<PAGE> 1
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 period ended September 30, 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 0-20255
I.R.S. Employer Identification Number 34-1692031
Mahoning National Bancorp, Inc.
(an Ohio Corporation)
23 Federal Plaza
Youngstown, Ohio 44501-0479
Telephone: (330) 742-7000
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 issuers classes of
common stock, as of the latest practicable date: 6,300,000 shares of the
Company's Common Stock (No par value) were outstanding as of October 31, 1997.
<PAGE> 2
MAHONING NATIONAL BANCORP, INC.
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements Consolidated
Balance Sheet (unaudited) - September 30, 1997 and
December 31, 1996 3
Consolidated Statements of Income-Three and
Nine Months Ended September 30, 1997
and 1996 (unaudited) 4
Condensed Consolidated Statement of Cash Flows -
Nine Months Ended September 30, 1997 and 1996
(unaudited) 5
Notes to Consolidated Financial Statements 6
Item 2 - Management Discussion and Analysis
of Operations and Liquidity and Capital Resources 7-16
Item 3 - Summary of Average Balances and Interest Rates 17
PART II - OTHER INFORMATION 18
Exhibit Number 10 - Material Contracts 19-94
Exhibit Number 27 - Financial Data Schedule
SIGNATURES 95
</TABLE>
<PAGE> 3
PART I
FINANCIAL INFORMATION
MAHONING NATIONAL BANCORP INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
(Amounts in thousands)
SEPTEMBER 30 DECEMBER 31,
ASSETS 1997 1996
------------- -------------
<S> <C> <C>
Cash and due from banks $ 27,533 $ 29,257
Federal funds sold -- 19,500
Investment securities available for sale - at fair value 175,030 143,600
Investment securities held to maturity - at cost
(Market value $61,609 at September 30, 1997
and $85,646 at December 31, 1996) 61,548 85,732
Loans 494,581 477,795
Less allowance for possible loan losses 7,679 8,112
------------- -------------
Net loans 486,902 469,683
Bank premises and equipment 8,799 8,981
Other assets 14,327 12,807
------------- -------------
Total assets $ 774,139 $ 769,560
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits
Non-interest bearing $ 67,340 $ 70,706
Interest bearing
Savings 269,176 282,929
Time 196,510 197,363
------------- -------------
Total deposits 533,026 550,998
Federal funds purchased and securities
sold under agreement to repurchase 134,230 122,467
Short term borrowings 13,978 10,235
Long term borrowings 3,384 4,065
Other liabilities 5,157 4,700
------------- -------------
Total liabilities 689,775 692,465
------------- -------------
STOCKHOLDERS' EQUITY
Common stock (No par value, $1 stated value)
Authorized 15,000,000 shares, Issued
and Outstanding - 6,300,000 shares 6,300 6,300
Additional paid-in capital 44,100 44,100
Retained earnings 33,342 26,627
Unrealized gain (loss) on investment securities
available for sale, net of deferred taxes 622 68
------------- -------------
Total stockholders' equity 84,364 77,095
------------- -------------
Total liabilities and
stockholders' equity $ 774,139 $ 769,560
============= =============
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 4
<TABLE>
<CAPTION>
MAHONING NATIONAL BANCORP INC
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE FOR THE THREE FOR THE NINE FOR THE NINE
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
(Amounts in thousands, except per share data) SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 11,096 $ 10,710 $ 32,691 $ 31,662
Interest on investment securities
Taxable 3,193 3,097 9,526 9,288
Nontaxable 281 245 789 648
Interest on federal funds sold 25 90 331 256
-------------------------------------------------------------
14,595 14,142 43,337 41,854
INTEREST EXPENSE
Interest on deposits 4,237 4,517 12,691 13,688
Interest on federal funds purchased and
securities sold under agreement to repurchase 1,563 1,158 4,622 3,085
Interest on short term borrowings 94 100 320 245
Interest on long term borrowings 48 59 153 163
-------------------------------------------------------------
5,942 5,834 17,786 17,181
-------------------------------------------------------------
Net interest income 8,653 8,308 25,551 24,673
PROVISION FOR LOAN LOSSES 725 600 2,250 1,675
-------------------------------------------------------------
Net interest income after
provision for loan losses 7,928 7,708 23,301 22,998
OTHER OPERATING REVENUE
Trust department income 702 679 2,199 1,945
Service charges on deposit accounts 1,088 928 3,102 2,626
Other service charges 224 211 619 556
Other revenue 87 68 231 212
Gain on sale of investment securities
available for sale -- -- 178 --
-------------------------------------------------------------
2,101 1,886 6,329 5,339
OTHER OPERATING EXPENSE
Salaries and employee benefits 2,739 2,851 8,184 8,171
Expenses of premises and fixed assets 695 775 2,201 2,397
Other expense 1,621 1,532 4,806 4,817
-------------------------------------------------------------
5,055 5,158 15,191 15,385
-------------------------------------------------------------
Income before income taxes 4,974 4,436 14,439 12,952
APPLICABLE INCOME TAXES 1,619 1,432 4,699 4,198
-------------------------------------------------------------
NET INCOME $ 3,355 $ 3,004 $ 9,740 $ 8,754
=============================================================
EARNINGS PER COMMON SHARE $ 0.53 $ 0.48 $ 1.55 $ 1.39
DIVIDENDS PER SHARE $ 0.16 $ 0.135 $ 0.48 $ 0.405
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 5
MAHONING NATIONAL BANCORP INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS NINE MONTHS
ENDED ENDED
(Amounts in thousands) SEPTEMBER 30, SEPTEMBER 30,
1997 1996
(UNAUDITED) (UNAUDITED)
--------------------------------------
<S> <C> <C>
Cash flows from operating activities $ 12,220 $ 12,134
Cash flows from investing activities
Proceeds from maturities of investment securities available for sale 10,723 17,016
Proceeds from maturities of investment securities held to maturity 24,235 26,365
Sale of investment securities available for sale 20,075 --
Purchase of investment securities available for sale (61,202) (26,915)
Purchase of investment securities held to maturity -- (36,518)
Net increase in loans (20,472) (25,999)
Net decrease (increase) in federal funds sold 19,500 (14,000)
Capital expenditures (632) (562)
--------------------------------------
Net cash used in investing activities (7,773) (60,613)
Cash flows from financing activities
Net decrease in deposits (17,973) (13,307)
Net increase in federal funds purchased and
securities sold under agreement to repurchase 11,763 50,050
Net increase in short term borrowings 3,743 9,576
Proceeds from long term borrowings -- 3,500
Payments on long term borrowings (680) (516)
Dividends paid (3,024) (2,552)
--------------------------------------
Net cash (used) provided by financing activities (6,171) 46,751
Net decrease cash and cash equivalents (1,724) (1,728)
Cash and cash equivalents at beginning of year 29,257 30,731
--------------------------------------
Cash and cash equivalents at end of nine months $ 27,533 $ 29,003
======================================
Supplemental disclosures of cash flow information:
Cash paid during the first nine months for:
Interest $ 17,797 $ 17,118
======================================
Income Taxes $ 4,266 $ 3,735
======================================
Non-cash transactions:
Transfer from loans to other real estate owned $ 159 $ 34
======================================
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE> 6
MAHONING NATIONAL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The financial information presented is prepared in accordance with
generally accepted accounting principles and general policies within the
financial service industry. The financial information included herein has been
prepared by management without audit by independent certified public accountants
who do not express an opinion thereon. All significant intercompany balances and
transactions have been eliminated and the information furnished includes all
adjustments consisting of normal recurring accrual adjustments which are in the
opinion of management, necessary for a fair presentation of results for the
interim period. The results of the interim financial information presented are
not necessarily indicative of the results of operations for the full calendar
year ending December 31, 1997.
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Earnings Review
Net income for the first nine months of 1997 amounted to $9.740 million or $1.55
per share. This represents an increase of 11% over net income earned during the
same period in 1996. ($8.754 million or $1.39 per share). Mahoning National
Bancorp, Inc.'s net income for the current quarter increased 12% to $3.355
million or $0.53 per share from $3.004 million or $0.48 per share for the same
quarter in 1996.
The primary component of earnings is net interest income. Net interest income
for the first nine months of 1997 was $25.551 million compared with $24.673
million or a 4% increase from the comparable period in 1996. Net interest income
for the current quarter increased 4% over the comparable period of 1996 ($8.653
million from $8.308 million). Interest and fees on loans increased $1.029
million in the first nine months of 1997 compared to the first nine months of
1996. This increase was the result of a $13.112 million increase in average loan
balances for the first nine months of 1997 compared to 1996; $489.293 million
compared to $476.181 million. The increase in average loan balances in the first
nine months of 1997 accounted for nearly all of the additional interest and fee
income on loans. Interest expense increased $605 thousand in the first nine
months of 1997 compared to the same period in 1996. This increase can be
attributed to an increase in the volume of securities sold under agreements to
repurchase as 1997 average balances increased $35.659 million over average
balances in the same period of 1996. This increase in funding offset the $14.810
million decrease in average savings deposits in the first nine months of 1997
compared to the same period in 1996. The average balance of time deposits for
the first nine months of 1997 decreased $10.455 million from the average
balances for the same period of 1996. The cost of these funds also decreased
from 5.41% for the first nine months of 1996 to 5.30% for the first nine months
of 1997, an 11 basis point decrease. While time deposit costs for 1997 are
currently lower than 1996 costs, they should increase over the next three months
as maturing certificates are repricing at higher rates and the local time
deposit market remains extremely competitive. It is the Company's intent to
offer competitive rates on those time deposit maturities that the Asset
Liability Committee (ALCO) determines appropriate. The ALCO will base their
decisions on the Company's balance sheet structure, interest rate forecasts and
alternative funding costs.
For a detailed analysis of the Company's net interest margin, on a tax
equivalent basis, refer to the Summary of Average Balances and Interest Rates;
Item 3 of this report on page 17.
In late March of 1997 the Federal Reserve Bank increased the discount rate and
the Company increased its prime lending rate by 25 basis points. With this
increase a
<PAGE> 8
significant portion of the Company's loan portfolio was repriced upward
immediately, while rates on interest bearing deposits and borrowings continued
to increase more deliberately, with existing certificates of deposit repricing
at slightly higher rates than previously experienced.
The impact of this pricing change had minimal impact on year to date and third
quarter earnings. The change in the mix of the loan portfolio, which had
declines in consumer loans that were off-set with increases in lower yielding
residential mortgage loans, kept the portfolio yield at 8.97% for each of the
first three quarters of 1997. Strategic funding and pricing decisions on the
Company's deposits and other borrowings have resulted in a steady 3.84% cost on
interest bearing liabilities for the first nine months of 1997. The net interest
margin for the first nine months of 1997 was 4.77%, which is the same net
interest margin experienced in the first nine months of 1996. With the current
uncertainty on which direction the Federal Reserve will move rates over the next
twelve months, the Company analyzed the effect of a presumed 100 and 200 basis
point increase and decrease in interest rates through its simulation analysis.
While the results of the simulation indicated no significant impact on net
interest income over the next twelve months, they did indicate the Company to be
negatively impacted by rising interest rates and positively impacted by falling
interest rates due to the liability sensitive nature of the balance sheet.
Other operating revenue for the first nine months of 1997, exclusive of security
transactions, was $6.151 million or a 15% increase over the first nine months of
1996 total of $5.339 million. Other operating revenue for the current quarter
was $2.101 million compared to $1.886 million for the same quarter of 1996, an
11% increase. Other operating revenue, exclusive of security transactions, as a
percentage of average assets was 1.06% for the first nine months of 1997
compared to .96% for the same period in 1996.
The largest component of other operating revenue in the first nine months of
1997 was service charges on deposit accounts which increased $476 thousand or
18% over the first nine months of 1996. Service charges on deposit accounts for
the current quarter increased by $160 thousand or 17% over the same period in
1996, $1.088 million from $928 thousand. The Company annually reviews all of its
fee-based products and services for marketability and profitability. Adjustments
to fees for the Company's products and services and the strengthening of
controls for the collections of such fees are the reasons for the significant
increase.
Mahoning National Bank's Trust Department generated $2.199 million in other
revenue in the first nine months of 1997, an increase of $254 thousand or 13%
over the $1.945 million earned in the same period of 1996. The Trust Department
generated $702 thousand of operating income in the third quarter of 1997, a 3%
increase over the $679 thousand earned in the comparable quarter of 1996. This
increase can be attributed to market value based fees which increased due to the
significant increase in account market values due to rises in the stock market
over the past year. At September 30, 1997, Trust department assets totaled
$454.502 million with a market value of $653.778 million
<PAGE> 9
compared to $580.055 million with a market value of $743.932 million at
September 30, 1996. This decrease was the result of a corporate customer
consolidating employee benefit and custody trust accounts with a financial
institution outside of our market area in the second quarter of 1997. As a
result of the loss of this account relationship Trust department revenue for
1997 should approximate the $2.837 million earned in 1996.
In February of 1997 the Company realized a $178 thousand gain when $20.075
million of US Government securities were sold from the available for sale
portfolio. There were no security sales in the third quarter of 1997 or in the
first nine months of 1996.
Provision for loan losses for the first nine months of 1997 amounted to $2.250
million compared to $1.675 million for the comparable period in 1996. The
provision for the current quarter was $725 thousand compared to $600 thousand
for the same quarter of 1996. This increase is discussed in more detail under
the Provision For Loan Losses heading later in this discussion.
Other operating expense for the first nine months decreased $194 thousand or 1%
from the comparable period in 1996 to $15.191 million from $15.385 million. For
the current quarter other operating expense totaled $5.055 million compared to
$5.158 million in the same quarter of 1996. As a percentage of average assets,
other operating expense was 2.63% for the first nine months of 1997 compared to
2.75% in the same time period of 1996.
On September 30, 1996, the "Deposit Insurance Fund Act of 1996" was enacted.
This Act required Federal Deposit Insurance Corporation (FDIC) insured banks to
pay a 1.29 basis point assessment ($.0129 per $100 of deposits) for Bank
Insurance Fund deposits in 1997, 1998 and 1999. As a result of this assessment,
FDIC premium expense for the first nine months of 1997 totaled $53 thousand
compared to $2 thousand for the same period in 1996.
Salaries and employee benefits expense for the first nine months of 1997
increased $13 thousand but decreased $112 thousand or 4% for the most recent
quarter when compared to 1996. Salary expense alone decreased $125 thousand or
2% for the first nine months of 1997 and $204 thousand for the current quarter
when compared to the same periods in 1996. In the third quarter of 1996, as a
result of departmental restructuring and selective staff reductions a one time
charge of approximately $306 thousand was charged to salary expense. Health care
expenses for the first nine months of 1997 were $583 thousand compared to $414
thousand for the same period in 1996, an increase of $169 thousand or 41%. This
increase was due in part to increased health care claims over the past 12
months. The Company's renewal rates for the 1997 - 1998 plan year increased
between 5 - 10%, which should increase health care costs over the remainder of
1997 and into 1998. This increase should not have a material impact on future
earnings.
Expenses of premises and fixed assets for the first nine months of 1997 totaled
$2.201 million, an 8% decrease ($196 thousand) from the same period in 1996.
Current quarter
<PAGE> 10
expense totaled $695 thousand, a 10% decrease from the same quarter in 1996.
This decrease in mainly attributable to the termination of various equipment
leases early in the second quarter of 1997 and reduced building maintenance
costs.
Other expenses, exclusive of the FDIC insurance assessment, decreased $62
thousand in the first nine months of 1997, to $4.753 million from $4.815 million
for the same period of 1996, a 1% decrease. For the third quarter of 1997 other
expense, exclusive of the FDIC insurance assessment, totaled $1.604 million, an
increase of $73 thousand or 5%. Increases in third quarter expenses are the
result of increased marketing expenses and software amortization and support.
Overhead expenses for the remainder of 1997 are expected to approximate those
incurred in the first three quarters of the year. Management has decided to
close the South Side branch office and consolidate it into the South and
Midlothian office in the first quarter of 1998. Expenses to close this office
are not expected to be material. This consolidation will reduce overhead
expenses beginning in 1998.
Income Taxes
Income tax expense for the first nine months of 1997 amounted to $4.699 million
compared to $4.198 million for the same period in 1996. Income tax expense for
1997 is being accrued at an effective rate of approximately 32.5%, which
compares to an effective tax rate of 32.3% for all of 1996.
The Statement of Condition includes approximately $2.384 million and $2.681
million of net deferred tax assets at September 30, 1997 and December 31, 1996
respectively. It is management's belief that the Company has adequate taxable
income to realize the deferred tax asset and accordingly no valuation reserve
has been established.
The following annualized ratios reflect the earnings performance for the first
nine months of 1997 compared to the same time period of 1996:
<TABLE>
<CAPTION>
For the nine For the nine
months ended months ended
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Return on Average Assets 1.69% 1.56%
Return on Average Equity 16.19 16.14
Return on Earning Assets
- -Taxable Equivalent 8.02 8.01
Interest Cost as a
percentage of Earnings Assets 3.25 3.24
Net Interest Margin 4.77 4.77
</TABLE>
<PAGE> 11
Statements of Condition
As of September 30, 1997, total assets of the Company amounted to $774.139
million, an increase from December 31, 1996 total assets of $769.560 million.
Average assets for the first nine months of 1997 amounted to $772.307 million
compared to $746.370 million for the same period of 1996, a 3% increase. Through
the first nine months of 1997 total loans increased $16.786 million or 4% from
year end while the investment portfolio increased $7.246 million or 3% in that
same period. The growth in loans and the investment portfolio was primarily
funded through a $19.500 million reduction in federal funds sold and earnings
retention. Short term borrowings and federal funds purchased increased $3.743
million and $4.900 million respectively in the first nine months of 1997,
securities sold under agreements to repurchase increased $6.863 million from
$122.467 million on December 31, 1996 to $129.330 million at September 30, 1997.
A significant decline in securities sold under agreements to repurchase which
resulted in a loss of approximately $11.2 million in overnight repurchase
agreements (corporate "sweep" checking accounts) due to a corporate sweep
customer consolidating their funds with a financial institution outside of our
market area was offset with an increase in account relationships generated
throughout the first nine months of 1997.
