million for the three months ended March 31, 1997, compared to $4.4 million for
the three months ended March 31, 1996. Interest expense increased due to a
higher average balance of interest-bearing liabilities outstanding and due to a
higher cost of funds during the first quarter of 1997, as compared to the same
period in 1996. The average balance of interest-bearing deposit accounts
increased $368.4 million, or 115.6%, from the first quarter in 1996 to the first
quarter in 1997. Average interest-bearing liabilities increased 141.8%, from
$388.0 million to $938.3 million. These increases also primarily resulted from
the acquisition of County which contributed $520.2 million (including $15.0
million of acquisition related debt) to the increase in average interest-bearing
liabilities and $354.0 million to the increase in total interest-bearing
deposits.
The Company's cost of funds increased to 5.00% in the three months
ended March 31, 1997 compared to 4.56% in the same period of 1996, primarily due
to a higher cost of funds associated with County's interest-bearing liabilities.
The cost of funds was also affected by the continued shift by customers into
higher yielding certificates of deposit and higher borrowing levels relative to
total interest-bearing liabilities.
Provision for Possible Loan Losses. The provision for possible loan
losses was $298,000 for the three months ended March 31, 1997, compared to
$292,000 in the first quarter of 1996. Total non-performing loans increased
119.8% to $2.9 million at March 31, 1997, from $1.3 million at March 31, 1996,
with County adding $1.3 million to the 1997 total. The allowance for possible
loan losses at March 31, 1997 was $6.7 million, or .92% of total loans and
227.4% of non-performing loans compared to $3.4 million, or 1.23% of total loans
and 254.4% of non-performing loans at March 31, 1996. Management's estimate of
the adequacy of its allowance for possible loan losses is based upon its
continuing review of prevailing national and local economic conditions, changes
in the size and composition of the portfolio and individual problem credits.
Growth of the loan portfolio, loss experience, economic conditions, delinquency
levels, credit mix and selected credits are factors that affect judgments
concerning the adequacy of the allowance.
Non-Interest Income. Total non-interest income was $1.6 million for the
three months ended March 31,1997 and 1996. Fee and other income contributed by
County to the 1997 results totaled $250,000. This increase was offset by a
$161,000 decrease in gains on sales of SBA loans. During the first quarter of
1997, the Company sold approximately $3.1 million of the guaranteed portion of
its SBA loan originations in the secondary market compared to $5.2 million in
the first quarter of 1996, realizing gains of $320,000 in 1997, compared to
gains of $596,000 in 1996. In addition, the Company sold $3.2 million of the
guaranteed portion of a commercial real estate loan originated under the Farmers
B&I program, realizing a gain of $115,000
14
<PAGE> 15
in the first quarter of 1997. Also, in the first quarter of 1997, servicing fee
income associated with SBA loans was reduced $274,000 for additional
amortization of capitalized servicing assets due to prepayments of the
underlying loans (see also Interest Income above regarding additional acretion
of related discounts). At March 31, 1997, unamortized capitalized servicing
assets related to SBA loans totaled $2.0 million while discounts associated with
the retained portion of SBA loans totaled $1.4 million. While management cannot
predict, with certainty, the timing of future prepayments, further prepayments
of SBA loans are considered less likely as a result of recent increases in
interest rates.
Customer service fees, representing service charges on deposits and
fees from other banking services, increased 12.7% in the first quarter of 1997,
to $463,000, from $411,000 in the first quarter of 1996. This increase resulted
from fee income contributed by County to the 1997 results as well as from higher
fee structures. Trust income increased 12.5% to $422,000 in the first quarter of
1997, from $375,000 in the first quarter of 1996. Growth in trust and custodian
fees resulted primarily from the expansion of the customer base and higher asset
values. The $16,000 decrease in other income to $164,000 in the first quarter of
1997 compared to $180,000 in the first quarter of 1996 resulted from the
additional amortization of servicing fee assets more than offsetting other fee
income added by County, as previously discussed.
The following table sets forth the Company's non-interest income for
the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Trust and custodian fees $ 422 $ 375
Customer service fees 463 411
Investment securities gains 22 2
Gains on sales of loans 491 596
Other 164 180
------ ------
Total $1,562 $1,564
====== ======
</TABLE>
Non-Interest Expense. Total non-interest expense increased $3.0 million
to $6.4 million in the three months ended March 31, 1997, compared to $3.4
million in the three months ended March 31, 1996. Excluding expenses of $2.6
million that were added by or resulted from the acquisition of County,
non-interest expenses increased $373,000, or 11.0%, during the first quarter of
1997 compared to the same period in 1996. This increase generally resulted from
expansion of the Company's operating activities over the past year.
The following table sets forth the Company's non-interest expense for
the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Salaries and employee benefits $3,523 $1,887
Net occupancy expense 531 205
Furniture, fixtures and equipment 173 103
Data processing 262 152
Taxes other than income taxes 271 144
Federal deposit insurance 64 18
Amortization of goodwill and other intangibles 396 7
Other 1,166 871
------ ------
Total $6,386 $3,387
====== ======
</TABLE>
Salaries and employee benefits accounted for approximately 55.2% of
total non-interest expense in the three months
15
<PAGE> 16
ended March 31, 1997 compared to 55.7% in the first quarter of 1996. The average
full time equivalent staff was 358 in 1997 compared to 214 in 1996. Excluding
salary and employee benefits expense of $1.4 million added by County, such
expenses increased $268,000, or 14.2% as a result of market expansion and new
product offerings during 1996.
Net occupancy expense increased 159.0% to $531,000 in the first quarter
of 1997 from $205,000 in the first quarter of 1996. This increase resulted from
$300,000 of expenses added by County with the remainder attributed primarily to
the expansion of the Company's small business lending centers and opening of a
supermarket branch in July 1996.
Furniture, fixtures and equipment expense increased $70,000, or 70.0%
for the first quarter of 1997. In addition to $54,000 of expenses added by
County, the increase in furniture and equipment expense was due principally to
higher depreciation costs.
Data processing expense increased $110,000, or 72.4%, for the first
quarter of 1997. In addition to $76,000 of expenses added by County, higher
costs in 1997 resulted from the expansion of technology throughout the Company
during 1996 to enhance customer service, increase efficiencies and improve
information management systems.
Taxes other than income taxes increased $127,000, or 88.2%, for the
first quarter of 1997 compared to the first quarter of 1996. This increase
resulted from $107,000 of expenses added by County as well as from higher equity
levels of the Company's subsidiaries.
Federal deposit insurance expense increased $46,000 to $64,000 in 1997
from $18,000 in the first quarter of 1996 primarily as a result of $43,000 of
expense added by County.
Amortization of goodwill and other intangible assets resulting from the
application of purchase accounting in connection with the County acquisition
totaled $389,000 during the first quarter of 1997 with no comparable amount in
the first quarter of 1996.
Excluding $289,000 of expenses added by County, other non-interest
expenses were $877,000 during the first quarter of 1997 compared to $871,000 in
the first quarter of 1996.
The efficiency ratio is one method used in the banking industry to
assess profitability. It is defined as non-interest expense less amortization
expense divided by the net revenue stream, which is the sum of net interest
income on a tax-equivalent basis and non-interest income excluding net
investment securities gains or losses. The Company's efficiency ratio was 55.3%
for the first quarter of 1997, compared to 53.7% for the comparable period in
1996. Controlling costs and improving productivity, as measured by the
efficiency ratio, is considered by management a primary factor in enhancing
performance. As expected, operating expense levels have increased in 1997 as a
result of the Company's expansion into new markets, increased growth and volume
of activities, and overall inflation.
Provision for Income Taxes. The Company's provision for Federal income
taxes was $1.3 million, or 33.7% of pretax income, for the three months ended
March 31, 1997 compared to $763,000, or 29.1% of pretax income, for the three
months ended March 31, 1996. The effective tax rate for each period differed
from the federal statutory rate principally as a result of tax-exempt income
from obligations of states and political subdivisions and non-taxable loans and
the non-deductibility, for tax purposes, of goodwill and core deposit intangible
amortization expense.
ASSET QUALITY
Non-performing Assets. To maintain the level of credit risk of the loan
portfolio at an appropriate level, management sets underwriting standards and
internal lending limits and provides for proper diversification of the portfolio
by placing constraints on the concentration of credits within the portfolio. In
monitoring the level of credit risk within the loan portfolio, management
utilizes a formal loan review process to monitor, review, and consider relevant
factors in evaluating specific credits in determining the adequacy of the
allowance for possible loan losses. The Company's banking and thrift
subsidiaries formally document their evaluation of the adequacy of the allowance
for possible loan losses on a quarterly basis and the evaluations are reviewed
and discussed with the respective boards of directors.
