<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________
COMMISSION FILE NUMBER: 000-22201
EMERALD FINANCIAL CORP.
-----------------------
(Exact name of registrant as specified in its charter)
OHIO 34-1842953
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
14092 PEARL ROAD
STRONGSVILLE, OHIO 44136
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(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (216) 238-7311
CAPITAL STOCK, WITHOUT PAR VALUE
--------------------------------
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Capital Stock, No Par Value 5,064,600
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(Class) (Outstanding at July 31, 1997)
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EMERALD FINANCIAL CORP.
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
Item I. Financial Statements:
<S> <C>
Consolidated Statements of Financial
Condition as of June 30, 1997, and
December 31, 1996.............................................................. 2
Consolidated Statements of Income for
the Three and Six Month Periods Ended June
30, 1997 and 1996.............................................................. 3
Consolidated Statements of Cash Flows
for the Six Month Periods Ended June
30, 1997 and 1996.............................................................. 4
Notes to Consolidated Financial Statements..................................... 5
Selected Financial Information........................................................... 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.................................. 9
Tables......................................................................... 20
PART II. OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders.............................. 23
Item 6. Exhibits and Reports on Form 8-K............................................... 24
SIGNATURES ...................................................................................... 25
</TABLE>
1
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<TABLE>
EMERALD FINANCIAL CORP.
Consolidated Statements of Financial Condition
(Unaudited)
<CAPTION>
June 30, December 31,
1997 1996
- -----------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
ASSETS:
<S> <C> <C>
CASH AND CASH EQUIVALENTS
Cash and deposits with banks $ 3,191 $ 3,146
Interest bearing deposits with banks 5,616 4,406
INVESTMENT SECURITIES
Held-to-maturity (fair values of $22,018 and $47,496 at
June 30, 1997 and December 31, 1996, respectively) 22,182 47,684
Available for sale (at fair value) 46,509 21,996
MORTGAGE-BACKED SECURITIES
Held-to-maturity (fair values of $30,034 and $33,104 at
June 30, 1997 and December 31, 1996, respectively) 29,385 32,536
Available for sale (at fair value) 28,426 19,644
LOANS-NET
(Including allowance for loan losses of $1,577 and $1,423 at
June 30, 1997 and December 31, 1996, respectively) 451,295 425,060
Loans held for sale 2,264 795
Accrued interest receivable 3,773 3,238
Federal Home Loan Bank stock-at cost 3,379 2,831
Premises and equipment-net 4,066 3,939
Prepaid expenses and other assets 2,994 2,215
- -----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $603,080 $ 567,490
=======================================================================================================================
LIABILITIES:
Deposits $522,119 $ 493,471
Federal Home Loan Bank advances 30,728 25,234
Deferred federal income tax 1,829 1,584
Advance payments by borrowers 39 1,502
Accrued interest payable 795 586
Accounts payable and other 1,856 1,955
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 557,366 524,332
SHAREHOLDERS' EQUITY
Common stock, no par value, 10,000,000 shares authorized,
5,061,600 shares issued and outstanding 9,831 9,831
Fair value adjustment, net of tax effect 96 (95)
Retained earnings 35,787 33,422
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TOTAL SHAREHOLDERS' EQUITY 45,714 43,158
- -----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $603,080 $ 567,490
=======================================================================================================================
Shareholders' Equity per share $ 9.03 $ 8.53
Tangible Equity per share $ 8.87 $ 8.39
See notes to consolidated financial statements
</TABLE>
2
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<TABLE>
EMERALD FINANCIAL CORP.
Consolidated Statements of Income
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 9,222 $ 8,029 $ 17,986 $ 15,326
Investment securities 900 956 1,758 2,053
Mortgage-backed securities 985 758 2,049 1,651
Other 208 96 389 256
- ---------------------------------------------------------------------------------------------------------------
11,315 9,839 22,182 19,286
INTEREST EXPENSE
Deposits 6,687 5,664 13,044 11,231
Advances from the Federal Home Loan Bank 422 284 792 479
- ---------------------------------------------------------------------------------------------------------------
7,109 5,948 13,836 11,710
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NET INTEREST INCOME 4,206 3,891 8,346 7,576
Provision for loan losses 91 23 169 28
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 4,115 3,868 8,177 7,548
NON-INTEREST INCOME
Gain on sale of assets 103 25 151 260
Loan service fees 177 199 343 323
Other 226 169 437 327
- ---------------------------------------------------------------------------------------------------------------
506 393 931 910
NON-INTEREST EXPENSE
Salaries and employee benefits 1,010 867 2,071 1,810
Net occupancy and equipment 387 383 768 745
Franchise tax 146 140 293 280
Federal deposit insurance 79 241 155 483
Amortization of goodwill 31 34 62 67
Other 631 681 1,221 1,330
- ---------------------------------------------------------------------------------------------------------------
Non-interest expense 2,284 2,346 4,570 4,715
INCOME BEFORE FEDERAL INCOME TAXES 2,337 1,915 4,538 3,743
Provision for federal income taxes 801 671 1,566 1,311
- ---------------------------------------------------------------------------------------------------------------
NET INCOME $ 1,536 $ 1,244 $ 2,972 $ 2,432
================================================================================================================
Earnings per common share $ 0.30 $ 0.25 $ 0.59 $ 0.48
Weighted average number of common
shares outstanding 5,061,600 5,061,600 5,061,600 5,061,600
</TABLE>
See notes to consolidated financial statements
3
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<TABLE>
EMERALD FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended June 30,
1997 1996
- -----------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,972 $ 2,432
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Provision for loan losses 169 28
Gain from sale of assets (151) (260)
Accretion of discounts and other deferred yield items (1,118) (1,047)
Depreciation and amortization 380 400
Effect of change in accrued interest
receivable and payable (326) 35
Federal Home Loan Bank stock dividends (108) (88)
Deferred federal income taxes 245 17
Net change in other assets and liabilities (938) 92
Net (increase) decrease in loans held for sale (1,433) 4,461
- -----------------------------------------------------------------------------------------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (308) 6,070
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans (20,864) (75,242)
Purchases of:
Mortgage-backed securities and loans (13,433) (3,149)
Investment securities (34,689) (10,800)
Premises and equipment (430) (516)
Federal Home Loan Bank Stock (440) (239)
Proceeds from:
Mortgage-backed security principal repayments 3,650 5,166
Sales of available for sale mortgage-backed securities -- 6,744
Investment securities maturities and principal repayments 35,697 30,145
- -----------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (30,509) (47,891)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 28,648 26,094
Payments on advances from the Federal Home Loan Bank (7,906) (12,075)
Proceeds from advances from the Federal Home Loan Bank 13,400 22,500
Net decrease in escrows (1,463) (1,117)
Payment of dividends on common stock (607) (582)
- -----------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 32,072 34,820
- -----------------------------------------------------------------------------------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,255 (7,001)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF THE PERIOD 7,552 15,509
- -----------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, AT END OF THE PERIOD $ 8,807 $ 8,508
===============================================================================================
</TABLE>
See notes to consolidated financial statements
4
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EMERALD FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
--------------------
Emerald Financial Corp. (Emerald or Company) is a unitary thrift holding
company formed in 1996 which became the parent company of The Strongsville
Savings Bank (Strongsville or Bank) on March 6, 1997, through a tax-free
exchange of shares of Strongsville for shares of Emerald. The Company's primary
holding is The Strongsville Savings Bank. The Bank conducts its principal
activities from its Community Financial Centers located in southwestern
Cuyahoga, Lorain and Medina counties. The Bank's principal activities include
residential lending and retail banking.
2. BASIS OF PRESENTATION
---------------------
The consolidated financial statements of the Company include the accounts
of Emerald and the accounts of its wholly owned subsidiaries, The Strongsville
Savings Bank and Emerald Development Corp. All significant inter-company
transactions have been eliminated. In the opinion of management, the
accompanying unaudited financial statements include all adjustments (consisting
only of normal recurring accruals) which the Company considers necessary for a
fair presentation of (a) the results of operations for the three and six month
periods ended June 30, 1997 and 1996; (b) the financial condition at June 30,
1997, and December 31, 1996; and (c) the statements of cash flows for the six
month periods ended June 30, 1997 and 1996. The results of operations for the
three and six month periods ended June 30, 1997 are not necessarily indicative
of the results that may be expected for a full year.
Certain prior period data has been reclassified to conform to current year
presentation.
3. STATEMENTS OF CASH FLOWS
------------------------
For purposes of the Statements of Cash Flows, Emerald considers all cash
and deposits with banks with maturities of less than three months to be cash
equivalents.
Income tax payments of $739,000 and $1,299,000 were made during the six
month periods ended June 30, 1997 and 1996, respectively. Interest paid totaled
$13,627,000 and $11,659,000 for the six month periods ended June 30, 1997 and
1996, respectively. There were transfers from loans to real estate owned of
$951,000 and loans made to finance the sale of real estate owned of $544,000
during the six month period ended June 30, 1997. There were no transfers from
loans to real estate owned nor were any loans made to finance the sale of real
estate owned during the first half of 1996.
5
<PAGE> 7
4. EARNINGS PER SHARE
------------------
Basic and diluted earnings per share are calculated using the weighted
average number of shares of capital stock and capital stock equivalents
outstanding for the period. The impact of stock options was not dilutive in any
period. The weighted average number of shares of capital stock outstanding has
been retroactively adjusted to reflect the two-for-one stock split effective May
15, 1997 for shareholders of record on May 1, 1997.
5. NEW ACCOUNTING STANDARDS
------------------------
STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 125, Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities,
was effective January 1, 1997. SFAS 125 amends portions of SFAS 115, Accounting
for Certain Investments in Debt and Equity Securities, amends and extends to all
servicing assets and liabilities the accounting standards for mortgage servicing
rights provided by SFAS No. 65, and supersedes SFAS No. 122. SFAS No. 125
provides consistent standards for distinguishing transfers of financial assets
that are sales from transfers that are secured borrowings based on a
financial-components approach. Under the financial-components approach, after a
transfer of financial assets, an entity recognizes the financial and servicing
assets it controls and the liabilities it has incurred, derecognizes financial
assets when control has been surrendered, and derecognizes liabilities when
extinguished. The adoption of this statement did not have a material impact on
the Company's consolidated financial statements. SFAS No. 127 defers the
effective date of certain provisions of SFAS No. 125 until January 1, 1998, and
is not expected to have a material impact on the Company's consolidated
financial statements.
In February 1997 the FASB issued STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 128, Earnings Per Share. SFAS No. 128 establishes standards for
computing and presenting earnings per share (EPS) and applies to entities with
publicly held common stock. SFAS No. 128 simplifies the standards for computing
EPS previously found in Accounting Principles Board Opinion No. 15, Earnings Per
Share, and makes them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS. It also requires
dual presentation of basic and diluted EPS on the face of the income statement
for all entities with complex capital structures. SFAS 128 is effective for
financial statements for both interim and annual periods ending after
December 15, 1997.
In February 1997 the FASB also issued STATEMENT OF FINANCIAL ACCOUNTING
STANDARDS NO. 129, Disclosures of Information about Capital Structure. This
statement establishes standards for disclosing information about an entity's
capital structure. It supersedes specific disclosure requirements of APB
Opinions No. 10, Omnibus Opinion-1966, and No. 15, Earning Per Share, and FASB
Statement No. 47, Disclosure of Long-Term Obligations, and consolidates them in
this statement for ease of retrieval and for
6
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greater visibility to nonpublic entities. SFAS No. 129 is effective for
financial statements for periods ending after December 15, 1997. It contains no
changes in disclosure requirements for entities that were previously subject to
the requirements of Opinions 10 and 15 and Statement 47 and, therefore, is not
expected to have a significant impact on the financial condition or results of
operations of the Company.
In June 1997, the FASB issued STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 130, Reporting Comprehensive Income. This statement establishes standards
for the reporting and display of comprehensive income and its components in a
full set of general- purpose financial statements. This statement is effective
for fiscal years beginning after December 15, 1997.
7
<PAGE> 9
<TABLE>
SELECTED FINANCIAL INFORMATION
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
Unaudited
(Dollars in thousands, except per-share data)
<S> <C> <C> <C> <C>
ANNUALIZED RETURNS AND OPERATING RATIOS
Earnings per share $ 0.30 $ 0.25 $ 0.59 $ 0.48
Return on Average Assets 1.02% 0.96% 1.01% 0.96%
Return on Average Equity 13.66% 11.62% 13.40% 11.62%
Noninterest expense to
average assets 1.50% 1.79% 1.54% 1.84%
Efficiency ratio 48.89% 54.28% 49.40% 56.50%
OTHER SELECTED FINANCIAL RATIOS
Interest rate spread 2.51% 2.72% 2.54% 2.71%
Net yield on interest-earning assets 2.87% 3.09% 2.91% 3.08%
Yield on average interest-earning assets 7.73% 7.81% 7.73% 7.84%
Cost of average interest-bearing liabilities 5.22% 5.09% 5.19% 5.13%
Non-performing loans to total loans 0.25% 0.52% 0.25% 0.52%
Non-performing assets to total assets 0.24% 0.40% 0.24% 0.40%
Net recoveries (charge-offs) to average loans 0.01% 0.00% 0.00% 0.00%
Capital ratios:
Tangible capital ratio 7.25% 7.92% 7.25% 7.92%
Core capital ratio 7.25% 7.92% 7.25% 7.92%
Risk-based capital ratio 12.29% 13.12% 12.29% 13.12%
Dividends per share $ 0.06 $ 0.060 $ 0.12 $ 0.115
Annualized asset growth 9.82% 19.46% 12.54% 15.07%
Average total assets $ 600,063 $517,642 $586,089 $505,689
Average loans, net (includes held for sale) 449,753 389,829 440,904 366,911
Average interest-earning assets 585,825 504,023 573,610 492,282
Average deposits 516,253 448,042 506,701 439,811
Average advances from the FHLB 28,039 19,773 26,946 16,462
Average shareholders' equity 44,964 42,289 44,362 41,975
</TABLE>
8
<PAGE> 10
Part I, Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
- -------
Emerald Financial Corp. (Emerald or Company), a unitary thrift holding
company, became the holding company of The Strongsville Savings Bank
(Strongsville or Bank) in a tax-free exchange of shares of the Bank for shares
of Emerald on March 6, 1997. As a result, Emerald owns and operates the Bank.
All references to the Company or Emerald, unless otherwise indicated, refer to
the Bank and its subsidiary on a consolidated basis. Strongsville was founded in
1961 as an Ohio-chartered, federally insured savings association whose business
activities are concentrated in the greater Cleveland, Ohio area. The Company
conducts its business through its home office in Strongsville and its thirteen
additional full-service Community Financial Centers located in Cuyahoga, Lorain
and Medina counties. The Company formed Emerald Development Corp., a wholly
owned subsidiary, on June 3,1997. The development company was formed to take
advantage of opportunities to develop real estate as well as to enter into joint
real estate development ventures in the future.
The Company's principal business has historically been attracting deposits
from the general public and making loans secured by second mortgage liens on
residential and other real estate. The Bank and the banking industry in general
are significantly affected by prevailing economic conditions, the general level
and trend of interest rates as well as by government policies and regulations
concerning, among other things, fiscal affairs, housing and financial
institutions.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ---------------------------------------------
Emerald's total assets were $603.1 million at June 30, 1997, representing
an increase of $35.6 million, or 12.54%, annualized, for the six month period
and $73.9 million, or 14.0% for the twelve month period ended June 30, 1997. The
increase in assets was primarily concentrated in the loan portfolio. Emerald's
loan portfolio increased $27.7 million during the six months and $45.3 million
during the twelve months ended June 30, 1997. The increases in loans were funded
primarily by increases in deposits.
The Company's deposits were $522.1 million at June 30, 1997, representing
an increase of $28.6 million, or 11.6% during the six month period and $63.5
million, or 13.8% for the twelve month period ended June 30, 1997.
Net interest income was $4.2 million for the quarter ended June 30, 1997,
an increase of $0.3 million over the second quarter of 1996. The increase in
interest-earning assets, partially offset by a reduction in interest rate
spread, caused the improvement. Average interest-earning assets increased $81.8
million from $504.0 million for the second
9
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quarter of 1996 to $585.8 million for the second quarter of 1997. The Bank's
interest rate spread decreased 21 basis points from 2.72% during the second
quarter of 1996 to 2.51% during the second quarter of 1997.