Investment Portfolio
The deposits and other borrowings of the Company, in excess of required reserves
and operating funds of the Company, are invested in loans, investment securities
and federal funds sold. The objective of the investment portfolio is to combine
liquidity, earnings and safety of the investment in a prudent manner so as to
protect the depositor, fulfill responsibility to borrowers and offer a favorable
return to the stockholders.
At September 30, 1997 the investment portfolio which includes a $956 thousand
unrealized gain on available for sale securities, totaled $236.578 million an
increase of $7.246 million from December 31, 1996.
At September 30, 1997 the Company has classified investment securities with
amortized cost and fair market value of $174.074 and $175.030 million
respectively, or 74% of the portfolio as available for sale, with the remainder
of the portfolio classified as held to maturity. The adoption of SFAS 115 has
resulted in an increase in the carrying amount of investment securities of $956
thousand with an increase in stockholders' equity of $622 thousand net of
deferred income taxes. Those securities classified as available for sale will
afford the Company's Asset/Liability Committee the necessary flexibility to
manage the portfolio to meet liquidity needs that may arise.
In the first quarter of 1997, $20.075 million of U.S. Government Securities that
were coming due in 1997 were sold from the available for sale portfolio and were
reinvested in longer term U.S. Treasury securities. There were no security sales
in the third quarter of 1997, or the first nine months of 1996. No securities
were transferred between categories in the first nine months of 1997.
<PAGE> 12
Loans
Total loans outstanding increased by $16.786 million or 4% from $477.795 million
on December 31, 1996, to $494.581 million on September 30, 1997. This growth,
coupled with a decline in deposits resulted in a loan to deposit ratio of 92.79%
at September 30, 1997, compared to 86.71% at December 31, 1996.
This increase in the loan portfolio in the first nine months of 1997 is the
result of continued loan demand and good results from business development
efforts. The areas of largest growth in the first nine months of 1997 were
nonresidential mortgages, residential mortgages and commercial loans.
Nonresidential mortgages increased $9.984 million or 10% from $95.081 million at
December 31, 1996 to $105.065 million at September 30, 1997 and commercial loans
increased $1.201 million or 1% from $87.117 million at December 31, 1996 to
$88.318 million at September 30, 1997. The momentum established the past several
years with a strong sales culture in the corporate and branch business
development areas continue to result in new relationships. The continued
strength of the local economy and a favorable interest rate environment has
contributed to the growth. Lower demand for real estate and commercial loans is
anticipated for the next several quarters.
Residential mortgages increased $4.423 million or 3% from $156.574 million at
December 31, 1996 to $160.997 million at September 30, 1997. Strong demand for
equity loan products continues to result in increased loan balances. Equity loan
balances account for $3.478 million of the $4.423 million increase in
residential mortgages. The demand for purchase money mortgage loans lessened in
the second and third quarters as did refinancings.
Consumer loans which through six months of 1997 were down $3.966 million from
December 31, 1996 increased in the third quarter and are now up $733 thousand
through September 30, 1997. This follows a decrease of $10.496 million or 8% in
consumer loan balances from December 31, 1995 to December 31, 1996. Consumer
loan balances are primarily dependent on the level of indirect automobile
financing purchased by the Bank. Substantial growth of past years was not
sustained in 1996 and in the first nine months of 1997 due to a slower market,
greater competition among local lenders and the Company's close monitoring of
underwriting criteria due to increased charge-offs and delinquency trends.
Competition from leasing captive automobile finance companies (i.e. GMAC, Ford
Motor Credit) will impact future growth and necessitate a commitment to
providing the dealer network with a very high level of service. Given the rapid
amortization of the automobile loan portfolio, which has a short average
maturity, and a projected slow down in our national economy, consumer loan
totals are expected to remain flat through 1998.
<PAGE> 13
As of September 30, 1997, non-performing loans, defined as those loans which are
on non-accrual or are 90 days or more past due and still accruing, totaled
$3.685 million compared to $4.629 million at December 31, 1996. Listed below is
a schedule of the Company's non-performing assets:
<TABLE>
<CAPTION>
(Amounts in thousands) September 30, 1997 December 31, 1996
- ------------------------- ------------------ -----------------
<S> <C> <C>
Non accrual loans $2,449 $3,698
Accruing loans 90 days
or more past due 1,236 931
------ ------
Non performing loans 3,685 4,629
Restructured loans in
compliance with modified
terms - 411
Other real estate owned 147 269
------ ------
Total problem assets $3,832 $5,309
====== ======
Total problem assets to
total assets 0.50% 0.69%
</TABLE>
The following ratios will provide additional information on the status of the
loan portfolio:
<TABLE>
<CAPTION>
As of As of
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Loan to deposit ratio 92.79% 86.71%
Non performing loans to
total loans .75 .97
Non performing loans to
allowance for loan losses 47.99 57.06
Allowance for loan losses
to total loans 1.55 1.70
</TABLE>
Shown below is a summary of the allowance for loan losses:
<TABLE>
<CAPTION>
For the nine For the nine
months ended months ended
(Amounts in thousands) September 30, 1997 September 30, 1996
---------------------- ------------------ ------------------
<S> <C> <C>
Balance at beginning of period $8,112 $7,156
Provision charged to operating
expense 2,250 1,675
Recoveries of loans charged off 461 480
Losses charged to allowance (3,144) (1,749)
-------- -------
Balance at end of period $7,679 $7,562
====== ======
Net charge-offs to average loans .55% .27%
</TABLE>
<PAGE> 14
Information required under Statement of Financial Accounting Standards No. 114
"Accounting by Creditors for Impairment of a Loan" and No. 118 "Accounting by
Creditors for Impairment of a Loan - Income Recognition and Disclosure" is as
follows for the nine months ended September 30:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Principal amount of impaired loans $844 $462
Allowance allocated to impaired loans - 125
---- ----
Portion for which no allowance is allocated $844 $337
==== ====
Average investment in impaired loans for
the nine months ended September 30: $927 $515
==== ====
</TABLE>
Total cash collected on impaired loans during the first nine months of 1997 and
1996 was $582 thousand and $170 thousand respectively; $573 thousand was
credited to the principal balance outstanding and $9 thousand was credited to
interest in the first nine months of 1997, while $168 thousand was credited to
the principal balance and $2 thousand recognized as interest income on such
loans in 1996. Interest that would have been accrued on impaired loans in the
first nine months of 1997 and 1996 was $35 thousand and $39 thousand
respectively. Interest income of $9 thousand and $2 thousand was recognized
during the first nine months of 1997 and 1996, respectively.
Provision For Loan Losses:
The policies of the Company provide for loan loss reserves to adequately protect
the Company against potential unidentified and/or identified loan losses
consistent with sound and prudent banking practice.
In determining the monthly provision for loan losses and the adequacy of the
loan loss reserve, management reviews the current and forecasted economic
conditions and portfolio trends. The primary focus is placed on current problem
loans, delinquencies and anticipated charge-offs. As of September 30, 1997, all
loans classified for regulatory purposes do not represent or result from trends
or uncertainties which management reasonably expects will materially impact
future operating results, liquidity, or capital resources.
The provision for loan losses charged to expense during the first nine months of
1997 was $2.250 million, an increase of $575 thousand from the 1996 first nine
month provision. This increase was the result of the growth in the loan
portfolio and increases in consumer loan and commercial loan charge-offs.
Net charge-offs on consumer loans and credit card related plans totaled $1.384
million for the first nine months of 1997 compared to $1.286 million for the
same period in 1996.
<PAGE> 15
The Company's experience in 1996 and the first nine months of 1997 followed
national trends of deteriorating credit quality in consumer loans and credit
card and related plans brought on by the high level of consumer debt and record
personal bankruptcy filings. It is expected that net charge-offs on consumer and
credit card related plans in the fourth quarter will approximate those incurred
in recent quarters. Late in the first quarter of 1997, the Company became aware
of a severe deterioration in the financials of a particular Commercial loan
customer. In the subsequent loan work-out with this company, which resulted in a
secured party sale, a portion of that loan ($750 thousand), was charged-off. Net
commercial loan charge-offs for the first nine months of 1997 totaled $1.181
million compared to a net $53 thousand recovery in the first nine months of
1996. This increase in charge-offs is attributed to the deterioration of two
commercial loan credits in 1997.
It is anticipated that some of the amounts charged-off in the first nine months
will be collected in the future and will be added to the allowance for loan
losses. The timing and amounts of these collections are uncertain at this time.
The trends discussed above will continue to be monitored closely during the year
as the Company evaluates the adequacy of the allowance for loan losses. While
future provisions to the loan loss reserve are dependent upon the growth and
quality of the loan portfolio it is estimated that for the remainder of 1997,
quarterly provisions will approximate those of the first three quarters. At
September 30, 1997, the allowance for loan losses totaled $7.679 million or
1.55% of total loans, compared to $7.562 million or 1.55% at September 30, 1996.
Liquidity and Capital
It is a primary objective of Mahoning National Bancorp, Inc. to maintain a level
of liquidity deemed adequate to meet the expected and potential funding needs of
loan and deposit customers. It is the Company's policy to manage its affairs
such that liquidity needs are fully satisfied through normal bank operations.
Short-term investments (Federal funds sold) and short-term borrowings (Federal
funds purchased and repurchase agreements, U.S. Treasury demand notes and
Federal Home Loan Bank advances) are used as primary cash management and
liquidity tools. Short term Federal fund lines totaling $60 million have been
established at the Company's correspondent banks. When loan demand increases at
a faster rate than deposit growth it may be necessary to manage the available
for sale portion of the investment portfolio to meet that demand, or to sell
conforming residential mortgages on the secondary market. At September 30, 1997,
$315 thousand of residential mortgage loans were designated as available for
sale. At September 30, 1997, $175.030 million of the investment portfolio was
classified as available for sale. This classification will afford the Company's
Asset/Liability Committee the flexibility to manage the portfolio to meet any
liquidity needs that may arise.
An additional source of liquidity is derived from the Federal Home Loan Bank of
Cincinnati (FHLB). The FHLB provides short term funding alternatives with a line
of credit of $25.459 million and funding for one-to-four family residential
mortgage loans
<PAGE> 16
and allows the Company to better manage its interest rate risk. The Company had
$3.384 million outstanding in FHLB borrowings at September 30, 1997 compared to
$4.065 million at December 31, 1996.
Total Capital Accounts have grown $7.269 million or 9% in the first nine months
of 1997. This increase reflects retained earnings less dividends paid and also
reflects a $554 thousand unrealized gain on the available for sale investment
portfolio for the first nine months of 1997. Dividends paid in 1997 year to date
were $3.024 million or $.48 per share compared to $2.552 million or $.405 per
share for the same period in 1996.
Book value per share as of September 30, 1997 was $13.39 compared to $12.24 on
December 31, 1996.
Under regulations issued by federal banking agencies, banks and bank holding
companies are required to maintain certain minimum capital ratios known as the
risk-based capital ratio and the leverage ratio. At September 30, 1997, Mahoning
National Bancorp's leverage, Tier 1 and total risk-based capital ratios were
10.84%, 17.33% and 18.58%, respectively, compared to 10.27%, 16.31% and 17.57%
at December 31, 1996, respectively. The Company has exceeded all required
regulatory capital ratios for each period presented and is considered "well
capitalized" under all federal banking agency regulations. The Company's
risk-based capital ratios are well above the regulatory minimums due to the
capital strength and low risk nature of the balance sheet and off-balance sheet
commitments. The structure of the Company's balance sheet is such that nearly
all of the investment portfolio is invested in U.S. Government obligations or
other low risk categories, and over 20% of the loan portfolio is invested in
one-to-four family residential mortgage loans which have a 50% risk weight
assessment. It is the Company's intent to prudently manage the capital base in
an effort to increase return on equity performance while maintaining necessary
capital requirements to maintain the "well capitalized" classification.
<PAGE> 17
<TABLE>
<CAPTION>
MAHONING NATIONAL BANCORP, INC.
SUMMARY OF AVERAGE BALANCES AND INTEREST RATES
TAX EQUIVALENT BASIS
FOR THE NINE MONTHS ENDED FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
(Amounts in thousands) AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE%(2) BALANCE INTEREST RATE%(2)
------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST YIELDS
Loans $489,293 $ 32,845 8.97 $476,181 $ 31,901 8.92
Investment securities (1) 234,447 10,740 6.12 223,436 10,285 6.13
Other earning assets 8,070 331 5.40 6,425 256 5.23
------------------------------------- -----------------------------------------
Total return on earning assets 731,810 43,916 8.02 706,042 42,442 8.01
INTEREST COSTS
Interest bearing deposits:
Savings deposits 278,495 4,793 2.30 293,305 5,179 2.35
Time deposits 199,220 7,898 5.30 209,675 8,509 5.41
------------------------------------- -----------------------------------------
Total interest bearing deposits 477,715 12,691 3.55 502,980 13,688 3.63
Federal funds purchased 4,979 213 5.63 1,530 64 5.50
Repurchase agreements 124,862 4,409 4.72 89,203 3,021 4.51
Short term borrowings 3,760 153 5.42 6,370 245 5.05
Long term borrowings 8,124 320 5.20 4,035 163 5.39
------------------------------------- -----------------------------------------
Total interest bearing liabilities $619,440 $ 17,786 3.84 $604,118 $ 17,181 3.79
Interest spread $ 26,130 4.18 $ 25,261 4.22
============================= =============================
AS A PERCENT OF AVERAGE EARNING ASSETS
Total return on earning assets 8.02 8.01
Total interest cost 3.25 3.24
-------- --------
Net Interest Margin 4.77 4.77
======== ========
(1) Investment securities average balance is based on average carrying
value while the average rate is calculated using average historical cost.
(2) Annualized
</TABLE>
<PAGE> 18
PART II
OTHER INFORMATION
Mahoning National Bancorp, Inc.
Item 1 - Legal Proceedings
None
Item 2 - Changes in the Rights of the Company's Security Holders
None
Item 3 - Default Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6(a) - Exhibits
(10) Material Contracts:
(10a) Executive Phantom Stock Bonus Plan - Norman E. Benden, Jr.
(10b) Executive Phantom Stock Bonus Plan - Frank Hierro
(10c) Executive Phantom Stock Bonus Plan - Gregory L. Ridler
(10d) Executive Phantom Stock Bonus Plan - David E. Westerburg
(10e) Executive Deferred Cash Bonus Plan - Parker T. McHenry
(27) Financial Data Schedule
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q for the nine
months ended September 30, 1997 to be signed on its behalf by the undersigned
thereunto duly authorized.
DATE: November 4, 1997 Mahoning National Bancorp, Inc.
-----------------------
/s/ Gregory L. Ridler
------------------------------
Gregory L. Ridler
Chairman of the Board,
President and Chief
Executive Officer
DATE: November 4, 1997 /s/ Norman E. Benden, Jr.
----------------------- ------------------------------
Norman E. Benden, Jr.
Treasurer
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (a)
Executive Phantom Stock Bonus Plan
Norman E. Benden, Jr.
<PAGE> 2
EXECUTIVE PHANTOM STOCK BONUS PLAN
As Restated effective September 15, 1997
AGREEMENT made this 15th day of September, 1997 (the "Effective
Date"), restates and supersedes an agreement entered into on the 19th day of
November, 1993 between The Mahoning National Bank of Youngstown (hereinafter
referred to as the "Bank"), and Mr. Norman E. Benden, Jr. (hereinafter referred
to as "Executive").
In consideration of the mutual covenants, terms, conditions, and
agreements herein contained the parties hereby agree to enter into this
Executive Phantom Stock Bonus Plan (hereinafter sometimes referred to as the
"Plan"), as follows:
ARTICLE I
PURPOSES
The purposes of this Plan are: (a) to enable the Bank to retain the
Executive in its employ; and (b) to reward the Executive for the time and
effort he expends in his job and for the success achieved.
ARTICLE II
DEFINITIONS
The terms used in this Plan shall have the following meanings:
(a) "Aggregate Phantom Stock Account Value" shall mean the sum of the
Phantom Stock Account Value plus all distributions made to the
Executive pursuant to Article VII, Section (c), prior to the date said
Executive terminates his employment with the Bank.
(b) "Change in Control" shall mean:
(i) the acquisition of ownership, holding or power to vote more than
30% of the Bank's or the Company's voting stock; or
(ii) the acquisition of the ability to control the election of a
majority of the Bank's or the Company's directors; or
(iii) the acquisition of a controlling influence over the management
or policies of the Bank or the Company by any person or by persons
acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934); or
1
<PAGE> 3
(iv) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period constitute
the Board of Directors of the Bank or the Company (the "Existing
Board") cease for any reason to constitute at least two-thirds
thereof, provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a vote of
at least two-thirds of the Continuing Directors then in office shall
be considered a Continuing Director.
Notwithstanding the foregoing, in the case of (i), (ii) and (iii)
hereof, ownership or control of the Bank by the Company itself shall
not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of
entity not specifically listed herein.
Notwithstanding the foregoing, no trust department or other designated
fiduciary or other trustee of such trust department of the Bank or a
subsidiary of the Bank, or other similar fiduciary capacity of the
Bank with direct voting control of the stock shall be included or
considered. Further, no profit-sharing, employee stock ownership,
employee stock purchase and savings, employee pension, or other
employee benefit plan of the Bank or any of its subsidiaries, and no
trustee of any such plan in its capacity as such trustee, shall be
included or considered.
(c) "Change-in-Control Account Value" shall equal the sum of (i) the Net
Vested Account Value reasonably estimated as of the closing date of
the Change in Control, and (ii) the present value, which shall in no
event be less than zero, of the difference between (a) and (b) hereof,
assuming a discount at the current long-term applicable federal rate,
compounded monthly, for a period of 15 years.
(a) The future value determined by assuming that the Net
Vested Account Value determined in accordance with clause (i)
above appreciates for 15 years at a rate equal to 8%.
(b) The future value determined by assuming that the Net
Vested Account Value determined in accordance with clause (i)
above appreciates for 15 years at a rate equal to the current
long-term applicable federal rate (compounded monthly).
(d) "Committee" means the members of the Executive Committee of the Board
of Directors of the Bank who are not participants in this Plan.
(e) "Common Stock" and/or "Shares" shall mean shares of common stock of
Mahoning National Bancorp, Inc.
(f) "Election Form" shall mean the form attached hereto as Exhibit "A-1".