16
<PAGE> 17
Failure to receive principal and interest payments when due on any loan
results in efforts to restore such loan to current status. Loans are classified
as non-accrual when, in the opinion of management, full collection of principal
and accrued interest is in doubt. Continued unsuccessful collection efforts
generally lead to initiation of foreclosure or other legal proceedings. Property
acquired by the Company as a result of foreclosure or by deed in lieu of
foreclosure is classified as "other real estate owned" until such time as it is
sold or otherwise disposed of. The Company owned $523,000 of such property at
March 31, 1997 and $539,000 at December 31, 1996. No such property was owned at
March 31, 1996.
Non-performing loans totaled $2.9 million, or 0.41% of total loans, at
March 31, 1997, compared to $1.3 million, or 0.48% of total loans, at March 31,
1996. The increase in non-performing loans of $1.6 million from March 31, 1996
was primarily attributed to County's non-performing loans of $1.3 million.
Non-performing assets totaled $3.5 million, or 0.32% of total assets at March
31, 1997, compared to $1.3 million, or .28% of total assets at March 31, 1996.
Management of the Company is not aware of any material amounts of loans
outstanding, not disclosed in the table below, for which there is significant
uncertainty as to the ability of the borrower to comply with present payment
terms. The following is an analysis of the composition of non-performing assets:
<TABLE>
<CAPTION>
MARCH 31,
1997 1996
------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Non-accrual loans $1,682 $ 846
Accruing loans 90 days or more past due 1,261 493
------ ------
Total non-performing loans 2,943 1,339
Other real estate owned 523 --
------ ------
Total non-performing assets $3,466 $1,339
====== ======
Non-performing loans to total loans 0.41% 0.48%
Non-performing assets to total assets 0.32% 0.28%
</TABLE>
Non-performing loans considered to be impaired under Statement of
Financial Accounting Standards No. 114 at March 31, 1997 and the related effects
on earnings during the periods presented were not material.
Allowance for Possible Loan Losses. The Company records a provision
necessary to maintain the allowance for possible loan losses at a level
sufficient to provide for potential future credit losses. The provision is
charged against earnings when it is established. An allowance for possible loan
losses is established based on management's best judgment, which involves a
continuing review of prevailing national and local economic conditions, changes
in the size and composition of the portfolio and review of individual problem
credits. Growth of the loan portfolio, loss experience, economic conditions,
delinquency levels, credit mix, and selected credits are factors that affect
judgments concerning the adequacy of the allowance. Actual losses on loans are
charged against the allowance.
17
<PAGE> 18
The following table summarizes the Company's loan loss experience, and
provides a breakdown of the allowance for possible loan losses at the dates
indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Balance at beginning of period $ 6,599 $ 3,307
Provision charged to expense 298 292
Loans charged-off (331) (255)
Recoveries of loans previously
charged-off 125 62
--------- ---------
Balance at end of period $ 6,691 $ 3,406
========= =========
Loans outstanding at end of period $ 723,667 $ 277,715
Average loans outstanding $ 725,501 $ 276,582
Allowance as a percent of loans outstanding 0.92% 1.23%
Net charge-offs to average loans (annualized) 0.12% 0.28%
Allowance for possible loan losses
to nonperforming loans 227.4% 254.4%
</TABLE>
The allowance for possible loan losses totaled $6.7 million at March
31, 1997, representing .92% of total loans, compared to $3.4 million at March
31, 1996, or 1.23% of total loans. County's allowance for possible loan losses
represented $2.9 million of the $3.3 million increase in such allowances at
March 31, 1997 from March 31, 1996. Charge-offs represent the amount of loans
actually removed as earning assets from the balance sheet due to
uncollectibility. Amounts recovered on previously charged-off assets are netted
against charge-offs, resulting in net charge-offs for the period. Net loan
charge-offs for the three months ended March 31, 1997 were $206,000, compared to
net charge-offs of $193,000 for the same period in 1996. Charge-offs have been
made in accordance with the Company's standard policy and have occurred
primarily in the commercial and consumer loan portfolios.
The allowance for possible loan losses as a percentage of
non-performing loans ("coverage ratio"), was 227.4% at March 31, 1997, compared
to 254.4% at March 31, 1996. Although used as a general indicator, the coverage
ratio is not a primary factor in the determination of the adequacy of the
allowance by management. Total non-performing loans as a percentage of total
loans remained a relatively low 0.41% of total loans at March 31, 1997.
COMPARISON OF MARCH 31, 1997 AND DECEMBER 31, 1996 FINANCIAL CONDITION
Total assets amounted to $1.07 billion at March 31, 1997, compared to
$1.06 billion at December 31, 1996, an increase of $11.8 million, or 1.1%.
Total investment securities increased by $10.1 million to $294.7
million. The Company's general investment strategy is to manage the portfolio to
include rate sensitive assets, matched against interest sensitive liabilities to
reduce interest rate risk. In recognition of this strategy, as well as to
provide a secondary source of liquidity to accommodate loan demand and possible
deposit withdrawals, the Company has chosen to classify the majority of its
investment securities as available-for-sale. At March 31, 1997, 84.4% of the
total investment portfolio was classified as available-for-sale, while those
securities which the Company intends to hold to maturity represented the
remaining 15.6%. This compares to 83.6% and 16.4% classified as
available-for-sale and held to maturity, respectively, at December 31, 1996.
18
<PAGE> 19
Total loans increased $1.8 million to $723.7 million at March 31, 1997.
This slight increase reflects the relatively lower level of origination volume
that generally occurs during the first quarter. Also, first quarter 1997
origination volume as compared to 1996 was affected by increasing interest
rates.
Premises and equipment increased slightly from $8.0 million to $8.1
million at March 31, 1997, relating primarily to ATM installations at County's
branches.
Total deposits increased slightly to $733.2 million at March 31, 1997
from $732.7 million at December 31, 1996. The Company continues to emphasize
growth in its existing retail deposit base provided incremental deposit growth
is cost effective compared to alternative funding sources. Total
interest-bearing deposits accounted for 93.3% of total deposits at March 31,
1997, compared to 92.3% at December 31, 1996.
Total borrowings increased $13.4 million to $250.0 million at March 31,
1997, compared to $236.6 million at December 31, 1996. This increase resulted
primarily from funding needs associated with increases in the investment
portfolio.
LIQUIDITY AND CAPITAL RESOURCES
The objective of liquidity management is to ensure the availability of
funds to accommodate customer loan demand as well as deposit withdrawals while
continuously seeking higher yields from longer term lending and investing
opportunities. This is accomplished principally by maintaining sufficient cash
flows and liquid assets along with consistent stable core deposits and the
capacity to maintain immediate access to funds. These immediately accessible
funds may include federal funds sold, unpledged marketable securities, reverse
repurchase agreements or available lines of credit from the Federal Reserve
Bank, FHLB, or other financial institutions. An important factor in the
preservation of liquidity is the maintenance of public confidence, as this
facilitates the retention and growth of a large, stable supply of core deposits
in funds.
The Company's principal source of funds to satisfy short-term liquidity
needs comes from cash, due from banks, federal funds sold and borrowing
capabilities through the FHLB as well as other sources. Changes in the balance
of cash and due from banks are due to changes in volumes of federal funds sold,
and the float and reserves related to deposit accounts, which may fluctuate
significantly on a day-to-day basis. The investment portfolio serves as an
additional source of liquidity for the Company. Securities with a market value
of $248.7 million were classified as available-for-sale as of March 31, 1997,
representing 84.4% of the total investment portfolio. Classification of
securities as available-for-sale provides for flexibility in managing net
interest margin, interest rate risk, and liquidity.
The Company's bank and thrift subsidiaries are members of FHLB.
Membership provides an opportunity to control the bank's cost of funds by
providing alternative funding sources, to provide flexibility in the management
of interest rate risk through the wide range of available funding sources, to
manage liquidity via immediate access to such funds, and to provide flexibility
through utilization of customized funding products to fund various loan and
investment products and strategies.
The Company obtained a $15 million term loan with a financial
institution in order to partially fund the acquisition of County. Under the
terms of the loan agreement, the Company is required to make quarterly interest
payments and annual principal payments, based on a ten year amortization,
commencing in February 1998. The unpaid loan balance is due in full September 1,
2003. The loan agreement also contains certain financial covenants all of which
the Company was in compliance with at March 31, 1997.
Shareholders' equity at March 31, 1997 was $78.4 million, compared to
prior year-end shareholders' equity of $77.9 million, an increase of $534,000.
