<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
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 Rule 14a-11(c) or Rule 14a-12
EMERALD FINANCIAL CORP.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
EMERALD FINANCIAL CORP.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
N/A
------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
------------------------------------------------
(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 was calculated and state how it was determined):
N/A
------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
------------------------------------------------
(5) Total fee paid:
N/A
------------------------------------------------
[ ] Fee paid previously with preliminary materials:
N/A
------------------------------------------------
[ ] 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:
N/A
------------------------------------------------
(2) Form, schedule or registration no.:
N/A
------------------------------------------------
(3) Filing party:
N/A
------------------------------------------------
(4) Date filed:
N/A
------------------------------------------------
<PAGE> 2
March 21, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of
Shareholders (the "Meeting") of Emerald Financial Corp. ("Emerald" or the
"Company") to be held at 10:30 a.m. on Thursday, April 24, 1997 at Quality
Catering Party Center located at 9200 Pearl Road, Strongsville, Ohio. The
attached Notice of Annual Meeting of Shareholders and Proxy Statement discuss
the business to be conducted at the Meeting. In addition to the specific matters
to be acted upon, the Meeting will include management's report to you on the
financial and operating performance for 1996 of Emerald's subsidiary, The
Strongsville Savings Bank.
Your vote is very important, regardless of the number of shares you
own. PLEASE READ THE ENCLOSED PROXY STATEMENT AND THEN COMPLETE, SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID RETURN
ENVELOPE AS PROMPTLY AS POSSIBLE so that your shares can be voted at the Meeting
in accordance with your instructions. This will not prevent you from voting in
person, but will assure that your vote is counted if you are unable to attend
the Meeting. Thank you for your consideration of this matter and please vote
today.
A copy of the Annual Report for the year ended December 31, 1996 is
enclosed.
Very truly yours,
EMERALD FINANCIAL CORP.
Thomas P. Perciak
President and Chief Executive Officer
<PAGE> 3
EMERALD FINANCIAL CORP.
14092 PEARL ROAD
STRONGSVILLE, OHIO 44136
(216) 238-7311
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 24, 1997
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of Emerald Financial Corp. ("Emerald" or the "Company") will be held
at 10:30 a.m. on April 24, 1997 at Quality Catering Party Center, 9200 Pearl
Road, Strongsville, Ohio.
A proxy card and a Proxy Statement for the Meeting are enclosed. The
purpose of the Meeting is to consider and act upon:
1. election of three directors for three-year terms expiring in
the year 2000;
2. ratification of the appointment of Deloitte & Touche LLP as
independent auditors for the fiscal year ending December 31,
1997; and
3. such other business as may properly come before the Meeting
or any adjournments or postponements thereof.
The Board of Directors is not aware of any other business to come
before the Meeting. Any action may be taken on the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which the
Meeting may be adjourned or postponed. As used herein, references to the Meeting
shall be deemed to include the Meeting and any adjournments or postponements
thereof. Shareholders of record at the close of business on March 7, 1997 are
the shareholders entitled to receive notice of and to vote at the Meeting.
You are requested to complete and sign the enclosed proxy, which is
solicited on behalf of the Board of Directors, and to return it promptly in the
postage-paid return envelope provided. Please sign your name on the proxy
exactly as indicated thereon.
By Order of the Board of Directors
Paula M. Dewey
Secretary
Strongsville, Ohio
March 21, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE> 4
PROXY STATEMENT
EMERALD FINANCIAL CORP.
14092 PEARL ROAD
STRONGSVILLE, OHIO 44136
ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 1997
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Emerald Financial Corp.
("Emerald" or the "Company") to be used at the Annual Meeting of Shareholders of
the Company to be held at 10:30 a.m. on Thursday, April 24, 1997, and at any
adjournments or postponements thereof (the "Meeting"). The Meeting will be held
at Quality Catering Party Center, 9200 Pearl Road, Strongsville, Ohio. The
accompanying Notice of Meeting and this Proxy Statement are first being mailed
to shareholders on or about March 21, 1997.
At the Meeting, shareholders of Emerald will be asked to consider and
vote upon election of three directors each for a three-year term, ratification
of the appointment by the Board of Directors of the firm of Deloitte & Touche
LLP as independent auditors for the fiscal year ending December 31, 1997, and
the transaction of such other business as may properly come before the Meeting
or any adjournments thereof. The Company is not aware of any other business to
come before the Meeting.
VOTING RIGHTS AND PROXY INFORMATION
All shares of Emerald's common stock, no par value (the "Stock" or
"Emerald Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will, unless revoked, be voted for election
of the nominees for directors named herein and for each of the other matters
presented herein.
Proxies solicited hereby may be used at the Meeting only and will not
be used for any other meeting. A proxy given pursuant to this solicitation may
be revoked at any time before it is voted. Proxies may be revoked by (i)
attending the Meeting and voting in person (although attendance at the Meeting
will not constitute revocation of a proxy), (ii) duly executing a subsequent
proxy relating to the same shares and delivering it to the Secretary of the
Company at or before the Meeting, (iii) filing with the Secretary at or before
the Meeting a written notice of revocation bearing a later date than the proxy.
Any written notice revoking a proxy should be delivered to Paula M. Dewey,
Secretary, Emerald Financial Corp., 14092 Pearl Road, Strongsville, Ohio 44136.
A copy of the Annual Report to Shareholders for the fiscal year ended
December 31, 1996 accompanies this Proxy Statement. Such Annual Report to
Shareholders is not to be treated as part of the proxy solicitation material or
as having been incorporated herein by reference.
VOTE REQUIRED FOR APPROVAL OF THE PROPOSALS
Except for the election of directors, for which a plurality of the
votes cast shall be sufficient to elect directors, the affirmative vote of a
majority of the shares represented and voting at the Meeting is required for
approval of the matters described in this Proxy Statement. Broker non-votes have
no effect on the vote for election of directors.
1
<PAGE> 5
For all proposals other than the election of directors, proxies marked
as abstaining will be treated as present at the Meeting, but will not be counted
as voting in favor of such proposals. Accordingly, abstentions as to any such
proposals will have the same effect as votes against adoption. Proxies returned
by brokers as "non-votes" on behalf of shares held in street name will also have
the same effect as votes against proposals other than the election of directors.