2
<PAGE> 4
(g) "Holding Company" means Mahoning National Bancorp, Inc., which owns
all of the issued and outstanding shares of Bank.
(h) "Net Vested Account Value" shall mean the Vested Account Value minus
the aggregate of all distributions to the Participant pursuant to
Article VII, Section (c).
(i) "Permanent Disability" shall mean a situation in which the Executive
is permanently physically or mentally unable to perform his customary
and/or required duties at the Bank. The determination as to whether or
not an Executive is permanently disabled shall be made by the
Committee, and such determination shall be conclusive. Provided,
however, if the Executive is disabled for purposes of the Bank's
disability insurance plan, he shall be conclusively determined to be
disabled under this Plan.
(j) "Phantom Stock Account Value" means the number of Phantom Shares
credited to a Participant's account multiplied by the average fair
market value, over the 10 business days preceding the date of any
valuation, of the Common Stock of Mahoning National Bancorp, Inc.
Notwithstanding the foregoing, in the event of the sale or merger of
the Holding Company, the sale or merger price of the Common Stock shall
determine the Executive's Phantom Stock Account Value.
(k) "Retirement" means a severance from the employment of the Bank under
the Bank's qualified benefit plan as constituted at present or as may
be amended hereafter.
(l) "Salary" and/or "Pay" shall mean the Executive's annual base
compensation, but does not include other compensation, including, but
not limited to hospitalization, pension benefits, etc.
(m) "Termination Date" means the date of Executive's severance from
employment with the Bank by reason of death, disability, retirement,
resignation, or otherwise.
(n) "Vested Account Value" shall equal the Aggregate Phantom Stock Account
Value multiplied by the applicable Vesting Percentage set forth in
Schedule A attached hereto.
(o) "Vesting Percentage" shall mean that percentage listed on Schedule A,
which is attached hereto, which corresponds with the age of the
Executive, at any given time. However, advances and or changes in the
vesting schedule with respect to a change in the age of the Executive
shall be made only on December 31 of each calendar year during which
Executive attained the stated age.
3
<PAGE> 5
ARTICLE III
ADMINISTRATION
(a) The complete and sole administration of this Plan is the
responsibility of those members of the Committee who are not
Participants. No member of the Committee shall be liable for any act
done or determination made in good faith.
(b) The construction and interpretation by the Committee of any provisions
of this Plan shall be final and conclusive. The Committee shall
determine, from time to time, subject to the provisions of this Plan,
the Executives who shall participate in the Plan (sometimes
hereinafter called "Participants").
(c) The Committee may, at its discretion, delegate its duties to the
outside auditors of the Bank, but may not delegate its authority to
apply or interpret the provisions of this Plan or to make
determinations specified in Section (b) of this Article III.
ARTICLE IV
ESTABLISHMENT OF PHANTOM STOCK ACCOUNT
The Bank shall set up an appropriate record (hereinafter called the
"Phantom Stock Account") in the name of each Executive under the Plan, and
shall record all activities of this agreement in the respective Phantom Stock
Accounts of each Executive.
ARTICLE V
CREDITS TO ACCOUNTS OF EXECUTIVES
(a) As of December 31st of each year that the Executive is a full-time
employee of the Bank, the Bank shall credit a number of Phantom Shares
of the Holding Company to the account of each Executive. The number of
Phantom Shares to be credited each year shall be determined by dividing
the Bank's contribution by the fair market value of the Holding
Company's Common Stock as of the date of crediting (December 31). The
contribution by the Bank each year shall be a percentage of the
Executive's salary as determined by the return on equity of the Bank
for the year pursuant to a schedule to be established by the Committee
no later than the close of the first quarter of that year.
The ultimate computation of the number of Phantom Shares to be credited
each year will be determined by interpolation for performance between
the three levels established (i.e., threshold, target, and
distinguished), and return on equity will be calculated after projected
expense attributable to the incentive pay out. Determination of the
number of Phantom Shares shall be solely by the Committee and shall be
final and binding on all parties. Provided, however, if the ROE is
below the threshold for the year, then no crediting based on a
percentage of pay for the year shall be made.
4
<PAGE> 6
(b) So long as this Plan remains in effect, the Bank shall credit each
Participant's account in the special ledger throughout the term of his
employment with the Bank. Phantom Shares equivalent to dividends
payable in cash or property paid from time to time on issued and
outstanding shares of Common Stock, so that the amount of each such
credit will be equivalent to dividends which the Participant would
have received had he been the owner of the number of shares of Common
Stock equal to the number of Phantom Shares in his account. No such
credit shall be made with respect to any dividend paid after a
Participant's termination of employment or after any date of
termination of this Plan, even though the record date is prior
thereto.
(c) In the event of any stock dividend on the Common Stock or any split-up
or combination of shares of the Common Stock, appropriate adjustments
shall be made by the Committee in the aggregate number of Phantom
Shares in the account of the Participant. However, the Committee shall
not be required to establish any fractional Phantom Shares.
(d) On or before January 31st of each year, the Bank shall provide to each
Executive a detail of his Phantom Share Account as of December 31 of
the previous year. This detail shall include the number of Phantom
Shares in the Executive's account, and the Net Vested Account Value.
ARTICLE VI
VESTING
So long as the Executive remains an employee of the Bank, he shall
continue to advance in the vesting schedule attached as Schedule A. Upon the
Executive's termination of employment with the Bank, he shall be permanently
vested according to the percentage given on Schedule A on the same line as his
age on the date of his termination of employment. Provided, however, if the
Executive, while in the employ of the Bank, dies or becomes permanently
disabled, he shall become permanently 100% vested. Moreover, if a Change in
Control shall occur while the Executive remains in the employ of the Bank, the
Executive shall also become permanently 100% vested.
ARTICLE VII
PAYMENTS OF BENEFITS
(a) Upon termination of any Participant's employment with the Bank, there
shall be paid to him, or in the event of his death to his beneficiary
or beneficiaries designated under Section (b) of this Article VII, an
amount equal to the Net Vested Account Value of such Participant,
determined in accordance with the valuation formula set forth in
Article II, Section (j) as of the date of termination of employment of
such Participant. Such amounts will be reduced by any amounts required
by law to be withheld by the Bank. Such amounts with interest at the
rate of eight percent (8%) per annum shall be distributed in the manner
elected by the Executive on an Election Form accepted by the
5
<PAGE> 7
Bank. The Executive may elect (1) to begin receiving distributions from
his account on either the first day of the second month after
termination of service with the Bank or the first day of second month
of the calendar year immediately after termination of service with the
Bank and (2) to receive his benefits in either a lump-sum or in
substantially equal monthly installments over a period up to 15 years.
In order to be effective with respect to the timing of distributions,
the Executive's Election Form must be submitted to the Bank either
more than one year before the date on which the Executive's service
with the Bank terminates for any reason or within 30 days of the
Plan's Effective Date. In the absence of a validly completed Election
Form, the Executive's account shall be paid in 60 substantially equal
monthly payments beginning on the first day of the second month after
termination of service with the Bank.
(b) Each person shall file an Election Form with the Bank's Employee
Benefits Plan Administrator designating one or more beneficiaries to
whom payments otherwise due the Executive shall be made in the event of
his death while in the employ of the Bank or after termination
therefrom. The beneficiary or beneficiaries so designated shall be one
or more persons or entities, including a trust or estate, other than
his creditors, or the creditors of his estate, or an entity in which
any of the foregoing may have an interest. The Executive shall have the
right to change the beneficiary or beneficiaries from time to time
whether before or after termination of employment; provided, however,
that any change shall not become effective until an Election Form is
received by the Employee Benefits Plan Administrator.
If the Executive dies before receiving all amounts payable of his Net
Vested Account Value, then the remaining balance of the Executive's
account shall be distributed in a lump sum to the Executive's
designated beneficiary (or estate, in the absence of a validly named
or living beneficiary) as soon as administratively practicable
following the Executive's death; provided that the Executive may
direct on an Election Form that any death benefits payable pursuant to
this Agreement shall instead be distributed over a distribution period
that effectuates the monthly installment payments selected by the
Executive (with payments made as though the Executive survived to
collect all payments, and terminated service on the date of his death
if payments had not previously begun).
(c) At the time of the college education of a child of an Executive, an
amount of money equal to the actual expenses associated with such
child's education may, upon application of the Executive, be disbursed
for such purposes by the Committee, in the Committee's sole
discretion, from the Net Vested Account Value of the Executive's
Phantom Stock Account.
6
<PAGE> 8
ARTICLE VIII
RESTRICTIONS UPON FUNDING
(a) The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement.
The Executive, his beneficiaries or any successor in interest to him
shall be and remain simply a general creditor of the Bank in the same
manner as any other creditor having a general claim for matured and
unpaid compensation.
(b) Subject to subsection (d) hereof, the Bank reserves the absolute right
in its sole discretion to either fund the obligations undertaken by
this Agreement or to refrain from funding the same and to determine the
extent, nature, and method of such funding. Should the Bank elect to
fund this Agreement, in whole or in part, through the purchase of life
insurance, mutual funds, disability policies or annuities, the Bank
reserves the absolute right, in its sole discretion, to terminate such
funding at any time, in whole or in part. At no time shall Executive be
deemed to have any lien nor right, title or interest in or to any
specific funding investment or to any assets of the Bank.
(c) If Bank elects to invest in a life insurance, disability or annuity
policy upon the life of Executive, then Executive shall assist the
Bank by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or
annuities.
(d) Not later than ten business days before the closing date of
a Change in Control, the Bank shall --
(i) deposit in a grantor trust (the "Trust") that is designed in
accordance with Revenue Procedure 92-64 and has a trustee independent
of the Bank and the Company an amount equal to the Change-in-Control
Account Value, unless the Executive has previously provided a written
release of any claims under this Agreement, and
(ii) provide the trustee of the Trust with a written direction to hold
said amount and any investment return thereon in a segregated account
for the benefit of the Executive, and to follow the payment schedule
to be provided by the Executive, based on this Agreement and the
Executive's Election Form, as to the payment of amounts from the
Trust.
Upon the Trust's final payment of all amounts due under this Section
(d) of Article VIII, the trustee of the Trust shall pay to the Bank
the entire balance remaining in the segregated account maintained for
the benefit of the Executive. The Executive shall thereafter have no
further interest in the Trust.
7
<PAGE> 9
ARTICLE IX
MISCELLANEOUS
(a) Neither Executive, his widow nor any other beneficiary under this
Agreement shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify or otherwise
encumber in advance any of the benefits payable hereunder, nor shall
any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the Executive
or his beneficiary, nor be transferable by operation of law in the
event of bankruptcy, insolvency or otherwise. In the event Executive or
any beneficiary attempts assignment, commutation, hypothecation,
transfer or disposal of the benefits hereunder, the Bank's liabilities
shall forthwith cease and terminate. However, in such event, the
Committee may, in its sole discretion, from time to time, make payments
of amounts which would otherwise be due the Executive hereunder, to
such Executive.
(b) The Bank expressly agrees that it shall not merge or consolidate into
or with another Bank or sell substantially all of its assets to
another corporation, firm or person until such corporation, firm or
person expressly agrees, in writing, to assume and discharge the
duties and obligations of the Bank under this Agreement. This
Agreement shall be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representatives.
(c) It is agreed by and between the parties hereto that, during the
lifetime of the Executive, this Agreement may be amended or revoked at
any time or times, in whole or in part, by the mutual written assent
of the Executive and the Bank.
(d) Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine
or neuter gender, whenever they should so apply.
(e) Nothing contained in this Agreement shall affect the right of the
Executive to participate in or be covered by any qualified or
non-qualified pension, profit sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part
of the Bank's existing or future compensation structure.
(f) Headings and Subheadings in this Agreement are inserted for reference
and convenience only and shall not be deemed a part of this Agreement.
(g) The validity and interpretation of this Agreement shall be governed by
the laws of the State of Ohio.
8
<PAGE> 10
ARTICLE X
ERISA PROVISIONS
(a) The "Named Fiduciary and Plan Administrator" of this Plan shall be the
Bank's Employee Benefits Plan Administrator until his resignation or
removal by the Committee. As named Fiduciary and Administrator, the
Employee Benefits Plan Administrator shall be responsible for the
management, control and administration of the Executive Phantom Stock
Bonus Plan as established herein. He may delegate to others certain
aspects of the management and operation responsibilities of the Plan
including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
(b) In the event that benefits under this Plan Agreement are not paid to
the Executive (or to his beneficiary in the case of the Executive's
death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Named Fiduciary and
Plan Administrator named above within sixty (60) days from the date
payments are refused. The Named Fiduciary and Plan Administrator and
the Bank shall review the written claim and if the claim is denied, in
whole or in part, they shall provide in writing within ninety (90)
days of receipt of such claim their specific reasons for such denial,
reference to the provisions of this Agreement upon which the denial is
based and any additional material or information necessary to perfect
the claim. Such written notice shall further indicate the additional
steps to be taken by claimants for a further review of the claim
denial if the Named Fiduciary and Plan Administrator fails to take any
actions within the aforesaid ninety-day period.
If claimants desire a second review, they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60) days of
the first claim denial. Claimants may review the Plan Agreement or any
documents relating thereto and submit any written issues and comments
they may feel appropriate. In its sole discretion, the Named Fiduciary
and Plan Administrator shall then review the second claim and provide
a written decision within sixty (60) days of receipt of such claim.
This decision shall likewise state the specific reasons for the
decision, and shall include reference to specific provisions of the
Plan Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of the Agreement or the meaning and effect of
the terms and conditions thereof, then claimants may submit the
dispute to a Board of Arbitration for final arbitration. Said Board
shall consist of one member selected by the claimant, one member
selected by the Bank and the third member selected by the first two
members. The Board shall operate under any generally recognized set of
arbitration rules. The parties hereto agree that they and their heirs,
personal representatives, successors and assigns shall be bound by the
decision of such Board with respect to any controversy properly
submitted to it for determination.
9
<PAGE> 11
ARTICLE XI
REIMBURSEMENT OF EXECUTIVE FOR ENFORCEMENT PROCEEDINGS
In the event that any dispute arises between the Executive and the
Bank as to the terms or interpretation of this Agreement, whether instituted by
formal legal proceedings or otherwise, including any action that the Executive
takes to defend against any action taken by the Bank or the Company, the Bank
shall reimburse the Executive for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions, provided
that the Executive obtains either a written settlement or a final judgement by
a court of competent jurisdiction substantially in his favor. Such
reimbursement shall be paid within ten days of Executive's furnishing to the
Bank written evidence, which may be in the form, among other things, of a
cancelled check or receipt, of any costs or expenses incurred by the Executive.
10
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the originals thereof on the day and
year first hereinabove written.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- ------------------------------- -------------------------------
Its SVP and Cashier Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Norman E. Benden, Jr.
- ------------------------------- -------------------------------
Norman E. Benden, Jr.
11
<PAGE> 13
<TABLE>
<CAPTION>
SCHEDULE "A"
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
EXECUTIVE PHANTOM STOCK BONUS PLAN
Vesting Schedule for Norman E. Benden, Jr.
- ------------------------- ------------------------ ----------------------------
Age on 12/31 Preceding Retirement & Termination Death, Permanent
Termination of Employment Vesting Schedule Disability or
Change in Control
- ------------------------- ----------------------- -----------------------------
<S> <C> <C>
35 4.8% 100%
- ------------------------- ----------------------- -----------------------------
36 9.6% 100%
- ------------------------- ----------------------- -----------------------------
37 14.4% 100%
- ------------------------- ----------------------- -----------------------------
38 19.2% 100%
- ------------------------- ----------------------- -----------------------------
39 24.0% 100%
- ------------------------- ----------------------- -----------------------------
40 28.8% 100%
- ------------------------- ----------------------- -----------------------------
41 33.6% 100%
- ------------------------- ----------------------- -----------------------------
42 38.4% 100%
- ------------------------- ----------------------- -----------------------------
43 43.2% 100%
- ------------------------- ----------------------- -----------------------------
44 48.0% 100%
- ------------------------- ----------------------- -----------------------------
45 52.8% 100%
- ------------------------- ----------------------- -----------------------------
46 57.6% 100%
- ------------------------- ----------------------- -----------------------------
47 62.4% 100%
- ------------------------- ----------------------- -----------------------------
48 67.2% 100%
- ------------------------- ----------------------- -----------------------------
49 72% 100%
- ------------------------- ----------------------- -----------------------------
50 76.8% 100%
- ------------------------- ----------------------- -----------------------------
51 81.6% 100%
- ------------------------- ----------------------- -----------------------------
52 86.4% 100%
- ------------------------- ----------------------- -----------------------------
53 91.2% 100%
- ------------------------- ----------------------- -----------------------------
54 96% 100%
- ------------------------- ----------------------- -----------------------------
55 and over 100% 100%
- ------------------------- ----------------------- -----------------------------
</TABLE>
12
<PAGE> 14
EXHIBIT "A-1"
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
EXECUTIVE PHANTOM STOCK BONUS PLAN
-------------------------------
ELECTION FORM
-------------------------------
AGREEMENT, made this ____ day of ________, 19__, by and between the
undersigned executive (the "Executive") and The Mahoning National Bank of
Youngstown (the "Bank") with respect to distribution of the benefits pursuant
to The Mahoning National Bank of Youngstown Executive Phantom Stock Bonus Plan
(the "Plan") entered into by the parties on September 15, 1997.
NOW THEREFORE, it is mutually agreed as follows:
1. FORM OF PAYMENT. The Executive elects to have his
account distributed as follows:
____ in one lump sum payment.
____ in substantially equal monthly payments over a
period of _____ years (no more than 15).
The Executive must make this election EITHER at least one year before
terminating his service with the Bank or by October 15, 1997 in order for it to
be valid and supersede a prior election.
2. The Executive elects to have distributions from his account begin:
____ on the first day of the second month immediately
following the date in which the Executive ceases
service with the Bank.
____ on the first day of the second month of
the calendar year immediately following
the year in which the Executive ceases
service with the Bank.
3. In the event of the Executive's death, his account
shall be distributed:
____ in one lump sum payment.
____ in accordance with the payment schedule selected in
paragraph 1 hereof (with payments made as though the
Executive survived to collect all benefits, and as
though the Executive terminated service on the date
of his death, if payments had not already begun).
