<PAGE> 1
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
CROGHAN BANCSHARES, INC.
(Name of Registrant as Specified in its Charter)
N/A
(Names of Person (s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
CROGHAN BANCSHARES, INC.
323 CROGHAN STREET
FREMONT, OHIO 43420
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 11, 1999
Notice is hereby given that the Annual Meeting of Shareholders of
Croghan Bancshares, Inc., an Ohio corporation, will be held at PK's Banquet
Hall, 2270 West Hayes Avenue, Fremont, Ohio on May 11, 1999 at 1:00 p.m. local
time for the following purposes:
1. To elect Directors to serve until the next annual meeting of
shareholders and until their successors are elected and
qualified;
2. To vote on a shareholder proposal to recommend that the Board
of Directors contemplate a merger with a larger bank; and
3. To transact such other business as may properly come before
the Meeting or any adjournment thereof.
Your attention is directed to the Proxy Statement accompanying this
Notice for a more complete description of the matters to be acted upon at the
Meeting. The 1998 Annual Report of the Corporation is also enclosed.
Shareholders of record at the close of business on March 19, 1999 are entitled
to receive notice of and to vote at the Meeting and any adjournment thereof.
All shareholders are cordially invited to attend the Meeting. Whether
or not you expect to attend, please complete, sign, date and return the enclosed
proxy form promptly in the envelope provided to assure the presence of a quorum.
You may revoke your proxy and vote in person at the Meeting if you desire.
By order of the Board of Directors
/s/ Thomas Hite
Thomas F. Hite, President
and Chief Executive Officer
Fremont, Ohio
March 26, 1999
<PAGE> 3
CROGHAN BANCSHARES, INC.
PROXY STATEMENT
Dated March 26, 1999
For Annual Meeting of Shareholders
to be Held Tuesday, May 11, 1999
This Proxy Statement is furnished by the Board of Directors and
Management of Croghan Bancshares, Inc. (the "Corporation") in connection with
the solicitation of proxies to be voted at the Corporation's 1999 Annual Meeting
of Shareholders, which will be held at 1:00 p.m. on Tuesday, May 11, 1999 at
PK's Banquet Hall, 2270 West Hayes Avenue, Fremont, Ohio 43420 (the "Meeting").
Any proxy delivered pursuant to this solicitation may be revoked, at
the option of the person executing the proxy, at any time before it is exercised
by delivering a signed revocation to the Corporation, by submitting a
later-dated proxy, or by attending the Meeting in person and casting a ballot.
If proxies are signed and returned without voting instructions, the shares
represented by the proxies will be voted as recommended by the Board of
Directors.
The cost of soliciting proxies will be borne by the Corporation. In
addition to the use of the mails, proxies may be solicited personally or by
telephone by regular employees of the Corporation. The Corporation does not
expect to pay any compensation for the solicitation of proxies, but may
reimburse brokers and other persons holding stock in their names, or in the
names of nominees, for their expense in sending proxy materials to their
principals and obtaining their proxies. The approximate date on which this Proxy
Statement and enclosed form of proxy has been first mailed to shareholders is
March 26, 1999.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The close of business on March 19, 1999 has been designated as the
record date for the determination of shareholders entitled to receive notice of
and to vote at the Meeting. It is anticipated, as of that date, that
approximately 1,904,100 shares of the Corporation's Common Stock, par value
$12.50 per share, will be issued and outstanding. Each shareholder will be
entitled to one vote for each share of Common Stock registered in his or her
name on the books of the Corporation at the close of business on March 19, 1999
on all matters that come before the Meeting. Holders of a majority of the shares
of Common Stock outstanding on the record date must be either present or
represented by proxy at the Meeting to constitute a quorum for the transaction
of business. To the knowledge of Management, no person or entity owns
beneficially, directly or indirectly, 5% or more of the Corporation's Common
Stock as of the date hereof.