Broker non-votes will have no effect on whether a quorum is present at the
Meeting, because the Company's Code of Regulations provides that shareholders
present in person or by proxy at a meeting shall constitute a quorum.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record as of the close of business on March 7, 1997 are
entitled to notice of and to vote at the Meeting. Shareholders are entitled to
one vote for each share held. As of January 31, 1997, there were 2,530,800
shares of capital stock, without par value, of The Strongsville Savings Bank
(the "Bank") issued and outstanding, which were held of record by approximately
420 holders. Effective March 6, 1997, the date on which the holding company
formation was completed, each issued and outstanding share of capital stock of
the Bank was converted into one share of Emerald Stock.
The following table sets forth certain information as to those persons
who were known by management to be beneficial owners of more than five percent
of Emerald Stock outstanding and as to the shares of Emerald Stock beneficially
owned by all executive officers and directors of Emerald as a group. Information
in the table below is as of January 31, 1997, prior to the March 6, 1997
conversion of all shares of Bank capital stock into shares of Emerald Stock.
<TABLE>
<CAPTION>
Shares
Name and Address Beneficially Percent of
of Beneficial Owner Owned Class
- - ------------------- ----- -----
<S> <C> <C>
Joan M. Dzurilla 631,335(1) 24.91%
14092 Pearl Road
Strongsville, OH 44136
All directors and officers as a group (12 persons) 955,593(2) 35.59%
- - -----------------------
<FN>
(1) Mrs. Dzurilla holds 47,035 shares through the Joan M. Dzurilla
Charitable Remainder Trust of which she is the settlor and sole
trustee. A charitable organization is the sole beneficiary of the
trust.
(2) This amount includes shares held directly as well as an aggregate of
154,000 shares which the directors and officers have the right to
acquire pursuant to options granted under The Strongsville Savings Bank
1994 Long-Term Incentive Plan, and shares held in retirement accounts,
in a fiduciary capacity or by certain family members, over which shares
the respective directors and officers may be deemed to have sole voting
and investment power. This amount does not include shares as to which
the respective directors and officers have disclaimed beneficial
ownership. In connection with the holding company reorganization of the
Bank that was completed on March 6, 1997, Emerald assumed the Bank's
obligations under the 1994 Long-Term Incentive Plan and adopted the
1994 Long-Term Incentive Plan. Accordingly, options issued under the
1994 Long-Term Incentive Plan to acquire Bank capital stock have become
options to acquire a like number of shares of Emerald Stock.
</TABLE>
2
<PAGE> 6
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board of Directors currently consists of nine members. The Board of
Directors is divided into three classes, each of which contains three members.
The directors are elected by the shareholders for three-year terms, or until
their successors are elected and qualified.
The following table sets forth certain information, as of December 31,
1996, regarding the composition of the Board of Directors of Emerald, including
term of office and the security ownership of the directors. It is intended that
the proxies solicited on behalf of the Board of Directors (other than proxies in
which the vote is withheld as to the nominees) will be voted at the Meeting FOR
the election of the following nominees. If any nominee is unable to serve, the
shares represented by all valid proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this time, the Board of
Directors knows of no reason any nominee might be unable to serve if elected.
Except as disclosed herein, there are no arrangements or understandings between
any nominee and any other person pursuant to which such nominee was selected.
All of the individuals identified in the table below have been
directors of Emerald since its inception in 1996. The table indicates, among
other things, the period during which they have been directors also of Emerald's
subsidiary, The Strongsville Savings Bank (the "Bank"). At the present time, the
Boards of Directors of Emerald and the Bank are comprised of the same
individuals, serving identical terms as directors of each company. Information
in the table concerning security ownership reflects ownership of Bank capital
stock, which shares were converted into a like number of shares of Emerald Stock
effective March 6, 1997.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
Amount &
Nature of
Director's Name and Director Expiration Beneficial % of Share
Position Age Since of Term Ownership (1) Ownership (2)
---------- --- ------- --------- --------- ---------
NOMINEES
<S> <C> <C> <C> <C> <C>
Joan M. Dzurilla(3) 70 1985 2000 631,335 24.91%
Mike Kalinich, Sr. 66 1967 2000 26,400 1.04%
Chairman of the Board
Thomas P. Perciak(4) 49 1982 2000 107,899 4.18%
President and
Chief Executive Officer
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
CONTINUING DIRECTORS
Amount &
Nature of
Director's Name and Director Expiration Beneficial % of Share
Position Age Since of Term Ownership (1) Ownership (2)
------------------------ --- ------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
George P. Bohnert 56 1993 1999 4,300 (5)
William A. Fraunfelder, Jr.(6) 53 1989 1998 10,197 (5)
Glenn W. Goist, D.D.S. 56 1990 1998 10,927 (5)
Kenneth J. Piechowski 48 1996 1999 200 (5)
John J. Plucinsky, M.D. 69 1978 1999 54,693 2.16%
John F. Ziegler (7) 44 1987 1999 60,028 2.34%
Executive Vice President and
Chief Financial Officer
All directors, nominees and
executive officers as a group 955,593 35.59%
(12 persons) (8)
- - ------------------------
<FN>
(1) All shares, except as may be set forth in notes (5), (6) and (7) below,
are owned directly or indirectly by the named individuals or by their
spouses and minor children, over which shares the named individuals
effectively exercise voting and investment power. The shares reported
include shares exercisable under stock option grants pursuant to The
Strongsville Savings Bank 1994 Long-Term Incentive Plan, which plan has
been adopted by Emerald.
(2) The percentage ownership figures are inclusive of shares underlying
unexercised stock options. Other than director Kenneth J. Piechowski
who became a director after the adoption of the 1994 Long-Term
Incentive Plan, each non-executive officer director holds a stock
option to acquire 4,000 shares. Messrs. Perciak and Ziegler hold stock
options to acquire 50,000 and 36,000 shares, respectively, while three
other executive officers hold stock options that in the aggregate
permit them to acquire 44,000 shares.
(3) Mrs. Dzurilla holds 47,035 shares through the Joan M. Dzurilla
Charitable Remainder Trust of which she is the settlor and sole
trustee. A charitable organization is the sole beneficiary of this
trust.