<PAGE> 15
Election Form
Page 2
4. PRIMARY BENEFICIARY. The Executive hereby designates the person(s)
named below to be his primary beneficiary and to receive any distributions that
become payable, after the Executive's death, under the Plan:
<TABLE>
<CAPTION>
========================= ==================== ======================
Name of Mailing Address Percentage of
Primary Beneficiary Death Benefit
------------------------- -------------------- ----------------------
<S> <C> <C>
%
------------------------- -------------------- ----------------------
%
========================= ==================== ======================
</TABLE>
5. CONTINGENT BENEFICIARY. In the event that the primary beneficiary
or beneficiaries named above are not living at the time any distributions
become payable to them under the Plan, the Executive hereby designates the
following person(s) to be his contingent beneficiary:
<TABLE>
<CAPTION>
========================= ==================== ======================
Name of Mailing Address Percentage of
Contingent Beneficiary Death Benefit
------------------------- -------------------- ----------------------
<S> <C> <C>
%
------------------------- -------------------- ----------------------
%
========================= ==================== ======================
</TABLE>
6. EFFECT OF ELECTION. The elections made in paragraph 1 hereof shall
become IRREVOCABLE one year prior to the Executive's termination of service.
The Executive may, by submitting an effective superseding Election Form at any
time and from time to time, prospectively change the beneficiary designation
and the manner of payment to a beneficiary. Such elections shall, however,
become irrevocable upon the Executive's death.
7. MUTUAL COMMITMENTS. The Bank agrees to make payment of all amounts
due the Executive in accordance with the terms of the Plan regarding the
elections made by the Executive herein. The Executive agrees to be bound by the
terms of the Plan, as in effect on the date hereof or properly amended
hereafter.
<PAGE> 16
Election Form
Page 3
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the originals thereof on the day and
year first hereinabove written.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
By
- ---------------------------- ----------------------------
Its SVP and Cashier Its duly authorized Director
WITNESS:
- ---------------------------- ----------------------------
Executive
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6(a)
Exhibit 10(b)
Executive Phantom Stock Bonus Plan
Frank Hierro
<PAGE> 2
EXECUTIVE PHANTOM STOCK BONUS PLAN
As Restated effective September 15, 1997
AGREEMENT made this 15th day of September, 1997 (the "Effective
Date"), restates and supersedes an agreement entered into on the 19th day of
November, 1993 between The Mahoning National Bank of Youngstown (hereinafter
referred to as the "Bank"), and Mr. Frank Hierro (hereinafter referred to as
"Executive").
In consideration of the mutual covenants, terms, conditions, and
agreements herein contained the parties hereby agree to enter into this
Executive Phantom Stock Bonus Plan (hereinafter sometimes referred to as the
"Plan"), as follows:
ARTICLE I
PURPOSES
The purposes of this Plan are: (a) to enable the Bank to retain the
Executive in its employ; and (b) to reward the Executive for the time and
effort he expends in his job and for the success achieved.
ARTICLE II
DEFINITIONS
The terms used in this Plan shall have the following meanings:
(a) "Aggregate Phantom Stock Account Value" shall mean the sum of the
Phantom Stock Account Value plus all distributions made to the
Executive pursuant to Article VII, Section (c), prior to the date said
Executive terminates his employment with the Bank.
(b) "Change in Control" shall mean:
(i) the acquisition of ownership, holding or power to vote
more than 30% of the Bank's or the Company's voting stock;
or
(ii) the acquisition of the ability to control the election
of a majority of the Bank's or the Company's directors; or
1
<PAGE> 3
(iii) the acquisition of a controlling influence over the management
or policies of the Bank or the Company by any person or by persons
acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934); or
(iv) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period constitute
the Board of Directors of the Bank or the Company (the "Existing
Board") cease for any reason to constitute at least two-thirds
thereof, provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a vote of
at least two-thirds of the Continuing Directors then in office shall
be considered a Continuing Director.
Notwithstanding the foregoing, in the case of (i), (ii) and (iii)
hereof, ownership or control of the Bank by the Company itself shall
not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of
entity not specifically listed herein.
Notwithstanding the foregoing, no trust department or other designated
fiduciary or other trustee of such trust department of the Bank or a
subsidiary of the Bank, or other similar fiduciary capacity of the
Bank with direct voting control of the stock shall be included or
considered. Further, no profit-sharing, employee stock ownership,
employee stock purchase and savings, employee pension, or other
employee benefit plan of the Bank or any of its subsidiaries, and no
trustee of any such plan in its capacity as such trustee, shall be
included or considered.
(c) "Change-in-Control Account Value" shall equal the sum of (i) the Net
Vested Account Value reasonably estimated as of the closing date of
the Change in Control, and (ii) the present value, which shall in no
event be less than zero, of the difference between (a) and (b) hereof,
assuming a discount at the current long-term applicable federal rate,
compounded monthly, for a period of 15 years.
(a) The future value determined by assuming that the Net Vested
Account Value determined in accordance with clause (i) above
appreciates for 15 years at a rate equal to 8%.
(b) The future value determined by assuming that the Net Vested
Account Value determined in accordance with clause (i) above
appreciates for 15 years at a rate equal to the current
long-term applicable federal rate (compounded monthly).
(d) "Committee" means the members of the Executive Committee of the Board
of Directors of the Bank who are not participants in this Plan.
2
<PAGE> 4
(e) "Common Stock" and/or "Shares" shall mean shares of common stock of
Mahoning National Bancorp, Inc..
(f) "Election Form" shall mean the form attached hereto as Exhibit "A-1".
(g) "Holding Company" means Mahoning National Bancorp, Inc., which owns
all of the issued and outstanding shares of Bank.
(h) "Net Vested Account Value" shall mean the Vested Account Value minus
the aggregate of all distributions to the Participant pursuant to
Article VII, Section (c).
(i) "Permanent Disability" shall mean a situation in which the Executive
is permanently physically or mentally unable to perform his customary
and/or required duties at the Bank. The determination as to whether or
not an Executive is permanently disabled shall be made by the
Committee, and such determination shall be conclusive. Provided,
however, if the Executive is disabled for purposes of the Bank's
disability insurance plan, he shall be conclusively determined to be
disabled under this Plan.
(j) "Phantom Stock Account Value" means the number of Phantom Shares
credited to a Participant's account multiplied by the average fair
market value, over the 10 business days preceding the date of any
valuation, of the Common Stock of Mahoning National Bancorp, Inc.
Notwithstanding the foregoing, in the event of the sale or merger of
the Holding Company, the sale or merger price of the Common Stock
shall determine the Executive's Phantom Stock Account Value.
(k) "Retirement" means a severance from the employment of the Bank under
the Bank's qualified benefit plan as constituted at present or as may
be amended hereafter.
(l) "Salary" and/or "Pay" shall mean the Executive's annual base
compensation, but does not include other compensation, including, but
not limited to hospitalization, pension benefits, etc.
(m) "Termination Date" means the date of Executive's severance from
employment with the Bank by reason of death, disability, retirement,
resignation, or otherwise.
(n) "Vested Account Value" shall equal the Aggregate Phantom Stock Account
Value multiplied by the applicable Vesting Percentage set forth in
Schedule A attached hereto.
(o) "Vesting Percentage" shall mean that percentage listed on Schedule A,
which is attached hereto, which corresponds with the age of the
Executive, at any given time. However, advances and or changes in the
vesting schedule with respect to a change in the age of the Executive
shall be made only on December 31 of each calendar year during which
Executive attained the stated age.
3
<PAGE> 5
ARTICLE III
ADMINISTRATION
(a) The complete and sole administration of this Plan is the
responsibility of those members of the Committee who are not
Participants. No member of the Committee shall be liable for any act
done or determination made in good faith.
(b) The construction and interpretation by the Committee of any provisions
of this Plan shall be final and conclusive. The Committee shall
determine, from time to time, subject to the provisions of this Plan,
the Executives who shall participate in the Plan (sometimes
hereinafter called "Participants").
(c) The Committee may, at its discretion, delegate its duties to the
outside auditors of the Bank, but may not delegate its authority to
apply or interpret the provisions of this Plan or to make
determinations specified in Section (b) of this Article III.
ARTICLE IV
ESTABLISHMENT OF PHANTOM STOCK ACCOUNT
The Bank shall set up an appropriate record (hereinafter called the
"Phantom Stock Account") in the name of each Executive under the Plan, and
shall record all activities of this agreement in the respective Phantom Stock
Accounts of each Executive.
ARTICLE V
CREDITS TO ACCOUNTS OF EXECUTIVES
(a) As of December 31st of each year that the Executive is a full-time
employee of the Bank, the Bank shall credit a number of Phantom Shares
of the Holding Company to the account of each Executive. The number of
Phantom Shares to be credited each year shall be determined by
dividing the Bank's contribution by the fair market value of the
Holding Company's Common Stock as of the date of crediting (December
31). The contribution by the Bank each year shall be a percentage of
the Executive's salary as determined by the return on equity of the
Bank for the year pursuant to a schedule to be established by the
Committee no later than the close of the first quarter of that year.
The ultimate computation of the number of Phantom Shares to be
credited each year will be determined by interpolation for performance
between the three levels established (i.e., threshold, target, and
distinguished), and return on equity will be calculated after
projected expense attributable to the incentive pay out. Determination
of the number of Phantom Shares shall be solely by the Committee and
shall be final and binding on all parties. Provided, however, if the
ROE is below the threshold for the year, then no crediting based on a
percentage of pay for the year shall be made.
4
<PAGE> 6
(b) So long as this Plan remains in effect, the Bank shall credit each
Participant's account in the special ledger throughout the term of his
employment with the Bank. Phantom Shares equivalent to dividends
payable in cash or property paid from time to time on issued and
outstanding shares of Common Stock, so that the amount of each such
credit will be equivalent to dividends which the Participant would
have received had he been the owner of the number of shares of Common
Stock equal to the number of Phantom Shares in his account. No such
credit shall be made with respect to any dividend paid after a
Participant's termination of employment or after any date of
termination of this Plan, even though the record date is prior
thereto.
(c) In the event of any stock dividend on the Common Stock or any split-up
or combination of shares of the Common Stock, appropriate adjustments
shall be made by the Committee in the aggregate number of Phantom
Shares in the account of the Participant. However, the Committee shall
not be required to establish any fractional Phantom Shares.
(d) On or before January 31st of each year, the Bank shall provide to each
Executive a detail of his Phantom Share Account as of December 31 of
the previous year. This detail shall include the number of Phantom
Shares in the Executive's account, and the Net Vested Account Value.
ARTICLE VI
VESTING
So long as the Executive remains an employee of the Bank, he shall
continue to advance in the vesting schedule attached as Schedule A. Upon the
Executive's termination of employment with the Bank, he shall be permanently
vested according to the percentage given on Schedule A on the same line as his
age on the date of his termination of employment. Provided, however, if the
Executive, while in the employ of the Bank, dies or becomes permanently
disabled, he shall become permanently 100% vested. Moreover, if a Change in
Control shall occur while the Executive remains in the employ of the Bank, the
Executive shall also become permanently 100% vested.
ARTICLE VII
PAYMENTS OF BENEFITS
(a) Upon termination of any Participant's employment with the Bank, there
shall be paid to him, or in the event of his death to his beneficiary
or beneficiaries designated under Section (b) of this Article VII, an
amount equal to the Net Vested Account Value of such Participant,
determined in accordance with the valuation formula set forth in
Article II, Section (j) as of the date of termination of employment of
such Participant. Such amounts will be reduced by any amounts required
by law to be withheld by the Bank. Such amounts with interest at the
rate of eight percent (8%) per annum shall be distributed in the
manner elected by the Executive on an Election Form accepted by the
5
<PAGE> 7
Bank. The Executive may elect (1) to begin receiving distributions
from his account on EITHER the first day of the second month after
termination of service with the Bank OR the first day of second month
of the calendar year immediately after termination of service with the
Bank and (2) to receive his benefits in either a lump-sum or in
substantially equal monthly installments over a period up to 15 years.
In order to be effective with respect to the timing of distributions,
the Executive's Election Form must be submitted to the Bank EITHER
more than one year before the date on which the Executive's service
with the Bank terminates for any reason OR within 30 days of the
Plan's Effective Date. In the absence of a validly completed Election
Form, the Executive's account shall be paid in 60 substantially equal
monthly payments beginning on the first day of the second month after
termination of service with the Bank.
(b) Each person shall file an Election Form with the Bank's
Employee Benefits Plan Administrator designating one or more
beneficiaries to whom payments otherwise due the Executive
shall be made in the event of his death while in the employ
of the Bank or after termination therefrom. The beneficiary
or beneficiaries so designated shall be one or more persons
or entities, including a trust or estate, other than his
creditors, or the creditors of his estate, or an entity in
which any of the foregoing may have an interest. The
Executive shall have the right to change the beneficiary or
beneficiaries from time to time whether before or after
termination of employment; provided, however, that any change
shall not become effective until an Election Form is received
by the Employee Benefits Plan Administrator.
If the Executive dies before receiving all amounts payable of
his Net Vested Account Value, then the remaining balance of
the Executive's account shall be distributed in a lump sum to
the Executive's designated beneficiary (or estate, in the
absence of a validly named or living beneficiary) as soon as
administratively practicable following the Executive's death;
provided that the Executive may direct on an Election Form
that any death benefits payable pursuant to this Agreement
shall instead be distributed over a distribution period that
effectuates the monthly installment payments selected by the
Executive (with payments made as though the Executive
survived to collect all payments, and terminated service on
the date of his death if payments had not previously begun).
(c) At the time of the college education of a child of an
Executive, an amount of money equal to the actual expenses
associated with such child's education may, upon application
of the Executive, be disbursed for such purposes by the
Committee, in the Committee's sole discretion, from the Net
Vested Account Value of the Executive's Phantom Stock
Account.
6
<PAGE> 8
ARTICLE VIII
RESTRICTIONS UPON FUNDING
(a) The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement.
The Executive, his beneficiaries or any successor in interest to him
shall be and remain simply a general creditor of the Bank in the same
manner as any other creditor having a general claim for matured and
unpaid compensation.
(b) Subject to subsection (d) hereof, the Bank reserves the absolute right
in its sole discretion to either fund the obligations undertaken by
this Agreement or to refrain from funding the same and to determine
the extent, nature, and method of such funding. Should the Bank elect
to fund this Agreement, in whole or in part, through the purchase of
life insurance, mutual funds, disability policies or annuities, the
Bank reserves the absolute right, in its sole discretion, to terminate
such funding at any time, in whole or in part. At no time shall
Executive be deemed to have any lien nor right, title or interest in
or to any specific funding investment or to any assets of the Bank.
(c) If Bank elects to invest in a life insurance, disability or annuity
policy upon the life of Executive, then Executive shall assist the
Bank by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or
annuities.
(d) Not later than ten business days before the closing date of
a Change in Control, the Bank shall --
(i) deposit in a grantor trust (the "Trust") that is designed in
accordance with Revenue Procedure 92-64 and has a trustee
independent of the Bank and the Company an amount equal to
the Change-in-Control Account Value, unless the Executive has
previously provided a written release of any claims under
this Agreement, and
(ii) provide the trustee of the Trust with a written direction to
hold said amount and any investment return thereon in a
segregated account for the benefit of the Executive, and to
follow the payment schedule to be provided by the Executive,
based on this Agreement and the Executive's Election Form, as
to the payment of amounts from the Trust.
Upon the Trust's final payment of all amounts due under this Section
(d) of Article VIII, the trustee of the Trust shall pay to the Bank
the entire balance remaining in the segregated account maintained for
the benefit of the Executive. The Executive shall thereafter have no
further interest in the Trust.
7
<PAGE> 9
ARTICLE IX
MISCELLANEOUS
(a) Neither Executive, his widow nor any other beneficiary under this
Agreement shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify or otherwise
encumber in advance any of the benefits payable hereunder, nor shall
any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the
Executive or his beneficiary, nor be transferable by operation of law
in the event of bankruptcy, insolvency or otherwise. In the event
Executive or any beneficiary attempts assignment, commutation,
hypothecation, transfer or disposal of the benefits hereunder, the
Bank's liabilities shall forthwith cease and terminate. However, in
such event, the Committee may, in its sole discretion, from time to
time, make payments of amounts which would otherwise be due the
Executive hereunder, to such Executive.
(b) The Bank expressly agrees that it shall not merge or consolidate into
or with another Bank or sell substantially all of its assets to
another corporation, firm or person until such corporation, firm or
person expressly agrees, in writing, to assume and discharge the
duties and obligations of the Bank under this Agreement. This
Agreement shall be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representatives.
(c) It is agreed by and between the parties hereto that, during the
lifetime of the Executive, this Agreement may be amended or revoked at
any time or times, in whole or in part, by the mutual written assent
of the Executive and the Bank.
(d) Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine
or neuter gender, whenever they should so apply.
(e) Nothing contained in this Agreement shall affect the right of the
Executive to participate in or be covered by any qualified or
non-qualified pension, profit sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part
of the Bank's existing or future compensation structure.
(f) Headings and Subheadings in this Agreement are inserted for reference
and convenience only and shall not be deemed a part of this Agreement.
(g) The validity and interpretation of this Agreement shall be governed by
the laws of the State of Ohio.
8
<PAGE> 10
ARTICLE X
ERISA PROVISIONS
(a) The "Named Fiduciary and Plan Administrator" of this Plan shall be the
Bank's Employee Benefits Plan Administrator until his resignation or
removal by the Committee. As named Fiduciary and Administrator, the
Employee Benefits Plan Administrator shall be responsible for the
management, control and administration of the Executive Phantom Stock
Bonus Plan as established herein. He may delegate to others certain
aspects of the management and operation responsibilities of the Plan
including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
(b) In the event that benefits under this Plan Agreement are not paid to
the Executive (or to his beneficiary in the case of the Executive's
death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Named Fiduciary and
Plan Administrator named above within sixty (60) days from the date
payments are refused. The Named Fiduciary and Plan Administrator and
the Bank shall review the written claim and if the claim is denied, in
whole or in part, they shall provide in writing within ninety (90)
days of receipt of such claim their specific reasons for such denial,
reference to the provisions of this Agreement upon which the denial is
based and any additional material or information necessary to perfect
the claim. Such written notice shall further indicate the additional
steps to be taken by claimants for a further review of the claim
denial if the Named Fiduciary and Plan Administrator fails to take any
actions within the aforesaid ninety-day period.