Net income for the second quarter of 1997, at $1.5 million, was $0.3
million more than the $1.2 million for the same period in 1996. The increase was
primarily due to the increase in net interest income.
Net interest income was $8.3 million for the first half of 1997, an
increase of $0.7 million over the first half of 1996. The increase in
interest-earning assets, partially offset by a reduction in interest rate
spread, caused the improvement. Average interest-earning assets increased $81.3
million from $492.3 million for the six months ended June 30, 1996 to $573.6
million for the like period in 1997. The Bank's interest rate spread decreased
17 basis points from 2.71% during the first half of 1996 to 2.54% during the
first half of 1997.
Net income for the first half of 1997, at $3.0 million, was $0.6 million
more than the $2.4 million for the same period in 1996. The increase was
primarily due to the increase in net interest income.
10
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Tables 1(a) and 1(b) present information regarding the average balances of
interest-earning assets and interest-bearing liabilities, the total dollar
amount of interest income from interest-earning assets and their average yields
and the total dollar amount of interest expense on interest-bearing liabilities
and their average rates. Table 1 also presents net interest income,
interest-rate spread, net interest margin and the ratio of average
interest-earning assets to average interest-bearing liabilities. Interest-rate
spread represents the difference between the weighted average yield on
interest-earning assets and the weighted average cost of interest-bearing
liabilities. Net interest margin represents net interest income as a percent of
average interest-earning assets. Average balance calculations were based on
daily and monthly balances. Assets available for sale are included in the major
asset category as if they were held-to-maturity.
<TABLE>
TABLE 1 (a)
AVERAGE BALANCE TABLE
<CAPTION>
FOR THE THREE MONTHS ENDED JUNE 30,
1997 1996
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
Loans, net (1) $ 449,753 $ 9,222 8.20% $ 389,829 $ 8,029 8.24%
Investment securities 59,829 900 6.02% 62,652 956 6.10%
Mortgage-backed securities 58,730 985 6.70% 44,234 758 6.85%
Other interest-earning assets 17,513 208 4.74% 7,307 96 5.25%
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 585,825 11,315 7.73% 504,022 9,839 7.81%
Noninterest-earning assets 14,238 13,620
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 600,063 $ 517,642
====================================================================================================================================
INTEREST-BEARING LIABILITIES
Deposits (2) $ 516,253 $ 6,687 5.18% $ 448,042 $ 5,664 5.06%
Advances from FHLB 28,039 422 6.02% 19,773 284 5.75%
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 544,292 7,109 5.22% 467,815 5,948 5.09%
Noninterest-bearing liabilities 10,807 7,538
Shareholders' equity 44,964 42,289
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 600,063 $ 517,642
====================================================================================================================================
Net interest income $ 4,206 $ 3,891
Interest-rate spread 2.51% 2.72%
Net interest margin 2.87% 3.09%
Ratio of average interest-
earning assets to average
interest-bearing liabilities 107.63% 107.74%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Average balances include non-accrual loans. Interest income includes
deferred loan fee amortization of $411,000 and $494,000 for the three
months ended June 30, 1997 and 1996, respectively.
(2) Deposits include noninterest-bearing demand accounts which were $11,559,000
and $9,264,000 at June 30, 1997 and 1996, respectively.
11
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<TABLE>
TABLE 1(b)
AVERAGE BALANCE TABLE
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30
1997 1996
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
- ------------------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
Loans, net (1) $440,904 $17,986 8.16% $366,911 $15,326 8.35%
Investment securities 58,005 1,758 6.06% 68,228 2,053 6.02%
Mortgage-backed securities 58,150 2,049 7.05% 47,517 1,651 6.95%
Other interest-earning assets 16,551 389 4.70% 9,626 256 5.32%
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-earning assets 573,610 22,182 7.73% 492,282 19,286 7.84%
Noninterest-earning assets 12,479 13,407
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $586,089 $505,689
====================================================================================================================================
INTEREST-BEARING LIABILITIES
Deposits (2) $506,702 $13,044 5.15% 439,811 $11,231 5.11%
Advances from FHLB 26,946 792 5.88% 16,462 479 5.82%
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities 533,648 13,836 5.19% 456,273 11,710 5.13%
Noninterest-bearing liabilities 8,079 7,441
Shareholders' equity 44,362 41,975
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $586,089 $505,689
====================================================================================================================================
Net interest income $ 8,346 $ 7,576
Interest-rate spread 2.54% 2.71%
Net interest margin 2.91% 3.08%
Ratio of average interest-
earning assets to average
interest-bearing liabilities 107.49% 107.89%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Average balances include non-accrual loans. Interest income includes
deferred loan fee amortization of $792,000 and $992,000 for the three
months ended June 30, 1997 and 1996, respectively.
(2) Deposits include noninterest-bearing demand accounts which were $11,559,000
and $9,264,000 at June 30, 1997 and 1996, respectively.
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Tables 2(a) and 2(b) present certain information regarding changes in interest
income and interest expense of the Company for the three month periods ended
June 30, 1997 and 1996. The table shows the changes in interest income and
interest expense by major category attributable to changes in the average
balance (volume) and the changes in interest rates. The net change not
attributable to either rate or volume is allocated on a prorata basis to the
change in rate or volume. Assets available for sale are included in the major
asset category as if they were held-to-maturity.
<TABLE>
<CAPTION>
TABLE 2 (a)
RATE/VOLUME TABLE
THREE MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
1997 COMPARED TO 1996 1996 COMPARED TO 1995
INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO CHANGES IN DUE TO CHANGES IN
VOLUME RATE TOTAL VOLUME RATE TOTAL
- -----------------------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME ON INTEREST-EARNING ASSETS
Loans, net $ 1,232 $ (39) $ 1,193 $ 1,962 $ (264) $ 1,698
Investment securities (43) (13) (56) (352) (60) (412)
Mortgage-backed securities 243 (16) 227 41 (11) 30
Other 120 (8) 112 (178) (10) (188)
- -----------------------------------------------------------------------------------------------------------------------------------
Total 1,552 (76) 1,476 1,473 (345) 1,128
- -----------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE ON INTEREST-BEARING LIABILITIES
Deposits 885 138 1,023 659 (86) 573
Advances from FHLB 124 14 138 73 (21) 52
- -----------------------------------------------------------------------------------------------------------------------------------
Total 1,009 152 1,161 732 (107) 625
- -----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET INTEREST INCOME $ 543 $ (228) $ 315 $ 741 $ (238) $ 503
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TABLE 2 (b)
RATE/VOLUME TABLE
SIX MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1997 COMPARED TO 1996 1996 COMPARED TO 1995
INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO CHANGES IN DUE TO CHANGES IN
VOLUME RATE TOTAL VOLUME RATE TOTAL
- ----------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME ON INTEREST-EARNING ASSETS
Loans, net $ 2,999 $ (339) $ 2,660 $ 3,198 $ (432) $ 2,766
Investment securities (309) 14 (295) (419) (25) (444)
Mortgage-backed securities 374 24 398 278 (6) 272
Other 158 (25) 133 (177) 12 (165)
- ----------------------------------------------------------------------------------------------------------------------------------
Total 3,222 (326) 2,896 2,880 (451) 2,429
- ----------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE ON INTEREST-BEARING LIABILITIES
Deposits 1,724 89 1,813 1,472 311 1,783
Advances from FHLB 308 5 313 20 (17) 3
- ----------------------------------------------------------------------------------------------------------------------------------
Total 2,032 94 2,126 1,492 294 1,786
- ----------------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET INTEREST INCOME $ 1,190 $ (420) $ 770 $ 1,388 $ (745) $ 643
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 15
NET INTEREST INCOME
- -------------------------------------------------------------------------------
Net interest income is the primary component of net income and is
determined by the characteristics of interest-earning assets and
interest-bearing liabilities, including the spread, or the difference between
the yields earned and the rates paid on those assets and liabilities. Net
interest income is the difference between interest income and interest expense.
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, 1997 June 30, 1997
- -------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Net interest income:
Current period $ 4,206 $ 8,346
Prior period 3,891 7,576
- -------------------------------------------------------------------------------
Dollar change from prior period $ 315 $ 770
===============================================================================
Percent change from prior period 8.10% 10.16%
===============================================================================
</TABLE>
Interest income
- ---------------
Interest income for the three months ended June 30, 1997, was $11.3
million, compared to $9.8 million for the second quarter of 1996, an increase of
$1.5 million or 15.00%. This increase was primarily due to the increase in
average interest-earning assets as demonstrated on Table 2. Average
interest-earning assets increased to $585.8 million for the second quarter of
1997 from $504.0 million for the second quarter of 1996. The effect of the
increase in interest-earning assets was offset somewhat by the 8 basis point
decline in the average yield on interest-earning assets to 7.73% for the second
quarter of 1997 from 7.81% for the like period in 1996.
Interest income for the six months ended June 30, 1997, was $22.2 million,
compared to $19.3 million for the first half of 1996, an increase of $2.9
million or 15.02%. This increase was primarily due to the increase in average
interest-earning assets as demonstrated on Table 2. Average interest-earning
assets increased to $573.6 million for the first half of 1997 from $492.3
million for the first half of 1996. The effect of the increase in
interest-earning assets was offset somewhat by the 11 basis point decline in the
average yield on interest-earning assets to 7.73% for the first half of 1997
from 7.84% for the like period in 1996.
Interest expense
- ----------------
Interest expense increased during the quarter ended June 30, 1997, compared
to the same period in 1996 primarily due to an increase in average
interest-bearing liabilities
14
<PAGE> 16
of $76.5 million, or 16.35%, combined with an increase in the average cost of
interest-bearing liabilities. Average interest-bearing liabilities were $544.3
million and $467.8 million for the second quarter of 1997 and 1996,
respectively. The average cost of interest-bearing liabilities increased 13
basis points to 5.22% for the second quarter of 1997 from 5.09% for the same
period in 1996.
Interest expense increased during the six months ended June 30, 1997,
compared to the same period in 1996 primarily due to an increase in average
interest-bearing liabilities of $77.3 million, or 16.96%, combined with an
increase in the average cost of interest-bearing liabilities. Average
interest-bearing liabilities were $533.6 million and $456.3 million for the
first half of 1997 and 1996, respectively. The average cost of interest-bearing
liabilities increased 6 basis points to 5.19% for the first half of 1997 from
5.13% for the same period in 1996.
Provision for loan losses
- -------------------------
The provision for loan losses for the three and six month periods ended
June 30, 1997, were $91,000 and $169,000, respectively; compared to $23,000 and
$28,000, respectively, for the same periods in 1996. The provisions for all
periods were commensurate with management's estimate of the credit risk in the
loan portfolio. Economic conditions in the Bank's market area were stable.
Further discussion and other information relating to loan losses and
nonperforming assets are included in the section titled "Asset Quality."
NONINTEREST INCOME
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Three months ended Six months ended
June 30, 1997 June 30, 1997
- -------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Noninterest income:
Current period $ 506 $ 931
Prior period 393 910
- -------------------------------------------------------------------------------
Dollar change from prior period $ 113 $ 21
===============================================================================
Percent change from prior period 28.84% 2.34%
===============================================================================
</TABLE>
Noninterest income consists primarily of fees earned for servicing loans,
providing services for customers and from gains on loan sales. The increase in
noninterest income is primarily due to increased fee income. An increase in
gains on sales of assets of $78,000 contributed to the increase for the second
quarter of 1997 compared to the 1996 quarter. A decrease in gains on sales of
assets of $109,000 offset the increase during the six months ended June 30, 1997
compared to the 1996 period.
15
<PAGE> 17
NONINTEREST EXPENSE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, 1997 June 30, 1997
- --------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Noninterest expense:
Current period $ 2,284 $ 4,570
Prior period 2,346 4,715
- --------------------------------------------------------------------------------
Dollar change from prior period $ (62) $ (145)
================================================================================
Percent change from prior period (2.60)% (3.07)%
================================================================================
</TABLE>
The decrease in noninterest expense is primarily due to the reduction in
the federal deposit insurance premium from 23(cent) per $100 of deposits during
the three and six month periods ended June 30, 1996, to 6.5(cent) per $100 of
deposits for the same periods in 1997. The decrease in federal deposit insurance
premium expense was offset by an increase in the cost of human resources.
Management is pleased with the efficiency ratio of 48.89%, which has improved
from the 54.28% for the second quarter of 1996.
FEDERAL INCOME TAXES
- --------------------------------------------------------------------------------
The Company provided $801,000 and $1,566,000 for federal income tax during
the three and six month periods ended June 30, 1997, respectively; compared to
the $671,000 and $1,311,000 provided for federal income taxes during the like
periods in 1996. Net income before the provision for federal income taxes
increased for the compared periods resulting in a corresponding increase in the
provision for federal income taxes.
FINANCIAL RESOURCES AND LIQUIDITY
- --------------------------------------------------------------------------------
The Company's primary sources of funds are deposits, principal and interest
payments on loans, maturities of investment securities, proceeds from the sale
of loans, FHLB advances and funds generated through earnings. The primary uses
for such funds are to originate loans, maintain liquidity requirements and
manage interest rate risk.
For an analysis of Emerald's cash flows, refer to the Consolidated
Statements of Cash Flows on page 3. Management believes the Company has adequate
resources to meet its normal funding requirements.
The Bank is required to maintain an average daily balance of liquid assets
equal to 5% of the sum of its average daily balance of net withdrawable accounts
and borrowed funds due in one year or less. The Bank's June 1997 monthly average
of eligible liquid assets was 13.40%.
16
<PAGE> 18
SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------------
Shareholders' equity was $45.7 million at June 30, 1997, an increase of
$2,556,000, or 11.84%, annualized, during the first half of 1997. This increase
was primarily the result of net income offset by dividends paid. Emerald paid
dividends in the first half of 1997 of 12(cent) per share, an increase of 4.35%
over the 11.5(cent) per share dividend paid in the first half of 1996.
The Company's return on average assets was 1.01% and return on average
equity was 13.40% for the first half of 1997.
At June 30, 1997, the Bank was in excess of all capital requirements
specified by federal regulations as shown by the following table.
<TABLE>
<CAPTION>
TANGIBLE CORE RISK-BASED
CAPITAL CAPITAL CAPITAL
---------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Capital amount -- Actual $ 43,648 $ 43,648 $ 45,225
Capital amount -- Required 9,026 18,052 29,447
---------------------------------------
Amount in excess of requirement $ 34,622 $ 25,596 $ 15,778
=======================================
Capital ratio -- Actual 7.25% 7.25% 12.29%
Capital ratio -- Required 1.50% 3.00% 8.00%
---------------------------------------
Amount in excess of requirement 5.75% 4.25% 4.29%
=======================================
</TABLE>
Strongsville Savings' capital levels at June 30, 1997, qualify it as a
"well-capitalized" institution, the highest of five tiers under applicable
federal definitions.
QUALIFIED THRIFT LENDER TEST
- -------------------------------------------------------------------------------
Savings associations insured by the Savings Association Insurance Fund of
the Federal Deposit Insurance Corporation (FDIC) are required to maintain 65% of
total portfolio assets in Qualified Thrift Investments. As of June 30, 1997, the
Bank had 85.03% of total assets invested in Qualified Thrift Investments.
17
<PAGE> 19
ASSET QUALITY
- -------------------------------------------------------------------------------
Table 3 sets forth information regarding non-performing assets at June 30,
1997, December 31, 1996, and June 30, 1996.