ELECTION OF DIRECTORS
The term of office of each current Director of the Corporation will
expire at the 1999 Annual Meeting. Directors are to be elected at the Meeting to
hold office until the next annual meeting and until their successors shall be
duly elected and qualified.
The Code of Regulations of the Corporation provides that the Board of
Directors shall consist of not less than five (5) nor more than twelve (12)
members who must be shareholders of the Corporation, with the number of
Directors within such range fixed or changed by the shareholders at a meeting
for the election of Directors. The Corporation's Code of Regulations provides
that the Directors may increase the number of Directors by no more than two (2)
and may appoint additional Directors to fill any such new Board seats, provided
that the total number of Directors may not exceed twelve (12).
<PAGE> 4
The number of Directors has previously been fixed by the shareholders at twelve
(12), and no change in such number is proposed this year.
Shareholders may vote for up to twelve nominees and the twelve nominees
receiving the highest number of votes shall be elected as Directors.
Shareholders may not vote cumulatively in the election of Directors.
The following is the slate of the twelve (12) nominees proposed for
election as Directors together with their respective ages, occupations, and
amount and nature of beneficial ownership of shares of Common Stock as of
December 31, 1998. The Board of Directors and Management recommend that you vote
"FOR" the election of such nominees as Directors of the Corporation. Each
nominee contributes to the breadth of business experience represented on the
Board of Directors, and most have long-standing records of service to the
Corporation and The Croghan Colonial Bank (the "Bank") as a Director. In the
event any of the nominees should be unable to serve, which is not anticipated,
the proxy committee, which consists of Directors Thomas Hite, Janet Burkett and
Clemens Szymanowski, will vote for such other person or persons for the office
of Director as the Board of Directors may recommend.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
NAME OF DIRECTOR AGE PRINCIPAL OCCUPATION DIRECTOR BENEFICIAL PERCENT
NOMINEE DURING PAST FIVE YEARS SINCE OWNERSHIP OF
(1) OF COMMON CLASS
STOCK (2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JANET E. BURKETT 64 Treasurer of Burkett Industries, 1991 6,795 (3) .4%
Inc., an electrical contracting
firm located in Fremont, Ohio.
- ------------------------------------------------------------------------------------------------------------------
THOMAS F. HITE 59 President and Chief Executive 1987 6,456 (4) .3%
Officer of the Corporation and the
Bank.
- ------------------------------------------------------------------------------------------------------------------
JOHN P. KELLER 65 Vice President of Keller-Ochs-Koch 1973 15,138 .8%
Funeral Home located in Fremont,
Ohio.
- ------------------------------------------------------------------------------------------------------------------
STEPHEN A. KEMPER 59 Owner of Kemper Iron and Metal 1996 3,738 (5) .2%
Company, a recycler and scrap
processor located in Bellevue, Ohio
- ------------------------------------------------------------------------------------------------------------------
DANIEL W. LEASE 50 President of Wahl Refractories, 1994 1,500 (6) .1%
Inc., a refractory products
manufacturer located in Fremont,
Ohio.
- ------------------------------------------------------------------------------------------------------------------
ROBERT H. MOYER 70 Chairman of Mosser Construction, 1973 16,308 (7) .9%
Inc., a commercial construction and
contracting company located in
Fremont, Ohio.
- ------------------------------------------------------------------------------------------------------------------
ALBERT C. NICHOLS 80 Chairman of the Board of the 1964 27,000 (8) 1.4%
Corporation and the Bank.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
NAME OF DIRECTOR AGE PRINCIPAL OCCUPATION DIRECTOR BENEFICIAL PERCENT
NOMINEE DURING PAST FIVE YEARS SINCE OWNERSHIP OF
(1) OF COMMON CLASS
STOCK (2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
K. BRIAN PUGH 59 President of Clyde Parts Company, 1996 2,155 (9) .1%
an automotive parts distributor
located in Clyde, Ohio.
- ------------------------------------------------------------------------------------------------------------------
CLEMENS J. SZYMANOWSKI 80 Retired, formerly a principal with 1978 73,000 (10) 3.8%
Tony's Bakery in Fremont, Ohio,
which has since been acquired by
Nickles Bakery.