If claimants desire a second review, they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60) days of
the first claim denial. Claimants may review the Plan Agreement or any
documents relating thereto and submit any written issues and comments
they may feel appropriate. In its sole discretion, the Named Fiduciary
and Plan Administrator shall then review the second claim and provide
a written decision within sixty (60) days of receipt of such claim.
This decision shall likewise state the specific reasons for the
decision, and shall include reference to specific provisions of the
Plan Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of the Agreement or the meaning and effect of
the terms and conditions thereof, then claimants may submit the
dispute to a Board of Arbitration for final arbitration. Said Board
shall consist of one member selected by the claimant, one member
selected by the Bank and the third member selected by the first two
members. The Board shall operate under any generally recognized set of
arbitration rules. The parties hereto agree that they and their heirs,
personal representatives, successors and assigns shall be bound by the
decision of such Board with respect to any controversy properly
submitted to it for determination.
9
<PAGE> 11
ARTICLE XI
REIMBURSEMENT OF EXECUTIVE FOR ENFORCEMENT PROCEEDINGS
In the event that any dispute arises between the Executive and the
Bank as to the terms or interpretation of this Agreement, whether instituted by
formal legal proceedings or otherwise, including any action that the Executive
takes to defend against any action taken by the Bank or the Company, the Bank
shall reimburse the Executive for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions, provided
that the Executive obtains either a written settlement or a final judgement by
a court of competent jurisdiction substantially in his favor. Such
reimbursement shall be paid within ten days of Executive's furnishing to the
Bank written evidence, which may be in the form, among other things, of a
canceled check or receipt, of any costs or expenses incurred by the Executive.
10
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the originals thereof on the day and
year first herein above written.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- ---------------------------- ----------------------------
Its SVP and Cashier Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Frank Hierro
- ---------------------------- ----------------------------
Frank Hierro
11
<PAGE> 13
<TABLE>
<CAPTION>
SCHEDULE "A"
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
EXECUTIVE PHANTOM STOCK BONUS PLAN
Vesting Schedule for Frank Hierro
- --------------------------- -------------------------- ------------------------
Age on 12/31 Preceding Retirement & Termination Death, Permanent
Termination of Employment Vesting Schedule Disability or
Change in Control
- --------------------------- -------------------------- ------------------------
<S> <C> <C>
39 5.9% 100%
- --------------------------- -------------------------- ------------------------
40 11.8% 100%
- --------------------------- -------------------------- ------------------------
41 17.7% 100%
- --------------------------- -------------------------- ------------------------
42 23.6% 100%
- --------------------------- -------------------------- ------------------------
43 29.5% 100%
- --------------------------- -------------------------- ------------------------
44 35.4% 100%
- --------------------------- -------------------------- ------------------------
45 41.3% 100%
- --------------------------- -------------------------- ------------------------
46 47.2% 100%
- --------------------------- -------------------------- ------------------------
47 53.1% 100%
- --------------------------- -------------------------- ------------------------
48 59.0% 100%
- --------------------------- -------------------------- ------------------------
49 64.9% 100%
- --------------------------- -------------------------- ------------------------
50 70.8% 100%
- --------------------------- -------------------------- ------------------------
51 76.7% 100%
- --------------------------- -------------------------- ------------------------
52 82.6% 100%
- --------------------------- -------------------------- ------------------------
53 88.5% 100%
- --------------------------- -------------------------- ------------------------
54 94.4% 100%
- --------------------------- -------------------------- ------------------------
55 and over 100% 100%
- --------------------------- -------------------------- ------------------------
</TABLE>
12
<PAGE> 14
EXHIBIT "A-1"
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
EXECUTIVE PHANTOM STOCK BONUS PLAN
-------------------------------
ELECTION FORM
-------------------------------
AGREEMENT, made this ____ day of ________, 19__, by and between the
undersigned executive (the "Executive") and The Mahoning National Bank of
Youngstown (the "Bank") with respect to distribution of the benefits pursuant
to The Mahoning National Bank of Youngstown Executive Phantom Stock Bonus Plan
(the "Plan") entered into by the parties on September 15, 1997.
NOW THEREFORE, it is mutually agreed as follows:
1. FORM OF PAYMENT. The Executive elects to have his account
distributed as follows:
____ in one lump sum payment.
____ in substantially equal monthly payments over a
period of _____ years (no more than 15).
The Executive must make this election either at least one year before
terminating his service with the Bank or by October 15, 1997 in order for it to
be valid and supersede a prior election.
2. The Executive elects to have distributions from his account begin:
____ on the first day of the second month immediately
following the date in which the Executive ceases
service with the Bank.
____ on the first day of the second month of the calendar
year immediately following the year in which the
Executive ceases service with the Bank.
3. In the event of the Executive's death, his account shall be
distributed:
____ in one lump sum payment.
____ in accordance with the payment schedule
selected in paragraph 1 hereof (with
payments made as though the Executive
survived to collect all benefits, and as
though the Executive terminated service on
the date of his death, if payments had not
already begun).
<PAGE> 15
Election Form
Page 2
4. PRIMARY BENEFICIARY. The Executive hereby designates the person(s)
named below to be his primary beneficiary and to receive any distributions that
become payable, after the Executive's death, under the Plan:
<TABLE>
<CAPTION>
======================= ===================== ====================
Name of Mailing Address Percentage of
Primary Beneficiary Death Benefit
----------------------- --------------------- --------------------
<S> <C> <C>
%
----------------------- --------------------- --------------------
%
======================= ===================== ====================
</TABLE>
<TABLE>
5. CONTINGENT BENEFICIARY. In the event that the primary beneficiary
or beneficiaries named above are not living at the time any distributions
become payable to them under the Plan, the Executive hereby designates the
following person(s) to be his contingent beneficiary:
<CAPTION>
========================== =================== ======================
Name of Mailing Address Percentage of
Contingent Beneficiary Death Benefit
-------------------------- ------------------- ----------------------
<S> <C> <C>
%
-------------------------- ------------------- ----------------------
%
========================== =================== ======================
</TABLE>
6. EFFECT OF ELECTION. The elections made in paragraph 1 hereof shall
become IRREVOCABLE one year prior to the Executive's termination of service.
The Executive may, by submitting an effective superseding Election Form at any
time and from time to time, prospectively change the beneficiary designation
and the manner of payment to a beneficiary. Such elections shall, however,
become irrevocable upon the Executive's death.
7. MUTUAL COMMITMENTS. The Bank agrees to make payment of all amounts
due the Executive in accordance with the terms of the Plan regarding the
elections made by the Executive herein. The Executive agrees to be bound by the
terms of the Plan, as in effect on the date hereof or properly amended
hereafter.
<PAGE> 16
Election Form
Page 3
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the originals thereof on the day and
year first hereinabove written.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
By
- -------------------------- --------------------------
Its SVP and Cashier Its duly authorized Director
WITNESS:
- -------------------------- --------------------------
Executive
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (c)
Executive Phantom Stock Bonus Plan
Gregory L. Ridler
<PAGE> 2
EXECUTIVE PHANTOM STOCK BONUS PLAN
As Restated effective September 15, 1997
AGREEMENT made this 15th day of September, 1997 (the "Effective
Date"), restates and supersedes an agreement entered into on the 19th day of
November, 1993 between The Mahoning National Bank of Youngstown (hereinafter
referred to as the "Bank"), and Mr. Gregory L. Ridler (hereinafter referred to
as "Executive").
In consideration of the mutual covenants, terms, conditions, and
agreements herein contained the parties hereby agree to enter into this
Executive Phantom Stock Bonus Plan (hereinafter sometimes referred to as the
"Plan"), as follows:
ARTICLE I
PURPOSES
The purposes of this Plan are: (a) to enable the Bank to retain the
Executive in its employ; and (b) to reward the Executive for the time and
effort he expends in his job and for the success achieved.
ARTICLE II
DEFINITIONS
The terms used in this Plan shall have the following meanings:
(a) "Aggregate Phantom Stock Account Value" shall mean the sum of the
Phantom Stock Account Value plus all distributions made to the
Executive pursuant to Article VII, Section (c), prior to the date said
Executive terminates his employment with the Bank.
(b) "Change in Control" shall mean:
(i) the acquisition of ownership, holding or power to vote more than
30% of the Bank's or the Company's voting stock; or
(ii) the acquisition of the ability to control the election of a
majority of the Bank's or the Company's directors; or
(iii) the acquisition of a controlling influence over the management
or policies of the Bank or the Company by any person or by persons
acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934); or
1
<PAGE> 3
(iv) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period constitute
the Board of Directors of the Bank or the Company (the "Existing
Board") cease for any reason to constitute at least two-thirds
thereof, provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a vote of
at least two-thirds of the Continuing Directors then in office shall
be considered a Continuing Director.
Notwithstanding the foregoing, in the case of (i), (ii) and (iii)
hereof, ownership or control of the Bank by the Company itself shall
not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of
entity not specifically listed herein.
Notwithstanding the foregoing, no trust department or other designated
fiduciary or other trustee of such trust department of the Bank or a
subsidiary of the Bank, or other similar fiduciary capacity of the
Bank with direct voting control of the stock shall be included or
considered. Further, no profit-sharing, employee stock ownership,
employee stock purchase and savings, employee pension, or other
employee benefit plan of the Bank or any of its subsidiaries, and no
trustee of any such plan in its capacity as such trustee, shall be
included or considered.
(c) "Change-in-Control Account Value" shall equal the sum of (i) the Net
Vested Account Value reasonably estimated as of the closing date of
the Change in Control, and (ii) the present value, which shall in no
event be less than zero, of the difference between (a) and (b) hereof,
assuming a discount at the current long-term applicable federal rate,
compounded monthly, for a period of 15 years.
(a) The future value determined by assuming that the Net
Vested Account Value determined in accordance with clause (i)
above appreciates for 15 years at a rate equal to 8%.
(b) The future value determined by assuming that the Net
Vested Account Value determined in accordance with clause (i)
above appreciates for 15 years at a rate equal to the current
long-term applicable federal rate (compounded monthly).
(d) "Committee" means the members of the Executive Committee of the Board
of Directors of the Bank who are not participants in this Plan.
(e) "Common Stock" and/or "Shares" shall mean shares of common stock of
Mahoning National Bancorp, Inc..
(f) "Election Form" shall mean the form attached hereto as Exhibit "A-1".
2
<PAGE> 4
(g) "Holding Company" means Mahoning National Bancorp, Inc., which owns
all of the issued and outstanding shares of Bank.
(h) "Net Vested Account Value" shall mean the Vested Account Value minus
the aggregate of all distributions to the Participant pursuant to
Article VII, Section (c).
(i) "Permanent Disability" shall mean a situation in which the Executive
is permanently physically or mentally unable to perform his customary
and/or required duties at the Bank. The determination as to whether or
not an Executive is permanently disabled shall be made by the
Committee, and such determination shall be conclusive. Provided,
however, if the Executive is disabled for purposes of the Bank's
disability insurance plan, he shall be conclusively determined to be
disabled under this Plan.
(j) "Phantom Stock Account Value" means the number of Phantom Shares
credited to a Participant's account multiplied by the average fair
market value, over the 10 business days preceding the date of any
valuation, of the Common Stock of Mahoning National Bancorp, Inc.
Notwithstanding the foregoing, in the event of the sale or merger of
the Holding Company, the sale or merger price of the Common Stock
shall determine the Executive's Phantom Stock Account Value.
(k) "Retirement" means a severance from the employment of the Bank under
the Bank's qualified benefit plan as constituted at present or as may
be amended hereafter.
(l) "Salary" and/or "Pay" shall mean the Executive's annual base
compensation, but does not include other compensation, including, but
not limited to hospitalization, pension benefits, etc.
(m) "Termination Date" means the date of Executive's severance from
employment with the Bank by reason of death, disability, retirement,
resignation, or otherwise.
(n) "Vested Account Value" shall equal the Aggregate Phantom Stock Account
Value multiplied by the applicable Vesting Percentage set forth in
Schedule A attached hereto.
(o) "Vesting Percentage" shall mean that percentage listed on Schedule A,
which is attached hereto, which corresponds with the age of the
Executive, at any given time. However, advances and or changes in the
vesting schedule with respect to a change in the age of the Executive
shall be made only on December 31 of each calendar year during which
Executive attained the stated age.
3
<PAGE> 5
ARTICLE III
ADMINISTRATION
(a) The complete and sole administration of this Plan is the
responsibility of those members of the Committee who are not
Participants. No member of the Committee shall be liable for any act
done or determination made in good faith.
(b) The construction and interpretation by the Committee of any provisions
of this Plan shall be final and conclusive. The Committee shall
determine, from time to time, subject to the provisions of this Plan,
the Executives who shall participate in the Plan (sometimes
hereinafter called "Participants").
(c) The Committee may, at its discretion, delegate its duties to the
outside auditors of the Bank, but may not delegate its authority to
apply or interpret the provisions of this Plan or to make
determinations specified in Section (b) of this Article III.
ARTICLE IV
ESTABLISHMENT OF PHANTOM STOCK ACCOUNT
The Bank shall set up an appropriate record (hereinafter called the
"Phantom Stock Account") in the name of each Executive under the Plan, and
shall record all activities of this agreement in the respective Phantom Stock
Accounts of each Executive.
ARTICLE V
CREDITS TO ACCOUNTS OF EXECUTIVES
(a) As of December 31st of each year that the Executive is a full-time
employee of the Bank, the Bank shall credit a number of Phantom Shares
of the Holding Company to the account of each Executive. The number of
Phantom Shares to be credited each year shall be determined by
dividing the Bank's contribution by the fair market value of the
Holding Company's Common Stock as of the date of crediting (December
31). The contribution by the Bank each year shall be a percentage of
the Executive's salary as determined by the return on equity of the
Bank for the year pursuant to a schedule to be established by the
Committee no later than the close of the first quarter of that year.
The ultimate computation of the number of Phantom Shares to be
credited each year will be determined by interpolation for performance
between the three levels established (i.e., threshold, target, and
distinguished), and return on equity will be calculated after
projected expense attributable to the incentive pay out. Determination
of the number of Phantom Shares shall be solely by the Committee and
shall be final and binding on all parties. Provided, however, if the
ROE is below the threshold for the year, then no crediting based on a
percentage of pay for the year shall be made.
4
<PAGE> 6
(b) So long as this Plan remains in effect, the Bank shall credit each
Participant's account in the special ledger throughout the term of his
employment with the Bank. Phantom Shares equivalent to dividends
payable in cash or property paid from time to time on issued and
outstanding shares of Common Stock, so that the amount of each such
credit will be equivalent to dividends which the Participant would
have received had he been the owner of the number of shares of Common
Stock equal to the number of Phantom Shares in his account. No such
credit shall be made with respect to any dividend paid after a
Participant's termination of employment or after any date of
termination of this Plan, even though the record date is prior
thereto.
(c) In the event of any stock dividend on the Common Stock or any split-up
or combination of shares of the Common Stock, appropriate adjustments
shall be made by the Committee in the aggregate number of Phantom
Shares in the account of the Participant. However, the Committee shall
not be required to establish any fractional Phantom Shares.
(d) On or before January 31st of each year, the Bank shall provide to each
Executive a detail of his Phantom Share Account as of December 31 of
the previous year. This detail shall include the number of Phantom
Shares in the Executive's account, and the Net Vested Account Value.
ARTICLE VI
VESTING
The Executive shall be permanently 100% vested as exhibited in
Schedule A.
ARTICLE VII
PAYMENTS OF BENEFITS
(a) Upon termination of any Participant's employment with the Bank, there
shall be paid to him, or in the event of his death to his beneficiary
or beneficiaries designated under Section (b) of this Article VII, an
amount equal to the Net Vested Account Value of such Participant,
determined in accordance with the valuation formula set forth in
Article II, Section (j) as of the date of termination of employment of
such Participant. Such amounts will be reduced by any amounts required
by law to be withheld by the Bank. Such amounts with interest at the
rate of eight percent (8%) per annum shall be distributed in the
manner elected by the Executive on an Election Form accepted by the
Bank. The Executive may elect (1) to begin receiving distributions
from his account on EITHER the first day of the second month after
termination of service with the Bank OR the first day of second month
of the calendar year immediately after termination of service with the
Bank and (2) to receive his benefits in either a lump-sum or in
substantially equal monthly installments over a period up to 15 years.
5
<PAGE> 7
In order to be effective with respect to the timing of distributions,
the Executive's Election Form must be submitted to the Bank EITHER
more than one year before the date on which the Executive's service
with the Bank terminates for any reason OR within 30 days of the
Plan's Effective Date. In the absence of a validly completed Election
Form, the Executive's account shall be paid in 60 substantially equal
monthly payments beginning on the first day of the second month after
termination of service with the Bank.
(b) Each person shall file an Election Form with the Bank's Employee
Benefits Plan Administrator designating one or more beneficiaries to
whom payments otherwise due the Executive shall be made in the event
of his death while in the employ of the Bank or after termination
therefrom. The beneficiary or beneficiaries so designated shall be one
or more persons or entities, including a trust or estate, other than
his creditors, or the creditors of his estate, or an entity in which
any of the foregoing may have an interest. The Executive shall have
the right to change the beneficiary or beneficiaries from time to time
whether before or after termination of employment; provided, however,
that any change shall not become effective until an Election Form is
received by the Employee Benefits Plan Administrator.
If the Executive dies before receiving all amounts payable of his Net
Vested Account Value, then the remaining balance of the Executive's
account shall be distributed in a lump sum to the Executive's
designated beneficiary (or estate, in the absence of a validly named
or living beneficiary) as soon as administratively practicable
following the Executive's death; provided that the Executive may
direct on an Election Form that any death benefits payable pursuant to
this Agreement shall instead be distributed over a distribution period
that effectuates the monthly installment payments selected by the
Executive (with payments made as though the Executive survived to
collect all payments, and terminated service on the date of his death
if payments had not previously begun).
(c) At the time of the college education of a child of an Executive, an
amount of money equal to the actual expenses associated with such
child's education may, upon application of the Executive, be disbursed
for such purposes by the Committee, in the Committee's sole
discretion, from the Net Vested Account Value of the Executive's
Phantom Stock Account.