<TABLE>
TABLE 3
NON-PERFORMING ASSETS ANALYSIS
<CAPTION>
JUNE 30, DECEMBER 31, JUNE 30,
1997 1996 1996
- -------------------------------------------------------------------------------------------------------------------------------
(Dollars In thousands)
<S> <C> <C> <C> <C>
NON-ACCRUING LOANS
1-4 family - permanent $ 61 $ 600 $ 247
1-4 family - construction 413 - -
Multi-family and Commercial
real estate - - -
Land and development - - -
Commercial non-real estate - - 70
Consumer and other 22 5 20
- --------------------------------------------------------------------------------------------------------
Total 496 605 337
LOANS DELINQUENT 90 DAYS OR MORE
AND STILL ACCRUING
1-4 family - permanent 640 682 1,158
1-4 family - construction - 412 625
Multi-family and Commercial
real estate - - -
Land and development - - 9
Commercial non-real estate - - -
Consumer and other - - 8
- --------------------------------------------------------------------------------------------------------
Total 640 1,094 1,800
Total non-performing loans 1,136 1,699 2,137
Real estate owned 340 - -
- --------------------------------------------------------------------------------------------------------
Total non-performing assets $ 1,476 $ 1,699 $ 2,137
========================================================================================================
Allowances for loan losses $ 1,577 $ 1,423 $ 1,170
========================================================================================================
Non-performing loans to total loans-net 0.25% 0.40% 0.52%
Non-performing assets to total assets 0.24% 0.30% 0.40%
Allowance for loan losses to ending
loan balance (before allowance) 0.35% 0.33% 0.29%
Allowance for loan losses to
non-performing loans 138.85% 83.76% 54.74%
- --------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 20
Table 4 presents information concerning activity in the allowance for loan
losses during the quarters ended June 30, 1997 and 1996.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
TABLE 4
ACTIVITY IN THE ALLOWANCE FOR LOAN LOSSES
For the Three Months Ended For the Six Months Ended
June 30, June 30,
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Allowance at the beginning of the period $ 1,500 $ 1,146 $ 1,423 $ 1,168
Provision charged to expense 91 23 169 28
Charge-offs:
- ------------
1-4 family - permanent 5 -- 5 --
1-4 family - construction -- -- -- --
Multi-family and Commercial
real estate -- -- -- --
Land and development -- -- -- --
Commercial non-real estate -- -- -- --
Consumer and other 14 -- 19 27
- ----------------------------------------------------------------------------------------------------------------------------
19 -- 24 27
Recoveries
- ----------
1-4 family - permanent -- -- -- --
1-4 family - construction -- -- -- --
Multi-family and Commercial
real estate -- -- -- --
Land and development -- -- -- --
Commercial non-real estate -- -- -- --
Consumer and other 5 1 9 1
- ----------------------------------------------------------------------------------------------------------------------------
5 1 9 1
- ----------------------------------------------------------------------------------------------------------------------------
Net recoveries (charge-offs) (14) 1 (15) (26)
- ----------------------------------------------------------------------------------------------------------------------------
Allowance at the end of the period $ 1,577 $ 1,170 $ 1,577 $ 1,170
============================================================================================================================
Net charge-offs during the period to average
loans outstanding during the period
(Annualized) 0.01% 0.00% 0.00% 0.00%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The amount of the allowance for loan losses is based on management's
analysis of risks inherent in the various segments of the loan portfolio,
management's assessment of known or potential problem credits which have come to
management's attention during the ongoing analysis of credit quality, historical
loss experience, current economic conditions, and other factors. Loan loss
estimates are reviewed periodically, and adjustments, if any, are reported in
earnings in the period in which they become known.
19
<PAGE> 21
TABLE A
Table A sets forth the composition of the Bank's loan portfolio at June
30, 1997, December 31, 1996, and June 30, 1996.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
LOAN PORTFOLIO COMPOSITION
June 30, 1997 December 31, 1996 June 30, 1996
Amount Percent Amount Percent Amount Percent
- --------------------------------------------------------------------------------------------------------------------
REAL ESTATE MORTGAGE LOANS: (Dollars In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Permanent first mortgage loans:
1-4 family $ 314,328 69.65% $ 301,284 70.88% $ 289,030 70.97%
Multi-family 991 0.22% 1,049 0.25% 1,107 0.27%
Commercial real estate 52,280 11.58% 46,883 11.03% 42,445 10.42%
Land 283 0.06% 195 0.05% 332 0.08%
Construction first mortgage loans:
Residential development 54,591 12.09% 54,670 12.85% 57,489 14.12%
1-4 family 44,317 9.82% 37,049 8.72% 39,189 9.62%
Multi-family -- 0.00% 240 0.06% 1,439 0.35%
Commercial real estate 1,288 0.30% 2,376 0.56% 4,943 1.22%
- --------------------------------------------------------------------------------------------------------------------
Total mortgage loans 468,078 103.72% 443,746 104.40% 435,974 107.05%
OTHER LOANS
Commercial 4,695 1.04% 4,250 1.00% 3,541 0.87%
Consumer 12,532 2.78% 9,118 2.14% 8,417 2.07%
- --------------------------------------------------------------------------------------------------------------------
Total other loans 17,227 3.82% 13,368 3.14% 11,958 2.94%
- --------------------------------------------------------------------------------------------------------------------
Total loans 485,305 107.54% 457,114 107.54% 447,932 109.99%
Less:
Loans in process 28,826 6.39% 26,676 6.28% 35,208 8.64%
Allowance for loan losses 1,577 0.35% 1,423 0.33% 1,170 0.29%
Deferred yield items 3,607 0.80% 3,955 0.93% 4,304 1.06%
- --------------------------------------------------------------------------------------------------------------------
34,010 7.54% 32,054 7.54% 40,682 9.99%
- --------------------------------------------------------------------------------------------------------------------
Total loans held for investment-Net $ 451,295 100.00% $ 425,060 100.00% $ 407,250 100.00%
=====================================================================================================================
Real estate loans held for sale $ 2,264 $ 795 $ 1,022
=====================================================================================================================
</TABLE>
- --------------------------------------------------------------------------------
20
<PAGE> 22
TABLE B
Table B sets forth the activities in the Bank's loan portfolio for the
three and six month periods ended June 30, 1997, and 1996.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
ACTIVITY IN THE LOAN PORTFOLIO
For the Three Months Ended For the Six Months Ended
June 30, June 30,
1997 1996 1997 1996
- --------------------------------------------------------------------------------------------------------------------
(In thousands)
PERMANENT MORTGAGE LOAN ORIGINATIONS
<S> <C> <C> <C> <C>
1-4 family $ 25,666 $ 49,262 $ 44,929 $ 89,430
Multi-family - - - -
Commercial real estate 1,169 465 2,629 2,765
Land 165 - 245 -
- ------------------------------------------------------------------------------------------------------------------
27,000 49,727 47,803 92,195
CONSTRUCTION FIRST MORTGAGE LOAN ORIGINATIONS
Residential development 7,122 16,399 18,616 26,480
1-4 family 17,044 16,954 25,301 25,928
Multi-family - - - -
Commercial real estate 735 1,425 1,643 1,425
- ------------------------------------------------------------------------------------------------------------------
24,901 34,778 45,560 53,833
NONMORTGAGE LOANS
Commercial 1,218 579 1,683 1,174
Consumer 5,576 1,084 11,138 1,470
- ------------------------------------------------------------------------------------------------------------------
6,794 1,663 12,821 2,644
- ------------------------------------------------------------------------------------------------------------------
TOTAL LOAN ORIGINATIONS 58,695 86,168 106,184 148,672
PURCHASED LOANS
Commercial real estate - - 4,422 -
- ------------------------------------------------------------------------------------------------------------------
TOTAL NEW LOANS 58,695 86,168 110,606 148,672
LESS
Principal repayments 35,072 30,586 60,462 56,076
Loan sales 13,412 280 20,445 8,346
- ------------------------------------------------------------------------------------------------------------------
48,484 30,866 80,907 64,422
- ------------------------------------------------------------------------------------------------------------------
NET INCREASE IN LOANS $ 10,211 $ 55,302 $ 29,699 $ 84,250
==================================================================================================================
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 23
TABLE C
Table C sets forth the composition of the Bank's deposits by interest rate
category at June 30, 1997, December 31, 1996, and June 30, 1996.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
DEPOSIT COMPOSITION
----------------------------------------------------------------------------------
June 30, 1997 December 31, 1996 June 30, 1996
Wtd Avg Wtd Avg Wtd Avg
Cost Amount Percent Cost Amount Percent Cost Amount Percent
- ------------------------------------------------------------------------------------------------------------------
(Dollars In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PASSBOOK ACCOUNTS 2.91 $ 48,808 9.35% 2.90 $ 46,034 9.33% 2.88 $ 47,552 10.37%
NOW ACCOUNTS 1.99% 31,678 6.07% 2.02% 29,661 6.01% 2.02% 28,861 6.29%
MONEY MARKET DEPOSIT ACCOUNTS 2.53% 16,663 3.19% 2.53% 17,882 3.62% 2.53% 20,436 4.46%
COMMERCIAL ACCOUNTS 0.00% 11,082 2.12% 0.00% 11,535 2.34% 0.00% 9,264 2.02%
- ------------------------------------------------------------------------------------------------------------------
2.28% 108,231 20.73% 2.27% 105,112 21.30% 2.33% 106,113 23.14%
CERTIFICATES OF DEPOSIT:
4.50% and less 2.52% 1,237 0.24% 2.54% 1,849 0.37% 2.99% 3,100 0.68%
4.51% to 5.50% 5.28% 87,857 16.83% 5.34% 116,857 23.68% 5.27% 119,458 26.04%
5.51% to 6.50% 6.05% 250,809 48.04% 6.03% 187,013 37.90% 5.96% 134,058 29.23%
6.51% to 7.50% 7.33% 65,659 12.57% 7.33% 73,823 14.96% 7.28% 86,665 18.89%
7.51% and greater 8.89% 8,326 1.59% 8.86% 8,817 1.79% 8.84% 9,264 2.02%
- ------------------------------------------------------------------------------------------------------------------
6.13% 413,888 79.27% 6.11% 388,359 78.70% 6.10% 352,545 76.86%
- ------------------------------------------------------------------------------------------------------------------
TOTAL DEPOSITS 5.34% $522,119 100.00% 5.29% $493,471 100.00% 5.23% $458,658 100.00%
===================================================================================================================
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
TABLE D
Table D sets forth the remaining terms to maturity for the certificates of
deposit at June 30, 1997.
<TABLE>
<CAPTION>
CERTIFICATES OF DEPOSIT MATURING DURING:
(In Thousands)
<S> <C>
The year ending June 30, 1998 $ 272,516
The year ending June 30, 1999 53,596
The year ending June 30, 2000 41,516
The year ending June 30, 2001 7,353
The year ending June 30, 2002 5,836
After June 30, 2002 33,071
==================================================
$ 413,888
==================================================
</TABLE>
22
<PAGE> 24
PART II
ITEM 4 Submission of Matters to a Vote of Security Holders
----------------------------------------------------
(a) The Annual Meeting of Shareholders was held on April 24, 1997.
(b) The following three directors were elected for the three year
term stated. All were elected without opposition.
<TABLE>
<CAPTION>
Director Term
--------------------------------------------------------
<S> <C>
Joan M. Dzurilla 1997 to 2000
Mike Kalinich. Sr. 1997 to 2000
Thomas P. Perciak 1997 to 2000
</TABLE>
The remaining directors and year in which their current term
expires are as follows:
<TABLE>
<CAPTION>
Director Term
--------------------------------------------------------
<S> <C>
John F. Ziegler 1998
William A. Fraunfelder, Jr. 1998
Glenn W. Goist 1998
George P. Bohnert, Jr. 1999
John J. Plucinsky 1999
Kenneth J. Piechowski 1999
</TABLE>
(c) The following matters were voted upon at the Annual Shareholders
Meeting, with the allocation of the votes cast indicated.
(i) Election of three directors for three-year terms expiring
in 2000. The nominees were elected and the record of votes was
as follows:
<TABLE>
<CAPTION>
Nominee Votes for Votes Abstaining Shares not
against Votes Voted
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joan M. Dzurilla 2,016,987.380 0 26,153.000 487,659.620
Mike Kalinich, Sr 2,017,787.380 0 25,353.000 487,659.620
Thomas P. Perciak 2,019,187.380 0 23,953.000 487,659.620
</TABLE>
(ii) Ratification of Deloitte & Touche LLP as the Company's
independent auditors for the year ended December 31, 1997.
23
<PAGE> 25
Deloitte & Touche LLP were ratified as proposed and the record
of votes was as follows:
<TABLE>
<CAPTION>
Votes Votes Abstaining Shares not
for against Votes Voted
------------------------------------------------------
<S> <C> <C> <C> <C>
2,016,974.620 4,587.000 21,578.760 487,659.620
</TABLE>
(d) Not applicable.
ITEM 5 Exhibits and Reports on Form 8-K
(a) Not applicable
(b) No reports on Form 8-K were filed during the quarter.
ITEM 6(a) Exhibits
10. Material Contracts - See exhibit index
24
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Emerald Financial Corp.
------------------------
(Registrant)
Date August 8, 1997 /s/ THOMAS P. PERCIAK .
---------------- ------------------------
Thomas P. Perciak,
President & Chief Executive Officer
Date August 8, 1997 /s/ JOHN F. ZIEGLER .
---------------- ---------------------------
John F. Ziegler,
Executive Vice President &
Chief Financial Officer
25
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Exhibit Attachment
Number Description Number
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
10 (a) Amendment No. 1 to Employment Agreement 10 (a)
(Thomas P. Perciak)
- -------------------------------------------------------------------------------------------------------------------
10 (b) Amendment No. 1 to Employment Agreement 10 (b)
(John F. Ziegler)
- -------------------------------------------------------------------------------------------------------------------
10 (c) Amendment to Executive Supplemental Benefit Agreement 10 (c)
Dated January 1, 1995
(Thomas P. Perciak)
- -------------------------------------------------------------------------------------------------------------------
10 (d) Amendment to Executive Supplemental Benefit Agreement 10 (d)
Dated January 1, 1995
(John F. Ziegler)
- -------------------------------------------------------------------------------------------------------------------
10 (e) Split Dollar Life Insurance Agreement 10 (e)
(Thomas P. Perciak)
- -------------------------------------------------------------------------------------------------------------------
10 (f) Split Dollar Life Insurance Agreement 10 (f)
(John F. Ziegler)
- -------------------------------------------------------------------------------------------------------------------
10 (g) Executive Supplemental Benefit Agreement 10 (g)
(Thomas P. Perciak)
- -------------------------------------------------------------------------------------------------------------------
10 (h) Executive Supplemental Benefit Agreement 10 (h)
(John F. Ziegler)
- -------------------------------------------------------------------------------------------------------------------
10 (i) Amendment No. 1 to The Severance Agreement 10 (i)
(Paula M. Dewey)
- -------------------------------------------------------------------------------------------------------------------
10 (j) Amendment No. 1 to The Severance Agreement 10 (j)
(Cynthia W. Gannon)
- -------------------------------------------------------------------------------------------------------------------
10 (k) Amendment No. 1 to The Severance Agreement 10 (k)
(William J. Harr, Jr.)
- -------------------------------------------------------------------------------------------------------------------
10 (l) Amendment No. 1 to Executive Supplemental Benefit 10 (l)
Agreement
(Paula M. Dewey)
- -------------------------------------------------------------------------------------------------------------------
10 (m) Amendment No. 1 to Executive Supplemental Benefit 10 (m)
Agreement
(Cynthia W. Gannon)
- -------------------------------------------------------------------------------------------------------------------
10 (n) Amendment No. 1 to Executive Supplemental Benefit 10 (n)
Agreement
(William J. Harr, Jr.)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 1
EXHIBIT 10(a)
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
THOMAS P. PERCIAK
<PAGE> 2
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT
The term "Change in Control, " "Change in Control of the Bank" or
"Change in Control of the Corporation" as used in this Employment Agreement (the
"Agreement")] is amended effective as of this 16th day of July, 1997 to read as
set forth hereinafter. From and after the date hereof, any reference herein or
in the Agreement to the "Corporation" or the "Company" shall mean Emerald
Financial Corp., an Ohio corporation, and any reference to the "Bank" shall mean
The Strongsville Savings Bank, an Ohio-chartered savings and loan association.
For purposes of the Agreement, a "Change in Control" shall mean:
(i) The acquisition by a person or persons acting in concert of
the power to vote twenty five percent (25%) or more of a class
of the Corporation's voting securities, or the acquisition by
a person of the power to direct the Corporation's management
or policies, if the Board of Directors or the Office of Thrift
Supervision has made a determination that such acquisition
constitutes or will constitute an acquisition of control of
the Corporation for the purposes of the Savings and Loan
Holding Company Act or the Change in Bank Control Act and the
regulations thereunder;
(ii) during any period of two (2) consecutive years during the term
of this Agreement, individuals who at the beginning of such
period constitute the Board of Directors of the Bank or the
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been
approved in advance by directors representing at least two
thirds (2/3) of the directors then in office who were
directors in office at the beginning of the period;
(iii) the Corporation shall have merged into or consolidated with
another corporation, or merged another corporation into the
Corporation, on a basis whereby less than fifty percent (50%)
of the total voting power of the surviving corporation is
represented by shares held by former shareholders of the
Corporation prior to such merger or consolidation; or
(iv) the Corporation shall have sold substantially all of its
assets to another person. The term "person" refers to an
individual, corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or other entity.