(4) Mr. Perciak holds 57,150 shares through a trust of which he and his
wife, Deborah A. Perciak, a Vice President of the Bank, are co-
trustees with shared voting and investment power. Not shown are 9,200
shares held jointly by Mrs. Perciak and her parents, as to which shares
Mr. and Mrs. Perciak disclaim beneficial ownership. Mr. Perciak also
disclaims beneficial ownership of 3,000 shares not shown herein, and
held jointly with his father, Walter J. Perciak, Sr. The shares
reported do not include 500 shares owned by Mr. Perciak's adult
children, as to which shares Mr. Perciak disclaims beneficial
ownership, and 240 shares held by Mr. Perciak's spouse, as to which
shares Mr. Perciak disclaims beneficial ownership.
(5) The shares owned by each of Messrs. George P. Bohnert, William A.
Fraunfelder, Glenn W. Goist and Kenneth J. Piechowski constitute less
than one percent (1%) of the outstanding Stock.
(6) Not shown are 950 shares owned by William A. Fraunfelder's wife,
Barbara Fraunfelder, as to which shares Mr. Fraunfelder disclaims
beneficial ownership.
(7) Of these shares, 4,250 represent shares Mr. Ziegler holds as custodian
for his minor children. Not shown are 6,800 shares Mr. Ziegler
owns jointly with his parents, as to which shares he disclaims
beneficial ownership.
(8) Includes shares owned by all executive officers of the Bank, including
those executive officers identified in the summary compensation table.
See "Executive Compensation." Mr. William A. Harr, Jr., who is
identified in that table, beneficially owns directly or indirectly
20,588 shares, including 20,000 shares that may be acquired upon
exercise of options. Does not include shares as to which directors and
officers have disclaimed beneficial ownership.
</TABLE>
Thomas P. Perciak has been President and Chief Executive Officer of
the Bank since January 1985, and President and Chief Executive Officer of
Emerald since its inception in 1996. He has been Managing Officer of the Bank
since April 1979. Mr. Perciak is also active in community organizations and
serves on the Board of Trustees of the following organizations: The Strongsville
Chamber of Commerce, Advisory Board of St. Andrew's
4
<PAGE> 8
Abbey and Southwest Community Health Center Foundation Board. Mr. Perciak
serves as the Chairman of the Southwest Health Center Foundation Board.
John F. Ziegler was first employed by the Bank in 1975, became the
Treasurer in 1983 and has served as the Bank's Vice President for the last
nine (9) years. Since January, 1992, Mr. Ziegler has also served as the Bank's
Chief Financial Officer, and he has served as Executive Vice President and Chief
Financial Officer of Emerald since its inception in 1996.
George P. Bohnert, Jr. is a certified public accountant who practiced
with his own firm from 1992 until February 1996. From February 1996 to present,
Mr. Bohnert has been a partner in Foerster & Bohnert, Inc. From 1978 until 1992,
Mr. Bohnert was a partner with a regional accounting firm, Hausser & Taylor,
where his practice concentrated on savings and loan association audits.
Joan M. Dzurilla served as Vice President of the Bank from 1989 through
February 9, 1994. Prior to that, Mrs. Dzurilla, who is a registered nurse, was a
housewife for over 30 years and raised a family.
William A. Fraunfelder, Jr., a lawyer, has served as a Referee in the
Juvenile Division of the Cuyahoga Court of Common Pleas for 28 years.
Glenn W. Goist, D.D.S. has been a practicing dentist for over 25 years.
Dr. Goist maintains a private dental practice in Berea.
Mike Kalinich, Sr. has been President of the Kalinich Fence Company,
Inc. for over 30 years and is active in numerous community organizations. Mr.
Kalinich has been Chairman of the Board from 1991 through the present. He serves
as a Director of Southwest Community Health Center, Middleburg Heights, Ohio,
and serves as a Trustee Emeritus of the Strongsville Chamber of Commerce.
Kenneth J. Piechowski is Director of the Diaconate of the Diocese of
Cleveland. Mr. Piechowski has been employed full time by the Diocese since
1988. Prior to joining the Diocese full time, Mr. Piechowski worked for
approximately eighteen years with nationally recognized insurance companies.
Mr. Piechowski was elected director at the Bank's 1996 Annual Meeting of
Shareholders and has served as a director since April 1996.
John J. Plucinsky, M.D. has been a doctor of internal medicine with a
specialty in hematology and oncology for over 30 years.
COMMITTEES OF THE BOARD OF DIRECTORS AND BOARD ATTENDANCE
The Board of Directors, which is responsible for the overall affairs of
the Company, conducts its business through regular and special meetings and
through meetings and activities of its committees. All committees report their
activities to the Board monthly.
The Board of Directors of Emerald is comprised of the same people who
currently constitute the Board of Directors of the Bank. During 1996, the Board
of Directors of Emerald held two meetings only and took only such actions as
were necessary to complete the holding company formation, which reorganization
into a holding company structure became effective on March 6, 1997. None of the
committees of the Board of Directors of Emerald held any meetings during 1996.
Information given hereinafter concerning the number of meetings of and
director attendance at meetings of the Board of Directors and committees thereof
during 1996 has to do with meetings of the Board of Directors of the Bank, and
committees thereof. In 1997 and thereafter, the Board of Directors of Emerald
and the Audit
5
<PAGE> 9
Committee of Emerald and the Wage and Salary Committee of the Bank thereof
will perform the functions of nominating, audit and compensation committees,
respectively.
The Board of Directors met thirteen times during the fiscal year ended
December 31, 1996. Except for former director Elton L. Bedford whose term
expired April 19, 1996 and Director Joan M. Dzurilla who missed one out of
Emerald's two meetings, no director attended fewer than 75% of the aggregate
number of meetings of the Board of Directors (of the Bank or Emerald) held
during the last fiscal year and the total number of meetings held by all
committees of the Board of Directors on which he served during such year. Due to
illness, former director Elton L. Bedford missed all committee meetings and
three out of four board meetings of the Bank held during his four months of
service as a director during 1996.