This increase resulted from the retention of earnings, net of dividends paid of
$1.0 million, offset by the change in unrealized gains (loses) on
available-for-sale securities from a net gain of $304,000 at December 31, 1996
compared to a net loss of $761,000 at March 31, 1997. This change in the effect
on equity was attributable to increases in interest rates during the first
quarter of 1997.
Under the risk-based capital guidelines, a minimum capital to
risk-weighted assets ratio of 8.0% is required, of which, at least 4.0% must
consist of Tier 1 capital (equity capital net of goodwill). Additionally, a
minimum leverage ratio (Tier 1 capital to total assets) of 3.0% must be
maintained. At March 31, 1997, the Company had a total risk-based capital ratio
of 11.27%,
19
<PAGE> 20
of which 10.23% consisted of Tier 1 capital. The leverage ratio for the Company
at March 31, 1997, was 6.16%.
Cash dividends declared to shareholders of the Company totaled $1.0
million, or $0.26 per share, during the first three months of 1997. This
compares to dividends of $743,000, or $0.25 per share, for the same period in
1996. Cash dividends paid as a percentage of net income amounted to 39.3% and
40.1% for the three months ended March 31, 1997 and 1996, respectively.
Considering the Company's capital adequacy, profitability, available
liquidity sources and funding sources, the Company's liquidity is considered by
management to be adequate to meet current and projected needs.
20
<PAGE> 21
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits on Item 601 of Regulation S-K
Exhibit 3(a) - Articles of Incorporation, as amended
Exhibit 3(b) - Code of Regulations, as amended
Exhibit 11: Computation of Per Share Earnings
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------
1997 1996
---------- ----------
<S> <C> <C>
Gross Weighted Average Common
Shares Outstanding 4,033,919 3,033,919
Weighted Average Treasury
Shares Outstanding 52,558 61,625
---------- ----------
Net Weighted Average Common
Shares Outstanding 3,981,361 2,972,294
========== ==========
Net Income $2,632,000 $1,855,000
========== ==========
Net Income Per Common Share $ 0.66 $ 0.62
========== ==========
</TABLE>
(b) Exhibit 27: Financial Data Schedule
(c) Reports on Form 8-K - None -
21
<PAGE> 22
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BancFirst Ohio Corp.
(Registrant)
Date May 13, 1997 (Signed) /s/ Gary N. Fields
----------------------- ---------------------------------------------
Gary N. Fields
President and
Chief Executive Officer
Date May 13, 1997 (Signed) /s/Kim M. Taylor
----------------------- ---------------------------------------------
Kim M. Taylor
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
22
<PAGE> 1
Exhibit 3(a)
ARTICLES OF INCORPORATION
-------------------------
FOR
---
BANCFIRST CORP.
---------------
The undersigned, desiring to form a corporation for profit under Ohio
Revised Code Chapter 1701, certify that:
ARTICLE 1
1.1 The name of the corporation shall be BancFirst Corp.
ARTICLE 2
2.1 The principal office shall be 422 Main Street, Zanesville, Ohio 43701
and at such location as designated by the Board of Directors.
ARTICLE 3
3.1 The purpose for which the corporation is formed is to engage in
business as a "bank holding company" in accordance with, and to the extent
permitted by, the Bank Holding Company Act of 1956 (Pub. Law 511, 84th Cong. 2d
Sess., approved May 9th, 1956) as amended, and consistent therewith to engage in
any other lawful act or activity for which corporations may be formed under
Chapter 1701 of the Ohio Revised Code, to the extent that such act or activity
is not then prohibited by the Bank Holding Company Act of 1956, as amended.
The corporation may from time to time, pursuant to authorization by the Board of
Directors and without action by the shareholders, purchase, redeem or other
acquire and hold, retire, reissue or sell shares of the corporation of any class
or classes in such manner, upon such terms and in such amounts as the Board of
Directors shall determine; subject, however, to such limitation or restriction,
if any, as is contained in the express terms of any class of shares of the
corporation outstanding at the time of the purchase or acquisition in question.
ARTICLE 4
4.1 The maximum number of shares of capital shares which this corporation
is authorized to issue or to have outstanding at any time shall be Two Million
Five Hundred Thousand (2,500,000) shares all of which shall be common shares.
The shares will have par value of $10 per share. The Board of Directors of the
corporation is hereby empowered to issue from time to time shares of its capital
shares, whether now or hereafter authorized. No holders of any class of shares
of the corporation shall have any pre-emptive rights to purchase or to have
offered to them for purchase any shares or other securities of the corporation.
<PAGE> 2
ARTICLE 5
5.1 The amount of stated capital with which this corporation will begin
business shall be Five Hundred Dollars ($500).
ARTICLE 6
6.1 The Board of Directors (hereinafter sometimes referred to as the
"Board") shall consist of not less than nine nor more than fifteen shareholders,
the exact number of such minimum and maximum limits to be fixed and determined
from time to time by a vote of the shareholders owning a majority of the stock
of the Corporation.
The Directors shall be divided into three classes: Class I, Class II and
Class III, and each class shall be comprised of an equal number of members of
the Board of Directors. The term of office of the initial Class I Directors
shall expire at the annual meeting of the shareholders in 1992, the term of
office of the initial Class II Directors shall expire at the annual meeting of
shareholders in 1991, and the term of office of the initial Class III Directors
shall expire at the annual meeting of shareholders in 1990, or thereafter in
each case when their respective successors are elected and have qualified. At
each annual election held after classification of Directors, the Directors
chosen to succeed those whose term then expire shall be identified as being of
the same class as the Directors they succeed and shall be elected for a term
expiring at the third succeeding annual meeting or thereafter when their
respective successors in each case are elected and have qualified. If the
number of Directors is changed, any increase or decrease in Directors shall be
apportioned among the classes so as to maintain all classes as nearly equal in
number as possible, and any additional Director to any class shall hold office
for a term which shall coincide with the terms of such class.
ARTICLE 7
7.1 Each person who is or was a director, trustee, officer or employee of
the corporation shall be indemnified by the corporation to the full extent
permitted by the corporation laws of the State of Ohio, now or hereafter in
force, against any liability, cost or expense incurred by him in his capacity
as a director, trustee, officer or employee, or arising out of his status as a
director, trustee, officer or employee. The corporation may, but shall not be
obligated to, maintain insurance, at its expense, to protect itself and any such
person against any such liability cost or expense, The rights of indemnification
provided in this Article 7 shall be in addition to any rights to which any
person concerned may otherwise be entitled by the Regulations of the
corporation from time to time in effect, by contract or as a matter of law, and
shall inure to the benefit of the heirs, executors and administrators of any
such person.
2
<PAGE> 3
ARTICLE 8
1) A. In addition to any affirmative vote required by law:
(i) any merger or consolidation of the corporation or any subsidiary
(as hereinafter defined) with (a) any Related Person (as
hereinafter defined) or (b) any other corporation (whether or not
itself a Related Person) which is, or after such merger or
consolidation would be, an Affiliate (as hereinafter defined) of
a Related Person; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions)
to or with any Related Person or any Affiliate of any Related
Person of any assets of the corporation or any subsidiary having
an aggregate Fair Market Value (as hereinafter defined) equal to
10% or more of the consolidated net worth of the corporation; or
(iii) the issuance or transfer by the corporation or any
subsidiary (in one transaction or a series of transactions) of any
securities of the corporation or any subsidiary to any Related
Person or any affiliate of any Related Person in "change for cash,
securities or other property (or combination thereof) having an
aggregate Fair Market Value equal to 10% or more of the
consolidated net worth of the corporation; or
(iv) the adoption of any plan or proposal for the liquidation or
dissolution of the corporation; or
(v) any reclassification of securities (including any reverse
share split), or recapitalization of the corporation, or any
merger or consolidation of the corporation with any of its
subsidiaries or any other transaction (whether of not with or into
or otherwise involving a Related Person) which has the effect,
directly or indirectly, of increasing the proportionate share of
the outstanding shares of any class of Equity Security (as
hereinafter defined) of the corporation or any subsidiary which is
directly or indirectly owned by any Related Person or any
Affiliate of any Related Person, shall require the affirmative
vote of the holders of at least 75% of the voting power of the
then outstanding shares of capital shares of the corporation
entitled to vote generally in the election of directors. Such
affirmative vote shall be required notwithstanding the fact that
no vote may be required or that a lesser percentage may be
specified, by law or otherwise.
B. The term "Business Combination" used in this Article 8 shall
mean any transaction which is referred to in any one or more of clauses (i)
through (v) of paragraph A of this Section.