<PAGE> 3
IN WITNESS WHEREOF, we have hereunto set our hands as of this 16th day of July
1997.
THE STRONGSVILLE SAVINGS BANK EXECUTIVE
By: \s\ JOHN F. ZIEGLER \s\ THOMAS P. PERCIAK
-------------------------------- ----------------------------------
John F. Ziegler Thomas P. Perciak
Its: Executive Vice President
EMERALD FINANCIAL CORP.
By: \s\ JOHN F. ZIEGLER
--------------------------------
John F. Ziegler
Its: Executive Vice President
<PAGE> 1
EXHIBIT 10(b)
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
JOHN F. ZIEGLER
<PAGE> 2
AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT
The term "Change in Control, " "Change in Control of the Bank" or
"Change in Control of the Corporation" as used in this Employment Agreement (the
"Agreement")] is amended effective as of this 16th day of July, 1997 to read as
set forth hereinafter. From and after the date hereof, any reference herein or
in the Agreement to the "Corporation" or the "Company" shall mean Emerald
Financial Corp., an Ohio corporation, and any reference to the "Bank" shall mean
The Strongsville Savings Bank, an Ohio-chartered savings and loan association.
For purposes of the Agreement, a "Change in Control" shall mean:
(i) The acquisition by a person or persons acting in concert of
the power to vote twenty five percent (25%) or more of a class
of the Corporation's voting securities, or the acquisition by
a person of the power to direct the Corporation's management
or policies, if the Board of Directors or the Office of Thrift
Supervision has made a determination that such acquisition
constitutes or will constitute an acquisition of control of
the Corporation for the purposes of the Savings and Loan
Holding Company Act or the Change in Bank Control Act and the
regulations thereunder;
(ii) during any period of two (2) consecutive years during the term
of this Agreement, individuals who at the beginning of such
period constitute the Board of Directors of the Bank or the
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been
approved in advance by directors representing at least two
thirds (2/3) of the directors then in office who were
directors in office at the beginning of the period;
(iii) the Corporation shall have merged into or consolidated with
another corporation, or merged another corporation into the
Corporation, on a basis whereby less than fifty percent (50%)
of the total voting power of the surviving corporation is
represented by shares held by former shareholders of the
Corporation prior to such merger or consolidation; or
(iv) the Corporation shall have sold substantially all of its
assets to another person. The term "person" refers to an
individual, corporation, partnership, trust, association,
joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or other entity.
<PAGE> 3
IN WITNESS WHEREOF, we have hereunto set our hands as of this 16th day of July
1997.
THE STRONGSVILLE SAVINGS BANK EXECUTIVE
By: \s\ THOMAS P. PERCIAK \s\ JOHN F. ZIEGLER
-------------------------- ---------------------------
Thomas P. Perciak John F. Ziegler
Its: President
EMERALD FINANCIAL CORP.
By: \s\ THOMAS P. PERCIAK
--------------------------
Thomas P. Perciak
Its: President
<PAGE> 1
EXHIBIT 10(C)
AMENDMENT TO EXECUTIVE
SUPPLEMENTAL BENEFIT AGREEMENT DATED
JANUARY 1, 1995
THOMAS P. PERCIAK
<PAGE> 2
AMENDMENT
This amendment made and entered into as of this 15th day of July 1997,
by and between The Strongsville Savings Bank (the "Bank"), a corporation
organized and existing under the laws of the State of Ohio, with its principal
office at 14092 Pearl Road, Strongsville, Ohio, and Thomas P. Perciak (the
"Executive").
WHEREAS, the Bank and the Executive have entered into an Executive
Supplemental Benefit Agreement effective January 1, 1995,
WHEREAS, the parties of this Amendment recognize that it is in their
best interest to amend certain aspects of the Executive Supplemental Benefit
Agreement,
NOW, THEREFORE, it is mutually agreed as follows:
SECTION 1. DEFINITIONS.
The following shall be added to Section 1 of the original agreement.
(C) "Supplemental Retirement Benefits" for purposes of both the
original Agreement and the Amendment shall mean the Supplemental Retirement
Benefits provided for in the Executive Supplement Benefit Agreement entered
into and effective January 1, 1995 and in this Amendment. The term
"Supplemental Retirement Benefits" does not include benefits provided under any
other agreements which the parties may have entered into.
SECTION 2. SUPPLEMENTAL RETIREMENT BENEFITS.
Section 2 of the original Agreement shall be replaced in its entirety
by the following:
(a) Provided that the Executive has remained continuously in the
employ of the Bank (except for normal vacation time and such other leaves of
absence as may be approved by the Board of Directors of the Bank), the
Executive shall vest in the Supplemental Retirement Benefits provided for in
the Agreement each year on a pro rata basis in accordance with SCHEDULE 1
attached hereto and made part of this Amendment. Vesting shall begin with the
one year anniversary date of the effective date of this Amendment and continue
with each succeeding annual anniversary date of this Amendment until the
Executive's attainment of age sixty-five (65). Upon the Executive's attainment
of age sixty-five (65), the Executive shall be fully vested in the Supplemental
Retirement Benefits. In the event that the Executive dies or becomes
permanently disabled while in the employ of the Bank and prior to age
sixty-five (65), the Supplemental Retirement Benefits will fully vest upon the
death or permanent disability.
<PAGE> 3
(b) As of the first day of the calendar month following the
Executive's Retirement Date and on each annual anniversary date thereafter for
a period of twenty (20) years, the Executive shall be entitled to an annual
Supplemental Retirement Benefit. The amount of the annual Supplemental
Retirement Benefit shall be the Executive's vested Benefit as determined in
accordance with Schedule 1.
(c) The Executive may petition the Compensation Committee of the Board
of Directors of the Bank, to have the Supplemental Retirement Benefits to which
Executive is entitled, paid in a single lump sum, discounted at an annual rate
of six percent (6%) per annum applied to each future payment from the time it
would have been become payable to the date the lump sum is paid.
(d) In the event the Executive wishes to retire prior to attaining age
sixty-five (65), the Board of Directors of the Bank may agree, by resolution,
to fully vest the Executive's Supplemental Retirement Benefit. The Board of
Directors of the Bank may also agree, by resolution and with the approval of
the Executive, to begin payment of the Executive's benefits prior to the
Executive's attainment of age sixty-five (65). However, in no event may the
amounts paid to the Executive be less than his entire vested Supplemental
Retirement Benefit or the payments begin any later than the first day of the
calendar month following the Executive's attainment of age sixty-five (65).
SECTION 4. DEATH BENEFITS.
Section 4 of the original Agreement shall be replaced in its entirety
by the following:
(a) In the event that the Executive dies while in the employ of the
Bank and prior to the Retirement Date, the Executive's designated beneficiary
shall succeed to the rights of the Executive to receive the Supplemental
Retirement Benefits under Section 2(b) hereof, and the date of the Executive's
death shall be deemed to be the Retirement Date hereunder. It is hereby
expressly acknowledged that the Executive's designated beneficiary shall also
have the right under Section 2(c) hereof to petition the Compensation Committee
of the Board of Directors to have the entire Supplemental Retirement Benefits
paid as a lump sum. If no beneficiary has been designated by the Executive,
such amounts shall be paid to the Executive's estate in annual installments, it
being expressly acknowledged that the Executive's estate has the right to
petition that the entire Supplemental Retirement Benefits be paid as a lump sum
as provided in Section 2(c) hereof
(b) In the event that the Executive dies while receiving annual
Supplemental Retirement Benefits, the Executive's designated beneficiary shall
succeed to the rights of the Executive to receive the Benefits under Section
2(b) or Section 2(c) hereof. If no beneficiary has been designated by the
Executive, such amounts shall be paid to the Executive's estate in annual
installments, it being expressly acknowledged that the Executive's estate has
the right to petition that the entire Supplemental Retirement Benefits be paid
as a lump sum as provided in Section 2(c) hereof
<PAGE> 4
SECTION 5. CHANGE IN CONTROL OF THE BANK.
Section 5 and Schedule 3 of the original Agreement shall be replaced in
their entirety by the following:
(a) This Agreement shall be binding upon and inure to the benefit of
all successors and assigns of the Bank and the Executive. In the event of a
change in control of the Bank, the Executive shall be fully vested in the
Supplemental Retirement Benefit and the entire Benefit shall be paid to the
Executive immediately upon the effective date of the change in control. The
amount of the Benefit to be paid to the Executive shall be the "lump sum"
amount as defined in Section 2 (c) and Schedule 1 of this Amendment.
(b) For purposes of this Agreement, a change in control shall mean:
(i) The acquisition by a person or persons acting in
concert of the power to vote twenty-five percent (25%) or more
of a class of the voting securities of Emerald Financial Corp.
("Corporation"), or the acquisition by a person of the power to
direct the Corporation's management or policies, if the Board of
Directors or the Office of Thrift Supervision or successor
regulatory agency has made a determination that such acquisition
constitutes or will constitute an acquisition of control of the
Corporation for the purposes of the Savings and Loan Holding
Company Act or the Change in Bank Control Act and the
regulations thereunder;
(ii) during any period of two (2) consecutive years during
the term of this Agreement, individuals who at the beginning of
such period constitute the Board of Directors of the Bank or
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been approved
in advance by directors representing at least two thirds (2/3)
of the directors then in office who were directors in office at
the beginning of the period:
(iii) the Corporation shall have merged into or
consolidated with another corporation, or merged another
corporation into the Corporation, on a basis whereby less than
fifty percent (50%) of the total voting power of the surviving
corporation is represented by shares held by former shareholders
of the Corporation prior to such merger or consolidation: or
(iv) the Corporation shall have sold substantially all of
its assets to another person. The term "person" refers to an
individual, corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated
organization or other entity.
<PAGE> 5
SECTION 6. TERMINATION FOR CAUSE AS A RESULT OF CERTAIN REGULATORY ACTIONS
Section 6(a) shall be replaced in its entirety by the following:
(a) In the event of the termination of the Executive for Cause, the
Bank shall have no further obligations under this Agreement other than payment
to the Executive at the Retirement Date of any vested Supplemental Retirement
Benefits.
This Amendment pertains only to the provisions of the Agreement
referenced herein. All other provisions of the original Agreement shall remain
intact.
ATTEST: THE STRONGSVILLE SAVINGS BANK
\s\ PAULA M. DEWEY \s\ JOHN F. ZIEGLER
- ------------------------- ------------------------------
BY: John F. Ziegler
Executive Vice President
[Corporate Seal]
WITNESS:
\s\ PAULA M. DEWEY \s\ THOMAS P. PERCIAK
- ------------------------- -------------------------------.
Thomas P. Perciak
Executive
<PAGE> 6
SCHEDULE 1
POST RETIREMENT BENEFIT FOR: THOMAS P. PERCIAK
Schedule 1 of the original Agreement shall be replaced in its entirety by the
following:
The benefit payable to Thomas P. Perciak at Retirement Date (age 65) is
$134,693 annually for a period of twenty (20) years. Mr. Perciak shall become
vested in this benefit on each annual anniversary date of this Amendment as
follows:
Annual Benefit
Year of Anniversary Vested Amount
1998 $ 8,980
1999 17,959
2000 26,939
2001 35,918
2002 44,898
2003 53,877
2004 62,857
2005 71,836
2006 80,816
2007 89,795
2008 98,775
2009 107,754
2010 116,734
2011 125,713
2012 134,693
LUMP SUM PAYMENT: Should the Executive desire and Board agree that
benefits should be paid in a lump sum, the amount of the lump sum benefit
provided that no benefits under the Agreement have yet been paid and the
Executive is fully vested in the Supplemental Retirement Benefit is $1,544,918.
In the event that benefits are to paid in a lump sum and the Executive
is not fully vested in the Supplemental Retirement Benefit, the amount of the
lump sum benefit shall be determined by discounting each future fully vested
benefit payment at an annual rate of 6% per annum from the time it would have
become payable to the date the lump sum is paid.
<PAGE> 1
EXHIBIT 10(d)
AMENDMENT TO EXECUTIVE
SUPPLEMENTAL BENEFIT AGREEMENT DATED
JANUARY 1, 1995
JOHN F. ZIEGLER
<PAGE> 2
AMENDMENT
This amendment made and entered into as of this 15th day of July 1997,
by and between The Strongsville Savings Bank (the "Bank"), a corporation
organized and existing under the laws of the State of Ohio, with its principal
office at 14092 Pearl Road, Strongsville, Ohio, and John F. Ziegler (the
"Executive").
WHEREAS, the Bank and the Executive have entered into an Executive
Supplemental Benefit Agreement effective January 1, 1995,
WHEREAS, the parties of this Amendment recognize that it is in their
best interest to amend certain aspects of the Executive Supplemental Benefit
Agreement,
NOW, THEREFORE, it is mutually agreed as follows:
SECTION 1. DEFINITIONS.
The following shall be added to Section 1 of the original agreement.
(C) "Supplemental Retirement Benefits" for purposes of both the
original Agreement and the Amendment shall mean the Supplemental Retirement
Benefits provided for in the Executive Supplement Benefit Agreement entered
into and effective January 1, 1995 and in this Amendment. The term
"Supplemental Retirement Benefits" does not include benefits provided under any
other agreements which the parties may have entered into.
SECTION 2. SUPPLEMENTAL RETIREMENT BENEFITS.
Section 2 of the original Agreement shall be replaced in its entirety
by the following:
(a) Provided that the Executive has remained continuously in the
employ of the Bank (except for normal vacation time and such other leaves of
absence as may be approved by the Board of Directors of the Bank), the
Executive shall vest in the Supplemental Retirement Benefits provided for in
the Agreement each year on a pro rata basis in accordance with SCHEDULE 1
attached hereto and made part of this Amendment. Vesting shall begin with the
one year anniversary date of the effective date of this Amendment and continue
with each succeeding annual anniversary date of this Amendment until the
Executive's attainment of age sixty-five (65). Upon the Executive's attainment
of age sixty-five (65), the Executive shall be fully vested in the Supplemental
Retirement Benefits. In the event that the Executive dies or becomes
permanently disabled while in the employ of the Bank and prior to age
sixty-five (65), the Supplemental Retirement Benefits will fully vest upon the
death or permanent disability.
<PAGE> 3
(b) As of the first day of the calendar month following the
Executive's Retirement Date and on each annual anniversary date thereafter for
a period of twenty (20) years, the Executive shall be entitled to an annual
Supplemental Retirement Benefit. The amount of the annual Supplemental
Retirement Benefit shall be the Executive's vested Benefit as determined in
accordance with Schedule 1.
(c) The Executive may petition the Compensation Committee of the Board
of Directors of the Bank, to have the Supplemental Retirement Benefits to which
Executive is entitled, paid in a single lump sum, discounted at an annual rate
of six percent (6%) per annum applied to each future payment from the time it
would have been become payable to the date the lump sum is paid.
(d) In the event the Executive wishes to retire prior to attaining age
sixty-five (65), the Board of Directors of the Bank may agree, by resolution,
to fully vest the Executive's Supplemental Retirement Benefit. The Board of
Directors of the Bank may also agree, by resolution and with the approval of
the Executive, to begin payment of the Executive's benefits prior to the
Executive's attainment of age sixty-five (65). However, in no event may the
amounts paid to the Executive be less than his entire vested Supplemental
Retirement Benefit or the payments begin any later than the first day of the
calendar month following the Executive's attainment of age sixty-five (65).
SECTION 4. DEATH BENEFITS.
Section 4 of the original Agreement shall be replaced in its
entirety by the following:
(a) In the event that the Executive dies while in the employ of the
Bank and prior to the Retirement Date, the Executive's designated beneficiary
shall succeed to the rights of the Executive to receive the Supplemental
Retirement Benefits under Section 2(b) hereof, and the date of the Executive's
death shall be deemed to be the Retirement Date hereunder. It is hereby
expressly acknowledged that the Executive's designated beneficiary shall also
have the right under Section 2(c) hereof to petition the Compensation Committee
of the Board of Directors to have the entire Supplemental Retirement Benefits
paid as a lump sum. If no beneficiary has been designated by the Executive,
such amounts shall be paid to the Executive's estate in annual installments, it
being expressly acknowledged that the Executive's estate has the right to
petition that the entire Supplemental Retirement Benefits be paid as a lump sum
as provided in Section 2(c) hereof
(b) In the event that the Executive dies while receiving annual
Supplemental Retirement Benefits, the Executive's designated beneficiary shall
succeed to the rights of the Executive to receive the Benefits under Section
2(b) or Section 2(c) hereof. If no beneficiary has been designated by the
Executive, such amounts shall be paid to the Executive's estate in annual
installments, it being expressly acknowledged that the Executive's estate has
the right to petition that the entire Supplemental Retirement Benefits be paid
as a lump sum as provided in Section 2(c) hereof
<PAGE> 4
SECTION 5. CHANGE IN CONTROL OF THE BANK.
