<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1997
[ ] TRANSITIONAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from___________ to ____________
COMMISSION FILE NUMBER: 333-27373
THE STRONGSVILLE SAVINGS BANK 401(k) RETIREMENT SAVINGS PLAN
------------------------------------------------------------
(Full title of plan)
EMERALD FINANCIAL CORP.
14092 PEARL ROAD, STRONGSVILLE, OHIO 44136
------------------------------------------
(Name of issuer of the securities held
pursuant to the plan and the address
of its principal executive office)
<PAGE> 2
THE STRONGSVILLE SAVINGS BANK 401(k) RETIREMENT SAVINGS PLAN
------------------------------------------------------------
FORM 11-K
---------
Required information
- --------------------
Item 4. Financial Statements and Supplemental Schedules for the Plan.
- ------
The Strongsville Savings Bank 401(k) Retirement Savings Plan ("Plan") is subject
to the Employee Retirement Income Security Act of 1974 ("ERISA"). In lieu of the
requirements of Items 1 -3 of this Form, the Plan is filing financial statements
and supplemental schedules prepared in accordance with the financial reporting
requirements of ERISA. The Plan financial statements and supplemental schedules
for the fiscal year ended December 31, 1997, are included as Exhibit 99.1 to
this report on Form 11-K and are incorporated herein by reference. The Plan
financial statements and supplemental schedules have been examined by KPMG Peat
Marwick LLP, Independent Auditors, and their report is included therein.
Exhibits
- --------
<TABLE>
<C> <S> <C>
23.1 Consent of Independent Auditors, KPMG Peat Marwick, LLP Page 3
99.1 Financial statements and supplemental schedules of The Page 5
Strongsville Savings Bank 401(k) Retirement Savings Plan
for the year ended December 31, 1997, prepared in accordance
with the financial reporting requirements of ERISA.
</TABLE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1934, the trustees (or
other persons who administer the Plan) have duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
<TABLE>
<S> <C>
The Strongsville Savings Bank 401(k) Retirement Savings Plan
Date: June 29, 1998
By: /s/ John F. Ziegler
John F. Ziegler
Executive Vice President & Chief Financial Officer
</TABLE>
2
<PAGE> 1
Exhibit 23.1
CONSENT OF KPMG PEAT MARWICK LLP
3
<PAGE> 2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
The Plan Administrator
Emerald Financial Corp.:
We consent to the incorporation by reference in the Registration Statement No.
333-27373 of Emerald Financial Corp. of our report dated May 14, 1998, relating
to the statements of net assets available for benefits of The Strongsville
Savings Bank 401(k) Retirement Savings Plan as of December 31, 1997 and 1996,
and the related statement of changes in net assets available for benefits for
the year ended December 31, 1997, which report appears in Form 11-K of The
Strongsville Savings Bank 401(k) Retirement Savings Plan.
/s/ KPMG Peat Marwick LLP
Cleveland, Ohio
June 29, 1998
4
<PAGE> 1
EXHIBIT 99.1
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES OF THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN FOR THE YEAR ENDED DECEMBER 31, 1997, PREPARED IN
ACCORDANCE WITH THE FINANCIAL REPORTING REQUIREMENTS OF ERISA.
5
<PAGE> 2
THE STRONGSVILLE SAVINGS BANK
401(K) RETIREMENT SAVINGS PLAN
Financial Statements and Schedules
December 31, 1997 and 1996
(With Independent Auditors' Report Thereon)
<PAGE> 3
THE STRONGSVILLE SAVINGS BANK
401(K) RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Independent Auditors' Report ................................................................................. 1
Financial Statements:
Statement of Net Assets Available for Benefits, with Fund Information,
December 31, 1997 and 1996 ........................................................................... 2-3
Statement of Changes in Net Assets Available for Benefits, with Fund Information,
Year ended December 31, 1997 ......................................................................... 4
Notes to Financial Statements ................................................................................ 5-10
Schedules:
1 Line 27(a) - Schedule of Assets Held for Investment Purposes (at the end of
the Plan year), December 31, 1997 ............................................................. 11
2 Line 27(d) - Schedule of Reportable Transactions, Year ended December 31, 1997..................... 12
</TABLE>
All other schedules required by the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974 have been omitted because there is no information to report.