The Board of Directors acts as a nominating committee for selecting
nominees for election as directors. Pursuant to the Company's Code of
Regulations, nominations may also be made by shareholders. Shareholder
nominations for directors must be made in writing and delivered to the Secretary
of the Company at least sixty (60) days prior to the Company's annual meeting,
and such written nominations of shareholders must contain certain information as
provided in the Company's Code of Regulations. Any shareholder recommendation
for director-nominee must contain background information concerning the
recommended nominee, including name, age, business and home address,
relationships with person making the recommendation, educational background,
description of nominee's principal occupation and business experience for the
last five years, directorships or trusteeships in public companies, the reasons
the person is being recommended, and a statement that such person would consent
to serve as director. The shareholder's notice of nomination must indicate the
name and address of the shareholder and the number of shares of Stock
beneficially owned by such shareholder on the date of such notice. Although the
Board of Directors will consider nominees recommended by shareholders, the
Company has not actively solicited nominations.
The Audit Committee, which is comprised of Messrs. Bohnert, Goist and
Fraunfelder, with Mr. Bohnert serving as Chairman, recommends the appointment of
the Company's independent public accountants, reviews and approves the audit
plan and fee estimate of the independent public accountants, appraises the
effectiveness of the internal and external audit efforts, evaluates the adequacy
and effectiveness of the Company's accounting policies and financial and
accounting management, supervises the Company's Internal Auditor, and reviews
and approves the annual financial statements. The Audit Committee met 4 times
during 1996.
The Wage and Salary Committee, which is comprised of Mr. Kalinich as
Chairman and Mr. Perciak and Mrs. Dzurilla, reviews the performance of managers,
employees and officers and recommends appropriate salaries, incentives and
benefits. The Wage and Salary Committee does not determine the compensation and
benefits paid to the senior executive officers. The compensation and benefits of
the senior executive officers is determined by the full Board of Directors, with
the two most senior executive officers excusing themselves from the
deliberations and voting upon their compensation and benefits. The Wage and
Salary Committee met twice during 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Wage and Salary Committee of the Bank's Board of
Directors consisted of Messrs. Kalinich and Perciak and Mrs. Dzurilla. Mr.
Perciak is President and Chief Executive Officer of Emerald. Mr. Kalinich
served as Vice President of the Bank from 1980 through 1991. Mr. Kalinich's
position of Vice President was an officer position in name only, without
operational authority. It was a tradition of the savings and loan industry of
that era to title senior board members as officers. Mrs. Dzurilla served as
Vice President of the Bank from 1989 until her resignation on February 9, 1994.
Neither Mr. Kalinich nor Mrs. Dzurilla is an officer of Emerald or the Bank.
6
<PAGE> 10
DIRECTORS' COMPENSATION
As compensation for services rendered as a director, each director
other than Messrs. Perciak and Ziegler received $600 for attendance at Board of
Directors' meetings during the fiscal year ended December 31, 1996. Mr.
Kalinich received additional compensation as Chairman of the Board totaling
$20,000 during the period. Directors who serve on committees, including the
Executive Committee, the Wage and Salary Committee and the Audit Committee,
received fees of $300 for attendance at each committee meeting during the fiscal
year ended December 31, 1996.
The foregoing compensation of directors has been paid to directors for
their service on the Board of Directors of the Bank, and committees thereof.
Since the formation of Emerald, none of its executive officers or directors has
received any remuneration from Emerald. Because Emerald's business consists and
is expected to consist for the foreseeable future of acting merely as holding
company for the Bank, it is expected that no separate compensation will be paid
to officers of Emerald in addition to that paid to them by the Bank. However,
Emerald may determine that separate compensation is appropriate in the future.
At the present time, Emerald does not intend to employ any persons other than
its present management.
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the Bank
for services rendered in all capacities for the fiscal years ended December 31,
1996, 1995 and 1994 to its three most highly compensated executive officers,
including its chief executive officer, with total cash compensation in excess of
$100,000.
7
<PAGE> 11
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
---------------------- -------------
SECURITIES
NAME AND PRINCIPAL UNDERLYING ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#) COMPENSATION($)(2)
- - ------------------ ---- ------ ----- ------------ ------------
<S> <C> <C> <C> <C>
Thomas P. Perciak 1996 $191,500 $101,274(3) - $12,155
President & Chief
Executive Officer 1995 $183,200 $100,055 - $15,710
1994 $174,400 $95,249 50,000 $16,309
John F. Ziegler
Executive Vice President 1996 $125,800 $66,529(3) $15,081
& Chief Financial
Officer 1995 $120,300 $65,702 - $18,473
1994 $114,500 $62,535 36,000 $19,114
William J. Harr, Jr.
Vice President, Branch 1996 $85,000 $23,804(3) $9,461
Administration
1995 $72,060 $29,308 - $11,413
1994 $65,049 $12,111 20,000 $7,888
- - ---------------------
<FN>
(1) Perquisites and other personal benefits would be included herein only
to the extent that the aggregate perquisites and personal benefits for
each named executive officer exceed the lesser of $50,000 or ten
percent (10%) of a named executive officer's salary and bonus. None of
the items that comprise perquisites and personal benefits represents
25% or more of the total for any named executive officer.
(2) Represents the amounts paid, payable or accrued to the named executive
officers under the Bank's trusteed profit-sharing retirement plan and
401(k) plan. For Mr. Perciak, $6,455 and $5,700 represent amounts
contributed by the Bank during 1996 on his behalf under the Bank's
profit-sharing and 401(k) plans, respectively. The "All Other
Compensation" column does not include amounts that would be payable
under the Executive Supplemental Benefit Agreements (collectively the
"Agreements" and individually as to each covered executive the
"Agreement"), discussed hereinafter. See "Executive Compensation -
Pension and Retirement Plan Information." Under the Agreement, Mr.
Perciak would be entitled to a payment of $120,345 in the event of a
change in control in fiscal year 1997, increasing in amount should a
change in control occur in subsequent years. For Mr. Ziegler, $9,492
and $5,589 represent amounts contributed by the Bank during 1996 on his
behalf under the Bank's profit-sharing and 401(k) plans, respectively.
Under the Agreement, Mr. Ziegler would be entitled to a payment of
$16,948 in the event of a change in control in fiscal year 1997,
increasing in amount should a change in control occur in subsequent
years. For Mr. Harr, $6,196 and $3,264 represent amounts contributed by
the Bank during 1996 on his behalf under the Bank's profit-sharing and
401(k) plans, respectively. Under the Agreement, Mr. Harr would be
entitled to a payment of $8,182 in the event of a change in control in
fiscal year 1997, increasing in amount should a change in control occur
in subsequent years.