Section 5 and Schedule 3 of the original Agreement shall be replaced
in their entirety by the following:
(a) This Agreement shall be binding upon and inure to the benefit of
all successors and assigns of the Bank and the Executive. In the event of a
change in control of the Bank, the Executive shall be fully vested in the
Supplemental Retirement Benefit and the entire Benefit shall be paid to the
Executive immediately upon the effective date of the change in control. The
amount of the Benefit to be paid to the Executive shall be the "lump sum"
amount as defined in Section 2 (c) and Schedule 1 of this Amendment.
(b) For purposes of this Agreement, a change in control shall mean:
(i) The acquisition by a person or persons acting in
concert of the power to vote twenty-five percent (25%) or more of
a class of the voting securities of Emerald Financial Corp.
("Corporation"), or the acquisition by a person of the power to
direct the Corporation's management or policies, if the Board of
Directors or the Office of Thrift Supervision or successor
regulatory agency has made a determination that such acquisition
constitutes or will constitute an acquisition of control of the
Corporation for the purposes of the Savings and Loan Holding
Company Act or the Change in Bank Control Act and the regulations
thereunder;
(ii) during any period of two (2) consecutive years during
the term of this Agreement, individuals who at the beginning of
such period constitute the Board of Directors of the Bank or
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been approved
in advance by directors representing at least two thirds (2/3) of
the directors then in office who were directors in office at the
beginning of the period:
(iii) the Corporation shall have merged into or
consolidated with another corporation, or merged another
corporation into the Corporation, on a basis whereby less than
fifty percent (50%) of the total voting power of the surviving
corporation is represented by shares held by former shareholders
of the Corporation prior to such merger or consolidation: or
(iv) the Corporation shall have sold substantially all of
its assets to another person. The term "person" refers to an
individual, corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated
organization or other entity.
<PAGE> 5
SECTION 6. TERMINATION FOR CAUSE AS A RESULT OF CERTAIN REGULATORY ACTIONS
Section 6(a) shall be replaced in its entirety by the following:
(a) In the event of the termination of the Executive for Cause, the
Bank shall have no further obligations under this Agreement other than payment
to the Executive at the Retirement Date of any vested Supplemental Retirement
Benefits.
This Amendment pertains only to the provisions of the Agreement
referenced herein. All other provisions of the original Agreement shall remain
intact.
ATTEST: THE STRONGSVILLE SAVINGS BANK
\s\ PAULA M. DEWEY \s\ THOMAS P. PERCIAK
- ------------------------ ---------------------------------
BY: Thomas P. Perciak
President
[Corporate Seal]
WITNESS:
\s\ PAULA M. DEWEY \s\ JOHN F. ZIEGLER
- ------------------------ ---------------------------------
John F. Ziegler
Executive
<PAGE> 6
SCHEDULE 1
POST RETIREMENT BENEFIT FOR: JOHN F. ZIEGLER
Schedule 1 of the original Agreement shall be replaced in its entirety by the
following:
The benefit payable to John F. Ziegler at Retirement Date (age 65) is
$25,647 annually for a period of twenty (20) years. Mr. Ziegler shall become
vested in this benefit on each annual anniversary date of this Amendment as
follows:
<TABLE>
<CAPTION>
Annual Benefit
Year of Anniversary Vested Amount
<S> <C>
1998 $1,282
1999 2,565
2000 3,847
2001 5,129
2002 6,412
2003 7,694
2004 8,976
2005 10,259
2006 11,541
2007 12,824
2008 14,106
2009 15,388
2010 16,671
2011 17,953
2012 19,235
2013 20,518
2014 21,800
2015 23,082
2016 24,365
2017 25,647
</TABLE>
LUMP SUM PAYMENT: Should the Executive desire and Board agree that
benefits should be paid in a lump sum, the amount of the lump sum benefit
provided that no benefits under the Agreement have yet been paid and the
Executive is fully vested in the Supplemental Retirement Benefit is $ 294,169.
In the event that benefits are to paid in a lump sum and the Executive
is not fully vested in the Supplemental Retirement Benefit, the amount of the
lump sum benefit shall be determined by discounting each future fully vested
benefit payment at an annual rate of 6% per annum from the time it would have
become payable to the date the lump sum is paid.
<PAGE> 1
EXHIBIT 10(e)
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
THOMAS P. PERCIAK
<PAGE> 2
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
-------------------------------------
(COLLATERAL ASSIGNMENT APPROACH)
This Agreement is made and entered into effective April 16, 1997
between The Strongsville Savings Bank (the "Bank"), a corporation organized and
existing under the laws of the State of Ohio with its principal office at 14092
Pearl Road, Strongsville, Ohio, and Thomas P. Perciak (the "Executive").
WHEREAS, the Executive is and has been an employee of the Bank for
years and is presently serving as the Bank's President; and
WHEREAS, the Executive has rendered valuable and loyal services to the
Bank and as a result has made a substantial contribution to the success and
growth of the Bank; and
WHEREAS, the Executive's services are invaluable to the continued
growth and success of the Bank; and
WHEREAS, the Bank wishes to retain the services of the Executive, to
reward him for future contributions to the Bank, and to assist him in providing
life insurance protection for the security of his family.
IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES:
ARTICLE 1. LIFE INSURANCE POLICY
The Executive will apply to The Berkshire Life Insurance Company (the
"Insurer") for a life insurance policy on his life in the amount of $1,500,000.
The Executive will be the owner of the policy and retain the right to name and
change the life policy beneficiary; however, he agrees to limit his right to:
(a) Surrender the policy for its cash value;
(b) Make policy loans or cash withdrawals;
(c) Assign the policy as collateral;
(d) Change ownership of the policy, unless approved by the Bank..
The approval of the Bank will no longer be required on or
after the first to occur of:
(i) Executive's sixty-fifth (65th) birthday,
(ii) Elimination of the collateral assignment or
(iii) Insolvency or dissolution of the Bank.
<PAGE> 3
ARTICLE 2. PREMIUM PAYMENTS
On behalf of the Executive, each year the Bank will forward an amount
equal to the premium to the Insurer. Payment of an amount equal to the
"economic benefit" (PS-58 cost) shall be the responsibility of the Executive.
ARTICLE 3. COLLATERAL ASSIGNMENT
As security for the Executive's indebtedness to the Bank under this
plan, the Executive shall execute a collateral assignment in favor of
the Bank. The Executive will be free to exercise all rights, options
and privileges of ownership not otherwise limited by the collateral
assignment, or Article 1 of this Agreement.
ARTICLE 4. DIVIDEND OPTION
The parties recognize that the payment and application of dividends can
have a dramatic impact on the benefits of this Split Dollar Life Insurance
Plan. The parties intend that if any dividends are paid under this life
insurance policy, they will be added to the values of the base policy by the
purchase of additional paid-up insurance;
ARTICLE 5. TERMINATION AT DEATH
In the event of the Executive's death, the Bank will be entitled to a
return of any and all amounts it contributed to the plan as advances from the
policy death proceeds. The balance of the death proceeds shall be payable to
the beneficiaries designated by the Executive, or the Executive's estate if a
qualified beneficiary has not survived the Executive.
ARTICLE 6. TERMINATION DURING LIFE
During the Executives lifetime, this Agreement may only be terminated
at the executive's sixty-fifth (65th) birthday and the Bank agrees to limit its
right to make policy loans, unless approved by the Executive. Termination of
the Agreement will trigger repayment to the Bank of all amounts advanced or
alternate arrangement as agreed to by the parties. If the Executive does not
repay the Bank or make other arrangements with the Bank, the Bank may exercise
any of its rights under the collateral assignment. Upon settlement of the
obligation by the Executive, the Bank will release its collateral interest in
the policy.
ARTICLE 7. TERMINATION OF EMPLOYER ADVANCES
Termination of Bank advances to this plan does not of itself trigger
termination of the plan. If the Bank can no longer make payments, does not wish
to make additional payments, the policy itself does not require further
payments, or the Executive does not wish the Bank to make further payments
under this plan, the party terminating Bank payments (the Executive or the
Bank) will advise the other. Either party can then elect whether or not to
terminate the plan under Paragraph 6 above. This plan shall continue unless and
until one or both parties take
<PAGE> 4
affirmative steps to terminate the plan or circumstances so dictate.
Termination of the employment relationship due to retirement, disability or
other circumstances shall be deemed to terminate the plan. Under such
circumstances, the Executive shall continue with individual ownership of the
life insurance policy as if this plan did not exist.
ARTICLE 8. INSURER NOT A PARTY
Berkshire Life Insurance Company shall not be deemed to be a party to
this Agreement for any purpose and has not made any representations with
respect to its validity.
ARTICLE 9. CHANGE IN CONTROL OF THE BANK
In the event that there is a change in control of the Bank or the
Bank's parent company (Emerald Financial Corp. "Corporation") during the first
seven (7) years of this Split Dollar Agreement, the Bank shall contribute the
following sum of money to the policy to complete its obligation under the plan:
<TABLE>
<CAPTION>
Year Amount To Be Contributed
---- ------------------------
<S> <C>
1 $ 380,679
2 $ 336,266
3 $ 285,153
4 $ 226,697
5 $ 160,199
6 $ 84,906
7 N/A
</TABLE>
For purposes of this Agreement, a change in control shall mean:
(i) The acquisition by a person or persons acting in
concert of the power to vote twenty-five percent (25%) or
more of a class of the Corporation's voting securities, or
the acquisition by a person of the power to direct the
Corporation's management or policies, if the Board of
Directors or the Office of Thrift Supervision or successor
regulatory agency has made a determination that such
acquisition constitutes or will constitute an acquisition of
control of the Corporation for the purposes of the Savings
and Loan Holding Company Act or the Change in Bank Control
Act and the regulations thereunder;
(ii) during any period of two (2) consecutive years
during the term of this Agreement, individuals who at the
beginning of such period constitute the Board of Directors of
the Bank or Corporation cease for any reason to constitute at
least a majority thereof, unless the election of each
director who was not a director at the beginning of such
period has been approved in advance by directors representing
at least two thirds (2/3) of the directors then in office who
were directors in office at the beginning of the period:
<PAGE> 5
(iii) the Corporation shall have merged into or
consolidated with another corporation, or merged another
corporation into the Corporation, on a basis whereby less
than fifty percent (50%) of the total voting power of the
surviving corporation is represented by shares held by former
shareholders of the Corporation prior to such merger or
consolidation: or
(iv) the Corporation shall have sold substantially
all of its assets to another person. The term "person" refers
to an individual, corporation, partnership, trust,
association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or other entity.
ARTICLE 10 THE FOLLOWING PROVISIONS ARE PART OF THIS AGREEMENT AND
ARE INTENDED TO MEET THE SECURITY ACT OF 1974 REQUIREMENTS OF
THE EMPLOYEE RETIREMENT INCOME.
(a) The named fiduciary: The Strongsville Savings Bank
(b) The funding policy under this plan is that all premiums on
the Policy be remitted to the Insurer when due.
(c) Direct payment by the Insurer is the basis of payment of
benefits under this Plan, with those benefits in turn being
based on the payment of premiums as provided in the Plan.
(d) For claims procedure purposes, the "Claims Manager" shall be
the Secretary of the Bank.
(i) If for any reason a claim for benefit under this Plan is
denied by the Bank, the Claims Manager shall deliver to the
claimant a written explanation setting forth the specific
reasons for the denial, pertinent references to the Plan
section on which the denial is based, such other data as may
be pertinent and information on the procedures to be followed
by the claimant in obtaining a review of his claim, all
written in a manner calculated to be understood by the
claimant. For this purpose:
(A) The claimant's claim shall be deemed filed when
presented in writing to the Claims Manager.
(B) The Claim's Manager's explanation shall be in
writing delivered to the claimant within 90 days of
the date the claim is filed.
(ii) The claimant shall have 60 days following his receipt of
the denial of the claim to file with the Claim Manager a
written request for review of the denial. For such review,
the claimant or his representative may submit pertinent
documents and written issues and comments.
<PAGE> 6
(iii) The Claim Manager shall decide the issue on review and
furnish the claimant with a copy within 60 days of receipt of
the claimant's request for review of his claim. The decision
on review shall be in writing and shall include specific
reasons for the decision, written in a manner calculated to
be understood by the claimant, as well as specific references
to the pertinent Plan provisions on which the decision is
based. If a copy of the decision is not so furnished to the
claimant within such 60 days, the claim shall be deemed
denied on review.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed, sealed
and attested on its behalf by its duly authorized officers and the Executive
has hereunto set his/her hand as of the day and year first above written.
ATTEST: THE STRONGSVILLE SAVINGS BANK
\s\ PAULA M. DEWEY \s\ JOHN F. ZIEGLER
- ------------------------- ---------------------------------
BY: John F. Ziegler
Executive Vice President
[Corporate Seal]
WITNESS:
\s\ PAULA M. DEWEY \s\ THOMAS P. PERCIAK
- ------------------------- ---------------------------------
Thomas P. Perciak
Executive
<PAGE> 1
EXHIBIT 10(f)
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
JOHN F. ZIEGLER
<PAGE> 2
SPLIT DOLLAR LIFE INSURANCE AGREEMENT
-------------------------------------
(COLLATERAL ASSIGNMENT APPROACH)
This Agreement is made and entered into effective April 16, 1997
between The Strongsville Savings Bank (the "Bank"), a corporation organized and
existing under the laws of the State of Ohio with its principal office at 14092
Pearl Road, Strongsville, Ohio, and John F. Ziegler (the "Executive").
WHEREAS, the Executive is and has been an employee of the Bank for
years and is presently serving as the Bank's Executive Vice President; and
WHEREAS, the Executive has rendered valuable and loyal services to the
Bank and as a result has made a substantial contribution to the success and
growth of the Bank; and
WHEREAS, the Executive's services are invaluable to the continued
growth and success of the Bank; and
WHEREAS, the Bank wishes to retain the services of the Executive, to
reward him for future contributions to the Bank, and to assist him in providing
life insurance protection for the security of his family.
IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES:
ARTICLE 1. LIFE INSURANCE POLICY
The Executive will apply to The Berkshire Life Insurance Company (the
"Insurer") for a life insurance policy on his life in the amount of $700,000.
The Executive will be the owner of the policy and retain the right to name and
change the life policy beneficiary; however, he agrees to limit his right to:
(a) Surrender the policy for its cash value;
(b) Make policy loans or cash withdrawals;
(c) Assign the policy as collateral;
(d) Change ownership of the policy, unless approved by the Bank..
The approval of the Bank will no longer be required on or
after the first to occur of:
(i) Executive's sixty-fifth (65th) birthday,
(ii) Elimination of the collateral assignment or
(iii) Insolvency or dissolution of the Bank.
<PAGE> 3
ARTICLE 2. PREMIUM PAYMENTS
On behalf of the Executive, each year the Bank will forward an amount
equal to the premium to the Insurer. Payment of an amount equal to the
"economic benefit" (PS-58 cost) shall be the responsibility of the Executive.
ARTICLE 3. COLLATERAL ASSIGNMENT
As security for the Executive's indebtedness to the Bank under this
plan, the Executive shall execute a collateral assignment in favor of the Bank.
The Executive will be free to exercise all rights, options and privileges of
ownership not otherwise limited by the collateral assignment, or Article 1 of
this Agreement.
ARTICLE 4. DIVIDEND OPTION
The parties recognize that the payment and application of dividends can
have a dramatic impact on the benefits of this Split Dollar Life Insurance
Plan. The parties intend that if any dividends are paid under this life
insurance policy, they will be added to the values of the base policy by the
purchase of additional paid-up insurance;
ARTICLE 5. TERMINATION AT DEATH
In the event of the Executive's death, the Bank will be entitled to a
return of any and all amounts it contributed to the plan as advances from the
policy death proceeds. The balance of the death proceeds shall be payable to
the beneficiaries designated by the Executive, or the Executive's estate if a
qualified beneficiary has not survived the Executive.