6
<PAGE> 8
ARTICLE VIII
RESTRICTIONS UPON FUNDING
(a) The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement.
The Executive, his beneficiaries or any successor in interest to him
shall be and remain simply a general creditor of the Bank in the same
manner as any other creditor having a general claim for matured and
unpaid compensation.
(b) Subject to subsection (d) hereof, the Bank reserves the absolute right
in its sole discretion to either fund the obligations undertaken by
this Agreement or to refrain from funding the same and to determine
the extent, nature, and method of such funding. Should the Bank elect
to fund this Agreement, in whole or in part, through the purchase of
life insurance, mutual funds, disability policies or annuities, the
Bank reserves the absolute right, in its sole discretion, to terminate
such funding at any time, in whole or in part. At no time shall
Executive be deemed to have any lien nor right, title or interest in
or to any specific funding investment or to any assets of the Bank.
(c) If Bank elects to invest in a life insurance, disability or annuity
policy upon the life of Executive, then Executive shall assist the
Bank by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or
annuities.
(d) Not later than ten business days before the closing date of
a Change in Control, the Bank shall --
(i) Deposit in a grantor trust (the "Trust") that is designed in
accordance with Revenue Procedure 92-64 and has a trustee
independent of the Bank and the Company an amount equal to
the Change-in-Control Account Value, unless the Executive has
previously provided a written release of any claims under
this Agreement, and
(ii) provide the trustee of the Trust with a written direction to
hold said amount and any investment return thereon in a
segregated account for the benefit of the Executive, and to
follow the payment schedule to be provided by the Executive,
based on this Agreement and the Executive's Election Form, as
to the payment of amounts from the Trust.
Upon the Trust's final payment of all amounts due under this Section
(d) of Article VIII, the trustee of the Trust shall pay to the Bank
the entire balance remaining in the segregated account maintained for
the benefit of the Executive. The Executive shall thereafter have no
further interest in the Trust.
7
<PAGE> 9
ARTICLE IX
MISCELLANEOUS
(a) Neither Executive, his widow nor any other beneficiary under this
Agreement shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify or otherwise
encumber in advance any of the benefits payable hereunder, nor shall
any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the
Executive or his beneficiary, nor be transferable by operation of law
in the event of bankruptcy, insolvency or otherwise. In the event
Executive or any beneficiary attempts assignment, commutation,
hypothecation, transfer or disposal of the benefits hereunder, the
Bank's liabilities shall forthwith cease and terminate. However, in
such event, the Committee may, in its sole discretion, from time to
time, make payments of amounts which would otherwise be due the
Executive hereunder, to such Executive.
(b) The Bank expressly agrees that it shall not merge or consolidate into
or with another Bank or sell substantially all of its assets to
another corporation, firm or person until such corporation, firm or
person expressly agrees, in writing, to assume and discharge the
duties and obligations of the Bank under this Agreement. This
Agreement shall be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representatives.
(c) It is agreed by and between the parties hereto that, during the
lifetime of the Executive, this Agreement may be amended or revoked at
any time or times, in whole or in part, by the mutual written assent
of the Executive and the Bank.
(d) Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine
or neuter gender, whenever they should so apply.
(e) Nothing contained in this Agreement shall affect the right of the
Executive to participate in or be covered by any qualified or
non-qualified pension, profit sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part
of the Bank's existing or future compensation structure.
(f) Headings and Subheadings in this Agreement are inserted for reference
and convenience only and shall not be deemed a part of this Agreement.
(g) The validity and interpretation of this Agreement shall be governed by
the laws of the State of Ohio.
8
<PAGE> 10
ARTICLE X
ERISA PROVISIONS
(a) The "Named Fiduciary and Plan Administrator" of this Plan shall be the
Bank's Employee Benefits Plan Administrator until his resignation or
removal by the Committee. As named Fiduciary and Administrator, the
Employee Benefits Plan Administrator shall be responsible for the
management, control and administration of the Executive Phantom Stock
Bonus Plan as established herein. He may delegate to others certain
aspects of the management and operation responsibilities of the Plan
including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
(b) In the event that benefits under this Plan Agreement are not paid to
the Executive (or to his beneficiary in the case of the Executive's
death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Named Fiduciary and
Plan Administrator named above within sixty (60) days from the date
payments are refused. The Named Fiduciary and Plan Administrator and
the Bank shall review the written claim and if the claim is denied, in
whole or in part, they shall provide in writing within ninety (90)
days of receipt of such claim their specific reasons for such denial,
reference to the provisions of this Agreement upon which the denial is
based and any additional material or information necessary to perfect
the claim. Such written notice shall further indicate the additional
steps to be taken by claimants for a further review of the claim
denial if the Named Fiduciary and Plan Administrator fails to take any
actions within the aforesaid ninety-day period.
If claimants desire a second review, they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60) days of
the first claim denial. Claimants may review the Plan Agreement or any
documents relating thereto and submit any written issues and comments
they may feel appropriate. In its sole discretion, the Named Fiduciary
and Plan Administrator shall then review the second claim and provide
a written decision within sixty (60) days of receipt of such claim.
This decision shall likewise state the specific reasons for the
decision, and shall include reference to specific provisions of the
Plan Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of the Agreement or the meaning and effect of
the terms and conditions thereof, then claimants may submit the
dispute to a Board of Arbitration for final arbitration. Said Board
shall consist of one member selected by the claimant, one member
selected by the Bank and the third member selected by the first two
members. The Board shall operate under any generally recognized set of
arbitration rules. The parties hereto agree that they and their heirs,
personal representatives, successors and assigns shall be bound by the
decision of such Board with respect to any controversy properly
submitted to it for determination.
9
<PAGE> 11
ARTICLE XI
REIMBURSEMENT OF EXECUTIVE FOR ENFORCEMENT PROCEEDINGS
In the event that any dispute arises between the Executive and the
Bank as to the terms or interpretation of this Agreement, whether instituted by
formal legal proceedings or otherwise, including any action that the Executive
takes to defend against any action taken by the Bank or the Company, the Bank
shall reimburse the Executive for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions, provided
that the Executive obtains either a written settlement or a final judgement by
a court of competent jurisdiction substantially in his favor. Such
reimbursement shall be paid within ten days of Executive's furnishing to the
Bank written evidence, which may be in the form, among other things, of a
canceled check or receipt, of any costs or expenses incurred by the Executive.
10
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the originals thereof on the day and
year first herein above written.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- ------------------------- --------------------------
Its SVP and Cashier Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Gregory L. Ridler
- -------------------------- --------------------------
Gregory L. Ridler
11
<PAGE> 13
SCHEDULE "A"
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
EXECUTIVE PHANTOM STOCK BONUS PLAN
Vesting Schedule for Gregory L. Ridler
Effective September 15, 1997, Gregory L. Ridler's Vested Percentage
under the Agreement shall at all times be 100%.
<PAGE> 14
EXHIBIT "A-1"
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
EXECUTIVE PHANTOM STOCK BONUS PLAN
-------------------------------
ELECTION FORM
-------------------------------
AGREEMENT, made this ____ day of ________, 19__, by and between the
undersigned executive (the "Executive") and The Mahoning National Bank of
Youngstown (the "Bank") with respect to distribution of the benefits pursuant
to The Mahoning National Bank of Youngstown Executive Phantom Stock Bonus Plan
(the "Plan") entered into by the parties on September 15, 1997.
NOW THEREFORE, it is mutually agreed as follows:
1. FORM OF PAYMENT. The Executive elects to have his account
distributed as follows:
____ in one lump sum payment.
____ in substantially equal monthly payments over a
period of _____ years (no more than 15).
The Executive must make this election EITHER at least one year before
terminating his service with the Bank OR by October 15, 1997 in order for it to
be valid and supersede a prior election.
2. The Executive elects to have distributions from his account begin:
____ on the first day of the second month immediately
following the date in which the Executive ceases
service with the Bank.
____ on the first day of the second month of
the calendar year immediately following
the year in which the Executive ceases
service with the Bank.
3. In the event of the Executive's death, his account shall be
distributed:
____ in one lump sum payment.
____ in accordance with the payment schedule selected in
paragraph 1 hereof (with payments made as though the
Executive survived to collect all benefits, and as
though the Executive terminated service on the date
of his death, if payments had not already begun).
<PAGE> 15
4. PRIMARY BENEFICIARY. The Executive hereby designates the person(s)
named below to be his primary beneficiary and to receive any distributions that
become payable, after the Executive's death, under the Plan:
<TABLE>
<CAPTION>
======================= =================== ==================
Name of Mailing Address Percentage of
Primary Beneficiary Death Benefit
----------------------- ------------------- ------------------
<S> <C> <C>
%
----------------------- ------------------- ------------------
%
----------------------- ------------------- ------------------
======================= =================== ==================
</TABLE>
5. CONTINGENT BENEFICIARY. In the event that the primary beneficiary
or beneficiaries named above are not living at the time any distributions
become payable to them under the Plan, the Executive hereby designates the
following person(s) to be his contingent beneficiary:
<TABLE>
<CAPTION>
======================= =================== ==================
Name of Mailing Address Percentage of
Contingent Beneficiary Death Benefit
----------------------- ------------------- ------------------
<S> <C> <C>
%
----------------------- ------------------- ------------------
%
----------------------- ------------------- ------------------
======================= =================== ==================
</TABLE>
6. EFFECT OF ELECTION. The elections made in paragraph 1 hereof shall
become IRREVOCABLE one year prior to the Executive's termination of service.
The Executive may, by submitting an effective superseding Election Form at any
time and from time to time, prospectively change the beneficiary designation
and the manner of payment to a beneficiary. Such elections shall, however,
become irrevocable upon the Executive's death.
7. MUTUAL COMMITMENTS. The Bank agrees to make payment of all amounts
due the Executive in accordance with the terms of the Plan regarding the
elections made by the Executive herein. The Executive agrees to be bound by the
terms of the Plan, as in effect on the date hereof or properly amended
hereafter.
<PAGE> 16
Election Form
Page 3
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the originals thereof on the day and
year first hereinabove written.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
By
- ------------------------------ ------------------------------
Its SVP and Cashier Its duly authorized Director
WITNESS:
- ------------------------------ ------------------------------
Executive
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (d)
Executive Phantom Stock Bonus Plan
David E. Westerburg
<PAGE> 2
EXECUTIVE PHANTOM STOCK BONUS PLAN
AGREEMENT made this 15th day of September, 1997 (the "Effective
Date"), between The Mahoning National Bank of Youngstown (hereinafter referred
to a the "Bank"), and Mr. David E. Westerburg (hereinafter referred to as
"Executive").
In consideration of the mutual covenants, terms, conditions, and
agreements herein contained the parties hereby agree to enter into this
Executive Phantom Stock Bonus Plan (hereinafter sometimes referred to as the
"Plan"), as follows:
ARTICLE I
PURPOSES
The purposes of this Plan are: (a) to enable the Bank to retain the
Executive in its employ; and (b) to reward the Executive for the time and
effort he expends in his job and for the success achieved.
ARTICLE II
DEFINITIONS
The terms used in this Plan shall have the following meanings:
(a) "Aggregate Phantom Stock Account Value" shall mean the sum of the
Phantom Stock Account Value plus all distributions made to the
Executive pursuant to Article VII, Section (c), prior to the date said
Executive terminates his employment with the Bank.
(b) "Change in Control" shall mean:
(i) the acquisition of ownership, holding or power to vote more than
30% of the Bank's or the Company's voting stock; or
(ii) the acquisition of the ability to control the election
of a majority of the Bank's or the Company's directors; or
(iii) the acquisition of a controlling influence over the management
or policies of the Bank or the Company by any person or by persons
acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934); or
(iv) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period constitute
the Board of Directors of the Bank or the Company (the "Existing
Board") cease for any reason to constitute at least two-thirds
thereof, provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a vote of
at least two-
1
<PAGE> 3
thirds of the Continuing Directors then in office shall be considered
a Continuing Director.
Notwithstanding the foregoing, in the case of (i), (ii) and (iii)
hereof, ownership or control of the Bank by the Company itself shall
not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of
entity not specifically listed herein.
Notwithstanding the foregoing, no trust department or other designated
fiduciary or other trustee of such trust department of the Bank or a
subsidiary of the Bank, or other similar fiduciary capacity of the
Bank with direct voting control of the stock shall be included or
considered. Further, no profit-sharing, employee stock ownership,
employee stock purchase and savings, employee pension, or other
employee benefit plan of the Bank or any of its subsidiaries, and no
trustee of any such plan in its capacity as such trustee, shall be
included or considered.
(c) "Change-in-Control Account Value" shall equal the sum of (i) the Net
Vested Account Value reasonably estimated as of the closing date of
the Change in Control, and (ii) the present value, which shall in no
event be less than zero, of the difference between (a) and (b) hereof,
assuming a discount at the current long-term applicable federal rate,
compounded monthly, for a period of 15 years.
(a) The future value determined by assuming that the Net
Vested Account Value determined in accordance with clause (i)
above appreciates for 15 years at a rate equal to 8%.
(b) The future value determined by assuming that the Net
Vested Account Value determined in accordance with clause (i)
above appreciates for 15 years at a rate equal to the current
long-term applicable federal rate (compounded monthly).
(d) "Committee" means the members of the Executive Committee of the Board
of Directors of the Bank who are not participants in this Plan.
(e) "Common Stock" and/or "Shares" shall mean shares of common stock of
Mahoning National Bancorp, Inc.
(f) "Election Form" shall mean the form attached hereto as Exhibit "A-1".
(g) "Holding Company" means Mahoning National Bancorp, Inc., which owns
all of the issued and outstanding shares of Bank.
(h) "Net Vested Account Value" shall mean the Vested Account Value minus
the aggregate of all distributions to the Participant pursuant to
Article VII, Section (c).
2
<PAGE> 4
(i) "Permanent Disability" shall mean a situation in which the Executive
is permanently physically or mentally unable to perform his customary
and/or required duties at the Bank. The determination as to whether or
not an Executive is permanently disabled shall be made by the
Committee, and such determination shall be conclusive. Provided,
however, if the Executive is disabled for purposes of the Bank's
disability insurance plan, he shall be conclusively determined to be
disabled under this Plan.
(j) "Phantom Stock Account Value" means the number of Phantom Shares
credited to a Participant's account multiplied by the average fair
market value, over the 10 business days preceding the date of any
valuation, of the Common Stock of Mahoning National Bancorp, Inc.
Notwithstanding the foregoing, in the event of the sale or merger of
the Holding Company, the sale or merger price of the Common Stock
shall determine the Executive's Phantom Stock Account Value.
(k) "Retirement" means a severance from the employment of the Bank under
the Bank's qualified benefit plan as constituted at present or as may
be amended hereafter.
(l) "Salary" and/or "Pay" shall mean the Executive's annual base
compensation, but does not include other compensation, including, but
not limited to hospitalization, pension benefits, etc.
(m) "Termination Date" means the date of Executive's severance from
employment with the Bank by reason of death, disability, retirement,
resignation, or otherwise.
(n) "Vested Account Value" shall equal the Aggregate Phantom Stock Account
Value multiplied by the applicable Vesting Percentage set forth in
Schedule A attached hereto.
(o) "Vesting Percentage" shall mean that percentage listed on Schedule A,
which is attached hereto, which corresponds with the age of the
Executive, at any given time. However, advances and or changes in the
vesting schedule with respect to a change in the age of the Executive
shall be made only on December 31 of each calendar year during which
Executive attained the stated age.
ARTICLE III
ADMINISTRATION
(a) The complete and sole administration of this Plan is the
responsibility of those members of the Committee who are not
Participants. No member of the Committee shall be liable for any act
done or determination made in good faith.
(b) The construction and interpretation by the Committee of any provisions
of this Plan shall be final and conclusive. The Committee shall
determine, from time to time, subject to the provisions of this Plan,
the Executives who shall participate in the Plan (sometimes
hereinafter called "Participants").
3
<PAGE> 5
(c) The Committee may, at its discretion, delegate its duties to the
outside auditors of the Bank, but may not delegate its authority to
apply or interpret the provisions of this Plan or to make
determinations specified in Section (b) of this Article III.
ARTICLE IV
ESTABLISHMENT OF PHANTOM STOCK ACCOUNT
The Bank shall set up an appropriate record (hereinafter called the
"Phantom Stock Account") in the name of each Executive under the Plan, and
shall record all activities of this agreement in the respective Phantom Stock
Accounts of each Executive.
ARTICLE V
CREDITS TO ACCOUNTS OF EXECUTIVES
(a) As of December 31st of each year that the Executive is a full-time
employee of the Bank, the Bank shall credit a number of Phantom Shares
of the Holding Company to the account of each Executive. The number of
Phantom Shares to be credited each year shall be determined by
dividing the Bank's contribution by the fair market value of the
Holding Company's Common Stock as of the date of crediting (December
31). The contribution by the Bank each year shall be a percentage of
the Executive's salary as determined by the return on equity of the
Bank for the year pursuant to a schedule to be established by the
Committee no later than the close of the first quarter of that year.
The ultimate computation of the number of Phantom Shares to be
credited each year will be determined by interpolation for performance
between the three levels established (i.e., threshold, target, and
distinguished), and return on equity will be calculated after
projected expense attributable to the incentive pay out. Determination
of the number of Phantom Shares shall be solely by the Committee and
shall be final and binding on all parties. Provided, however, if the
ROE is below the threshold for the year, then no crediting based on a
percentage of pay for the year shall be made.
(b) So long as this Plan remains in effect, the Bank shall credit each
Participant's account in the special ledger throughout the term of his
employment with the Bank. Phantom Shares equivalent to dividends
payable in cash or property paid from time to time on issued and
outstanding shares of Common Stock, so that the amount of each such
credit will be equivalent to dividends which the Participant would
have received had he been the owner of the number of shares of Common
Stock equal to the number of Phantom Shares in his account. No such
credit shall be made with respect to any dividend paid after a
Participant's termination of employment or after any date of
termination of this Plan, even though the record date is prior
thereto.
(c) In the event of any stock dividend on the Common Stock or any split-up
or combination of shares of the Common Stock, appropriate adjustments
shall be made by the Committee in the aggregate number of Phantom
Shares in the account of the
4
<PAGE> 6
Participant. However, the Committee shall not be required to establish
any fractional Phantom Shares.