- ------------------------------------------------------------------------------------------------------------------
J. TERRENCE WOLFE 58 Vice President in charge of the 1994 30,000 (11) 1.6%
paper converting operation of the
Robert F. Wolfe Co. located in
Fremont, Ohio.
- ------------------------------------------------------------------------------------------------------------------
CLAUDE E. YOUNG 66 Chairman of the Board of Progress 1979 24,071 (12) 1.3%
Plastic Products, Inc., a plastics
parts manufacturer with locations
in Bellevue and Tiffin, Ohio.
- ------------------------------------------------------------------------------------------------------------------
GARY L. ZIMMERMAN 52 Vice President of Swint-Reineck 1991 840 .1%
Hardware, Inc., a hardware store
located in Fremont, Ohio.
- ------------------------------------------------------------------------------------------------------------------
All Directors and Executive -- -- -- 218,943 11.5%
Officers as a Group (18
Persons) (13)
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Directorships were with the Bank alone until 1983 and with the Bank and
the Corporation since such date.
(2) All shares are held of record with sole voting and investment power
unless otherwise indicated. Beneficial ownership numbers are as of
December 31, 1998.
(3) Includes 6,495 shares held in trust as co-trustee with Mrs. Burkett's
husband.
(4) Includes 930 shares owned by Mr. Hite's wife.
(5) Includes 162 shares owned by Mr. Kemper's wife.
(6) Includes 600 shares owned jointly by Mr. Lease and his wife.
(7) Includes 6,072 shares owned by Mr. Moyer's wife in trust.
(8) Includes 6,000 shares owned by Mr. Nichols' wife.
(9) Includes 908 shares owned jointly by Mr. Pugh and his wife, 30 shares
owned jointly by Mr. Pugh and his grandson, and 338 shares owned
individually by his wife.
(10) Includes 72,400 shares held in trust as co-trustee with Mr.
Szymanowski's wife.
(11) Includes 29,900 shares held in trust as co-trustee with Mr. Wolfe's
wife.
(12) Includes 9,916 shares owned jointly by Mr. Young and his wife and 7,855
shares owned individually by his wife.
(13) Includes all executive officers of the Corporation and all executive
officers of the Bank.
No family relationships exist between the Corporation's Directors,
nominees and executive officers, except that Janet E. Burkett, a current
Director, is an aunt by marriage to William C. Hensley, a Vice President of the
Bank. There are no arrangements or understandings between any Director or
nominee and any other person concerning service or nomination as a Director.
3
<PAGE> 6
Each Director of the Corporation is also a Director of the Bank. The
Board of Directors of the Bank met twelve (12) times during 1998. Meetings of
the Board of Directors of the Corporation were held immediately following on
nine (9) of these occasions. Each Director attended at least seventy-five
percent (75%) of the total number of Board meetings and meetings of committees
on which he or she served. The Bank has standing audit and compensation
committees that function in lieu of audit and compensation committees of the
Corporation. The Audit Committee, which consists of Directors Kemper, Lease and
Zimmerman, met seven (7) times during 1998. The Audit Committee's primary
responsibility is overseeing the activities of the internal and external
auditors for the Corporation and the Bank. The Compensation Committee, which
consists of Directors Keller, Moyer, and Young, met four (4) times during 1998.
The Compensation Committee's primary responsibility is to review the annual
compensation and benefits of the Chief Executive Officer and other officers of
the Corporation and the Bank and make recommendations to the Board of Directors
regarding annual increases and other appropriate changes. Neither the
Corporation nor the Bank has a standing nominating committee or a committee
performing a similar function.
During 1998, the Directors received Director's fees at the rate of $450
per Bank Board meeting attended and $200 per committee meeting attended. No
separate compensation is paid for meetings of the Corporation's Board of
Directors. Directors who are also officers of the Corporation or the Bank do not
receive compensation for attendance at any committee meetings.