ARTICLE 6. TERMINATION DURING LIFE
During the Executives lifetime, this Agreement may only be terminated
at the executive's sixty-fifth (65th) birthday and the Bank agrees to limit its
right to make policy loans, unless approved by the Executive. Termination of
the Agreement will trigger repayment to the Bank of all amounts advanced or
alternate arrangement as agreed to by the parties. If the Executive does not
repay the Bank or make other arrangements with the Bank, the Bank may exercise
any of its rights under the collateral assignment. Upon settlement of the
obligation by the Executive, the Bank will release its collateral interest in
the policy.
ARTICLE 7. TERMINATION OF EMPLOYER ADVANCES
Termination of Bank advances to this plan does not of itself trigger
termination of the plan. If the Bank can no longer make payments, does not wish
to make additional payments, the policy itself does not require further
payments, or the Executive does not wish the Bank to make further payments
under this plan, the party terminating Bank payments (the Executive or the
Bank) will advise the other. Either party can then elect whether or not to
terminate the plan under Paragraph 6 above. This plan shall continue unless and
until one or both parties take
<PAGE> 4
affirmative steps to terminate the plan or circumstances so dictate.
Termination of the employment relationship due to retirement, disability or
other circumstances shall be deemed to terminate the plan. Under such
circumstances, the Executive shall continue with individual ownership of the
life insurance policy as if this plan did not exist.
ARTICLE 8. INSURER NOT A PARTY
Berkshire Life Insurance Company shall not be deemed to be a party to
this Agreement for any purpose and has not made any representations with
respect to its validity.
ARTICLE 9. CHANGE IN CONTROL OF THE BANK
In the event that there is a change in control of the Bank or the
Bank's parent company (Emerald Financial Corp. "Corporation") during the first
seven (7) years of this Split Dollar Agreement, the Bank shall contribute the
following sum of money to the policy to complete its obligation under the plan:
<TABLE>
<CAPTION>
Year Amount To Be Contributed
---- ------------------------
<S> <C>
1 $ 190,339
2 $ 168,133
3 $ 142,577
4 $ 113,349
5 $ 80,100
6 $ 42,453
7 N/A
</TABLE>
For purposes of this Agreement, a change in control shall mean:
(i) The acquisition by a person or persons acting in
concert of the power to vote twenty-five percent (25%) or
more of a class of the Corporation's voting securities, or
the acquisition by a person of the power to direct the
Corporation's management or policies, if the Board of
Directors or the Office of Thrift Supervision or successor
regulatory agency has made a determination that such
acquisition constitutes or will constitute an acquisition of
control of the Corporation for the purposes of the Savings
and Loan Holding Company Act or the Change in Bank Control
Act and the regulations thereunder;
(ii) during any period of two (2) consecutive years
during the term of this Agreement, individuals who at the
beginning of such period constitute the Board of Directors of
the Bank or Corporation cease for any reason to constitute at
least a majority thereof, unless the election of each
director who was not a director at the beginning of such
period has been approved in advance by directors representing
at least two thirds (2/3) of the directors then in office who
were directors in office at the beginning of the period:
<PAGE> 5
(iii) the Corporation shall have merged into or
consolidated with another corporation, or merged another
corporation into the Corporation, on a basis whereby less
than fifty percent (50%) of the total voting power of the
surviving corporation is represented by shares held by former
shareholders of the Corporation prior to such merger or
consolidation: or
(iv) the Corporation shall have sold substantially
all of its assets to another person. The term "person" refers
to an individual, corporation, partnership, trust,
association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or other entity.
ARTICLE 10 THE FOLLOWING PROVISIONS ARE PART OF THIS AGREEMENT AND
ARE INTENDED TO MEET THE SECURITY ACT OF 1974 REQUIREMENTS OF
THE EMPLOYEE RETIREMENT INCOME.
(a) The named fiduciary: The Strongsville Savings Bank
(b) The funding policy under this plan is that all premiums on
the Policy be remitted to the Insurer when due.
(c) Direct payment by the Insurer is the basis of payment of
benefits under this Plan, with those benefits in turn being
based on the payment of premiums as provided in the Plan.
(d) For claims procedure purposes, the "Claims Manager" shall be
the Secretary of the Bank.
(i) If for any reason a claim for benefit under this Plan is
denied by the Bank, the Claims Manager shall deliver to the
claimant a written explanation setting forth the specific
reasons for the denial, pertinent references to the Plan
section on which the denial is based, such other data as may
be pertinent and information on the procedures to be followed
by the claimant in obtaining a review of his claim, all
written in a manner calculated to be understood by the
claimant. For this purpose:
(A) The claimant's claim shall be deemed filed when
presented in writing to the Claims Manager.
(B) The Claim's Manager's explanation shall be in
writing delivered to the claimant within 90 days of
the date the claim is filed.
(ii) The claimant shall have 60 days following his receipt of
the denial of the claim to file with the Claim Manager a
written request for review of the denial. For such review,
the claimant or his representative may submit pertinent
documents and written issues and comments.
<PAGE> 6
(iii) The Claim Manager shall decide the issue on review and
furnish the claimant with a copy within 60 days of receipt of
the claimant's request for review of his claim. The decision
on review shall be in writing and shall include specific
reasons for the decision, written in a manner calculated to
be understood by the claimant, as well as specific references
to the pertinent Plan provisions on which the decision is
based. If a copy of the decision is not so furnished to the
claimant within such 60 days, the claim shall be deemed
denied on review.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed, sealed
and attested on its behalf by its duly authorized officers and the Executive
has hereunto set his/her hand as of the day and year first above written.
ATTEST: THE STRONGSVILLE SAVINGS BANK
\s\ PAULA M. DEWEY \s\ THOMAS P. PERCIAK
- -------------------------------- ----------------------------------
BY: Thomas P. Perciak
President
[Corporate Seal]
WITNESS:
\s\ PAULA M. DEWEY \s\ JOHN F. ZIEGLER
- -------------------------------- ----------------------------------
John F. Ziegler
Executive
<PAGE> 1
EXHIBIT 10(g)
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
THOMAS P. PERCIAK
<PAGE> 2
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
This AGREEMENT made and entered into effective July l5, l997 by and
between The Strongsville Savings Bank (the "Bank"), a corporation organized and
existing under the laws of the State of Ohio, with its principal office at
l4092 Pearl Road, Strongsville, Ohio, and Thomas P. Perciak (the "Executive").
WHEREAS, the Executive is and has been an employee of the Bank and
currently is serving as the Bank's President;
WHEREAS, the Bank wishes to recognize that Executive has rendered
valuable services to the Bank and has made substantial contributions to the
success and growth of the Bank;
WHEREAS, the Bank wishes to have the benefit of Executive's continued
services and to provide an incentive to Executive to continue to provide such
services and contribute to the Bank's future success and growth;
WHEREAS, the Executive is willing to continue in the employ of the
Bank and to continue to perform such duties as assigned by the Board of
Directors of the Bank, if the Bank provides the benefits specified in this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises of the parties
and the mutual benefits to be gained by the performance thereof, the parties
hereto, intending to be legally bound hereby, agree as follows:
SECTION L. DEFINITIONS.
As used in this Agreement, the following terms shall have the meanings
indicated:
(a) "Bank" shall mean, in addition to The Strongsville Savings Bank,
any parent or subsidiary of The Strongsville Savings Bank.
(b) "Retirement Date" shall mean the first day of any calendar month
following the Executive's 65th birthday on which the Executive elects to
retire, or such earlier date as the Board of Directors of the Bank, by
resolution, may agree to grant Executive early retirement.
(c) "Account Balance" shall mean all amounts provided for in this
Agreement, including the Bank's initial contribution as defined in Section 8
(a), and any earnings or appreciation thereon. The Account Balance shall be
maintained and invested by the Bank on behalf of the Executive. Although the
<PAGE> 3
Account Balance shall remain an asset of the Bank until it is distributed, the
Account Balance shall be segregated from the Bank's other assets.
SECTION 2. SUPPLEMENTAL RETIREMENT BENEFITS.
(a) Provided that Executive has remained continuously in the employ of
the Bank (except for normal vacation time and such other leaves of absence as
may be approved by the Board of Directors of the Bank), the Executive shall
vest in the Account Balance provided for in this Agreement each year on a pro
rata basis beginning with the one year anniversary date of the effective date
of this Agreement and continuing with each succeeding annual anniversary date
thereafter until the Executive's attainment of age sixty-five (65). Upon the
Executive's attainment of age sixty-five (65), the Executive shall be fully
vested in the Account Balance. In the event that the Executive dies or becomes
permanently disabled while in the employ of the Bank and prior to age
sixty-five (65), the Account Balance will fully vest upon the death or
permanent disability.
(b) As of the first day of the calendar month following the
Executive's Retirement Date and on each annual anniversary date thereafter, the
Executive's vested Account Balance shall be distributed to the Executive in
annual installments on a pro rata basis each year for a period of twenty (20)
years.
(c) The Executive may petition the Compensation Committee of the Board
of Directors of the Bank, to have the entire vested Account Balance paid in a
single lump sum rather than in annual installments as provided in Paragraph (b)
of this Section.
SECTION 3. EARLY RETIREMENT
In the event the Executive wishes to retire prior to attaining age
sixty-five (65), the Board of Directors of the Bank may agree, by resolution,
to fully vest the Executive in the entire Account Balance. The Board of
Directors of the Bank may also agree, by resolution and with the approval of
the Executive, to begin payment of the Executive's Account Balance prior to the
Executive's attainment of age sixty-five (65). However, in no event may the
amounts paid to the Executive be less than his entire vested Account Balance
and the distributions of such must begin no later than the first day of the
calendar month following the Executive's attainment of age sixty-five (65).
SECTION 4. DISABILITY
(a) For purposes of this Agreement, total disability means the
Executive's inability to engage in his occupation as a result of a bodily
injury or sickness. If this disability lasts for twenty-four (24) consecutive
months, then for the rest of the period of such disability, total disability
means his inability to engage in any gainful occupation for which he is fitted
due to your education, training and experience. Any one of the following events
also constitutes total disability: the total and irrecoverable loss of speech
or hearing; the loss of sight of both eyes; the severance of both hands at or
above the wrist; the severance of both feet at or above the ankles; or the
severance of one entire hand and one entire foot.
<PAGE> 4
(b) If any dispute arises as to whether the Executive is or was
physically or mentally unable to perform his duties pursuant to this Agreement,
or whether his disability has ceased and he is able to resume his duties, the
parties shall submit such questions to a licensed physician agreed upon by the
parties, or, if the parties are unable to agree, to a licensed physician
appointed by the President of the Academy of Medicine of Cleveland, Cleveland,
Ohio, at the request of either party. The Executive shall submit to such
examinations and provide information as such physician may request and the
determination of such physical as to Executive's physical or mental condition
shall be binding and conclusive on the parties. The Bank agrees to pay the cost
of any such physician and examinations.
SECTION 5. DEATH BENEFITS.
(a) In the event that Executive dies while in the employ of the Bank
and prior to the Retirement Date, Executive's designated beneficiary shall
succeed to the rights of Executive to receive the distributions from the
Account Balance under Section 2(b) hereof, and the date of Executive's death
shall be deemed to be the Retirement Date hereunder. It is hereby expressly
acknowledged that the Executive's designated beneficiary shall also have the
right under Section 2(c) hereof to petition the Compensation Committee of the
Board of Directors to have the Account Balance paid as a lump sum. If no
beneficiary has been designated by Executive, such amounts shall be paid to
Executive's estate in annual installments, it being expressly acknowledged that
Executive's estate has the right to petition that the Account Balance be
distributed in a lump sum as provided in Section 2(c) hereof.
(b) In the event that the Executive dies while receiving distributions
from the Account Balance during retirement, the Executive's designated
beneficiary shall succeed to the rights of the Executive to receive the
distributions under Section 2(b) or Section 2(c) hereof. If no beneficiary has
been designated by the Executive, such amounts shall be paid to the Executive's
estate in annual installments, it being expressly acknowledged that the
Executive's estate has the right to petition that the Account Balance be
distributed in a lump sum as provided in Section 2(c) hereof.
SECTION 6. CHANGE IN CONTROL OF THE BANK.
(a) This Agreement shall be binding upon and inure to the benefit of
all successors and assigns of the Bank and Executive. In the event of a change
in control of the Bank, the entire Account Balance provided for hereof shall
become vested and be immediately paid in full to the Executive.
(b) For purposes of this Agreement, a change in control shall mean:
(i) The acquisition by a person or persons acting in
concert of the power to vote twenty-five percent (25%) or more of
a class of the voting securities of Emerald Financial Corp.
("Corporation"), or the acquisition by a person of the power to
direct the Corporation's management or policies, if the Board of
Directors or the Office of Thrift Supervision or successor
regulatory agency has made a determination that such acquisition
constitutes or will constitute an acquisition of control of the
Corporation for the purposes
<PAGE> 5
of the Savings and Loan Holding Company Act or the Change in Bank
Control Act and the regulations thereunder;
(ii) during any period of two (2) consecutive years during
the term of this Agreement, individuals who at the beginning of
such period constitute the Board of Directors of the Bank or
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been approved
in advance by directors representing at least two thirds (2/3) of
the directors then in office who were directors in office at the
beginning of the period:
(iii) the Corporation shall have merged into or consolidated
with another corporation, or merged another corporation into the
Corporation, on a basis whereby less than fifty percent (50%) of
the total voting power of the surviving corporation is
represented by shares held by former shareholders of the
Corporation prior to such merger or consolidation: or
(iv) the Corporation shall have sold substantially all of
its assets to another person. The term "person" refers to an
individual, corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated
organization or other entity.
SECTION 7. TERMINATION FOR CAUSE OR AS A RESULT OF CERTAIN REGULATORY
ACTIONS.
(a) In the event of the termination of Executive for Cause, the Bank
shall have no further obligations under this Agreement other than payment to
the Executive at the Retirement Date of any vested portion of the Account
Balance.
(b) For purposes of the Agreement, Cause shall be defined as
termination as a result of Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.
(c) If any of the events specified in Section 563.39(b)(2) through (5)
of the OTS regulations (or any successor provision thereto) shall occur,
Executive's rights under this Agreement shall be determined in accordance with
the provisions of such Sections.
SECTION 8. FUNDING OF BENEFITS.
(a) An initial amount of $645,000.00 shall represent the Bank's
initial contribution under this Agreement. Although this amount will remain as
an asset of the Bank, it shall be segregated from the Bank's other assets and
maintained in an account on behalf of the Executive. The entire Account
<PAGE> 6
Balance shall be invested and the earnings and appreciation thereon shall
accrue to the Executive's Account Balance.
(b) The Executive shall be credited with the earnings on the Account
Balance as of the end of each year. In the event that the Executive's Account
Balance is distributed other than at the end of any year, the account shall be
credited with earnings thereon from the end of the immediately preceding year
to the date of the distribution. No earnings shall be credited to the Executive
after the date of the distribution of his balance. Earnings to be credited for
any period shall be at a rate equal to the time weighted return earned during
the corresponding year on the Account Balance held on behalf of the Executive.
(c) The right of the Executive or any successor or assign of the
Executive to receive distributions from the Account Balance under this
Agreement shall be no greater than the rights of an unsecured creditor of the
Bank.
SECTION 9. NOTICES.
All notices or other communications under this Agreement shall be made
in writing as follows:
(a) If to the Bank:
Corporate Secretary
The Strongsville Savings Bank
l4092 Pearl Road
Strongsville, Ohio 44l36
(b) If to the Executive:
Mr. Thomas P. Perciak
17429 Falmouth Drive
Strongsville, Ohio 44136
SECTION 10. CLAIMS PROCEDURES.
Claims under this Agreement shall be made in writing by Executive or
his duly authorized representative pursuant to Section 9 hereof. All claims
shall be processed within l5 days of receipt by the Bank. If a claim under this
Agreement is wholly or partially denied, the Bank shall provide a written
notice to the Executive within five (5) business days of such denial, setting
forth:
(a) The specific reason or reasons for the denial;
(b) Specific reference to the pertinent provisions of this Agreement
upon which the denial is based; and
<PAGE> 7
(c) A description of any additional material or information necessary
for Executive to perfect the claim and an explanation of why such material or
information is necessary.
Within 15 days of receipt of such additional material or information
or receipt of Executive's request for a review of the denial of his claim, the
Bank shall provide Executive with its final determination of his claim.