<PAGE> 4
Independent Auditors' Report
The Plan Administrator
The Strongsville Savings Bank 401(k) Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of The Strongsville Savings Bank 401(k) Retirement Savings Plan (Plan) as of
December 31, 1997 and 1996, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1997. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for benefits
for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The Fund Information in the
statements of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ KPMG Peat Marwick LLP
May 14, 1998
1
<PAGE> 5
THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN
Statement of Net Assets Available for Benefits, with Fund Information
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1997
------------------------------------------------------------------------------------------
Participant-Directed
------------------------------------------------------------------------------------------
Govern- Bond Stock Stock Medium Medium
Money ment Bond & Emphasis Emphasis Index U.S. Company Company
Market Securities Mortgage Balanced Balanced 500 Stock Value Blend
Fund Fund Fund Fund Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value (note 3):
Money Market Fund $ 24,910 - - - - - - - -
Government Securities Fund - 1,045 - - - - - - -
Bond & Mortgage Fund - - 115,929 - - - - - -
Bond Emphasis Balanced Fund - - - 22,717 - - - - -
Stock Emphasis Balanced Fund - - - - 30,195 - - - -
Stock Index 500 Fund - - - - - 96,603 - - -
U.S. Stock Fund - - - - - - 577,153 - -
Medium Company Value Fund - - - - - - - 15,979 -
Medium Company Blend Fund - - - - - - - - 23,772
Small Company Blend Fund - - - - - - - - -
International Stock Fund - - - - - - - - -
Real Estate Fund - - - - - - - - -
Common stock in employer - - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
24,910 1,045 115,929 22,717 30,195 96,603 577,153 15,979 23,772
- -----------------------------------------------------------------------------------------------------------------------------------
Investments, at contract value
(note 4):
Principal Mutual Life Insurance
Company guaranteed
interest contracts:
Matures 12/31/97 - - - - - - - - -
Matures 12/31/98 - - - - - - - - -
Matures 12/31/99 - - - - - - - - -
Matures 12/31/00 - - - - - - - - -
Matures 12/31/01 - - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
- - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Total investments 24,910 1,045 115,929 22,717 30,195 96,603 577,153 15,979 23,772
Receivables - loans to employees - - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets available for benefits $ 24,910 1,045 115,929 22,717 30,195 96,603 577,153 15,979 23,772
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
Small Inter- Common Guaran- Partici-
Company national Real Stock in teed pant
Blend Stock Estate Employer Interest Loan
Fund Fund Fund Fund Fund Fund Total
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value (note 3):
Money Market Fund - - - - - - 24,910
Government Securities Fund - - - - - - 1,045
Bond & Mortgage Fund - - - - - - 115,929
Bond Emphasis Balanced Fund - - - - - - 22,717
Stock Emphasis Balanced Fund - - - - - - 30,195
Stock Index 500 Fund - - - - - - 96,603
U.S. Stock Fund - - - - - - 577,153
Medium Company Value Fund - - - - - - 15,979
Medium Company Blend Fund - - - - - - 23,772
Small Company Blend Fund 48,272 - - - - - 48,272
International Stock Fund - 109,799 - - - - 109,799
Real Estate Fund - - 3,641 - - - 3,641
Common stock in employer - - - 478,728 - - 478,728
- -----------------------------------------------------------------------------------------------------------------
48,272 109,799 3,641 478,728 - - 1,548,743
- -----------------------------------------------------------------------------------------------------------------
Investments, at contract value (note 4):
Principal Mutual Life Insurance
Company guaranteed
interest contracts:
Matures 12/31/97 - - - - 68,901 - 68,901
Matures 12/31/98 - - - - 75,479 - 75,479
Matures 12/31/99 - - - - 120,244 - 120,244
Matures 12/31/00 - - - - 99,867 - 99,867
Matures 12/31/01 - - - - 330,558 - 330,558
- -----------------------------------------------------------------------------------------------------------------
- - - - 695,049 - 695,049
- -----------------------------------------------------------------------------------------------------------------
Total investments 48,272 109,799 3,641 478,728 695,049 - 2,243,792
Receivables - loans to employees - - - - - 45,955 45,955
- -----------------------------------------------------------------------------------------------------------------
Net assets available for benefits 48,272 109,799 3,641 478,728 695,049 45,955 2,289,747
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 6
THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN
Statement of Net Assets Available for Benefits, with Fund Information
<TABLE>
<CAPTION>
December 31, 1996
------------------------------------------------------------------------------------
Participant-Directed
------------------------------------------------------------------------------------
Bond Stock Stock Medium Medium Small Inter-
Money Bond & Emphasis Emphasis Index U.S. Company Company Company national
Market Mortgage Balanced Balanced 500 Stock Value Blend Blend Stock
Fund Fund Fund Fund Fund Fund Fund Fund Fund Fund
------ ------- ----- ------ ------ ------- ----- ---- ----- ------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value (note 3):
Money Market Fund $ 22,867 - - - - - - - - -
Bond & Mortgage Fund - 114,877 - - - - - - - -
Bond Emphasis Balanced Fund - - 9,267 - - - - - - -
Stock Emphasis Balanced Fund - - - 10,209 - - - - - -
Stock Index 500 Fund - - - - 42,416 - - - - -
U.S. Stock Fund - - - - - 446,584 - - - -
Medium Company Value Fund - - - - - - 6,657 - - -
Medium Company Blend Fund - - - - - - - 457 - -
Small Company Blend Fund - - - - - - - - 13,790 -
International Stock Fund - - - - - - - - - 83,615
Real Estate Fund - - - - - - - - - -
Common stock in employer - - - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
22,867 114,877 9,267 10,209 42,416 446,584 6,657 457 13,790 83,615
Investments, at contract value (note 4):
Principal Mutual Life Insurance
Company guaranteed
interest contracts:
Matures 12/31/96 - - - - - - - - - -
Matures 12/31/97 - - - - - - - - - -
Matures 12/31/98 - - - - - - - - - -
Matures 12/31/99 - - - - - - - - - -
Matures 12/31/00 - - - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
- - - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Total investments 22,867 114,877 9,267 10,209 42,416 446,584 6,657 457 13,790 83,615
Receivables - loans to employees - - - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets available for benefits $ 22,867 114,877 9,267 10,209 42,416 446,584 6,657 457 13,790 83,615
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
------------------------------------------
--------------------------------
Common Guaran- Partici-
Real Stock in teed pant
Estate Employer Interest Loan
Fund Fund Fund Fund Total
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value (note 3):
Money Market Fund - - - - 22,867
Bond & Mortgage Fund - - - - 114,877
Bond Emphasis Balanced Fund - - - - 9,267
Stock Emphasis Balanced Fund - - - - 10,209
Stock Index 500 Fund - - - - 42,416
U.S. Stock Fund - - - - 446,584
Medium Company Value Fund - - - - 6,657
Medium Company Blend Fund - - - - 457
Small Company Blend Fund - - - - 13,790
International Stock Fund - - - - 83,615
Real Estate Fund 4,362 - - - 4,362
Common stock in employer - 188,643 - - 188,643
- ---------------------------------------------------------------------------------------
4,362 188,643 - - 943,744
- ---------------------------------------------------------------------------------------
Investments, at contract value (note 4):
Principal Mutual Life Insurance
Company guaranteed
interest contracts:
Matures 12/31/96 - - 275,362 - 275,362
Matures 12/31/97 - - 68,271 - 68,271
Matures 12/31/98 - - 74,454 - 74,454
Matures 12/31/99 - - 118,797 - 118,797
Matures 12/31/00 - - 102,076 - 102,076
- ---------------------------------------------------------------------------------------
- - 638,960 - 638,960
- ---------------------------------------------------------------------------------------
Total investments 4,362 188,643 638,960 - 1,582,704
Receivables - loans to employees - - - 31,432 31,432
- ---------------------------------------------------------------------------------------
Net assets available for benefits 4,362 188,643 638,960 31,432 1,614,136
- ---------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 7
THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN
Statement of Changes in Net Assets Available for Benefits, with Fund Information
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1997
-------------------------------------------------------------------------------------------
Participant-Directed
-------------------------------------------------------------------------------------------
Govern- Bond Stock Stock Medium Medium Small Inter-
Money ment Bond & Emphasis Emphasis Index U.S. Company Company Company national
Market Securit Mortgage Balanced Balanced 500 Stock Value Blend Blend Stock
Account Account Account Account Account Account Account Account Account Account Account
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions:
Investment income:
Net appreciation in value of
investments $ 539 24 8,300 2,737 3,370 15,886 81,798 3,579 1,974 5,906 8,614
Interest 655 5 2,550 1,013 409 1,243 34,370 147 221 357 2,733
Dividends - - - - - - - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
1,194 29 10,850 3,750 3,779 17,129 116,168 3,726 2,195 6,263 11,347