EXECUTIVE OFFICERS
The following information is furnished concerning executive officers of
the Corporation and the Bank, all of whom are elected annually and serve at the
pleasure of the Board of Directors of the Corporation and the Bank:
Name Age Position and Business Background
---- --- --------------------------------
Albert C. Nichols 80 Mr. Nichols is Chairman of the
Board of the Corporation and the Bank and
has served in such position since 1984. He
first joined the Bank in 1952 and served as
President of the Bank from 1968 to 1984.
Thomas F. Hite 59 Mr. Hite is President and Chief Executive
Officer of the Corporation and the Bank and
has served in such position since 1988. He
joined the Bank in 1957 and served as
Executive Vice President of the Bank from
1984 to 1988 and Vice President and
Secretary of the Corporation from 1983 to
1988.
James K. Walter 62 Mr. Walter has served as Senior Vice
President/Commercial Loans of the Bank since
1991 and as Senior Vice President of the
Bank from 1988 to 1991. He has also served
as Vice President of the Corporation since
1984, Secretary of the Corporation since
1991, and Treasurer of the Corporation from
1984 to 1992. He joined the Bank in 1959 and
served as Vice President/Personnel and
Marketing of the Bank from 1980 to 1988.
James A. Draeger 58 Mr. Draeger has served as a Vice President
of the Bank since 1980, as officer in charge
of Real Estate Loans since 1985 and as
Agricultural Administrator of the Bank since
joining the Bank in 1975.
4
<PAGE> 7
William C. Hensley 55 Mr. Hensley has served as Vice
President/Chief Lending Officer of the Bank
since 1991. He joined the Bank in 1963 and
served as Vice President and Manager of
Consumer Loans from 1980 to 1991. He is the
nephew of Janet E. Burkett, a director of
the Corporation and the Bank.
Barry F. Luse 46 Mr. Luse has served as Vice President/Trust
Officer of the Bank since October 1993. He
first joined the Bank in 1990 and served as
a Trust Officer of the Bank from 1990 to
1993. He has been a member of the Ohio Bar
since 1983.
Allan E. Mehlow 43 Mr. Mehlow has served as Vice
President/Chief Financial Officer of the
Bank since October 1993 and as Controller of
the Bank from 1990 to 1993. He has also
served as Treasurer of the Corporation since
1992. He joined the Bank in 1975 and served
as Auditor from 1988 to 1990. He has carried
a CPA designation since 1992.
EXECUTIVE COMPENSATION
The following table sets forth information as to the compensation paid
or accrued by the Corporation or the Bank during 1996, 1997 and 1998 for Mr.
Thomas F. Hite, President and the Chief Executive Officer of the Corporation. No
other executive officer of the Corporation received compensation for services to
the Corporation or the Bank during 1998 in excess of $100,000.
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG TERM ALL OTHER
COMPENSATION COMPENSATION
ANNUAL COMPENSATION AWARDS ($)(3)
---------------------------------------- ----------------------------------
OTHER ANNUAL RESTRICTED
NAME AND SALARY BONUS COMPENSATION STOCK
PRINCIPAL POSITION YEAR ($)(1) ($) ($)(2) AWARDS($) OPTIONS(#)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas F. Hite, 1998 143,722 N/A N/A N/A N/A 13,511
President and Chief 1997 139,353 N/A N/A N/A N/A 3,915
Executive Officer 1996 131,509 N/A N/A N/A N/A N/A
</TABLE>
- --------------------
(1) Mr. Hite's salary includes fees received by him for services as a
Director of the Corporation and the Bank of $5,400 in 1998, $5,400 in
1997, and $7,200 in 1996.
(2) No other annual compensation was provided to Mr. Hite for services to
the Corporation or the Bank during 1996, 1997 or 1998 in amounts
sufficient to require disclosure.
(3) All other compensation consists solely of amounts contributed by the
Bank to the 401(k) Profit Sharing Plan on behalf of Mr. Hite.