3
<PAGE> 4
2) Notwithstanding the requirements of the previous Section, no
Business Combination between the corporation (or any subsidiary) and a Related
Person or any Affiliate of a Related Person may be effected unless all of the
following conditions are met:
A. The aggregate amount of the cash and the Fair Market Value as
of the date of the consummation of the Business Combination of consideration
other than cash to be received per share by holders of any class of Equity
Security in such Business Combination shall be at least equal to the highest
per share price (including any brokerage commissions, transfer taxes and
soliciting dealer's fees) paid by the Related Person for any shares of the same
class of Equity Security previously acquired by it, plus interest on such amount
compounded annually from the date that the Related Person became a related
Person (the "Determination Date") through the date of consummation of the
Business Combination (the "Consummation Date") at the rate publicly announced
as the "Prime Rate" of interest (announced by such major bank as may be
selected by a majority of the Continuing Directors), from time to time in
effect, less the aggregate amount of any cash dividends paid and the Fair
Market Value of any dividends paid in other than cash on each share from the
Determination Date through the Consummation Date, up to, but not exceeding,
the amount of interest payable per share.
B. The consideration to be received by holders of a particular
class of Equity Security shall, except to the extent a shareholder agrees
otherwise, be in cash or in the same form as the Related Person has previously
paid for shares of such class of Equity Security. If the Related Person has paid
for shares of any class of Equity Security with varying forms of consideration,
the form of consideration for such class of Equity Security shall be either cash
or in the form used to acquire the largest number of shares of such class of
Equity Security previously acquired by it. The price determined in accordance
with paragraph A of this Section shall be subject to appropriate adjustment in
the event of any share dividend, share split, combination of shares or similar
event.
3) The provisions of Sections (1) and (2) of this Article 8 shall
not apply to a Business Combination if:
A. The Continuing Directors of the corporation by a two-thirds
vote (i) have expressly approved a memorandum of understanding with the Related
Person with respect to the Business Combination prior to the time that the
Related Person became a Related Person and the Business Combination is effected
on substantially the same terms and conditions as are provided by the
memorandum of understanding, or (ii) have otherwise approved the Business
Combination (this provision is incapable of satisfaction unless there is at
least one Continuing Director); or
B. The Business Combination is solely between the corporation and
another corporation, one hundred percent of the Voting Shares of which is owned
directly or indirectly by the corporation.
In the event the Continuing Directors shall approve a Business
Combination as set forth in paragraph A above, or the Business Combination is
solely between the corporation and
4
<PAGE> 5
another corporation described in paragraph B above, such Business Combination
shall require only such shareholder vote, if any, as is required by law.
4) For the purpose of this Article 8:
A. "Person" shall mean any individual, firm, corporation or other entity.
B. "Related Person" shall mean any Person who or which:
(i) is the beneficial owner, directly or indirectly, of 10% or more of
the voting power of the outstanding Voting Shares; or
(ii) is an Affiliate or Associate of the corporation and at any time
within the two-year period immediately prior to the date in question was
the beneficial owner, directly or indirectly, of 10% or more of the
voting power of the then outstanding Voting Shares; or
(iii) is an assignee of or has otherwise succeeded to any shares of
Voting Shares which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any
Related Person, if such assignment or succession shall have occurred in
the course of a transaction or series of transactions not involving a
public offering within the meaning of the Securities Act of 1933, as
amended.
Provided, however, that the term "Related Person" shall not include (i)
the corporation or any subsidiary, (ii) any one or any group of the
Continuing Directors, or (iii) any profit-sharing employee shares
ownership or other employee benefit plan of the corporation or any
subsidiary of the corporation or any trustee of or other fiduciary with
respect to any such plan when acting in that capacity.
C. A Person shall be a "beneficial owner" of any Voting Shares:
(i) which such Person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly; or
(ii) which such Person or any of its Affiliates or Associates has (a) the
right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (b) the right to vote pursuant to
any agreement, arrangement or understanding; or
(iii) which is beneficially owned, directly or indirectly, by any other
Person with which such Person or any of its Affiliates or Associates has
any agreement,
5
<PAGE> 6
arrangement or understanding for the purposes of acquiring,
holding, voting of disposing of any shares of Voting Shares.
D. For the purpose of determining whether a Person is a Related
Person pursuant to paragraph B of this Section, the number of shares of Voting
Shares deemed to be outstanding shall include shares deemed owned through
application of paragraph C of this Section, but shall not include any other
shares of Voting Shares which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
E. "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as in effect on January 1, 1988.
F. "Subsidiary" means any corporation of which a majority of any
class of Equity Security is owned, directly or indirectly, by the corporation;
however, that for the purposes of the definition of Related Person set forth in
paragraph B of this section, the term "Subsidiary" shall mean only a
corporation of which a majority of each class of Equity Security is owned,
directly or indirectly, by the corporation.
G. "Continuing Director" means any member of the Board of
Directors who is unaffiliated with the "Related Person" and was a member of the
Board of Directors prior to the time that the Related Person became a Related
Person, and any successor of a Continuing Director who is unaffiliated with the
Related Person and is recommended to succeed a Continuing Director by two-thirds
of the Continuing Directors then on the Board of Directors.
H. "Fair Market Value" means: (i) in the case of stock, the
highest closing sales price during the 30-day period immediately preceding the
date in question of a share of such stock on the Composite Tape for New York
Stock Exchange - Listed Stock, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such stock is not listed
on the Exchange, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934 on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock during the 30-day period
preceding the date in question on the National Association of Securities
Dealers, Inc., Automated Quotations systems or any system then in use, or if
no such quotations are available, the fair market value on the date in question
of a share of such stock as determined by a two-thirds vote of the Continuing
Directors; and (ii) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined by a
two-thirds vote of the Continuing Directors.
I. In the event of any Business Combination in which the
corporation survives, the phrase "consideration other than cash to be received"
as used in paragraph A of this Section shall include the shares of any class of
Equity Security retained by the holders of such shares.
6
<PAGE> 7
J. "Equity Security" shall have the meaning ascribed to such term
in Section 3(a)(11) of the Securities Exchange Act of 1934, as in effect on
January 1, 1988.
K. "Voting Shares' means shares of any Equity Security of a
corporation which are entitled to vote in the election of Directors of such
corporation.
L. The phrase "series of related transactions" shall be deemed to
include not only a series of transactions with the same Related Person but also
a series of separate transactions with a Related Person or any Affiliate or
Associate of such Related Person.
5) The Continuing Directors shall, by two-thirds vote, have the
power and duty to determine for the purposes of this Article 8 on the basis of
information known to them after reasonable inquiry, (A) whether a person is a
Related Person, (B) the number of shares of Voting Shares beneficially owned by
any Person, (C) whether a Person is an Affiliate or Associate of another, (D)
whether the assets which are the subject of any Business Combination have, or
the consideration to be received for the issuance or transfer of securities by
the corporation or any subsidiary in any Business Combination has, an aggregate
Fair Market Value equal to 10% or more of the consolidated net worth of the
corporation. The Continuing Directors shall, by two-thirds vote, have the
further power to interpret all other terms and provisions of this Article 8.
6) Nothing contained in this Article 8 shall be construed to
relieve any Related Person from any fiduciary obligation imposed by law.
ARTICLE 9
Notwithstanding any statutory provision now or hereafter in force
requiring for any purpose the vote, consent, waiver or release of the holders of
shares entitling them to exercise two-thirds, or any other proportion, of the
voting power of the corporation of any class or classes of shares thereof, such
action, unless otherwise expressly required by statute or by these Articles, may
be taken by the vote, consent, waiver or release of the holders of shares
entitling them to exercise a majority of the voting power of the corporation or
of such class or classes. Each of Articles 7, 8 and 9 of these Articles of
Incorporation may be amended at any regular or special meeting of the
shareholders only by the affirmative vote of the holders of at least 75% of the
voting power of the outstanding shares of this corporation.
ARTICLE 10
Any and every statute of the State of Ohio hereafter enacted,
whereby the rights, powers or privileges of corporations or of the shareholders
of corporations organized under the laws of the State of Ohio are increased or
diminished or in any way affected, or whereby effect is given to the action
taken by any number, less than all, of the shareholders of any such corporation,
shall apply to the corporation and shall be binding not only upon the
corporation, but upon every shareholder of the corporation to the same extent as
if such statute had been in force at the date of
7
<PAGE> 8
filing these Articles of Incorporation of the corporation in the office of the
Secretary of State of Ohio. The right to alter, amend, change or repeat any
clause or provision of these Articles of Incorporation, in the manner now or
hereafter prescribed by law, is hereby reserved to the corporation; and all
rights conferred on officers, Directors and shareholders herein are granted
subject to such reservation.
IN WITNESS WHEREOF, we have hereunto set our hands this 13th day
of March, 1990.