Employer contributions - 268 1,111 933 395 2,774 5,238 211 2,945 3,024 1,475
Employee contributions 3,346 748 11,079 7,096 8,432 24,156 50,688 3,778 7,098 18,593 14,357
Repayments of loans 288 - 1,720 42 648 1,280 3,183 429 690 - 1,184
- -----------------------------------------------------------------------------------------------------------------------------------
Total additions 4,828 1,045 24,760 11,821 13,254 45,339 175,277 8,144 12,928 27,880 28,363
- -----------------------------------------------------------------------------------------------------------------------------------
Deductions:
Loans to employees 876 - 2,637 - 399 3,906 12,436 824 - 12 4,268
Benefits paid directly to
participants 246 - 6,507 81 437 4,183 20,109 610 236 1,208 2,079
Administrative expense 32 - 106 5 23 55 164 20 6 - 67
- -----------------------------------------------------------------------------------------------------------------------------------
Total deductions 1,154 - 9,250 86 859 8,144 32,709 1,454 242 1,220 6,414
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase prior to interfund
transfers 3,674 1,045 15,510 11,735 12,395 37,195 142,568 6,690 12,686 26,660 21,949
Interfund transfers (1,631) - (14,458) 1,715 7,591 16,992 (11,999) 2,632 10,629 7,822 4,235
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
available for benefits 2,043 1,045 1,052 13,450 19,986 54,187 130,569 9,322 23,315 34,482 26,184
Net assets available for benefits:
Beginning of year 22,867 - 114,877 9,267 10,209 42,416 446,584 6,657 457 13,790 83,615
- -----------------------------------------------------------------------------------------------------------------------------------
End of year $ 24,910 1,045 115,929 22,717 30,195 96,603 577,153 15,979 23,772 48,272 109,799
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[CAPTION]
<TABLE>
- --------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
Common Guaran- Partici-
Real Stock in teed pant
Estate Employer Interest Loan
Account Account Account Account Total
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Investment income:
Net appreciation in value of
investments 422 219,685 39,320 - 392,154
Interest 18 - 954 3,587 48,262
Dividends - 3,645 - - 3,645
- --------------------------------------------------------------------------------------
440 223,330 40,274 3,587 444,061
Employer contributions - 60,963 8,403 - 87,740
Employee contributions 1,154 3,072 56,169 - 209,766
Repayments of loans 19 1,189 3,428 (17,247) (3,147)
- --------------------------------------------------------------------------------------
Total additions 1,613 288,554 108,274 (13,660) 738,420
- --------------------------------------------------------------------------------------
Deductions:
Loans to employees 294 - 2,531 (28,183) -
Benefits paid directly to
participants 395 10,998 15,041 - 62,130
Administrative expense 5 - 196 - 679
- --------------------------------------------------------------------------------------
Total deductions 694 10,998 17,768 (28,183) 62,809
- --------------------------------------------------------------------------------------
Net increase prior to interfund
transfers 919 277,556 90,506 14,523 675,611
Interfund transfers (1,640) 12,529 (34,417) - -
- --------------------------------------------------------------------------------------
Net increase (decrease) in net assets
available for benefits (721) 290,085 56,089 14,523 675,611
Net assets available for benefits:
Beginning of year 4,362 188,643 638,960 31,432 1,614,136
- --------------------------------------------------------------------------------------
End of year 3,641 478,728 695,049 45,955 2,289,747
- --------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 8
THE STRONGSVILLE SAVINGS BANK
401(K) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997 and 1996
- --------------------------------------------------------------------------------
(1) DESCRIPTION OF THE PLAN
The following brief description of The Strongsville Savings Bank 401(k)
Retirement Savings Plan (Plan) is provided for general information
purposes only. Participants should refer to the Plan agreement for more
complete information.
(a) GENERAL
The Plan is a defined contribution plan covering all employees of The
Strongsville Savings Bank (Bank) who have attained age 20 1/2 and have
completed six months of entry service, as defined by the Plan. The Plan
is subject to the applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended (ERISA).
(b) EMPLOYEE CONTRIBUTIONS
Each year participants may contribute up to 15 percent of pretax annual
compensation as defined in the Plan.
(c) EMPLOYER CONTRIBUTIONS
The Bank is obligated to make matching contributions to each employee in
the Plan equal to 60 percent of the employee's contributions limited to
5 percent of the employee's compensation.