COMPENSATION COMMITTEE REPORT
The Corporation's executive compensation program is structured to
provide competitive compensation based upon an employee's job performance
relative to their area of responsibility. To achieve this goal, the Committee
authorizes salaries that are competitive with salaries for comparable positions
at other banks and bank holding companies of comparable size and performance.
The Corporation does not pay performance based bonuses and does not have any
stock option or other compensation plans based on the long term performance of
the Corporation.
To aid in establishing accurate peer group comparison data, the
Committee employs the services of an outside consulting firm and also uses
compensation surveys provided by the Bank Administration Institute, Employer's
Association of Toledo, and Ohio Bankers Association.
5
<PAGE> 8
To set an individual's salary within the range indicated by the peer
group comparison data for the individual's level of responsibility, the
Compensation Committee primarily considers the employee's job performance and
contribution to the objectives of the Corporation. These latter factors are
determined in the subjective judgment of the Compensation Committee for the
Chief Executive Officer and with the benefit of performance reviews and salary
recommendations by the Chief Executive Officer for other executive officers of
the Corporation. To a lesser extent, the Committee also considers local and
national economic conditions and future business prospects of the Bank in
setting salary levels for executive officers.
The Committee established the Chief Executive Officer's salary for 1998
at $138,322, which represents approximately a 3.3% increase over the previous
year's salary of $133,953. The Committee's determination of the Chief Executive
Officer's salary for 1998 was based upon the previously noted criteria,
including its subjective evaluation of the Chief Executive Officer's
performance.
This report is submitted by the members of the Compensation Committee.
JOHN P. KELLER ROBERT H. MOYER CLAUDE E. YOUNG
PERFORMANCE GRAPH
The following graph is a comparison of the cumulative total shareholder
return (change in share price plus reinvested dividends) through December 31,
1998 of an initial $100 investment on December 31, 1993 in (i) the Corporation's
Common Stock, (ii) the AMEX Stock Market (American Stock Exchange)-U.S.
Companies Stock Index, and (iii) the NASDAQ Bank Index. The comparisons in this
table are required by the Securities and Exchange Commission. The cumulative
return performance shown on the graph is not intended to forecast or be
indicative of future performance.
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CROGHAN BANCSHARES, INC 100.00 104.81 129.10 152.13 186.83 238.30
AMEX STOCK MARKET
U.S. COMPANIES STOCK INDEX 100.00 93.26 119.99 121.90 152.43 162.60
NASDAQ BANK INDEX 100.00 99.64 148.38 195.91 328.02 324.90
</TABLE>
6
<PAGE> 9
INDEBTEDNESS OF AND TRANSACTIONS WITH OFFICERS AND DIRECTORS
The Bank has had and expects to have banking transactions in the
ordinary course of business with Directors, officers and principal shareholders
of the Corporation and the Bank and associates of such persons on substantially
the same terms, including interest rates and collateral, as those prevailing at
the same time for comparable transactions with other persons and that do not
involve more than normal risk of collectability or present other unfavorable
features. The Corporation and the Bank also have had and expect to have other
transactions in the ordinary course of business with their Directors, officers,
principal shareholders and their associates on the same terms as those
prevailing at the same time for comparable transactions with others. Loans to
Directors and executive officers, including their immediate families and
companies in which they are principal owners, totaled $7,347,000 or 21.8% of
total stockholders' equity at December 31, 1998. The nature and amount of such
indebtedness and transactions during 1998 is such that no disclosure is required
for any individual items.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and Directors and persons who own 10% or more of the
Corporation's common shares to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission.
Officers, Directors and 10% or greater shareholders are required by the
Commission's regulations to furnish the Corporation with copies of all Forms 3,
4 and 5 they file.
Based on the Corporation's review of the copies of such forms it has
received, the Corporation believes that all of its officers, Directors and 10%
or greater shareholders complied with all filing requirements applicable to them
with respect to transactions during 1998, except that K. Brian Pugh, a Director
of the Corporation and the Bank, filed a Form 4 in December 1998 to amend a Form
4 filed in February 1998 to report the inadvertent omission of the purchase of
350 shares.