/s/ William R. Hoag
-------------------------------
William R. Hoag
/s/ William Randles
-------------------------------
William Randles
/s/ J.W. Straker
-------------------------------
J.W. Straker
/s/ Milman H. Linn, III
-------------------------------
Milman H. Linn, III
/s/ Robert Forker
-------------------------------
Robert Forker
8
<PAGE> 9
ORIGINAL APPOINTMENT OF AGENT
The undersigned, being at least a majority of the incorporators of
BancFirst Corp., hereby appoint William R. Hoag, a natural person who is a
resident in the state in which BancFirst Corp. has its principal office upon
whom any process, notice or demand required or permitted by statute to be
served upon the corporation may be served.
His complete address is:
422 Main Street
Post Office Box 2663
Zanesville, Ohio 43702-2668
Muskingum County, Ohio
/s/ Richard Johnson
---------------------------------
Richard Johnson
/s/ William Randles
---------------------------------
William Randles
/s/ J.W. Straker
---------------------------------
J.W. Straker
/s/ Milman H. Linn, III
---------------------------------
Milman H. Linn, III
/s/ Robert Forker
---------------------------------
Robert Forker
<PAGE> 10
ACCEPTANCE Of AGENT
BancFirst Corp.
Gentlemen:
I hereby accept appointment as agent of your corporation upon whom
process, tax notices or demands may be served,
/s/ William R. Hoag
------------------------------
William R. Hoag
<PAGE> 11
CERTIFICATE OF ADOPTION
OF
AMENDED ARTICLES OF INCORPORATION
OF
BANCFIRST CORP.
Gordon C. Wagner, President and James H. Nicholson, Secretary, of the
above named Ohio corporation for profit with its principal location in
Zanesville, Muskingum County, Ohio, do hereby certify that at a meeting of the
Shareholders of the corporation held on April 21, 1992, in accordance with
Section 1701.54 of the Ohio Revised Code. They hereby certify that in a writing
passed by a majority vote of the shareholders of the Corporation, the attached
Amendment to the Articles of Incorporation of the corporation were adopted.
Results of Voting to Amend Articles of Incorporation to change the corporation
name to BancFirst Ohio Corp.
<TABLE>
<S> <C>
Shares For 1,021,824
Shares Against 1,459
Shares Abstaining 19,433
</TABLE>
Results of Voting to Amend Articles of Incorporation to modify the
indemnification provisions.
<TABLE>
<S> <C>
Shares For 973,034
Shares Against 25,661
Shares Abstaining 44,021
</TABLE>
IN WITNESS WHEREOF, the above named officers, acting for and on behalf
of the corporation, have hereto subscribed their names this 12th day of May,
1992.
BANCFIRST CORP.
By: /s/ Gordon C. Wagner
---------------------------
Gordon C. Wagner, President
ATTESTED TO:
/s/ James H. Nicholson
- -----------------------------
James H. Nicholson, Secretary
<PAGE> 12
AMENDMENTS TO THE
ARTICLES OF INCORPORATION
FOR
BANCFIRST CORP.
EFFECTIVE APRIL 21, 1992
------------------------
ARTICLE 1, Section 1.1 shall be replaced in its entirety with the following:
1.1 The name of the corporation shall be BancFirst Ohio Corp.
ARTICLE 7, Section 7.1 shall be replaced in its entirety with the following:
SEVENTH. Indemnification.
(1) Actions by third parties. The Company shall indemnify any person
who was or is a party or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, other than an action
by or in the right of the Company, by reason of the fact that he is or
was a director or officer of the Company, or is or was serving at the
request of the Company as a director, trustee, officer, employee, or
agent of another corporation (including a subsidiary of this Company),
domestic or foreign, nonprofit or for profit, partnership, joint
venture, trust, or other enterprise, including service with respect to
employee benefit plans, against all expenses, liability, and loss
including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties, and amounts paid or to be paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company,
and with respect to any criminal action or proceedings, had no
reasonable cause to believe his conduct was unlawful. The termination
of any action, suit, or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall
not of itself create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company, and with respect to any
criminal action or proceeding, he had reasonable cause to believe that
his conduct was unlawful.
(2) Actions by or in the right of the Company. The Company shall
indemnify any person who was or is a party, or is a party, or is
threatened to be made a party to any threatened, pending, or completed
action or suit by or in the right of the Company to procure a judgment
in its favor by reason of the fact that he is or was a director, or
officer of the company, or is or was serving at the request of the
Company as a director, trustee, officer, employee, or agent of another
corporation (including a subsidiary of this Company), domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust, or
other enterprise against expenses, including attorneys' fees, actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Company, except that no indemnification shall be made
in respect of
<PAGE> 13
any claim, issue, or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance
of his duty to the Company unless, and only to the extent that the
court of common pleas, or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication
of liability, but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses
as the court of common pleas or such other court shall deem proper.
(3) Indemnification upon successful defense of proceeding. To the
extent that a current or former director, trustee or officer, has been
successful on the merits or otherwise in defense of any action, suit,
or proceeding referred to in sections (1) and (2) of this article, or
in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection therewith.
(4) Predicates for indemnification in other cases. Any indemnification
under section (1) and (2) of this article, unless ordered by a court,
shall be made by the Company only as authorized in the specific case
upon a determination that indemnification of the current or former
director, trustee or officer, is proper in the circumstances because he
has met the applicable standard of conduct set forth in sections (1)
and (2) of this article. Such determination shall be made (a) by a
majority vote of a quorum consisting of directors of the Company who
were not and are not parties to or threatened with any such action,
suit, or proceeding, or (b) if such a quorum is not obtainable or if a
majority vote of a quorum of disinterested directors so directs, in a
written opinion by independent legal counsel other than an attorney, or
a firm having associated with it an attorney, who has been retained by
or who has performed services for the Company, or any person to be
indemnified within the past five years, or (c) by the shareholders, or
(d) by the court of common pleas or the court in which such action,
suit, or proceeding was brought. Any determination made by the
disinterested directors under section (4)(a) or by independent legal
counsel under section (4)(b) of this article shall be promptly
communicated to the person who threatened or brought the action of suit
by or in the right of the Company under section (2) of this article,
and within ten days after receipt of such notification, such person
shall have the right to petition the court of common pleas or the court
in which such action or suit was brought to review the reasonableness
of such determination.
(5) Advancement of expenses. Expenses, including attorneys' fees,
incurred in defending any action, suit, or proceeding referred to in
section (1) and (2) of this article, shall be paid by the Company in
advance of the final disposition of such action, suit, or proceeding.
(6) Right of claimant to bring suit. If a claim under paragraph 1, 2,
or 3 is not paid in full by the Company within thirty days after a
written claim therefor has been received by the Company, the claimant
may any time thereafter bring suit against the Company to recover the
unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of prosecuting
such claim. Except in the case
2
<PAGE> 14
of claims made under paragraph (3) of this article, it shall be a
defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending action, suit or any proceeding
in advance of its final disposition where the required undertaking has
been tendered to the Company) that the claimant has not met the
standards of conduct which make it permissible under the applicable law
for the Company to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Company.
Neither the failure of the Company (including its board of
directors, independent legal counsel, or its shareholders) to have made
a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because
he or she has met the applicable standard of conduct, nor an actual
determination by the Company (including its board of directors,
independent legal counsel, or its shareholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the
applicable standard of conduct.
(7) Contractual rights. The right to be indemnified or to the
reimbursement or advancement of expenses pursuant thereto (i) is a
contract right based upon good and valuable consideration, pursuant to
which the person entitled thereto may bring suit as if the provisions
hereof were set forth in a separate written contract between the
Company and the director, or officer, (ii) is intended to be
retroactive and shall be available with respect to events occurring
prior to the adoption hereof, and (iii) shall continue to exist after
the rescission or restrictive modification hereof with the respect to
events occurring prior thereto.
(8) Requested service. Any director or officer of the Company serving,
in any capacity, (i) another company of which a majority of the shares
entitled to vote in the election of its directors is held by the
Company, or (ii) any employee benefit plan of the Company or of any
company referred to in clause (i), or (iii) any not-for-profit
organization designated for such service by a person who is an
"executive officer" of the Company's principal banking subsidiary,
within the meaning of Regulation O, 12 C.F.R. Section 215, or (iv) any
trust officer who serves as a director of a corporation a significant
portion of whose stock is owned in trust by the Company, shall be
deemed to be doing so at the request of the Company.
(9) Non-exclusivity of rights. The rights conferred on any person by
paragraphs (1), (2), and (3) shall not be exclusive of and are in
addition to any other right which such person may have or may hereafter
acquire under any statute, provision of the Articles of Incorporation,
Code of Regulations or bylaws, agreement, vote of shareholders or
disinterested directors or otherwise.