(d) On or before January 31st of each year, the Bank shall provide to each
Executive a detail of his Phantom Share Account as of December 31 of
the previous year. This detail shall include the number of Phantom
Shares in the Executive's account, and the Net Vested Account Value.
ARTICLE VI
VESTING
So long as the Executive remains an employee of the Bank, he shall
continue to advance in the vesting schedule attached as Schedule A. Upon the
Executive's termination of employment with the Bank, he shall be permanently
vested according to the percentage given on Schedule A on the same line as his
age on the date of his termination of employment. Provided, however, if the
Executive, while in the employ of the Bank, dies or becomes permanently
disabled, he shall become permanently 100% vested. Moreover, if a Change in
Control shall occur while the Executive remains in the employ of the Bank, the
Executive shall also become permanently 100% vested.
ARTICLE VII
PAYMENTS OF BENEFITS
(a) Upon termination of any Participant's employment with the Bank, there
shall be paid to him, or in the event of his death to his beneficiary
or beneficiaries designated under Section (b) of this Article VII, an
amount equal to the Net Vested Account Value of such Participant,
determined in accordance with the valuation formula set forth in
Article II, Section (j) as of the date of termination of employment of
such Participant. Such amounts will be reduced by any amounts required
by law to be withheld by the Bank. Such amounts with interest at the
rate of eight percent (8%) per annum shall be distributed in the
manner elected by the Executive on an Election Form accepted by the
Bank. The Executive may elect (1) to begin receiving distributions
from his account on either the first day of the second month after
termination of service with the Bank or the first day of second month
of the calendar year immediately after termination of service with the
Bank and (2) to receive his benefits in either a lump-sum or in
substantially equal monthly installments over a period up to 15 years.
In order to be effective with respect to the timing of distributions,
the Executive's Election Form must be submitted to the Bank either
more than one year before the date on which the Executive's service
with the Bank terminates for any reason or within 30 days of the
Plan's Effective Date. In the absence of a validly completed Election
Form, the Executive's account shall be paid in 60 substantially equal
monthly payments beginning on the first day of the second month after
termination of service with the Bank.
5
<PAGE> 7
(b) Each person shall file an Election Form with the Bank's Employee
Benefits Plan Administrator designating one or more beneficiaries to
whom payments otherwise due the Executive shall be made in the event
of his death while in the employ of the Bank or after termination
therefrom. The beneficiary or beneficiaries so designated shall be one
or more persons or entities, including a trust or estate, other than
his creditors, or the creditors of his estate, or an entity in which
any of the foregoing may have an interest. The Executive shall have
the right to change the beneficiary or beneficiaries from time to time
whether before or after termination of employment; provided, however,
that any change shall not become effective until an Election Form is
received by the Employee Benefits Plan Administrator.
If the Executive dies before receiving all amounts payable of his Net
Vested Account Value, then the remaining balance of the Executive's
account shall be distributed in a lump sum to the Executive's
designated beneficiary (or estate, in the absence of a validly named
or living beneficiary) as soon as administratively practicable
following the Executive's death; provided that the Executive may
direct on an Election Form that any death benefits payable pursuant to
this Agreement shall instead be distributed over a distribution period
that effectuates the monthly installment payments selected by the
Executive (with payments made as though the Executive survived to
collect all payments, and terminated service on the date of his death
if payments had not previously begun).
(c) At the time of the college education of a child of an Executive, an
amount of money equal to the actual expenses associated with such
child's education may, upon application of the Executive, be disbursed
for such purposes by the Committee, in the Committee's sole
discretion, from the Net Vested Account Value of the Executive's
Phantom Stock Account.
ARTICLE VIII
RESTRICTIONS UPON FUNDING
(a) The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement.
The Executive, his beneficiaries or any successor in interest to him
shall be and remain simply a general creditor of the Bank in the same
manner as any other creditor having a general claim for matured and
unpaid compensation.
(b) Subject to subsection (d) hereof, the Bank reserves the absolute right
in its sole discretion to either fund the obligations undertaken by
this Agreement or to refrain from funding the same and to determine
the extent, nature, and method of such funding. Should the Bank elect
to fund this Agreement, in whole or in part, through the purchase of
life insurance, mutual funds, disability policies or annuities, the
Bank reserves the absolute right, in its sole discretion, to terminate
such funding at any time, in whole or in part. At no time shall
Executive be deemed to have any lien nor right, title or interest in
or to any specific funding investment or to any assets of the Bank.
6
<PAGE> 8
(c) If Bank elects to invest in a life insurance, disability or annuity
policy upon the life of Executive, then Executive shall assist the
Bank by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or
annuities.
(d) Not later than ten business days before the closing date of
a Change in Control, the Bank shall --
(i) deposit in a grantor trust (the "Trust") that is designed in
accordance with Revenue Procedure 92-64 and has a trustee
independent of the Bank and the Company an amount equal to
the Change-in-Control Account Value, unless the Executive has
previously provided a written release of any claims under
this Agreement, and
(ii) provide the trustee of the Trust with a written direction to
hold said amount and any investment return thereon in a
segregated account for the benefit of the Executive, and to
follow the payment schedule to be provided by the Executive,
based on this Agreement and the Executive's Election Form, as
to the payment of amounts from the Trust.
Upon the Trust's final payment of all amounts due under this Section
(d) of Article VIII, the trustee of the Trust shall pay to the Bank
the entire balance remaining in the segregated account maintained for
the benefit of the Executive. The Executive shall thereafter have no
further interest in the Trust.
ARTICLE IX
MISCELLANEOUS
(a) Neither Executive, his widow nor any other beneficiary under this
Agreement shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify or otherwise
encumber in advance any of the benefits payable hereunder, nor shall
any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the
Executive or his beneficiary, nor be transferable by operation of law
in the event of bankruptcy, insolvency or otherwise. In the event
Executive or any beneficiary attempts assignment, commutation,
hypothecation, transfer or disposal of the benefits hereunder, the
Bank's liabilities shall forthwith cease and terminate. However, in
such event, the Committee may, in its sole discretion, from time to
time, make payments of amounts which would otherwise be due the
Executive hereunder, to such Executive.
(b) The Bank expressly agrees that it shall not merge or consolidate into
or with another Bank or sell substantially all of its assets to
another corporation, firm or person until such corporation, firm or
person expressly agrees, in writing, to assume and discharge the
duties and obligations of the Bank under this Agreement. This
Agreement shall be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representatives.
7
<PAGE> 9
(c) It is agreed by and between the parties hereto that, during the
lifetime of the Executive, this Agreement may be amended or revoked at
any time or times, in whole or in part, by the mutual written assent
of the Executive and the Bank.
(d) Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine
or neuter gender, whenever they should so apply.
(e) Nothing contained in this Agreement shall affect the right of the
Executive to participate in or be covered by any qualified or
non-qualified pension, profit sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part
of the Bank's existing or future compensation structure.
(f) Headings and Subheadings in this Agreement are inserted for reference
and convenience only and shall not be deemed a part of this Agreement.
(g) The validity and interpretation of this Agreement shall be governed by
the laws of the State of Ohio.
ARTICLE X
ERISA PROVISIONS
(a) The "Named Fiduciary and Plan Administrator" of this Plan shall be the
Bank's Employee Benefits Plan Administrator until his resignation or
removal by the Committee. As named Fiduciary and Administrator, the
Employee Benefits Plan Administrator shall be responsible for the
management, control and administration of the Executive Phantom Stock
Bonus Plan as established herein. He may delegate to others certain
aspects of the management and operation responsibilities of the Plan
including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
(b) In the event that benefits under this Plan Agreement are not paid to
the Executive (or to his beneficiary in the case of the Executive's
death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Named Fiduciary and
Plan Administrator named above within sixty (60) days from the date
payments are refused. The Named Fiduciary and Plan Administrator and
the Bank shall review the written claim and if the claim is denied, in
whole or in part, they shall provide in writing within ninety (90)
days of receipt of such claim their specific reasons for such denial,
reference to the provisions of this Agreement upon which the denial is
based and any additional material or information necessary to perfect
the claim. Such written notice shall further indicate the additional
steps to be taken by claimants for a further review of the claim
denial if the Named Fiduciary and Plan Administrator fails to take any
actions within the aforesaid ninety-day period.
8
<PAGE> 10
If claimants desire a second review, they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60) days of
the first claim denial. Claimants may review the Plan Agreement or any
documents relating thereto and submit any written issues and comments
they may feel appropriate. In its sole discretion, the Named Fiduciary
and Plan Administrator shall then review the second claim and provide
a written decision within sixty (60) days of receipt of such claim.
This decision shall likewise state the specific reasons for the
decision, and shall include reference to specific provisions of the
Plan Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of the Agreement or the meaning and effect of
the terms and conditions thereof, then claimants may submit the
dispute to a Board of Arbitration for final arbitration. Said Board
shall consist of one member selected by the claimant, one member
selected by the Bank and the third member selected by the first two
members. The Board shall operate under any generally recognized set of
arbitration rules. The parties hereto agree that they and their heirs,
personal representatives, successors and assigns shall be bound by the
decision of such Board with respect to any controversy properly
submitted to it for determination.
ARTICLE XI
REIMBURSEMENT OF EXECUTIVE FOR ENFORCEMENT PROCEEDINGS
In the event that any dispute arises between the Executive and the
Bank as to the terms or interpretation of this Agreement, whether instituted by
formal legal proceedings or otherwise, including any action that the Executive
takes to defend against any action taken by the Bank or the Company, the Bank
shall reimburse the Executive for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions, provided
that the Executive obtains either a written settlement or a final judgement by
a court of competent jurisdiction substantially in his favor. Such
reimbursement shall be paid within ten days of Executive's furnishing to the
Bank written evidence, which may be in the form, among other things, of a
canceled check or receipt, of any costs or expenses incurred by the Executive.
9
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the originals thereof on the day and
year first herein above written.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- ---------------------------- -------------------------------
Its SVP and Cashier Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ David E. Westerburg
- ---------------------------- -------------------------------
David E. Westerburg
10
<PAGE> 12
<TABLE>
<CAPTION>
SCHEDULE "A"
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
EXECUTIVE PHANTOM STOCK BONUS PLAN
Vesting Schedule for David E. Westerburg
- --------------------------- ---------------------------- ----------------------
Age on 12/31 Preceding Retirement & Termination Death, Permanent
Termination of Employment Vesting Schedule Disability or
Change in Control
- --------------------------- ---------------------------- ----------------------
<S> <C> <C>
44 8.3% 100%
- --------------------------- ---------------------------- ----------------------
45 16.6% 100%
- --------------------------- ---------------------------- ----------------------
46 24.9% 100%
- --------------------------- ---------------------------- ----------------------
47 33.2% 100%
- --------------------------- ---------------------------- ----------------------
48 41.5% 100%
- --------------------------- ---------------------------- ----------------------
49 49.8% 100%
- --------------------------- ---------------------------- ----------------------
50 58.1% 100%
- --------------------------- ---------------------------- ----------------------
51 66.4% 100%
- --------------------------- ---------------------------- ----------------------
52 74.7% 100%
- --------------------------- ---------------------------- ----------------------
53 83.0% 100%
- --------------------------- ---------------------------- ----------------------
54 91.3% 100%
- --------------------------- ---------------------------- ----------------------
55 and over 100% 100%
- --------------------------- ---------------------------- ----------------------
</TABLE>
11
<PAGE> 13
EXHIBIT "A-1"
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
EXECUTIVE PHANTOM STOCK BONUS PLAN
-------------------------------
ELECTION FORM
-------------------------------
AGREEMENT, made this ____ day of ________, 19__, by and between the
undersigned executive (the "Executive") and The Mahoning National Bank of
Youngstown (the "Bank") with respect to distribution of the benefits pursuant
to The Mahoning National Bank of Youngstown Executive Phantom Stock Bonus Plan
(the "Plan") entered into by the parties on September 15, 1997.
NOW THEREFORE, it is mutually agreed as follows:
1. FORM OF PAYMENT. The Executive elects to have his account
distributed as follows:
____ in one lump sum payment.
____ in substantially equal monthly payments over a
period of _____ years (no more than 15).
The Executive must make this election either at least one year before
terminating his service with the Bank or by October 15, 1997 in order for it to
be valid and supersede a prior election.
2. The Executive elects to have distributions from his account begin:
____ on the first day of the second month immediately
following the date in which the Executive ceases
service with the Bank.
____ on the first day of the second month of the calendar
year immediately following the year in which the
Executive ceases service with the Bank.
3. In the event of the Executive's death, his account shall be
distributed:
____ in one lump sum payment.
____ in accordance with the payment schedule
selected in paragraph 1 hereof (with
payments made as though the Executive
survived to collect all benefits, and as
though the Executive terminated service on
the date of his death, if payments had not
already begun).
<PAGE> 14
Election Form
Page 2
4. PRIMARY BENEFICIARY. The Executive hereby designates the person(s)
named below to be his primary beneficiary and to receive any distributions that
become payable, after the Executive's death, under the Plan:
<TABLE>
<CAPTION>
======================= ===================== =======================
Name of Mailing Address Percentage of
Primary Beneficiary Death Benefit
----------------------- --------------------- -----------------------
<S> <C> <C>
%
----------------------- --------------------- -----------------------
%
======================= ===================== =======================
</TABLE>
5. CONTINGENT BENEFICIARY. In the event that the primary beneficiary
or beneficiaries named above are not living at the time any distributions
become payable to them under the Plan, the Executive hereby designates the
following person(s) to be his contingent beneficiary:
<TABLE>
<CAPTION>
========================== =================== =====================
Name of Mailing Address Percentage of
Contingent Beneficiary Death Benefit
-------------------------- ------------------- ---------------------
<S> <C> <C>
%
-------------------------- ------------------- ---------------------
%
========================== =================== =====================
</TABLE>
6. EFFECT OF ELECTION. The elections made in paragraph 1 hereof shall
become IRREVOCABLE one year prior to the Executive's termination of service.
The Executive may, by submitting an effective superseding Election Form at any
time and from time to time, prospectively change the beneficiary designation
and the manner of payment to a beneficiary. Such elections shall, however,
become irrevocable upon the Executive's death.
7. MUTUAL COMMITMENTS. The Bank agrees to make payment of all amounts
due the Executive in accordance with the terms of the Plan regarding the
elections made by the Executive herein. The Executive agrees to be bound by the
terms of the Plan, as in effect on the date hereof or properly amended
hereafter.
<PAGE> 15
Election Form
Page 3
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the originals thereof on the day and
year first hereinabove written.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
By
- ------------------------------ ---------------------------------
Its SVP and Cashier Its duly authorized Director
WITNESS:
- ------------------------------ ---------------------------------
Executive
<PAGE> 1
Mahoning National Bancorp, Inc.
Form 10-Q
Item 6 (a)
Exhibit 10 (e)
Executive Deferred Cash Bonus Plan
Parker T. McHenry
<PAGE> 2
EXECUTIVE DEFERRED CASH BONUS PLAN
As Restated effective September 15, 1997
AGREEMENT made this 15th day of September, 1997 (the "Effective
Date"), restates and supersedes an agreement entered into on the 19th day of
November, 1993 between The Mahoning National Bank of Youngstown (hereinafter
referred to as the "Bank"), and Mr. Parker T. McHenry (hereinafter referred to
as "Executive").
In consideration of the mutual covenants, terms, conditions, and
agreements herein contained the parties hereby agree to enter into this
Executive Deferred Cash Bonus Plan (hereinafter sometimes referred to as the
"Plan"), as follows:
ARTICLE I
PURPOSES
The purposes of this Plan are: (a) to enable the Bank to retain the
Executive in its employ; and (b) to reward the Executive for the time and
effort he expends in his job and for the success achieved.
ARTICLE II
DEFINITIONS
The terms used in this Plan shall have the following meanings:
(a) "Bonus Account" shall mean the sum of all funds credited to the
Executive's account, pursuant to Article V hereof, plus interest at
the rate of 8% per annum (compounded annually), from the date of
crediting to the date of disbursement pursuant to Article VII hereof.
(b) "Change in Control" shall mean:
(i) the acquisition of ownership, holding or power to vote more than
30% of the Bank's or the Company's voting stock; or
(ii) the acquisition of the ability to control the election of a
majority of the Bank's or the Company's directors; or
1
<PAGE> 3
(iii) the acquisition of a controlling influence over the management
or policies of the Bank or the Company by any person or by persons
acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934); or
(iv) during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period constitute
the Board of Directors of the Bank or the Company (the "Existing
Board") cease for any reason to constitute at least two-thirds
thereof, provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a vote of
at least two-thirds of the Continuing Directors then in office shall
be considered a Continuing Director.
Notwithstanding the foregoing, in the case of (i), (ii) and (iii)
hereof, ownership or control of the Bank by the Company itself shall
not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of
entity not specifically listed herein.
Notwithstanding the foregoing, no trust department or other designated
fiduciary or other trustee of such trust department of the Bank or a
subsidiary of the Bank, or other similar fiduciary capacity of the
Bank with direct voting control of the stock shall be included or
considered. Further, no profit-sharing, employee stock ownership,
employee stock purchase and savings, employee pension, or other
employee benefit plan of the Bank or any of its subsidiaries, and no
trustee of any such plan in its capacity as such trustee, shall be
included or considered.
(c) "Change-in-Control Account Value" shall equal the sum of (i) the
Vested Bonus Account reasonably estimated as of the closing date of
the Change in Control, and (ii) the present value, which shall in no
event be less than zero, of the difference between (a) and (b) hereof,
assuming a discount at the current long-term applicable federal rate,
compounded monthly, for a period of 8 years.
(a) The future value determined by assuming that the Vested
Bonus Account determined in accordance with clause (i) above
appreciates for 8 years at a rate equal to 8%.
(b) The future value determined by assuming that the Vested
Bonus Account determined in accordance with clause (i) above
appreciates for 8 years at a rate equal to the current
long-term applicable federal rate (compounded monthly).
(d) "Committee" means the members of the Executive Committee of the Board
of Directors of the Bank who are not participants in this Plan.
(e) "Election Form" shall mean the form attached hereto as Exhibit "A-1".
2
<PAGE> 4
(f) "Holding Company" means Mahoning National Bancorp, Inc., which owns
all of the issued and outstanding shares of Bank.