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Corporation has engaged the firm of Clifton Gunderson Ltd.,
independent certified public accountants, to report upon the consolidated
financial statements included in the Annual Report submitted herewith. A
representative from said firm will be in attendance at the Annual Meeting, will
have the opportunity to make a statement if desired, and will be available to
respond to any questions from those in attendance. The Corporation has not yet
selected an accounting firm to report upon its 1999 financial statements,
although it intends to again engage Clifton Gunderson Ltd. for such purpose.
SHAREHOLDER PROPOSAL
A proposal is being presented by Jared E. Danziger, Nathan G. Danziger,
and Samuel R. Danziger. The Corporation's address of record for Jared E.
Danziger is 7740 Camino Real, Miami, Florida; for Nathan G. Danziger is 3014
Pembroke Drive, Toledo, Ohio; and for Samuel R. Danziger is 7740 Camino Real,
Miami, Florida. The share holdings that have been reported to the Corporation by
the proponents are 102 shares for Jared E. Danziger, 2,802 shares for Nathan G.
Danziger, and 5,625 shares for Samuel R. Danziger. The proposal is as follows:
"Resolved, the Directors of Croghan Bancshares, Inc. should attempt to
maximize shareholder value by contemplating a tax-free merger with a larger bank
rather than continuing the present course of management of the bank."
7
<PAGE> 10
SUPPORTING STATEMENT SUBMITTED BY
JARED E. DANZIGER, NATHAN G. DANZIGER, AND SAMUEL R. DANZIGER
The globalization of capital markets has increased the competition for
bank deposits in even the most traditional preserves. Small banks can no longer
produce the handsome profits of yesteryear simply by exploiting the interest
rate spread between loan and deposit rates. Fortunately, Congress'
liberalization of banking laws will allow banks to offer brokerage, insurance
and other financial services. The growth opportunities offered by fee-based
services coupled with the cost-saving efficiencies of technology promise returns
much greater than those generated by servicing deposits and loans. But
developing the efficiency necessary to profit from these fee-based services will
demand enormous economies of scale. To that end, there has been a massive
rationalization, in the form of mergers and acquisitions, of U.S. banks during
the past decade. Croghan, whose Directors are apparently unwilling to
contemplate merger with a larger bank, has seen its stock price lag relative to
other banks.
Management's attempts over the last three years to supplement the
pressured core banking business with fee based income has not produced
substantive results. While the net income of U.S. banks during the middle 1990's
has grown at an unprecedented rate, the declining returns produced by our bank
speaks for itself:
<TABLE>
<S> <C>
1st 6 months 1995 $1,425,000 Full calendar year 1995 $3,269,238
1st 6 months 1996 $1,657,000 Full calendar year 1996 $3,055,000
1st 6 months 1997 $1,603,000 Full calendar year 1997 $3,107,000
1st 6 months 1998 $1,524,000
</TABLE>
The present management is not only unprepared to expand into growing
financial market segments, it is unable to execute successfully in the core
business. A comparison with equal sized Ohio banks reveals the following (as of
June 30, 1998 which are the latest financial results available at the time this
statement was prepared):
<TABLE>
<CAPTION>
Assets ROA ROE PRICE:BV
<S> <C> <C> <C> <C>
Belmont Bancorp, Bridgeport, Ohio $394M 1.60% 19.82% 413%
Ohio Valley Banc Corp, Gallipolis, Ohio 378M 1.06% 11.61% 317%
Oak Hill Financial, Inc., Jackson, Ohio 388M 1.21% 13.15% 247%
Croghan Bancshares, Inc., Fremont, Ohio 334M .91% 9.59% 158%
</TABLE>
Assets set forth in millions. ROA is last twelve months percentage
return/income on total assets. ROE is last twelve months percentage
return/income on total shareholders equity. PRICE:BV is the multiple
times the book value of shareholders applied by the market.