(10) Insurance and other security for benefits. The Company may
purchase and maintain insurance or furnish similar protection,
including but not limited to trust funds, letters of credit or
self-insurance, at its expense, to protect itself and any director or
officer
3
<PAGE> 15
of the company or another corporation, partnership, joint venture,
trust or other enterprise against expenses, liabilities or losses,
whether or not the Company would have the power to indemnify such
person against such expense, liability of loss under the Ohio general
corporation law.
(11) Interpretation. As used in this article, references to "the
Company" include all constituent corporations in a consolidation or
merger and the new or surviving corporation, so that any person who is
or was a director or officer of such a constituent corporation, or is
or was serving at the request of such constituent corporation as a
director, trustee or officer of another corporation (including a
subsidiary of this Company), domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust, or other enterprise shall
stand in the same position under this article with respect to the new
or surviving corporation as he would if he had served the new or
surviving corporation in the same capacity.
(12) Prohibition of indemnification in certain cases. Notwithstanding
the foregoing, the Company shall not indemnify any officer, director,
or employee of the Company against expenses, penalties, or other
payments incurred in an administrative proceeding or action instituted
by an appropriate bank regulatory agency which proceeding or action
results in a final order assessing civil money penalties or requiring
affirmative action by an individual or individuals in the form of
payments to the Company or in any other case where indemnification is
prohibited by federal statute.
All other sections of the Articles of Incorporation shall remain in effect as
originally adopted.
4
<PAGE> 16
CERTIFICATE OF ADOPTION
OF
AMENDED ARTICLES OF INCORPORATION
OF
BANCFIRST OHIO CORP.
Gordon C. Wagner, President, and James H. Nicholson, Secretary and
Treasurer, of the above named Ohio corporation for profit with its principal
location in Zanesville, Muskingum County, Ohio, do hereby certify that at a
meeting of the Shareholders of the Corporation held on April 19, 1994, in
accordance with Section 1701.54 of the Ohio Revised Code, they hereby certify
that in a writing passed by a majority vote of the Shareholders of the
Corporation, the attached Amendment to the Articles of Incorporation of the
Corporation were adopted.
Results of Voting to Amend Articles of Incorporation to increase the authorized
number of common shares, $10.00 par value per share, of the Company from
2,500,000 shares to 7,500,000 shares.
<TABLE>
<S> <C>
Shares For 953,752
Shares Against 169,839
Shares Abstaining 29,219
</TABLE>
IN WITNESS WHEREOF, the above named officers, acting for and on behalf
of the Corporation, have hereto subscribed their names this 20th day of April,
1994.
BANCFIRST OHIO CORP.
By: /s/ Gordon C. Wagner
---------------------------
Gordon C. Wagner, President
ATTESTED TO:
/s/ James H. Nicholson
- -----------------------
James H. Nicholson
Secretary and Treasurer
<PAGE> 17
AMENDMENTS TO THE
ARTICLES OF INCORPORATION
FOR
BANCFIRST OHIO CORP.
The first sentence of ARTICLE 4 shall be replaced in its entirety with the
following:
ARTICLE 4. The total number of shares which the Company shall have
authority to issue is 7,500,000 shares, all of which shall be common shares, par
value $10.00 per share.
All other sections of the Articles of Incorporation shall remain in effect as
originally adopted.
<PAGE> 18
CERTIFICATE OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
BANCFIRST OHIO CORP.
Gary N. Fields, who is President and James H. Nicholson, who is
Secretary of BancFirst Ohio Corp., an Ohio corporation for profit with its
principal location in Zanesville, Muskingum County, Ohio, do hereby certify that
at a Meeting of the Shareholders of the corporation held on April 17, 1997, the
following resolution to adopt an amendment to the Articles of Incorporation of
the corporation was adopted:
"RESOLVED, that the Articles of Incorporation of BancFirst Ohio Corp.
be amended to read as follows:
The first sentence of ARTICLE 6 shall be replaced in its entirety with
the following:
6.1 The Board of Directors (hereinafter sometimes referred to as the
"Board") shall consist of not less than SEVEN nor more than fifteen
shareholders, the exact number of such minimum and maximum limits to be
fixed and determined from time to time by a vote of the shareholders
owning a majority of the stock of the Corporation.
The first two sentences of ARTICLE 4 shall be replaced in its entirety
with the following:
4.1 The maximum number of shares of capital shares which this
corporation is authorized to issue or to have outstanding at any time
shall be TWENTY MILLION (20,000,000) SHARES all of which shall be
common shares. The shares will have NO PAR VALUE."
IN WITNESS WHEREOF, the above named officers, acting for and on behalf
of the corporation, have hereto subscribed their name this 30th day of April,
1997.
BANCFIRST OHIO CORP.
By: /s/ Gary N. Field
-------------------------------------
Gary N. Fields, President
By: /s/ James N. Nicholson
-------------------------------------
James H. Nicholson, Secretary
<PAGE> 1
Exhibit 3(b)
Amended:
April 21, 1992
April 20, 1993
April 17, 1997
BANCFIRST OHIO CORP.
CODE OF REGULATIONS
-------------------
ARTICLE 1
Title and Offices
(Corporation name amended April 21, 1992)
Section 1.1. TITLE. The title of this corporation shall be BancFirst
Ohio Corp. (hereinafter sometimes referred to as the "Corporation").
Section 1.2. PRINCIPAL OFFICES. The principal office shall be 422 Main
Street, Zanesville, Ohio 43701 and at such location as designated by the Board
of Directors.
Section 1.3. OTHER OFFICES. The Corporation shall also have offices at
such other places without, as well as within, the State of Ohio as the Board of
Directors may determine.
Section 1.4. CHANGE IN LOCATION. The Board of Directors shall have the
power to change the location of the principal office of this Corporation to any
other place within or outside the State of Ohio without the approval of the
shareholders of this Corporation and shall have the power to change the location
of any branch or branches of this Corporation to any other location without the
approval of the shareholders of this Corporation.
ARTICLE 2
Meetings of Shareholders
(Section 2.4 amended in its entirety April 20, 1993)
Section 2.1. ANNUAL MEETING. The annual meeting of shareholders for the
election of Directors and the transaction of whatever other business may be
brought before said meeting shall be held at the main office or such other
places as the Board of Directors may designate, on the day of each year
specified therefore by the Board of Directors, but if no election is held on
that day, it may be held on any subsequent day according to the provisions of
law; and all elections shall be held according to such lawful regulations as may
be prescribed by the Board of Directors.
Section 2.2. SPECIAL MEETINGS. Special meetings of the shareholders may
be called at any time by the Chairman of the Board of Directors, President of
the Corporation or a majority of the Board of Directors acting with or without a
meeting, or by any three or more shareholders owning, in the aggregate, not less
than twenty-five percent of the stock of the Corporation.
<PAGE> 2
Section 2.3 NOTICE OF MEETINGS. Unless otherwise provided by the laws
of the United States, a notice of the time, place and purpose of every annual
and special meeting of the shareholders shall be given by first class mail,
postage prepaid, mailed at least ten days prior to the date of such meeting to
each shareholder of record at his address as shown upon the books of this
Corporation.
Section 2.4 QUORUM. At any meeting of the shareholders, the holders of
33-1/3% of the shares of stock entitled to vote at the meeting, present in
person or by proxy, shall constitute a quorum for all purposes, unless or except
to the extent that the presence of a larger number may be required by law. If a
quorum shall fail to attend any meeting, the chairman of the meeting or the
holders of a majority of the shares of the stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date
or time.
At any meeting at which a quorum is present, all questions and business
which shall come before the meeting shall be determined by the vote of the
holders of a majority of such voting shares as are represented in person or by
proxy, except when a greater proportion is required by law, the Articles of
Incorporation or this Code of Regulations.
Section 2.5. PROXIES. Any shareholder of record shall be entitled to be
represented at such meetings by proxy or proxies appointed by a written, signed
authorization by such shareholder. No appointment of a proxy shall be valid
longer than eleven (11) months after it is made, unless the writing specifies
the date on which it is to expire or the length of time it is to continue in
force. The presence of a shareholder at a meeting shall not revoke the
appointment of a proxy. A shareholder, without affecting any vote previously
taken, may revoke such vote by giving notice to the Corporation in writing or in
open meeting.