In the event that Executive disputes the Bank's final determination of
his claim, such dispute shall be subject to final and binding arbitration in
the City of Cleveland, County of Cuyahoga, Ohio, pursuant to the rules and
procedures of the American Arbitration Association.
SECTION 11. PAYMENT OF TAXES.
The Bank shall have the right to deduct from all benefits paid
hereunder any Federal, state or local taxes required by law to be withheld with
respect to such benefit payments.
SECTION 12. NO ATTACHMENT.
Neither this Agreement nor any benefit payable under this Agreement
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge or to execution, attachment, levy or
similar process or assignment by operation of law, and any attempt, voluntary
or involuntary, to effect any such action shall be void and of no effect.
SECTION 13. ENTIRE AGREEMENT: NO EMPLOYMENT AGREEMENT.
This Agreement contains the entire understanding between the parties
hereto with respect to the matters covered herein, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to
Executive of a kind elsewhere provided and not expressly provided in this
Agreement. This Agreement shall not be construed as an employment contract, nor
shall it be construed in any manner so as to restrict the Bank's or the
Executive's ability to terminate his/her employment with the Bank.
SECTION 14. AMENDMENT.
This Agreement may not be modified or amended by the parties hereto
except by an instrument in writing signed by all of the parties.
<PAGE> 8
SECTION 15. SEVERABILITY.
If, for any reason, any provision of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
so invalid, and each such other provision shall, to the full extent consistent
with the law, continue in full force and effect. If any provision of this
Agreement shall be held invalid in part, such invalidity shall in no way affect
the rest of such provision not held so invalid, and the rest of such provision,
together with all other provisions of this Agreement shall, to the full extent
consistent with the law, continue in full force and effect.
SECTION 16. HEADINGS.
The headings of Sections herein are included solely for convenience of
reference and shall not affect the meaning or interpretation of any provision
of this Agreement.
SECTION 17. GOVERNING LAW.
This Agreement was made and entered into in the State of Ohio and the
laws of said State shall govern the interpretation, construction and legal
effect of this Agreement and the rights and liabilities of the parties hereto.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed, sealed
and attested on its behalf by its duly authorized officers and the Executive
has hereunto set his/her hand as of the day and year first above written.
ATTEST: THE STRONGSVILLE SAVINGS BANK
\s\ PAULA M. DEWEY \s\ JOHN F. ZIEGLER
- -------------------------- ----------------------------
BY: John F. Ziegler
Executive Vice President
[Corporate Seal]
WITNESS:
\s\ PAULA M. DEWEY \s\ THOMAS P. PERCIAK
- -------------------------- ----------------------------
Thomas P. Perciak
Executive
<PAGE> 1
EXHIBIT 10(h)
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
JOHN F. ZIEGLER
<PAGE> 2
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
This AGREEMENT made and entered into effective July l5, l997 by and
between The Strongsville Savings Bank (the "Bank"), a corporation organized and
existing under the laws of the State of Ohio, with its principal office at
l4092 Pearl Road, Strongsville, Ohio, and John F. Ziegler (the "Executive").
WHEREAS, the Executive is and has been an employee of the Bank and
currently is serving as the Bank's Executive Vice President;
WHEREAS, the Bank wishes to recognize that Executive has rendered
valuable services to the Bank and has made substantial contributions to the
success and growth of the Bank;
WHEREAS, the Bank wishes to have the benefit of Executive's continued
services and to provide an incentive to Executive to continue to provide such
services and contribute to the Bank's future success and growth;
WHEREAS, the Executive is willing to continue in the employ of the
Bank and to continue to perform such duties as assigned by the Board of
Directors of the Bank, if the Bank provides the benefits specified in this
Agreement;
NOW, THEREFORE, in consideration of the mutual promises of the parties
and the mutual benefits to be gained by the performance thereof, the parties
hereto, intending to be legally bound hereby, agree as follows:
SECTION L. DEFINITIONS.
As used in this Agreement, the following terms shall have the meanings
indicated:
(a) "Bank" shall mean, in addition to The Strongsville Savings Bank,
any parent or subsidiary of The Strongsville Savings Bank.
(b) "Retirement Date" shall mean the first day of any calendar month
following the Executive's 65th birthday on which the Executive elects to
retire, or such earlier date as the Board of Directors of the Bank, by
resolution, may agree to grant Executive early retirement.
(c) "Account Balance" shall mean all amounts provided for in this
Agreement, including the Bank's initial contribution as defined in Section
8(a), and any earnings or appreciation thereon. The Account Balance shall be
maintained and invested by the Bank on behalf of the Executive. Although the
<PAGE> 3
Account Balance shall remain an asset of the Bank until it is distributed, the
Account Balance shall be segregated from the Bank's other assets.
SECTION 2. SUPPLEMENTAL RETIREMENT BENEFITS.
(a) Provided that Executive has remained continuously in the employ of
the Bank (except for normal vacation time and such other leaves of absence as
may be approved by the Board of Directors of the Bank), the Executive shall
vest in the Account Balance provided for in this Agreement each year on a pro
rata basis beginning with the one year anniversary date of the effective date
of this Agreement and continuing with each succeeding annual anniversary date
thereafter until the Executive's attainment of age sixty-five (65). Upon the
Executive's attainment of age sixty-five (65), the Executive shall be fully
vested in the Account Balance. In the event that the Executive dies or becomes
permanently disabled while in the employ of the Bank and prior to age
sixty-five (65), the Account Balance will fully vest upon the death or
permanent disability.
(b) As of the first day of the calendar month following the
Executive's Retirement Date and on each annual anniversary date thereafter, the
Executive's vested Account Balance shall be distributed to the Executive in
annual installments on a pro rata basis each year for a period of twenty (20)
years.
(c) The Executive may petition the Compensation Committee of the Board
of Directors of the Bank, to have the entire vested Account Balance paid in a
single lump sum rather than in annual installments as provided in Paragraph (b)
of this Section.
SECTION 3. EARLY RETIREMENT
In the event the Executive wishes to retire prior to attaining age
sixty-five (65), the Board of Directors of the Bank may agree, by resolution,
to fully vest the Executive in the entire Account Balance. The Board of
Directors of the Bank may also agree, by resolution and with the approval of
the Executive, to begin payment of the Executive's Account Balance prior to the
Executive's attainment of age sixty-five (65). However, in no event may the
amounts paid to the Executive be less than his entire vested Account Balance
and the distributions of such must begin no later than the first day of the
calendar month following the Executive's attainment of age sixty-five (65).
SECTION 4. DISABILITY
(a) For purposes of this Agreement, total disability means the
Executive's inability to engage in his occupation as a result of a bodily
injury or sickness. If this disability lasts for twenty-four (24) consecutive
months, then for the rest of the period of such disability, total disability
means his inability to engage in any gainful occupation for which he is fitted
due to your education, training and experience. Any one of the following events
also constitutes total disability: the total and irrecoverable loss of speech
or hearing; the loss of sight of both eyes; the severance of both hands at or
above the wrist; the severance of both feet at or above the ankles; or the
severance of one entire hand and one entire foot.
<PAGE> 4
(b) If any dispute arises as to whether the Executive is or was
physically or mentally unable to perform his duties pursuant to this Agreement,
or whether his disability has ceased and he is able to resume his duties, the
parties shall submit such questions to a licensed physician agreed upon by the
parties, or, if the parties are unable to agree, to a licensed physician
appointed by the President of the Academy of Medicine of Cleveland, Cleveland,
Ohio, at the request of either party. The Executive shall submit to such
examinations and provide information as such physician may request and the
determination of such physical as to Executive's physical or mental condition
shall be binding and conclusive on the parties. The Bank agrees to pay the cost
of any such physician and examinations.
SECTION 5. DEATH BENEFITS.
(a) In the event that Executive dies while in the employ of the Bank
and prior to the Retirement Date, Executive's designated beneficiary shall
succeed to the rights of Executive to receive the distributions from the
Account Balance under Section 2(b) hereof, and the date of Executive's death
shall be deemed to be the Retirement Date hereunder. It is hereby expressly
acknowledged that the Executive's designated beneficiary shall also have the
right under Section 2(c) hereof to petition the Compensation Committee of the
Board of Directors to have the Account Balance paid as a lump sum. If no
beneficiary has been designated by Executive, such amounts shall be paid to
Executive's estate in annual installments, it being expressly acknowledged that
Executive's estate has the right to petition that the Account Balance be
distributed in a lump sum as provided in Section 2(c) hereof.
(b) In the event that the Executive dies while receiving distributions
from the Account Balance during retirement, the Executive's designated
beneficiary shall succeed to the rights of the Executive to receive the
distributions under Section 2(b) or Section 2(c) hereof. If no beneficiary has
been designated by the Executive, such amounts shall be paid to the Executive's
estate in annual installments, it being expressly acknowledged that the
Executive's estate has the right to petition that the Account Balance be
distributed in a lump sum as provided in Section 2(c) hereof.
SECTION 6. CHANGE IN CONTROL OF THE BANK.
(a) This Agreement shall be binding upon and inure to the benefit of
all successors and assigns of the Bank and Executive. In the event of a change
in control of the Bank, the entire Account Balance provided for hereof shall
become vested and be immediately paid in full to the Executive.
(b) For purposes of this Agreement, a change in control shall mean:
(i) The acquisition by a person or persons acting in concert
of the power to vote twenty-five percent (25%) or more of a class
of the voting securities of Emerald Financial Corp.
("Corporation"), or the acquisition by a person of the power to
direct the Corporation's management or policies, if the Board of
Directors or the Office of Thrift Supervision or successor
regulatory agency has made a determination that such acquisition
constitutes or will constitute an acquisition of control of the
Corporation for the purposes
<PAGE> 5
of the Savings and Loan Holding Company Act or the Change in Bank
Control Act and the regulations thereunder;
(ii) during any period of two (2) consecutive years during
the term of this Agreement, individuals who at the beginning of
such period constitute the Board of Directors of the Bank or
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been approved
in advance by directors representing at least two thirds (2/3) of
the directors then in office who were directors in office at the
beginning of the period:
(iii) the Corporation shall have merged into or consolidated
with another corporation, or merged another corporation into the
Corporation, on a basis whereby less than fifty percent (50%) of
the total voting power of the surviving corporation is
represented by shares held by former shareholders of the
Corporation prior to such merger or consolidation: or
(iv) the Corporation shall have sold substantially all of
its assets to another person. The term "person" refers to an
individual, corporation, partnership, trust, association, joint
venture, pool, syndicate, sole proprietorship, unincorporated
organization or other entity.
SECTION 7. TERMINATION FOR CAUSE OR AS A RESULT OF CERTAIN REGULATORY
ACTIONS.
(a) In the event of the termination of Executive for Cause, the Bank
shall have no further obligations under this Agreement other than payment to
the Executive at the Retirement Date of any vested portion of the Account
Balance.
(b) For purposes of the Agreement, Cause shall be defined as
termination as a result of Executive's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order, or material breach of any provision of this Agreement.
(c) If any of the events specified in Section 563.39(b)(2) through (5)
of the OTS regulations (or any successor provision thereto) shall occur,
Executive's rights under this Agreement shall be determined in accordance with
the provisions of such Sections.
SECTION 8. FUNDING OF BENEFITS.
(a) An initial amount of $307,827.00 shall represent the Bank's
initial contribution under this Agreement. Although this amount will remain as
an asset of the Bank, it shall be segregated from the Bank's other assets and
maintained in an account on behalf of the Executive. The entire Account Balance
shall be invested and the earnings and appreciation thereon shall accrue to the
Executive's Account Balance.
<PAGE> 6
(b) The Executive shall be credited with the earnings on the Account
Balance as of the end of each year. In the event that the Executive's Account
Balance is distributed other than at the end of any year, the account shall be
credited with earnings thereon from the end of the immediately preceding year
to the date of the distribution. No earnings shall be credited to the Executive
after the date of the distribution of his balance. Earnings to be credited for
any period shall be at a rate equal to the time weighted return earned during
the corresponding year on the Account Balance held on behalf of the Executive.
(c) The right of the Executive or any successor or assign of the
Executive to receive distributions from the Account Balance under this
Agreement shall be no greater than the rights of an unsecured creditor of the
Bank.
SECTION 9. NOTICES.
All notices or other communications under this Agreement shall be made
in writing as follows:
(a) If to the Bank:
Corporate Secretary
The Strongsville Savings Bank
l4092 Pearl Road
Strongsville, Ohio 44l36
(b) If to the Executive:
Mr. John F. Ziegler
17889 Monterey Pine Drive
Strongsville, Ohio 44136
SECTION 10. CLAIMS PROCEDURES.
Claims under this Agreement shall be made in writing by Executive or
his duly authorized representative pursuant to Section 9 hereof. All claims
shall be processed within l5 days of receipt by the Bank. If a claim under this
Agreement is wholly or partially denied, the Bank shall provide a written
notice to the Executive within five (5) business days of such denial, setting
forth:
(a) The specific reason or reasons for the denial;
(b) Specific reference to the pertinent provisions of this Agreement
upon which the denial is based; and
(c) A description of any additional material or information necessary
for Executive to perfect the claim and an explanation of why such material or
information is necessary.
<PAGE> 7
Within 15 days of receipt of such additional material or information
or receipt of Executive's request for a review of the denial of his claim, the
Bank shall provide Executive with its final determination of his claim.
In the event that Executive disputes the Bank's final determination of
his claim, such dispute shall be subject to final and binding arbitration in
the City of Cleveland, County of Cuyahoga, Ohio, pursuant to the rules and
procedures of the American Arbitration Association.
SECTION 11. PAYMENT OF TAXES.
The Bank shall have the right to deduct from all benefits paid
hereunder any Federal, state or local taxes required by law to be withheld with
respect to such benefit payments.
SECTION 12. NO ATTACHMENT.
Neither this Agreement nor any benefit payable under this Agreement
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge or to execution, attachment, levy or
similar process or assignment by operation of law, and any attempt, voluntary
or involuntary, to effect any such action shall be void and of no effect.
SECTION 13. ENTIRE AGREEMENT: NO EMPLOYMENT AGREEMENT.
This Agreement contains the entire understanding between the parties
hereto with respect to the matters covered herein, except that this Agreement
shall not affect or operate to reduce any benefit or compensation inuring to
Executive of a kind elsewhere provided and not expressly provided in this
Agreement. This Agreement shall not be construed as an employment contract, nor
shall it be construed in any manner so as to restrict the Bank's or the
Executive's ability to terminate his/her employment with the Bank.
SECTION 14. AMENDMENT.
This Agreement may not be modified or amended by the parties hereto
except by an instrument in writing signed by all of the parties.
SECTION 15. SEVERABILITY.
If, for any reason, any provision of this Agreement is held invalid,
such invalidity shall not affect any other provision of this Agreement not held
so invalid, and each such other provision shall, to the full extent consistent
with the law, continue in full force and effect. If any provision of this
Agreement shall be held invalid in part, such invalidity shall in no way affect
the rest of such provision not held so invalid,
<PAGE> 8
and the rest of such provision, together with all other provisions of this
Agreement shall, to the full extent consistent with the law, continue in full
force and effect.
SECTION 16. HEADINGS.
The headings of Sections herein are included solely for convenience of
reference and shall not affect the meaning or interpretation of any provision
of this Agreement.
SECTION 17. GOVERNING LAW.
This Agreement was made and entered into in the State of Ohio and the
laws of said State shall govern the interpretation, construction and legal
effect of this Agreement and the rights and liabilities of the parties hereto.
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed, sealed
and attested on its behalf by its duly authorized officers and the Executive
has hereunto set his/her hand as of the day and year first above written.
ATTEST: THE STRONGSVILLE SAVINGS BANK
\s\ PAULA M. DEWEY \s\ THOMAS P. PERCIAK
- ------------------------------ -------------------------------
BY: Thomas P. Perciak
President
[Corporate Seal]
WITNESS:
\s\ PAULA M. DEWEY \s\ JOHN F. ZIEGLER
- ------------------------------ -------------------------------
John F. Ziegler
Executive
<PAGE> 1
EXHIBIT 10(i)
AMENDMENT NO. 1 TO
THE SEVERANCE AGREEMENT
PAULA M. DEWEY
<PAGE> 2
AMENDMENT NO. 1
TO
THE SEVERANCE AGREEMENT
The term "Change in Control, " "Change in Control of the Bank" or
"Change in Control of the Corporation" as used in this Severance Agreement (the
"Agreement")] is amended effective as of this 16th day of July, 1997 to read as
set forth hereinafter. From and after the date hereof, any reference herein or
in the Agreement to the "Corporation" or the "Company" shall mean Emerald
Financial Corp., an Ohio corporation, and any reference to the "Bank" shall mean
The Strongsville Savings Bank, an Ohio-chartered savings and loan association.