For the foregoing reasons, we urge you to vote your shares and instruct
the Directors to maximize shareholders value by contemplating a tax-free merger
of the bank with a larger bank.
OPPOSITION STATEMENT FROM THE BOARD OF DIRECTORS
RECOMMENDING A VOTE AGAINST THIS SHAREHOLDER PROPOSAL
The Board of Directors believes that this proposal will not serve in
the best interests of the Corporation, the shareholders, our customers, or the
communities in which we operate. The Board is aware of its duty to act on behalf
of the shareholders in managing and overseeing the Corporation's affairs,
including efforts at maximizing shareholder value. The Corporation's directors
are also shareholders and thus have a commonality of interest with all other
shareholders.
8
<PAGE> 11
The Board believes that focusing on superior customer service, a
commitment to the communities that are being served, and making appropriate
strategic acquisitions will allow the Corporation to effectively and profitably
compete with the other financial service providers in the area. Such a strategy
helps ensure stable dividend payments to shareholders and fosters market value
appreciation in the price of the Corporation's stock. A comparison with other
banks located in northwestern Ohio indicates the following (as of September 30,
1998 which are the latest available financial results):
<TABLE>
<CAPTION>
Price to
Assets ROAA ROAE Book Value
------ ---- ---- ----------
<S> <C> <C> <C> <C>
Rurban Financial Corp. $500M .86% 10.47% 162%
Defiance, Ohio
Croghan Bancshares, Inc., 337M .92% 9.57% 166%
Fremont, Ohio
First Citizens Banc Corp. 495M .95% 8.72% 197%
Sandusky, Ohio
Commercial Bancshares, Inc. 199M .74% 8.35% 192%
Upper Sandusky, Ohio
Exchange Bancshares, Inc. 93M .84% 7.77% 124%
Luckey, Ohio
</TABLE>
Assets are presented in millions of dollars. Return on Average
Assets (ROAA) is the annualized net income for the period
divided by the average total assets during the period. Return
on Average Equity (ROAE) is the annualized net income for the
period divided by the average shareholders' equity for the
period. Price to Book Value is the end-of-period market price
per share of stock divided by the end-of-period book value per
share of stock.
The Board of Directors efforts speak for themselves:
The per share market value of Croghan Bancshares, Inc. stock has more
than doubled over the past five years with average total annual shareholder
returns (change in share price plus reinvested dividends) of:
19.2% over the past five years
22.7% over the past three years
27.5% over the past one year
The Board of Directors believes it is in the best interest of the
shareholders to allow the Board to maintain its flexibility in determining
appropriate courses of action. Regardless of the outcome of the vote on this
Shareholder Proposal, your Board of Directors, 10 of whose 12 members are
independent, outside directors, will remain open and continue to consider all
opportunities for enhancing shareholder value.
FOR THESE REASONS, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
AGAINST THE SHAREHOLDER PROPOSAL.
REQUIRED VOTE
The approval of the proposal requires the affirmative vote of a
majority of the shares of Common Stock represented at the meeting in person or
by proxy. Abstentions and broker non-votes will be counted in determining the
presence of a quorum, but will not be counted as votes cast and will have the
same effect as a vote against the proposal.
9
<PAGE> 12
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE SHAREHOLDER
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED AGAINST THE
PROPOSAL UNLESS OTHERWISE SPECIFIED BY THE SHAREHOLDER(S).
OTHER BUSINESS
Management of the Corporation does not know of any other business that
may be presented at the Annual Meeting. If any matter not described herein
should be presented for shareholder action at the Meeting, the persons named in
the enclosed Proxy will vote the shares represented thereby in accordance with
their best judgment.
SHAREHOLDER PROPOSALS FOR PRESENTATION AT THE 2000 ANNUAL MEETING
The Board of Directors requests that any shareholder proposals intended
for inclusion in the Corporation's proxy materials for the 2000 Annual Meeting
be submitted to Thomas F. Hite, President, in writing no later than November 27,
1999. Unless the Corporation has been given written notice by February 10, 2000
of a shareholder proposal to be presented at the 2000 Annual Meeting other than
by means of inclusion in the Corporation's proxy materials for the Meeting,
persons named in the Proxies solicited by the Board of Directors for the Meeting
may use their discretionary voting authority to vote against the proposal.