Section 2.6. VOTING. At any meeting of shareholders, each shareholder
of the Corporation shall, except as otherwise provided by law, by the Articles
of Incorporation or by these Regulations be entitled to one vote in person or by
proxy for each share of the Corporation registered in his name on the books of
the Corporation, (1) on the record date for the determination of shareholders
entitled to vote at such meeting, or (2) if no such record date shall have been
fixed, then at the time of such meeting. No shareholder of this Corporation
shall be entitled to cumulate his voting power.
Section 2.7. INSPECTORS OF ELECTIONS. Inspectors of elections may be
appointed and act as provided in Section 1701.50, Ohio Revised Code, or any
future statute of like tenor or effect.
Section 2.8. RECORD DATE. The Board of Directors may fix a record date
for any lawful purpose, including without limitation the determination of
shareholders entitled to: (a) receive notice of or to vote at any meeting, (b)
receive payment of any dividend or other distribution, (c) receive or exercise
rights of purchase of, subscription for, or exchange or conversion of, shares of
other securities, subject to any contract right with respect thereto, or (d)
participate in the execution of written consents, waivers, or releases. Any such
record date shall not be more than sixty days preceding the date of such
meeting, the date fixed for the payment of any dividend or other distribution or
the date fixed for the receipt or the exercise of rights, as the case may be.
2
<PAGE> 3
Section 2.9. LIST OF SHAREHOLDERS. The President and Secretary of this
Corporation shall cause to be kept at all times a full and correct list of the
names and residences of all of its shareholders, and the number of shares held
by each, in the principal office. Such list shall be subject to the inspection
of all of the shareholders of the Corporation and the officers authorized to
assess taxes under State authority, during business hours of each day in which
business may be legally transacted. A copy of such list, verified by the oath of
the President or Secretary of the Corporation, shall be transmitted to the
Federal Reserve Board within ten days of any demand therefore made by him.
ARTICLE 3
Directors
(Minium number of directors amended April 17, 1997)
Section 3.1. NUMBER OF DIRECTORS. The Board of Directors (hereinafter
sometimes referred to as the "Board") shall consist of not less than seven nor
more than fifteen shareholders, the exact number of such minimum and maximum
limits to be fixed and determined from time to time by a vote of the
shareholders owning a majority of the stock of the Corporation.
Section 3.2. ELECTION AND TERMS OF DIRECTORS. The Directors shall be
divided into three classes: Class I, Class II and Class III, and each class
shall be comprised of an equal number of members of the Board of Directors. The
term of office of the initial Class I Directors shall expire at the Annual
Meeting of Shareholders in 1991, the term of office of the initial Class II
Directors shall expire at the Annual Meeting of Shareholders in 1990, and the
term of office of the initial Class III Directors shall expire at the Annual
Meeting of Shareholders in 1989, or thereafter in each case when their
respective successors are elected and have qualified. At each annual election
held after classification of Directors, the Directors chosen to succeed those
whose term then expire shall be identified as being of the same class as the
Directors they succeed and shall be elected for a term expiring at the third
succeeding annual meeting or thereafter when their respective successors in each
case are elected and have qualified. If the number of Directors is changed, any
increase or decrease in Directors shall be apportioned among the classes so as
to maintain all class as nearly equal in number as possible, and any additional
Director to any class shall hold office for a term which shall coincide with the
terms of such class.
Section 3.3. NOMINATIONS. Nominations for election to the Board of
Directors may be made by the Board of Directors or by any shareholder of any
outstanding class of capital stock of the Corporation entitled to vote for
election of Directors. Nominations, other than those made by or on behalf of the
existing management of the Corporation, shall be made in writing and shall be
delivered or mailed to the President of the Corporation and to the Chairman,
Federal Reserve Board, Washington, D.C., not less than 14 days nor more than 50
days prior to any meeting of shareholders called for the election of Directors,
provided, however, that if less than 21 days' notice of the meeting is given to
shareholders, such nominations shall be mailed or delivered to the President of
the Corporation and to the Chairman, Federal Reserve Board, Washington, D.C.,
not later than the close of business on the seventh day following the day on
which the notice of meeting was mailed. Such notification shall contain the
following information to the extent known to the notifying shareholders:
3
<PAGE> 4
(a) the name and address of each proposed nominee;
(b) the principal occupation of each proposed nominee;
(c) the total number of shares of capital stock of the Corporation
that will be voted for each proposed nominee;
(d) the name and residence address of the notifying shareholder;
and
(e) the number of shares of capital stock of the Corporation owned
by the notifying shareholder.
Nominations not made in accordance herewith may, in his discretion, be
disregarded by the Chairman of the meeting, and upon his instructions, the vote
tellers may disregard all votes cast for each such nominee.
Section 3.4. VACANCIES. The Board of Directors, by vote of majority of
the full Board, may, between annual meetings of shareholders, increase or
decrease the membership of the Board within the minimum and maximum limits
described in Section 3.1 and by like vote appoint qualified persons to fill the
vacancies created thereby, or by like vote appoint qualified persons to fill
vacancies occurring on the Board for any other reason. All such increases,
decreases or appointments shall be subject to the limitations imposed by Section
3.2 of this Article 3.
Section 3.5. OFFICERS. The Board of Directors shall have the power to
appoint and define duties of officers and employees of this Corporation; to
waive or require bonds from them and to fix the penalty thereof; to regulate the
manner in which Directors shall be elected or appointed, and to appoint
Inspectors of the Election; to regulate the manner in which any increase of the
capital of the Corporation shall be made; to authorize and issue debt
instruments whether or not subordinated; to manage and administer the business
and affairs of the Corporation; to make all by-laws that it may be lawful for
them to make for the general regulation of the business of this Corporation and
the management of its affairs; and generally to do and perform all acts that it
may be lawful for a Board of Directors to do and perform.
Section 3.6. ACTION IN WRITING IN LIEU OF MEETING. Any action which may
be authorized or taken at a meeting of the Directors, may be authorized or taken
without a meeting with the affirmative vote or approval of, and in writing or
writings signed by all the Directors.
ARTICLE 4
Committees of the Board
Section 4.1. AUDIT COMMITTEE. There shall be an Audit Committee
appointed by the Board. The Audit Committee shall consist of at least three
Directors, exclusive of the active officers of the Corporation, whose duty it
shall be to examine, at least once during each calendar year, the affairs of
this Corporation, ascertain whether the accounts are correctly kept and the
condition of the Corporation corresponds therewith, and other examination
procedures deemed necessary to determine whether the Corporation is in a sound
and solvent condition and to recommend to the Board such
4
<PAGE> 5
changes in the manner of doing business which would be deemed desirable. The
Audit Committee shall report in writing to the Board, at least annually, the
results of its examination. The members of the Audit Committee shall serve for a
term to be determined by the Board.
Section 4.2. EXECUTIVE AND OTHER COMMITTEES. The Directors may create
and from time to time abolish or reconstitute an executive committee and any
other committee or committees of Directors each to consist of not less than
three Directors, and may delegate to any such committee or committees any or all
of the authority of the Directors, however conferred, other than that of filling
vacancies in the Board of Directors or in any committee of Directors. Each such
committee shall serve at the pleasure of the Directors, and shall act only in
the intervals between meetings of the Board of Directors, and shall be subject
to the control and direction of the Board of Directors. The Directors may adopt
or authorize the committees to adopt provisions with respect to the government
of any such committee or committees which are not inconsistent with applicable
law, the Articles of Incorporation of the Corporation or these regulations. An
act or authorization of any act by any such committee within the authority
properly delegated to it by the Directors shall be as effective for all purposes
as the act or authorization of the Directors. Any right, power or authority
conferred in these regulations to the "Directors" or to the "Board of Directors"
shall also be deemed conferred upon each committee or committees of Directors to
which any such right, power or authority is delegated (expressly, or by general
delegation, or by necessary implication) by the Board of Directors.
ARTICLE 5
Capital Stock
Section 5.1. PRE-EMPTIVE RIGHTS. No holder of shares of the capital
stock of any class of the Corporation shall have any pre-emptive or preferential
right of subscription to any shares of any class of stock of the Corporation,
whether now or hereafter authorized, or to any obligations convertible into
stock of the Corporation, issued or sold, nor any right of subscription to any
thereof other than such, if any, as the Board of Directors, in its discretion,
may from time to time determine and at such price as the Board of Directors may
from time to time fix.
Section 5.2. LOST, MUTILATED OR DESTROYED CERTIFICATES. If any
certificate for shares is lost, mutilated or destroyed, the Board of Directors
may authorize the issuance of a new certificate in place thereof upon such terms
and conditions as it may deem advisable. The Board of Directors in its
discretion may refuse to issue such new certificates until the Corporation has
been indemnified by a final order or decree of a court of competent
jurisdiction.