(g) "Permanent Disability" shall mean a situation in which the Executive
is permanently physically or mentally unable to perform his customary
and/or required duties at the Bank. The determination as to whether or
not an Executive is permanently disabled shall be made by the
Committee, and such determination shall be conclusive. Provided,
however, if the Executive is disabled for purposes of the Bank's
disability insurance plan, he shall be conclusively determined to be
disabled under this Plan.
(h) "Retirement" means a severance from the employment of the Bank under
the Bank's qualified benefit plan as constituted at present or as may
be amended hereafter.
(i) "Salary" and or "Pay" shall mean the Executive's annual base
compensation, but does not include other compensation, including, but
not limited to hospitalization, pension benefits, etc.
(j) "Termination Date" means the date of Executive's severance from
employment with the Bank by reason of death, disability, retirement,
resignation, or otherwise.
(k) "Vested Bonus Account" shall equal the value of the Bonus Account
multiplied by the applicable Vesting Percentage set forth in Schedule
A attached hereto.
(l) "Vesting Percentage" shall mean that percentage listed on Schedule A,
which is attached hereto, which corresponds with the age of the
Executive, at any given time. However, advances and or changes in the
vesting schedule with respect to a change in the age of the Executive
shall be made only on December 31 of each calendar year during which
Executive attained the stated age.
ARTICLE III
ADMINISTRATION
(a) The complete and sole administration of this Plan is the
responsibility of those members of the Committee who are not
Participants. No member of the Committee shall be liable for any act
done or determination made in good faith.
(b) The construction and interpretation by the Committee of any provisions
of this Plan shall be final and conclusive. The Committee shall
determine, from time to time, subject to the provisions of this Plan,
the Executives who shall participate in the Plan (sometimes
hereinafter called "Participants").
(c) The Committee may, at its discretion, delegate its duties to the
outside auditors of the Bank, but may not delegate its authority to
apply or interpret the provisions of this Plan or to make
determinations specified in Section (b) of this Article III.
3
<PAGE> 5
ARTICLE IV
ESTABLISHMENT OF BONUS ACCOUNT
The Bank shall set up an appropriate record in the name of each
Executive under the Plan, and shall record all activities of this agreement in
the respective Bonus Account of the Executive.
ARTICLE V
CREDITS TO ACCOUNTS OF EXECUTIVES
(a) As of December 31st of each year that the Executive is a full-time
employee of the Bank, the Bank shall credit a monetary amount to
Executive's Bonus Account. The contribution by the Bank each year
shall be a percentage of the Executive's salary as determined by the
return on equity of the Bank for the year pursuant to a schedule to be
established by the Committee no later than the close of the first
quarter of that year.
The ultimate computation of the monetary amount to be credited each
year will be determined by interpolation for performance between the
three levels established (i.e., threshold, target, and distinguished),
and return on equity will be calculated after projected expense
attributable to the incentive pay out. Such determinations shall be
made solely by the Committee and shall be final and binding on all
parties. Provided, however, if the ROE is below the threshold for the
year, then no crediting based on a percentage of pay for the year
shall be made.
(b) On or before January 31st of each year, the Bank shall provide to the
Executive a detail of his Bonus Account as of December 31 of the
previous year. This detail shall include the value of the Vested Bonus
Account.
ARTICLE VI
VESTING
So long as the Executive remains an employee of the Bank, he shall
continue to advance in the vesting schedule attached as Schedule A. Upon the
Executive's termination of employment with the Bank, he shall be permanently
vested according to the percentage given on Schedule A on the same line as his
age on the date of his termination of employment. Provided, however, if the
Executive, while in the employ of the Bank, dies or becomes permanently
disabled, he shall become permanently 100% vested. Moreover, if a Change in
Control shall occur while the Executive remains in the employ of the Bank, the
Executive shall also become permanently 100% vested.
4
<PAGE> 6
ARTICLE VII
PAYMENTS OF BENEFITS
(a) Upon termination of any Participant's employment with the Bank, there
shall be paid to him, or in the event of his death to his beneficiary
or beneficiaries designated under Section (b) of this Article VII, an
amount equal to the Vested Bonus Account of such Participant,
determined as of the date of termination of employment of such
Participant. Such amounts shall be payable in equal monthly
installments with interest at the rate of eight percent (8%) per annum
over a period of eight (8) years, the first payment to be made within
two (2) months from Participant's termination date. Such payments will
be reduced by any amounts required by law to be withheld by the Bank.
(b) Each person shall file an Election Form with the Bank's Employee
Benefits Plan Administrator designating one or more beneficiaries to
whom payments otherwise due the Executive shall be made in the event
of his death while in the employ of the Bank or after termination
therefrom. The beneficiary or beneficiaries so designated shall be one
or more persons or entities, including a trust or estate, other than
his creditors, or the creditors of his estate, or an entity in which
any of the foregoing may have an interest. The Executive shall have
the right to change the beneficiary or beneficiaries from time to time
whether before or after termination of employment; provided, however,
that any change shall not become effective until an Election Form is
received by the Employee Benefits Plan Administrator.
If the Executive dies before receiving all amounts payable of his
Vested Bonus Account, then the remaining balance of the Executive's
account shall be distributed in a lump sum to the Executive's
designated beneficiary (or estate, in the absence of a validly named
or living beneficiary) as soon as administratively practicable
following the Executive's death; provided that the Executive may
direct on an Election Form that any death benefits payable pursuant to
this Agreement shall instead be distributed over a distribution period
that effectuates the monthly installment payments selected by the
Executive (with payments made as though the Executive survived to
collect all payments, and terminated service on the date of his death
if payments had not previously begun).
ARTICLE VIII
RESTRICTIONS UPON FUNDING
(a) The Bank shall have no obligation to set aside, earmark or entrust any
fund or money with which to pay its obligations under this Agreement.
The Executive, his beneficiaries or any successor in interest to him
shall be and remain simply a general creditor of the Bank in the same
manner as any other creditor having a general claim for matured and
unpaid compensation.
(b) Subject to subsection (d) hereof, the Bank reserves the absolute right
in its sole discretion to either fund the obligations undertaken by
this Agreement or to refrain
5
<PAGE> 7
from funding the same and to determine the extent, nature, and method
of such funding. Should the Bank elect to fund this Agreement, in
whole or in part, through the purchase of life insurance, mutual
funds, disability policies or annuities, the Bank reserves the
absolute right, in its sole discretion, to terminate such funding at
any time, in whole or in part. At no time shall Executive be deemed to
have any lien nor right, title or interest in or to any specific
funding investment or to any assets of the Bank.
(c) If Bank elects to invest in a life insurance, disability or annuity
policy upon the life of Executive, then Executive shall assist the
Bank by freely submitting to a physical exam and supplying such
additional information necessary to obtain such insurance or
annuities.
(d) Not later than ten business days before the closing date of
a Change in Control, the Bank shall --
(i) deposit in a grantor trust (the "Trust") that is designed in
accordance with Revenue Procedure 92-64 and has a trustee
independent of the Bank and the Company an amount equal to
the Change-in-Control Account Value, unless the Executive has
previously provided a written release of any claims under
this Agreement, and
(ii) provide the trustee of the Trust with a written direction to
hold said amount and any investment return thereon in a
segregated account for the benefit of the Executive, and to
follow the payment schedule to be provided by the Executive,
based on this Agreement and the Executive's Election Form, as
to the payment of amounts from the Trust.
Upon the Trust's final payment of all amounts due under this Section
(d) of Article VIII, the trustee of the Trust shall pay to the Bank
the entire balance remaining in the segregated account maintained for
the benefit of the Executive. The Executive shall thereafter have no
further interest in the Trust.
ARTICLE IX
MISCELLANEOUS
(a) Neither Executive, his widow nor any other beneficiary under this
Agreement shall have any power or right to transfer, assign,
anticipate, hypothecate, mortgage, commute, modify or otherwise
encumber in advance any of the benefits payable hereunder, nor shall
any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the
Executive or his beneficiary, nor be transferable by operation of law
in the event of bankruptcy, insolvency or otherwise. In the event
Executive or any beneficiary attempts assignment, commutation,
hypothecation, transfer or disposal of the benefits hereunder, the
Bank's liabilities shall forthwith cease and terminate. However, in
such event, the Committee may, in its sole discretion, from time to
time, make payments of amounts which would otherwise be due the
Executive hereunder, to such Executive.
6
<PAGE> 8
(b) The Bank expressly agrees that it shall not merge or consolidate into
or with another Bank or sell substantially all of its assets to
another corporation, firm or person until such corporation, firm or
person expressly agrees, in writing, to assume and discharge the
duties and obligations of the Bank under this Agreement. This
Agreement shall be binding upon the parties hereto, their successors,
beneficiaries, heirs and personal representatives.
(c) It is agreed by and between the parties hereto that, during the
lifetime of the Executive, this Agreement may be amended or revoked at
any time or times, in whole or in part, by the mutual written assent
of the Executive and the Bank.
(d) Whenever in this Agreement words are used in the masculine or neuter
gender, they shall be read and construed as in the masculine, feminine
or neuter gender, whenever they should so apply.
(e) Nothing contained in this Agreement shall affect the right of the
Executive to participate in or be covered by any qualified or
non-qualified pension, profit sharing, group, bonus or other
supplemental compensation or fringe benefit plan constituting a part
of the Bank's existing or future compensation structure.
(f) Headings and Subheadings in this Agreement are inserted for reference
and convenience only and shall not be deemed a part of this Agreement.
(g) The validity and interpretation of this Agreement shall be
governed by the laws of the State of Ohio.
ARTICLE X
ERISA PROVISIONS
(a) The "Named Fiduciary and Plan Administrator" of this Plan shall be the
Bank's Employee Benefits Plan Administrator until his resignation or
removal by the Committee. As named Fiduciary and Administrator, the
Employee Benefits Plan Administrator shall be responsible for the
management, control and administration of the Executive Deferred Cash
Bonus Plan as established herein. He may delegate to others certain
aspects of the management and operation responsibilities of the Plan
including the employment of advisors and the delegation of ministerial
duties to qualified individuals.
(b) In the event that benefits under this Plan Agreement are not paid to
the Executive (or to his beneficiary in the case of the Executive's
death) and such claimants feel they are entitled to receive such
benefits, then a written claim must be made to the Named Fiduciary and
Plan Administrator named above within sixty (60) days from the date
payments are refused. The Named Fiduciary and Plan Administrator and
the Bank shall review the written claim and if the claim is denied, in
whole or in part, they shall provide in writing within ninety (90)
days of receipt of such claim their specific
7
<PAGE> 9
reasons for such denial, reference to the provisions of this Agreement
upon which the denial is based and any additional material or
information necessary to perfect the claim. Such written notice shall
further indicate the additional steps to be taken by claimants for a
further review of the claim denial if the Named Fiduciary and Plan
Administrator fails to take any actions within the aforesaid
ninety-day period.
If claimants desire a second review, they shall notify the Named
Fiduciary and Plan Administrator in writing within sixty (60) days of
the first claim denial. Claimants may review the Plan Agreement or any
documents relating thereto and submit any written issues and comments
they may feel appropriate. In its sole discretion, the Named Fiduciary
and Plan Administrator shall then review the second claim and provide
a written decision within sixty (60) days of receipt of such claim.
This decision shall likewise state the specific reasons for the
decision, and shall include reference to specific provisions of the
Plan Agreement upon which the decision is based.
If claimants continue to dispute the benefit denial based upon
completed performance of the Agreement or the meaning and effect of
the terms and conditions thereof, then claimants may submit the
dispute to a Board of Arbitration for final arbitration. Said Board
shall consist of one member selected by the claimant, one member
selected by the Bank and the third member selected by the first two
members. The Board shall operate under any generally recognized set of
arbitration rules. The parties hereto agree that they and their heirs,
personal representatives, successors and assigns shall be bound by the
decision of such Board with respect to any controversy properly
submitted to it for determination.
ARTICLE XI
REIMBURSEMENT OF EXECUTIVE FOR ENFORCEMENT PROCEEDINGS
In the event that any dispute arises between the Executive and the
Bank as to the terms or interpretation of this Agreement, whether instituted by
formal legal proceedings or otherwise, including any action that the Executive
takes to defend against any action taken by the Bank or the Company, the Bank
shall reimburse the Executive for all costs and expenses, including reasonable
attorneys' fees, arising from such dispute, proceedings or actions, provided
that the Executive obtains either a written settlement or a final judgement by
a court of competent jurisdiction substantially in his favor. Such
reimbursement shall be paid within ten days of Executive's furnishing to the
Bank written evidence, which may be in the form, among other things, of a
canceled check or receipt, of any costs or expenses incurred by the Executive.
8
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the originals thereof on the day and
year first herein above written.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
/s/ Richard E. Davies By /s/ Daniel B. Roth
- ---------------------------- -------------------------------
Its SVP and Cashier Its duly authorized Director
WITNESS:
/s/ Sandra L. Douglas /s/ Parker T. McHenry
- ---------------------------- -------------------------------
Parker T. McHenry
9
<PAGE> 11
<TABLE>
<CAPTION>
SCHEDULE "A"
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
EXECUTIVE DEFERRED CASH BONUS PLAN
Vesting Schedule for Parker T. McHenry
- ---------------------------- ---------------------------- -------------------------------
Age on 12/31 Preceding Retirement & Termination Death, Permanent
Termination of Employment Vesting Schedule Disability or
Change in Control
- ---------------------------- ---------------------------- -------------------------------
<S> <C> <C>
60 20% 100%
- ---------------------------- ---------------------------- -------------------------------
61 40% 100%
- ---------------------------- ---------------------------- -------------------------------
62 60% 100%
- ---------------------------- ---------------------------- -------------------------------
63 80% 100%
- ---------------------------- ---------------------------- -------------------------------
64 and over 100% 100%
- ---------------------------- ---------------------------- -------------------------------
</TABLE>
10
<PAGE> 12
EXHIBIT "A-1"
THE MAHONING NATIONAL BANK OF YOUNGSTOWN
EXECUTIVE DEFERRED CASH BONUS PLAN
-------------------------------
ELECTION FORM
-------------------------------
AGREEMENT, made this ____ day of ________, 19__, by and between Parker
T. McHenry (the "Executive") and The Mahoning National Bank of Youngstown (the
"Bank") with respect to distribution of the benefits pursuant to The Mahoning
National Bank of Youngstown Executive Deferred Cash Bonus Plan (the "Plan")
entered into by the parties on September 15, 1997.
NOW THEREFORE, it is mutually agreed as follows:
1. In the event of the Executive's death, his account shall be
distributed:
____ in one lump sum payment.
____ in substantially equal monthly payments over a
period of _____ years (no more than 15). Payments
would be made as though the Executive survived to
collect all benefits, and as though the Executive
terminated service on the date of his death, if
payments had not already begun.
2. PRIMARY BENEFICIARY. The Executive hereby designates the person(s)
named below to be his primary beneficiary and to receive any distributions that
become payable, after the Executive's death, under the Plan:
<TABLE>
<CAPTION>
======================== ==================== =======================
Name of Mailing Address Percentage of
Primary Beneficiary Death Benefit
------------------------ -------------------- -----------------------
<S> <C> <C>
%
------------------------ -------------------- -----------------------
%
======================== ==================== =======================
</TABLE>
<PAGE> 13
Election Form
Page 2
3. CONTINGENT BENEFICIARY. In the event that the primary beneficiary
or beneficiaries named above are not living at the time any distributions
become payable to them under the Plan, the Executive hereby designates the
following person(s) to be his contingent beneficiary:
<TABLE>
<CAPTION>
========================= ===================== =====================
Name of Mailing Address Percentage of
Contingent Beneficiary Death Benefit
------------------------- --------------------- ---------------------
<S> <C> <C>
%
------------------------- --------------------- ---------------------
%
========================= ===================== =====================
</TABLE>
4. EFFECT OF ELECTION. The Executive may, by submitting an effective
superseding Election Form at any time and from time to time, prospectively
change the beneficiary designation and the manner of payment to a beneficiary.
Such elections shall, however, become irrevocable upon the Executive's death.
5. MUTUAL COMMITMENTS. The Bank agrees to make payment of all amounts
due the Executive in accordance with the terms of the Plan regarding the
elections made by the Executive herein. The Executive agrees to be bound by the
terms of the Plan, as in effect on the date hereof or properly amended
hereafter.
IN WITNESS WHEREOF, the parties hereto acknowledge that each has
carefully read this Agreement and executed the originals thereof on the day and
year first hereinabove written.
ATTEST: THE MAHONING NATIONAL BANK
OF YOUNGSTOWN
By
- ---------------------------- -----------------------------
Its SVP and Cashier Its duly authorized Director
WITNESS:
- ---------------------------- -----------------------------
Parker T. McHenry
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MAHONING
NATIONAL BANCORP, INC., CONSOLIDATED STATEMENT OF CONDITION AT SEPTEMBER 30,
1997 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 27,533
<INT-BEARING-DEPOSITS> 2
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 175,030
<INVESTMENTS-CARRYING> 61,548
<INVESTMENTS-MARKET> 61,609
<LOANS> 494,581
<ALLOWANCE> 7,679
<TOTAL-ASSETS> 774,139
<DEPOSITS> 533,026
<SHORT-TERM> 148,208
<LIABILITIES-OTHER> 5,157
<LONG-TERM> 3,384
0
0
<COMMON> 6,300
<OTHER-SE> 78,064
<TOTAL-LIABILITIES-AND-EQUITY> 774,139
<INTEREST-LOAN> 32,691
<INTEREST-INVEST> 10,315
<INTEREST-OTHER> 331
<INTEREST-TOTAL> 43,337
<INTEREST-DEPOSIT> 12,691
<INTEREST-EXPENSE> 17,786
<INTEREST-INCOME-NET> 25,551
<LOAN-LOSSES> 2,250
<SECURITIES-GAINS> 178
<EXPENSE-OTHER> 15,191
<INCOME-PRETAX> 14,439
<INCOME-PRE-EXTRAORDINARY> 9,740
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,740
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.55
<YIELD-ACTUAL> 8.02
<LOANS-NON> 2,449
<LOANS-PAST> 1,236
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 8,112
<CHARGE-OFFS> 3,144
<RECOVERIES> 461
<ALLOWANCE-CLOSE> 7,679
<ALLOWANCE-DOMESTIC> 7,679
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,172
</TABLE>