By Order of the Board of Directors
/s/ Thomas Hite
Thomas F. Hite, President
and Chief Executive Officer
10
<PAGE> 13
CROGHAN BANCSHARES, INC.
323 CROGHAN STREET
FREMONT, OHIO 43420
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 11, 1999.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned, having received notice of the Annual Meeting of
Shareholders of Croghan Bancshares, Inc. to be held at 1:00 p.m. local time on
Tuesday, May 11, 1999, hereby designates and appoints Thomas F. Hite, Janet E.
Burkett and Clemens J. Szymanowski, and each of them with authority to act
without the others, as attorneys and proxies for the undersigned, with full
power of substitution, to vote all shares of Common Stock, par value of $12.50
per share, of Croghan Bancshares, Inc. that the undersigned is entitled to vote
at such Meeting or at any adjournment thereof, with all the powers the
undersigned would possess if personally present, such proxies being directed to
vote as specified below and in their discretion on any other business that may
properly come before the Meeting.
1. To elect the following twelve (12) nominees as Directors:
JANET E. BURKETT, THOMAS F. HITE, JOHN P. KELLER, STEPHEN A.
KEMPER, DANIEL W. LEASE, ROBERT H. MOYER, ALBERT C. NICHOLS,
K. BRIAN PUGH, CLEMENS J. SZYMANOWSKI, J. TERRENCE WOLFE,
CLAUDE E. YOUNG, and GARY L. ZIMMERMAN.
<TABLE>
<CAPTION>
<S> <C>
____ FOR ALL NOMINEES (EXCEPT AS MARKED BELOW) ____ WITHHOLD AUTHORITY FOR ALL NOMINEES
</TABLE>
IF YOU WISH TO WITHHOLD AUTHORITY FOR INDIVIDUAL NOMINEE(S), ENTER THE NAME(S)
IN THE FOLLOWING SPACE:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
ELECTION OF THE NAMED NOMINEES. PLEASE MARK AN
"X" IN ONE OF THE SPACES PROVIDED.
2. To vote on the Shareholder Proposal recommending that the
Board of Directors contemplate a merger with a larger bank.
<TABLE>
<CAPTION>
<S> <C> <C>
_______ For the proposal _______ Against the proposal _______ Abstain
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS SHAREHOLDER PROPOSAL.
PLEASE MARK AN "X" IN ONE OF THE SPACES PROVIDED.
THIS PROXY WILL BE VOTED: (1) AS DIRECTED ON THE MATTERS LISTED ABOVE;
(2) IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATION WHERE A CHOICE IS NOT
SPECIFIED; AND (3) IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES ON ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
The undersigned reserves the right to revoke this Proxy at any time
prior to the Proxy being voted at the Meeting. The Proxy may be revoked by
delivering a signed revocation to the Corporation at any time prior to the
Meeting, by submitting a later-dated Proxy, or by attending the Meeting in
person and casting a ballot. The undersigned hereby revokes any proxy previously
given to vote such shares at the Meeting.
Dated
---------------------------------
--------------------------------------
Signature of Shareholder
--------------------------------------
Signature of Shareholder
<TABLE>
<CAPTION>
<S> <C>
To aid the Corporation in making arrangements
for the Annual Meeting, please indicate
your preliminary intentions for attendance: (Please sign Proxy as your name appears on your
stock certificate(s). JOINT OWNERS SHOULD EACH SIGN
PERSONALLY. When signing as attorney, executor,
____ I/We plan to attend the luncheon and the meeting administrator, trustee, guardian or corporate officer,
please give your full title as such).
____ I/We plan to attend only the meeting
____ I/We do not plan to attend
</TABLE>
PLEASE COMPLETE, SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE.