Section 5.3. REGISTERED SHAREHOLDERS. A person in whose name shares are
of record on the books of the Corporation shall conclusively be deemed the
unqualified owner thereof for all purposes and to have capacity to exercise all
rights of ownership. Neither the Corporation nor any transfer agent of the
Corporation shall be bound to recognize any equitable interest in or claim to
such shares on the part of any other person, whether disclosed upon such
certificate or otherwise, nor shall they be obliged to see to the execution of
any trust or obligation.
5
<PAGE> 6
Section 5.4. TRANSFER OF SHARES. Any certificate for shares of the
Corporation shall be transferable in person or by attorney upon the surrender of
the certificate to the Corporation or any transfer agent for the Corporation
(for the class of shares represented by the certificate surrendered) properly
endorsed for transfer and accompanied by such assurances as the Corporation or
its transfer agent may require as to the genuineness and effectiveness of each
necessary endorsement. The person in whose name any shares stand on the books of
the Corporation shall, to the full extent permitted by law, be conclusively
deemed to be the unqualified owner and holder of the shares and entitled to
exercise all rights of ownership, for all purposes relating to the Corporation.
Neither the Corporation nor any transfer agent of the Corporation shall be
required to recognize any equitable interest in, or any claim to, any such
shares on the part of any other person, whether disclosed on the certificate or
any other way, nor shall they be required to see to the performance of any trust
or other obligation.
Section 5.5. REGULATIONS. The Board of Directors may make such rules
and regulations as it may deem expedient or advisable, not inconsistent with
these regulations, concerning the issue, transfer and registration of
certificates for shares. It may appoint one or more transfer agents or one or
more registrars, or both, and may require all certificates for shares to bear
the signature of either or both.
ARTICLE 6
Officers & Employees
Section 6.1 CHAIRMAN OF THE BOARD. The Board of Directors may appoint
one of its members to be Chairman of the Board with powers and duties as may,
from time to time, be conferred or assigned by the Board of Directors.
Section 6.2. PRESIDENT. The Board of Directors shall appoint the
President of the Corporation who shall have general executive powers, and who
shall have and may exercise any and all other powers and duties permitted by
law, regulation or practice, in the office of President, or imposed by the
By-Laws. The President shall also have and may exercise such further powers and
duties as from time to time may be conferred, or assigned by the Board of
Directors.
Section 6.3. SECRETARY. The Board of Directors shall appoint and
designate an officer who shall be Secretary of the Board and of the Corporation
and shall keep accurate minutes of all meetings. The Secretary shall attend to
the giving of all notices required by the By-Laws to be given; shall be
custodian of the Corporate seal, records, documents and papers of the
Corporation; shall provide for the keeping of proper records of all transactions
of the Corporation; shall have and may exercise any and all other powers and
duties permitted by law, regulation or practice to the office of the Secretary,
or imposed by the By-laws, and shall also perform such other duties as may be
assigned from time to time by the Board of Directors.
Section 6.4. OTHER OFFICERS. The Board of Directors may appoint other
officers as from time to time may appear to the Board of Directors to be
required or desirable to transact the business of the Corporation. Such officers
shall respectively exercise such powers and perform such duties as pertain to
their several offices, or as may be conferred upon, or assigned to them by the
Board of
6
<PAGE> 7
Directors or the President. One officer may be designated by the Board of
Directors to act as Chief Executive Officer in the absence of the President.
Section 6.5. TENURE OF OFFICE. The President, and all other officers
shall hold office for the current year for which the Board was elected unless
they shall resign, become disqualified or be removed; and any vacancy occurring
in the office of the President shall be filled promptly by the Board of
Directors.
Section 6.6. EMPLOYMENT AGREEMENTS. The Board of Directors may enter
into employment agreements with any officers and employees of the Corporation
under such terms and conditions permitted by law, regulation or practice at the
sole discretion and judgment of the Board.
ARTICLE 7
Indemnification and Insurance
Section 7.1. COSTS INCURRED. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
Director, trustee, officer or employee of the Corporation, or is or was serving
at the request of the Corporation as a Director, trustee, officer or employee of
another corporation, domestic or foreign, nonprofit or for profit, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding provided
that: (a) he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation; (b) with respect to any
criminal action or proceeding, he had no reasonable cause to believe his conduct
was unlawful; and (c) in any action or suit by or in the right of the
Corporation, no indemnification shall be made with respect to any amounts paid
in settlement or with respect to any claim, issue, or matter as to which such
person shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Corporation unless and only to the extent that
the Court of Common Pleas or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the Court of Common Pleas
or such other court shall deem proper. The termination of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a plea of NOLO
CONTENDERE or its equivalent, shall not of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the Corporation, and with respect
to any criminal action or proceeding, he had reasonable cause to believe that
his conduct was unlawful.
Section 7.2. INDEMNIFICATION PROCEDURE. Any indemnification under
Section 7.1 shall be made by the Corporation only if and as authorized in the
specific case upon a determination that indemnification of the Director,
trustee, officer or employee is proper in the circumstances because he has met
the applicable standard of conduct set forth in Section 7.1. Such determination
shall be made by one of the following methods: (a) by a majority vote of a
quorum consisting of Directors of the
7
<PAGE> 8
Corporation who were not and are not parties to or threatened with any such
action, suit or proceeding; or (b) if such a quorum is not obtainable or if a
majority vote of a quorum of disinterested Directors so directs, in a written
opinion by independent legal counsel retained by the Corporation, other than an
attorney, or a firm having associated with it an attorney who has been retained
by or who has performed services for the Corporation or any person to be
indemnified within the past five years; or (c) by the shareholders; or (d) by
the Court of Common Pleas of Muskingum County, Ohio or the court in which such
action, suit or proceeding was brought.
Section 7.3. ADVANCE PAYMENT OF COSTS. Expenses, including attorneys'
fees, incurred in defending any action, suit or proceeding referred to in
Section 7.1 may be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding as authorized by the Directors in the
specific case upon receipt of an undertaking by or on behalf of the Director,
trustee, officer or employee to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article.
Section 7.4. NON-EXCLUSIVE. This indemnification authorized in this
Article shall not be deemed exclusive of any other rights to which persons
seeking indemnification may be entitled under any agreement, vote of
shareholders or disinterested Directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 7.5. INSURANCE. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, trustee, officer, or
employee of the Corporation, or in or was serving at the request of the
Corporation as a Director, trustee, officer or employee of another Corporation,
domestic or foreign, nonprofit or for profit, partnership, joint venture, trust
or other enterprise against any liability asserted against him and incurred by
him in any such capacity or arising out of his status as such, whether or not
the Corporation would have the power to indemnify him against such liability
under this Article or under Chapter 1701, Ohio Revised Code.
Section 7.6. SURVIVAL. The indemnification authorized in this Article
shall continue as to a person who has ceased to be a Director, trustee, officer
or employee.
Section 7.7. SUCCESSORS. The indemnification authorized in this Article
shall inure to the benefit of the heirs, executors and administrators of any
person entitled to indemnification under this Article.
ARTICLE 8
Corporate Seal
In accordance with Ohio Revised Code Section 1701.13(B), the Board of
Directors may adopt and alter a corporate seal and use the same or a facsimile
thereof, but failure to affix the corporate seal shall not affect the validity
of any instrument provided it is executed by the proper officers.
8
<PAGE> 9
ARTICLE 9
Fiscal Year
The fiscal year of the Corporation shall end on the 31st day of
December in each year, or on such other day as may be fixed from time to time by
the Board of Directors.
ARTICLE 10
Execution of Instrument
All contracts, checks, drafts, etc., shall be signed by the President
or Vice Presidents, or such other officer or officers as may be designated by
the Board of Directors.
ARTICLE 11
Recorded Information
The organization papers of this Corporation, the returns of the tellers
of the elections, the proceedings of all regular and special meetings of the
Directors and of the shareholders, the By-Laws and any amendments thereto, and
reports of the committees of Directors shall be recorded in the minute book; and
the minutes of each meeting shall be signed by the Secretary and attested by the
President.
ARTICLE 12
Amendments to Code of Regulations
The regulations of this Corporation may be amended or new regulations
may be adopted by a majority vote of the shareholders or written assent of
shareholders entitled to exercise a majority of voting power.
I, Charles E. White, certify that: (1) I am the duly constituted
secretary of BancFirst Corp. and secretary of its Board of Directors, and as
such officer am the official custodian of its records; (2) the foregoing Code of
Regulations is the Code of Regulations of the association and it is now lawfully
in force and effect.
9
<PAGE> 10
I have hereunto affixed my official signature on this 27th day of
March, 1990.
(Signed) /S/Charles E. White
----------------------------
CHARLES E. WHITE, Secretary
10
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