(3) The Bank gave a 1996 Christmas bonus to each employee, including the
three officers named in the Summary Compensation Table. The Christmas
bonus of each of Messrs. Perciak, Ziegler and Harr was $5,524, $3,629
and $2,452, respectively. These amounts are included in the bonus
figures in the table. In addition, Mr. Harr earned a bonus of $11,340
in 1996 under the Bank's incentive compensation plan for loan officers,
which bonus is also included in his total bonus amount shown in the
table. Mr. Harr was also awarded a year-end merit bonus of $10,000. The
bonus amounts reported are earned in the fiscal year noted even though
such amounts may be payable in subsequent years.
</TABLE>
The following table sets forth information concerning the number and
value of unexercised stock options held by the named executive officers at
December 31, 1996. These options expire ten years from the date of grant and
have exercise prices per share equal to the average of the closing bid and asked
prices of the Stock on the date
8
<PAGE> 12
of grant. The options were granted pursuant to the 1994 Long-Term Incentive
Plan of the Bank, which plan was adopted and assumed by the Company in
connection with the March 6, 1997 reorganization of the Bank into the holding
company form of ownership.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARs OPTIONS/SARs AT
SHARES AT FY-END (#) FY-END ($)
ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE (E)/ EXERCISABLE (E)/
NAME (#) ($) UNEXERCISABLE (U) UNEXERCISABLE (U) (1)
- - -------------------- ----- ----- ----------------- ---------------------
<S> <C> <C> <C> <C>
Thomas P. Perciak 0 0 50,000 (E) $150,000 (E)
John F. Ziegler 0 0 36,000 (E) $108,000 (E)
William J. Harr, Jr. 0 0 20,000 (E) $60,000 (E)
- - ----------------
<FN>
(1) Represents the aggregate market value of stock options to purchase
shares of stock (market price less the exercise price of $18.25 per
share), awarded the named executive officers, based upon the closing
bid price of $21.25 per share of the stock on December 31, 1996.
On January 12, 1995, all of the shares subject to the options became
exercisable.
</TABLE>
PENSION AND RETIREMENT PLAN INFORMATION
Neither Emerald nor the Bank has a retirement plan for officers or
employees that would provide defined benefits based upon salary, years of
service or other measures. Instead, the Bank has implemented a profit-sharing
plan under which the Bank may make entirely discretionary cash contributions.
The Bank also has implemented a 401(k) Plan whereby the Bank will make matching
contributions for each participating officer or employee who elects to defer a
portion of his or her salary pursuant to the 401(k) Plan. The amount of salary
that may be deferred by any individual and the amount (and vesting) of the
matching contributions are subject to certain limitations (matching
contributions of up to 60% of the deferral, subject to maximum matching
contribution amount; no matching contributions for deferral in excess of 5% of
salary; incremental vesting of the Bank's (or Emerald's) contribution over a
period of six years).
Recognizing the importance of building and retaining a competent
management team, effective January 1, 1995 the Bank entered into Executive
Supplemental Benefit Agreements ("Agreements") with six of its officers,
including the three named executive officers identified in the Summary
Compensation Table. The Bank entered into Agreements with three additional
officers during 1996. The Agreements provide for payments in the event of
retirement, disability, death or a change in control of the Bank. In order to
define the specific death, disability and post-employment/retirement benefits to
be provided, the Bank's Board of Directors adopted an integrated non-qualified
supplemental compensation plan based on a comprehensive compensation study
presented to the Bank by KPMG Peat Marwick LLP as compensation consultants.
Under the terms of each Agreement, different death, disability and post-
employment/retirement benefits are provided to each covered employee. By
defining the amounts each executive will receive upon formal retirement, each
executive has been given what the Board believes to be a reasonable incentive to
remain with the Bank until retirement. If, however, the executive's employment
is terminated for cause or the executive voluntarily resigns other than as a
constructive termination (other than for
9
<PAGE> 13
"good reason," that is, as defined below) following a change in control, the
Bank is released from all payment obligations to the executive.
The holding company reorganization of the Bank did not constitute a
change in control for purposes of the Agreements or for purposes of any other
change-in-control provision of any other plan or agreements discussed herein.
Instead, Emerald has assumed the obligations of the Bank with respect to Bank
capital stock, and a change in control for purposes of such plan and agreements
means a change in control of Emerald, rather than the Bank.
Upon retirement, the Agreements provide for an annual benefit payable
to each of Messrs. Perciak, Ziegler and Harr in the following amounts: $134,693
annually for 20 years for Mr. Perciak; $25,647 annually for 20 years for Mr.
Ziegler; and $23,585 annually for 20 years for Mr. Harr. In the event of death,
the foregoing amounts would be paid to these individuals' beneficiaries.
"Retirement Date" is defined in the Agreements to mean the first day of the
month following the executive officer's 65th birthday on which he or she elects
to retire (or an early retirement date that may be agreed to by the Board of
Directors). Retirement benefits under the Agreements are payable in one
installment annually, on the anniversary of the retirement date.
The disability payments provided under the Agreements are as follows
for each of the named executive officers: $65,635 annually in the event of total
disability prior to retirement, until age 65, for Mr. Perciak; $10,239 annually
in the event of total disability prior to retirement, until age 65, for Mr.
Ziegler; and $5,717 annually in the event of total disability prior to
retirement, until age 65, for Mr. Harr. Annual disability benefits payable under
the Agreements would be payable in equal monthly installments.
Under the Agreements, a payment in respect of a change in control would
be made if the executive officer is involuntarily terminated (except for cause)
or voluntarily terminates his or her employment for good reason (in general
terms, "good reason" is defined under the Agreements to include a change in the
executive officer's status, title or responsibilities that does not represent a
promotion, a reduction in base salary, certain relocations or a material
reduction in benefits). A change in control is defined for purposes of the
Agreements by reference to Part 574 of the regulations (the "Control
Regulations") of the Office of Thrift Supervision (the "OTS"). According to the
Control Regulations, control generally exists in situations in which a person:
(i) has direct or indirect voting control of at least 25% of an institution's
voting shares (or subject to rebuttal, more than 10% of the shares and is
subject to a control factor under the Control Regulations); (ii) controls in any
manner the election of a majority of the directors of the institution, or (iii)
the Director of the OTS determines that such person exercises a controlling
influence over the management or policies of the institution.