For purposes of the Agreement, a "Change in Control" shall mean:
(i) The acquisition by a person or persons acting in concert of the
power to vote twenty five percent (25%) or more of a class of
the Corporation's voting securities, or the acquisition by a
person of the power to direct the Corporation's management or
policies, if the Board of Directors or the Office of Thrift
Supervision has made a determination that such acquisition
constitutes or will constitute an acquisition of control of the
Corporation for the purposes of the Savings and Loan Holding
Company Act or the Change in Bank Control Act and the
regulations thereunder;
(ii) during any period of two (2) consecutive years during the term
of this Agreement, individuals who at the beginning of such
period constitute the Board of Directors of the Bank or the
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been approved
in advance by directors representing at least two thirds (2/3)
of the directors then in office who were directors in office at
the beginning of the period;
(iii) the Corporation shall have merged into or consolidated with
another corporation, or merged another corporation into the
Corporation, on a basis whereby less than fifty percent (50%) of
the total voting power of the surviving corporation is
represented by shares held by former shareholders of the
Corporation prior to such merger or consolidation; or
(iv) the Corporation shall have sold substantially all of its assets
to another person. The term "person" refers to an individual,
corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated
organization or other entity.
<PAGE> 3
IN WITNESS WHEREOF, we have hereunto set our hands as of this 16th day of July
1997.
THE STRONGSVILLE SAVINGS BANK EXECUTIVE
By: \s\ JOHN F. ZIEGLER \s\ PAULA M. DEWEY
----------------------------------- -----------------------
John F. Ziegler Paula M. Dewey
Its: Executive Vice President
EMERALD FINANCIAL CORP.
By: \s\ JOHN F. ZIEGLER
-----------------------------------
John F. Ziegler
Its: Executive Vice President
<PAGE> 1
EXHIBIT 10(j)
AMENDMENT NO. 1 TO
THE SEVERANCE AGREEMENT
CYNTHIA W. GANNON
<PAGE> 2
AMENDMENT NO. 1
TO
THE SEVERANCE AGREEMENT
The term "Change in Control, " "Change in Control of the Bank" or
"Change in Control of the Corporation" as used in this Severance Agreement (the
"Agreement")] is amended effective as of this 16th day of July, 1997 to read as
set forth hereinafter. From and after the date hereof, any reference herein or
in the Agreement to the "Corporation" or the "Company" shall mean Emerald
Financial Corp., an Ohio corporation, and any reference to the "Bank" shall mean
The Strongsville Savings Bank, an Ohio-chartered savings and loan association.
For purposes of the Agreement, a "Change in Control" shall mean:
(i) The acquisition by a person or persons acting in concert of the
power to vote twenty five percent (25%) or more of a class of
the Corporation's voting securities, or the acquisition by a
person of the power to direct the Corporation's management or
policies, if the Board of Directors or the Office of Thrift
Supervision has made a determination that such acquisition
constitutes or will constitute an acquisition of control of the
Corporation for the purposes of the Savings and Loan Holding
Company Act or the Change in Bank Control Act and the
regulations thereunder;
(ii) during any period of two (2) consecutive years during the term
of this Agreement, individuals who at the beginning of such
period constitute the Board of Directors of the Bank or the
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been approved
in advance by directors representing at least two thirds (2/3)
of the directors then in office who were directors in office at
the beginning of the period;
(iii) the Corporation shall have merged into or consolidated with
another corporation, or merged another corporation into the
Corporation, on a basis whereby less than fifty percent (50%) of
the total voting power of the surviving corporation is
represented by shares held by former shareholders of the
Corporation prior to such merger or consolidation; or
(iv) the Corporation shall have sold substantially all of its assets
to another person. The term "person" refers to an individual,
corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated
organization or other entity.
<PAGE> 3
IN WITNESS WHEREOF, we have hereunto set our hands as of this 16th day of July
1997.
THE STRONGSVILLE SAVINGS BANK EXECUTIVE
By: \s\ JOHN F. ZIEGLER \s\ CYNTHIA W. GANNON
------------------------------------ ------------------------
John F. Ziegler Cynthia W. Gannon
Its: Executive Vice President
EMERALD FINANCIAL CORP.
By: \s\ JOHN F. ZIEGLER
------------------------------------
John F. Ziegler
Its: Executive Vice President
<PAGE> 1
EXHIBIT 10(k)
AMENDMENT NO. 1 TO
THE SEVERANCE AGREEMENT
WILLIAM J. HARR, JR.
<PAGE> 2
AMENDMENT NO. 1
TO
THE SEVERANCE AGREEMENT
The term "Change in Control, " "Change in Control of the Bank" or
"Change in Control of the Corporation" as used in this Severance Agreement (the
"Agreement")] is amended effective as of this 16th day of July, 1997 to read as
set forth hereinafter. From and after the date hereof, any reference herein or
in the Agreement to the "Corporation" or the "Company" shall mean Emerald
Financial Corp., an Ohio corporation, and any reference to the "Bank" shall mean
The Strongsville Savings Bank, an Ohio-chartered savings and loan association.
For purposes of the Agreement, a "Change in Control" shall mean:
(i) The acquisition by a person or persons acting in concert of the
power to vote twenty five percent (25%) or more of a class of
the Corporation's voting securities, or the acquisition by a
person of the power to direct the Corporation's management or
policies, if the Board of Directors or the Office of Thrift
Supervision has made a determination that such acquisition
constitutes or will constitute an acquisition of control of the
Corporation for the purposes of the Savings and Loan Holding
Company Act or the Change in Bank Control Act and the
regulations thereunder;
(ii) during any period of two (2) consecutive years during the term
of this Agreement, individuals who at the beginning of such
period constitute the Board of Directors of the Bank or the
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been approved
in advance by directors representing at least two thirds (2/3)
of the directors then in office who were directors in office at
the beginning of the period;
(iii) the Corporation shall have merged into or consolidated with
another corporation, or merged another corporation into the
Corporation, on a basis whereby less than fifty percent (50%) of
the total voting power of the surviving corporation is
represented by shares held by former shareholders of the
Corporation prior to such merger or consolidation; or
(iv) the Corporation shall have sold substantially all of its assets
to another person. The term "person" refers to an individual,
corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated
organization or other entity.
<PAGE> 3
IN WITNESS WHEREOF, we have hereunto set our hands as of this 16th day of July
1997.
THE STRONGSVILLE SAVINGS BANK EXECUTIVE
By: \s\ JOHN F. ZIEGLER \s\ WILLIAM J. HARR, JR.
----------------------------- ------------------------
John F. Ziegler William J. Harr, Jr.
Its: Executive Vice President
EMERALD FINANCIAL CORP.
By: \s\ JOHN F. ZIEGLER
-----------------------------
John F. Ziegler
Its: Executive Vice President
<PAGE> 1
EXHIBIT 10(l)
AMENDMENT NO. 1 TO
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
PAULA M. DEWEY
<PAGE> 2
AMENDMENT NO. 1
TO
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
The term "Change in Control, " "Change in Control of the Bank" or
"Change in Control of the Corporation" as used in this Executive Supplemental
Benefit Agreement (the "Agreement")] is amended effective as of this 16th day of
July, 1997 to read as set forth hereinafter. From and after the date hereof, any
reference herein or in the Agreement to the "Corporation" or the "Company" shall
mean Emerald Financial Corp., an Ohio corporation, and any reference to the
"Bank" shall mean The Strongsville Savings Bank, an Ohio-chartered savings and
loan association.
For purposes of the Agreement, a "Change in Control" shall mean:
(i) The acquisition by a person or persons acting in concert of the
power to vote twenty five percent (25%) or more of a class of
the Corporation's voting securities, or the acquisition by a
person of the power to direct the Corporation's management or
policies, if the Board of Directors or the Office of Thrift
Supervision has made a determination that such acquisition
constitutes or will constitute an acquisition of control of the
Corporation for the purposes of the Savings and Loan Holding
Company Act or the Change in Bank Control Act and the
regulations thereunder;
(ii) during any period of two (2) consecutive years during the term
of this Agreement, individuals who at the beginning of such
period constitute the Board of Directors of the Bank or the
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been approved
in advance by directors representing at least two thirds (2/3)
of the directors then in office who were directors in office at
the beginning of the period;
(iii) the Corporation shall have merged into or consolidated with
another corporation, or merged another corporation into the
Corporation, on a basis whereby less than fifty percent (50%) of
the total voting power of the surviving corporation is
represented by shares held by former shareholders of the
Corporation prior to such merger or consolidation; or
(iv) the Corporation shall have sold substantially all of its assets
to another person. The term "person" refers to an individual,
corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated
organization or other entity.
<PAGE> 3
IN WITNESS WHEREOF, we have hereunto set our hands as of this 16th day of July
1997.
THE STRONGSVILLE SAVINGS BANK EXECUTIVE
By: \s\ JOHN F. ZIEGLER \s\ PAULA M. DEWEY
---------------------------------- -----------------------
John F. Ziegler Paula M. Dewey
Its: Executive Vice President
EMERALD FINANCIAL CORP.
By: \s\ JOHN F. ZIEGLER
----------------------------------
John F. Ziegler
Its: Executive Vice President
<PAGE> 1
EXHIBIT 10(m)
AMENDMENT NO. 1 TO
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
CYNTHIA W. GANNON
<PAGE> 2
AMENDMENT NO. 1
TO
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
The term "Change in Control, " "Change in Control of the Bank" or
"Change in Control of the Corporation" as used in this Executive Supplemental
Benefit Agreement (the "Agreement")] is amended effective as of this 16th day of
July, 1997 to read as set forth hereinafter. From and after the date hereof, any
reference herein or in the Agreement to the "Corporation" or the "Company" shall
mean Emerald Financial Corp., an Ohio corporation, and any reference to the
"Bank" shall mean The Strongsville Savings Bank, an Ohio-chartered savings and
loan association.
For purposes of the Agreement, a "Change in Control" shall mean:
(i) The acquisition by a person or persons acting in concert of the
power to vote twenty five percent (25%) or more of a class of
the Corporation's voting securities, or the acquisition by a
person of the power to direct the Corporation's management or
policies, if the Board of Directors or the Office of Thrift
Supervision has made a determination that such acquisition
constitutes or will constitute an acquisition of control of the
Corporation for the purposes of the Savings and Loan Holding
Company Act or the Change in Bank Control Act and the
regulations thereunder;
(ii) during any period of two (2) consecutive years during the term
of this Agreement, individuals who at the beginning of such
period constitute the Board of Directors of the Bank or the
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been approved
in advance by directors representing at least two thirds (2/3)
of the directors then in office who were directors in office at
the beginning of the period;
(iii) the Corporation shall have merged into or consolidated with
another corporation, or merged another corporation into the
Corporation, on a basis whereby less than fifty percent (50%) of
the total voting power of the surviving corporation is
represented by shares held by former shareholders of the
Corporation prior to such merger or consolidation; or
(iv) the Corporation shall have sold substantially all of its assets
to another person. The term "person" refers to an individual,
corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated
organization or other entity.
<PAGE> 3
IN WITNESS WHEREOF, we have hereunto set our hands as of this 16th day of July
1997.
THE STRONGSVILLE SAVINGS BANK EXECUTIVE
By: \s\ JOHN F. ZIEGLER \s\ CYNTHIA W. GANNON
--------------------------------- ---------------------------------
John F. Ziegler Cynthia W. Gannon
Its: Executive Vice President
EMERALD FINANCIAL CORP.
By: \s\ JOHN F. ZIEGLER
---------------------------------
John F. Ziegler
Its: Executive Vice President
<PAGE> 1
EXHIBIT 10(n)
AMENDMENT NO. 1 TO
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
WILLIAM J. HARR, JR.
<PAGE> 2
AMENDMENT NO. 1
TO
EXECUTIVE SUPPLEMENTAL BENEFIT AGREEMENT
The term "Change in Control, " "Change in Control of the Bank" or
"Change in Control of the Corporation" as used in this Executive Supplemental
Benefit Agreement (the "Agreement")] is amended effective as of this 16th day of
July, 1997 to read as set forth hereinafter. From and after the date hereof, any
reference herein or in the Agreement to the "Corporation" or the "Company" shall
mean Emerald Financial Corp., an Ohio corporation, and any reference to the
"Bank" shall mean The Strongsville Savings Bank, an Ohio-chartered savings and
loan association.
For purposes of the Agreement, a "Change in Control" shall mean:
(i) The acquisition by a person or persons acting in concert of the
power to vote twenty five percent (25%) or more of a class of
the Corporation's voting securities, or the acquisition by a
person of the power to direct the Corporation's management or
policies, if the Board of Directors or the Office of Thrift
Supervision has made a determination that such acquisition
constitutes or will constitute an acquisition of control of the
Corporation for the purposes of the Savings and Loan Holding
Company Act or the Change in Bank Control Act and the
regulations thereunder;
(ii) during any period of two (2) consecutive years during the term
of this Agreement, individuals who at the beginning of such
period constitute the Board of Directors of the Bank or the
Corporation cease for any reason to constitute at least a
majority thereof, unless the election of each director who was
not a director at the beginning of such period has been approved
in advance by directors representing at least two thirds (2/3)
of the directors then in office who were directors in office at
the beginning of the period;
(iii) the Corporation shall have merged into or consolidated with
another corporation, or merged another corporation into the
Corporation, on a basis whereby less than fifty percent (50%) of
the total voting power of the surviving corporation is
represented by shares held by former shareholders of the
Corporation prior to such merger or consolidation; or
(iv) the Corporation shall have sold substantially all of its assets
to another person. The term "person" refers to an individual,
corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated
organization or other entity.
<PAGE> 3
IN WITNESS WHEREOF, we have hereunto set our hands as of this 16th day of July
1997.
THE STRONGSVILLE SAVINGS BANK EXECUTIVE
By: \s\ JOHN F. ZIEGLER \s\ WILLIAM J. HARR, JR
--------------------------------- --------------------------
John F. Ziegler William J. Harr, Jr.
Its: Executive Vice President
EMERALD FINANCIAL CORP.
By: \s\ JOHN F. ZIEGLER
---------------------------------
John F. Ziegler
Its: Executive Vice President
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS IN
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997, FOR EMERALD FINANCIAL CORP. AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> APR-01-1997 JAN-01-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 3,191 3,191
<INT-BEARING-DEPOSITS> 5,616 5,616
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 74,935 74,935
<INVESTMENTS-CARRYING> 51,567 51,567
<INVESTMENTS-MARKET> 52,052 52,052
<LOANS> 453,559 453,559
<ALLOWANCE> 1,577 1,577
<TOTAL-ASSETS> 603,080 603,080
<DEPOSITS> 522,119 522,119
<SHORT-TERM> 3,041 3,041
<LIABILITIES-OTHER> 4,519 4,519
<LONG-TERM> 27,687 27,687
<COMMON> 9,831 9,831
0 0
0 0
<OTHER-SE> 35,883 35,883
<TOTAL-LIABILITIES-AND-EQUITY> 603,080 603,080
<INTEREST-LOAN> 9,222 17,986
<INTEREST-INVEST> 1,885 3,807
<INTEREST-OTHER> 208 389
<INTEREST-TOTAL> 11,315 22,182
<INTEREST-DEPOSIT> 6,687 13,044
<INTEREST-EXPENSE> 7,109 13,836
<INTEREST-INCOME-NET> 4,206 8,346
<LOAN-LOSSES> 91 169
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 2,284 4,570
<INCOME-PRETAX> 2,337 4,538
<INCOME-PRE-EXTRAORDINARY> 2,337 4,538
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,536 2,972
<EPS-PRIMARY> .30 .59
<EPS-DILUTED> .29 .57
<YIELD-ACTUAL> 2.87 2.91
<LOANS-NON> 496 496
<LOANS-PAST> 640 640
<LOANS-TROUBLED> 340 340
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 0 0
<CHARGE-OFFS> 19 24
<RECOVERIES> 5 9
<ALLOWANCE-CLOSE> 1,577 1,577
<ALLOWANCE-DOMESTIC> 1,577 1,577
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