In the event of a change in control in 1997 and involuntary termination
(except for cause) or voluntary termination for good reason within six months
thereafter, the benefit payable to Mr. Perciak would be $120,345, increasing in
amount for a change in control occurring in a subsequent year (from $176,909 in
1998 to $1,782,670 in 2012). For Mr. Ziegler, the benefit payable under similar
circumstances would be $16,948 in the event of a change in control in 1997 and
involuntary termination (except for cause) or voluntary termination for good
reason within six months thereafter, increasing in amount for a change in
control occurring in a subsequent year (from $25,589 in 1998 to $453,788 in
2017). Lastly, for Mr. Harr the benefit under similar circumstances would be
$8,182 in the event of a change in control in 1997 and involuntary termination
(except for cause) or voluntary termination for good reason within six months
thereafter, increasing in amount for a change in control occurring in a
subsequent year (from $13,211 in 1998 to $625,710 in 2027). Under the
Agreements, the change-in-control benefit payment would be made in one lump sum
for each affected officer.
The Bank has obtained life insurance policies whose benefits, payable
to the Bank as beneficiary, would be sufficient for the Bank to satisfy its
obligations under the Agreements. The Bank is the sole owner of and beneficiary
under the life insurance policies. Notwithstanding the future benefits payable
under the Agreements, the estimated present value of future benefits to be paid
is being accrued over the period from the effective date of the Agreements until
the expected retirement dates of the participants. The insurance premium expense
under the
10
<PAGE> 14
life insurance policies purchased to fund the Bank's contractual
obligations with respect to Messrs. Perciak, Ziegler and Harr in 1996, and their
approximate cash surrender value to the Bank, are an aggregate of $90,439 and
$129,263, respectively.
BOARD REPORT ON EXECUTIVE COMPENSATION
The full Board determines the executive compensation to be paid to the
two most senior executive officers, Messrs. Perciak and Ziegler. Mr. Perciak
and Mr. Ziegler are excluded from discussion and board deliberation
regarding compensation paid to them as officers.
For other than the senior executive officers, the function of
administering the executive compensation policies of the Bank is currently
performed by the Wage and Salary Committee of the Board. In this process, the
officers are evaluated as to their performance during the year and compared to
the Bank's performance, thrift industry compensation surveys and comparable
positions at other thrift institutions. In future years, it is expected that the
Wage and Salary Committee of the Bank will continue to perform the functions it
performs currently. The Bank is, and for the foreseeable future will be,
Emerald's sole operating subsidiary. The members and terms of the members of the
Boards of Directors of each of Emerald and the Bank are, and for the foreseeable
future will be, identical.
Because the Board views Messrs. Perciak and Ziegler as having the
greater impact on corporate performance, the Board members have established a
compensation philosophy of providing base pay and incentive compensation for the
Bank's top two executive officers reflective of the Bank's financial performance
relative to comparably situated thrifts. For individuals other than Messrs.
Perciak and Ziegler, the Board's Wage and Salary Committee seeks to establish
executive officer base salaries at a level commensurate with the Bank's
corporate performance, peer group competitors, and the individual officers'
performance. The Board, as to Messrs. Perciak and Ziegler, and the Wage and
Salary Committee, as to officers other than these two, continue to review all
elements of executive compensation to ensure that the total compensation
program, and each element therein, meets the Bank's business objectives and
philosophy.
As a general rule, it will be the Board of Directors' and the
Committee's policy to take into account tax and financial accounting
considerations in connection with the granting of options or other forms of
grants and awards under The Strongsville Savings Bank 1994 Long-Term Incentive
Plan (the "Plan"). Accordingly, the Board of Directors through its Option
Committee (in the case of stock option grants and other awards to the Bank's
executive officers) does not expect that grants or awards will be made which
would exceed the limit on deductibility established by the Omnibus Budget
Reconciliation Act of 1993 ("OBRA"). In 1993, OBRA added Section 162(m) to the
Internal Revenue Code, the effect of which is to eliminate the deductibility of
compensation over $1 million, with certain exclusions, paid to certain highly
compensated executive officers of publicly held corporations, such as, in
Emerald's case, those executive officers identified in the "Summary Compensation
Table." Section 162(m) applies to all remuneration (both cash and non-cash) that
would otherwise be deductible for tax years beginning on or after January 1,
1994, unless expressly excluded. Although the Board and Committee reserve the
right to make grants and awards under the Plan under circumstances in which the
compensation component thereof would not be fully deductible for federal income
tax purposes, it is not currently expected that they would do so.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Perciak received an increase in base salary for 1996 of $8,300, or
approximately 4.53%. This increase in base salary represents a similar
percentage increase as received by all Bank employees during 1996. While the
Board generally takes into consideration the overall performance of the Bank,
the Board does not use any specific measures or weighting of that performance in
establishing Mr. Perciak's base salary. Mr. Perciak's compensation package is
formalized in an employment agreement. See "Employment Agreements." Mr. Perciak
and Executive Vice President Ziegler are eligible to receive 50% of base salary
in annual bonus under the terms
11
<PAGE> 15
of their employment contracts. Mr. Perciak earned incentive compensation in
fiscal year 1996 for the maximum amount possible under his employment contract.
In reviewing Mr. Perciak's performance as President and Chief Executive
Officer and the justification for the Bank to renew his employment contract for
an additional year, the directors favorably considered Mr. Perciak's
performance relative to the following factors: the growth in deposits, loans and
profitability attributable to (i) the three de novo branches established in 1995
and 1996 and (ii) the branch office purchased in 1995, the Bank's corporate
performance (return on assets and return on equity), the volume of residential
acquisition and development lending attributable to Mr. Perciak, the market
share performance of the Bank and the Bank's compliance posture relative to
safety and soundness and Community Reinvestment Act/consumer compliance. At its
November 20, 1996 Board meeting, the Board determined that each of Messrs.
Perciak and Ziegler had met the requirements and standards of the Board relative
to executive officer performance and as such the employment contract of each was
renewed for one additional year.
The report of the Board shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Exchange Act of 1934, except to the extent that
Emerald specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such act.
Submitted by Emerald's Board of Directors:
Thomas P. Perciak, John F. Ziegler, George P. Bohnert, Jr., Joan M. Dzurilla,
William A. Fraunfelder, Jr., Glenn W. Goist, Mike Kalinich, Sr., Kenneth J.
Piechowski and John J. Plucinsky.
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Bank's Stock to the cumulative total return of a broad index of the National
Association of Securities Dealers, Inc. Automated Quotations ("Nasdaq") System
and the MG Savings and Loan Index comprised of 298 publicly traded savings
associations and thrift holding companies for the period commencing October 5,
1993 (the day the Bank's Stock first became available for public trading) and
ending December 31, 1996. The graph assumes that $100 was invested on October 5,
1993 and that all dividends were reinvested. On a split-adjusted basis, the
Bank's Stock sold in the initial public offering at a price of $13.00 per share.
Effective March 6, 1997, each share of Bank capital stock was converted into one
share of Emerald Stock. Emerald Stock was approved for designation as a Nasdaq
National Market security on March 6, 1997.
12
<PAGE> 16
COMPARISON OF THE CUMULATIVE TOTAL RETURN
AMONG THE STRONGSVILLE SAVINGS BANK,
MG S&L INDEX, AND NASDAQ MARKET INDEX
[GRAPH]
<TABLE>
10/5/93 12/31/93 12/31/94 12/31/95 12/31/96
================================================================================
<S> <C> <C> <C> <C> <C>
STRONGSVILLE SAVINGS $100.00 $134.34 $141.60 $156.87 $185.17
- - --------------------------------------------------------------------------------
NASDAQ $100.00 $100.23 $105.23 $136.50 $169.62
- - --------------------------------------------------------------------------------
MG S&L PEER GROUP $100.00 $ 97.09 $ 93.00 $147.31 $192.25
- - --------------------------------------------------------------------------------
</TABLE>
This stock performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Exchange Act of 1934, except to
the extent Emerald specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such act.
EMPLOYMENT AGREEMENTS
On August 18, 1988, the Bank entered into employment agreements with
Mr. Perciak and Mr. Ziegler retroactive to January 1, 1988. As amended effective
November 2, 1992, each employment agreement provides for a term of three years.
Each contract contains an evergreen feature such that the contract is extended
at each anniversary date for an additional year upon a determination and
resolution of the Board that the performance of the executive has met the
requirements and standards of the Board. The effect of this provision is that
each contract will then have a new three-year term. Each contract was renewed
for an additional year by virtue of Board action on November 20, 1996, and the
obligations of the Bank under the employment contracts were assumed by Emerald
in connection with the March 6, 1997 holding company reorganization of the Bank.
13
<PAGE> 17
Under the terms of his employment agreement, Mr. Perciak currently
receives a base salary of $199,200 per year, subject to annual adjustment by the
Board of Directors and annual incentive compensation of 2.5% of Emerald's
pre-tax profits. As amended effective January 1, 1992, Mr. Perciak's incentive
bonus can not exceed 50% of his base salary. Additionally, in the event that (i)
Mr. Perciak is involuntarily terminated within six months following a change in
control of Emerald or (ii) Mr. Perciak voluntarily terminates his employment for
good reason within six months after a change in control of Emerald, Mr. Perciak
will receive his base salary for the remaining term of the agreement and a fixed
equity appreciation bonus of ten percent of the increase in the Bank's value
between December 31, 1987 and the lesser of the acquisition price or the Bank's
tangible book value as of December 31, 1992 (exclusive of capital raised from
the Bank's Fall 1990 private stock offering). Ten percent of the increase in the
Bank's value between December 31, 1987 and the Bank's tangible book value as of
December 31, 1992 is approximately $1,187,512. The equity appreciation bonus has
been voluntarily capped such that further equity appreciation occurring after
December 31, 1992 will not entitle Mr. Perciak to any share of the increase in
tangible net worth. In the event there is a change in control of Emerald and Mr.
Perciak retains his position, Mr. Perciak is also entitled to the aforementioned
equity appreciation bonus. Payments under Mr. Perciak's employment agreement, in
the event of a change in control of Emerald, may constitute an excess parachute
payment under the Internal Revenue Code, resulting in the imposition of an
excise tax on the recipient and denial of the deduction for such excess amounts
to Emerald or the Bank. In the event that Mr. Perciak is terminated for any
reason other than cause, Mr. Perciak will receive his base salary for the
remaining term of this agreement.
For purposes of the change-in-control features of Mr. Perciak's
employment agreement, change in control is defined by reference to Part 574 of
the OTS regulations (the "Control Regulations"). According to the Control
Regulations, control generally exists in situations in which a person: (i) has
direct or indirect voting control of at least 25% of an institution's voting
shares (or subject to rebuttal, more than 10% of the shares and is subject to a
control factor under the Control Regulations); (ii) controls in any manner the
election of a majority of the directors of the institution, or (iii) the
Director of the OTS determines that such person exercises a controlling
influence over the management or policies of the institution. The holding
company reorganization of the Bank did not constitute a change in control for
purposes of the employment agreement of Mr. Perciak or Mr. Ziegler.
Under the terms of his employment agreement, Mr. Ziegler currently
receives a base salary of $130,900 per year, subject to annual adjustment by the
Board of Directors and annual incentive compensation of 1% of Emerald's pre-tax
profits. As amended effective January 1, 1992, Mr. Ziegler's incentive bonus can
not exceed 50% of his base salary. Additionally, in the event Mr. Ziegler (i) is
terminated at any time other than for cause, (ii) voluntarily terminates his
employment for good reason within six months after a change in control (defined
in the same manner as in Mr. Perciak's agreement) or (iii) is involuntarily
terminated within six months following a change in control, Mr. Ziegler will
receive his base salary for the remaining term of the agreement.
CHANGE-IN-CONTROL ARRANGEMENTS
Severance Agreements
On October 19, 1994, the Bank entered into severance agreements with
four of its executive officers (the "Executives," or individually an
"Executive," including Mr. William J. Harr, Jr., a named executive officer
identified in the Summary Compensation Table) other than Messrs. Perciak and
Ziegler. Each severance agreement provides for a term of one year, renewable
each year for an additional year upon a determination by the Board of Directors
that the Executive has met the performance standards and requirements of the
Board. Each severance agreement terminates by its terms once the Executive
reaches the retirement age of 65. The obligations of the Bank under the
severance agreements have become the obligations of Emerald pursuant to the
terms of the severance agreements.
14
<PAGE> 18
Each severance agreement provides that in the event of the involuntary
termination of the Executive, or the Executive's voluntary termination for good
reason, within six months after a change in control of Emerald, the
Executive would receive a lump sum payment equal to the Executive's then annual
base salary, plus the continuation of benefits until the earlier of the
Executive's employment by another employer or the expiration of twelve months
from the Executive's date of termination. No payments or benefits would be paid
to any Executive terminated for cause. In the event that the Executive incurs
legal fees or expenses in enforcing the severance agreement, Emerald would pay
all such fees and expenses if the Executive prevails, and an amount up to
$25,000 if the Executive does not prevail.
Like the employment agreements of Messrs. Perciak and Ziegler, the
severance agreements define a change in control by reference to Part 574 of the
Control Regulations of the OTS. The holding company reorganization of the Bank
did not constitute a change in control for purposes of the severance agreements.
Payments to the Executives under the severance agreements would not
constitute excess parachute payments under the Internal Revenue Code.
Executive Supplemental Benefit Agreements
The Bank has also entered into Executive Supplemental Benefit
Agreements with certain of its officers generally corresponding to the level of
Vice President or above, as discussed in "Pension and Retirement Plan
Information." The Executive Supplemental Benefit Agreements provide for payments
to the executive officers in certain events, including involuntary termination
(except for cause) or voluntary termination for good reason (defined in the same
fashion as under the severance agreements) within six months after a change in
control (also defined in the same fashion as under the severance agreements).
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 2)
The Board of Directors has appointed the firm of Deloitte & Touche LLP
to continue as independent auditors for the fiscal year ending December 31,
1997, subject to ratification of such appointment by the shareholders. Deloitte
& Touche LLP has acted as the independent auditors of the Bank since November
13, 1991. Unless otherwise indicated, properly executed proxies will be voted in
favor of ratifying the appointment of Deloitte & Touche LLP, independent
certified public accountants, to audit the financial records and accounts of the
Company for the fiscal year ending December 31, 1997.
Representatives of Deloitte & Touche LLP will be present at the
Meeting. They will be given an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions. Ratification of
the appointment of auditors requires the affirmative vote of a majority of the
votes actually cast at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1997.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Bank refers certain title insurance business to National Land Title
Insurance Company ("National Land") and City Title Company Agency, Inc. ("City
Title"). Through a trust of which they are the beneficiaries, Joseph and Michael
Dzurilla, the adult sons of Director Joan M. Dzurilla, own the majority of the
stock of National Land. City Title is a real estate title insurance agency
wholly owned by National Land. City Title performs title searches, title
examinations and insurability determinations related to title insurance
commitments for mortgage loan
15
<PAGE> 19
transactions insured by National Land. City Title and National Land are each
charging for title business work at a rate consistent with the standards for
that industry.
During 1996, City Title performed services for the Bank related to loan
transactions such as title insurance and commitments, title examinations, and
post-closing services. Borrowers of the Bank paid City Title $346,697.25 during
1996 for services related to the loan transactions, which amount also includes
transfer tax fees paid to the appropriate county recorder's office.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the 1998 Annual Meeting of Shareholders, any shareholder proposal to take
action at such meeting must be received at the Company's executive offices,
14092 Pearl Road, Strongsville, Ohio 44136, no later than November 17, 1997. Any
such proposal shall be subject to the requirements of the proxy rules adopted
under the Securities Exchange Act of 1934.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters discussed in this Proxy Statement. However, if
any other matters should properly come before the Meeting, it is intended that
holders of the proxies will act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company or the Bank may solicit
proxies personally or by telephone, without additional compensation.
Strongsville, Ohio
March 21, 1997
16
<PAGE> 20
REVOCABLE PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
P KNOW ALL MEN BY THESE PRESENTS, that the undersigned, a
R shareholder of Emerald Financial Corp. (the "Company"), hereby
O appoints William A. Fraunfelder, Jr. and Kenneth J. Piechowski, or
X either of them, with full power of substitution, my true and lawful
Y Proxy to represent and vote on behalf of the undersigned the same
number of shares which the undersigned is then entitled to vote,
for the matters as may come before the Annual Meeting of
Shareholders of Emerald Financial Corp. to be held on April 24,
1997 and at any adjournments or postponements thereof, as follows:
The Board of Directors recommends a vote "FOR" the nominees as
directors and all the listed proposals.
Joan M. Dzurilla, Mike Kalinich, Sr. and Thomas P. Perciak
THIS PROXY WILL BE VOTED AS DIRECTED. BUT IF NO INSTRUCTIONS
ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS
STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS
PROXY WILL BE VOTED, BY THOSE NAMED IN THIS PROXY, IN ACCORDANCE
WITH THEIR BEST JUDGMENT. AT PRESENT, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
SEE REVERSE
SIDE
<PAGE> 21
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C> <C>
[X] PLEASE MARK YOUR SHARES IN YOUR NAME REINVESTMENT SHARES
VOTES AS IN THIS
EXAMPLE.
VOTE
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. The approval of the [ ] [ ] [ ]
Directors appointment of Deloitte &
(see reverse) Touche LLP as auditors
for the fiscal year
INSTRUCTION: To withhold your vote for ending December 31, 1997.
a nominee or more than one nominee,
write the name(s) of the nominee(s) below: 3. In their discretion, the Proxies are
authorized to vote upon such other business as
__________________________________________ may properly come before the meeting.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT FROM EMERALD
FINANCIAL CORP. PRIOR TO THE EXECUTION OF THIS
PROXY OF A NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS, A PROXY STATEMENT DATED MARCH 21,
1997, AND ANNUAL REPORT TO SHAREHOLDERS FOR THE
YEAR ENDING DECEMBER 31, 1996.
Executed this ____ day of ________________, 1997.
Please
mark here [ ]
if attending
meeting
Signature _____________________________________________________________ DATE __________
(Signature of Shareholder or Authorized Representative)
Signature _____________________________________________________________ DATE __________
(Signature if Held Jointly)
(When signing as executor, attorney, guardian, administrator, trustee or in any
other representative capacity, please give full title as such. If a corporation,
please sign in full corporate name by the President or other duly authorized
officer. If a partnership, please sign in partnership name by a duly authorized
person (general partner).)
</TABLE>