(d) PARTICIPANTS' ACCOUNTS
Each participant's account is credited with the participant's and
employer's contributions. Participant accounts are also credited
annually with a share of the investment earnings, losses, and Plan
forfeitures.
(e) VESTING
Participants are immediately vested in their voluntary contributions.
Vesting in the remainder of their account is determined based upon years
of service in which the participant completes 1,000 hours of service.
Participants vest according to the following table:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Years of Service Vesting Percentage
--------------------------------------------------------------------------------------------------------------------
<S> <C>
2 20%
3 40%
4 60%
5 80%
6 or more 100%
--------------------------------------------------------------------------------------------------------------------
</TABLE>
A participant is automatically fully vested upon the date the
participant meets the age and service requirements for early retirement,
attains age 65, becomes totally disabled as defined in the Plan, or
becomes deceased.
(f) PAYMENT OF BENEFITS
Upon termination of service, a participant will be entitled to receive
only the vested percentage of his or her account, with the remainder
being forfeited to the Plan and reallocated to current Plan
participants.
(Continued)
5
<PAGE> 9
THE STRONGSVILLE SAVINGS BANK
401(K) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
- --------------------------------------------------------------------------------
(g) LOANS TO PARTICIPANTS
Participants may borrow from the vested portion of their 401(k) account.
The minimum loan amount is $1,000; the maximum is equal to the lesser of
$50,000 or 50 percent of the participant's vested balance. At the time
of the loan origination, the participant must be an employee of the
Bank.
(h) HARDSHIP WITHDRAWALS
Participants who experience financial hardship and have used up all
reasonable available resources, including loans from the Plan, may
withdraw all or part of their vested contributions, excluding earnings,
as a hardship withdrawal. Withdrawals are subject to taxes and are
available only for the following purposes:
* To pay necessary medical expenses for the participant, the
participant's spouse or dependents not repaid by insurance;
* To purchase the participant's primary residence or to stop
eviction or foreclosure on the participant's primary
residence; or
* To pay tuition and related educational fees for the next 12
months of college for the participant, the participant's
spouse, dependent, or child.
(i) INVESTMENT OPTIONS
Participants may direct the investment of their contributions in any of
the following 14 investment funds:
* Money Market Fund - Funds are invested in high-quality
commercial paper (short-term, unsecured corporate loans).
* Government Securities Fund - Funds are invested in
fixed-income securities for which the principal and interest
payments are guaranteed by the U.S. government or related
entities.
* Bond & Mortgage Fund - Funds are invested primarily in
private-market investments such as private-placement bonds and
commercial mortgages.
* Bond Emphasis Balanced Fund - Funds are invested in other
separate accounts offered by Principal Mutual Life Insurance
Company (Principal Mutual).
* Stock Emphasis Balanced Fund - Funds are invested in other
separate accounts offered by Principal Mutual.
* Stock Index 500 Fund - Funds are invested in the common stocks
of those companies listed in the Standard & Poor's 500 Stock
Index.
* U.S. Stock Fund - Funds are invested in any type of stock,
including growth stocks, traditional value stocks, and stocks
of various sizes.
* Medium Company Value Fund - Funds are invested in stocks of
medium-sized companies that Principal Mutual believes to be
undervalued in the marketplace.
* Medium Company Blend Fund - Funds are invested in stocks of
medium-sized companies that offer a combination of substantial
value and good earnings potential.
(Continued)
6
<PAGE> 10
* Small Company Blend Fund - Funds are invested in stocks of
smaller, seasoned companies where potential for long-term
growth is expected to be above average.
* International Stock Fund - Funds are invested in common stocks
of corporations located outside the United States.
* Real Estate Fund - Funds hold developed, rent-producing
properties.
* Common Stock in Employer - Funds are invested in common stock
of the employer.
* Guaranteed Interest Account (maturity dates of December 31,
1997, 1998, 1999, 2000, and 2001) - Funds are invested in
private-market bonds, commercial mortgages, and
mortgage-backed securities.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the accrual
basis of accounting.
(b) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of net assets
available for benefits and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of additions and deductions to net assets available for
benefits during the reporting period. Actual results could differ from
those estimates.
(c) INVESTMENTS
Assets of the Plan are valued at current value, thereby recognizing both
realized and unrealized gains and losses as they are determined either
through completed transactions or from changes in current quoted market
values of the investments. Carrying values are adjusted to quoted market
as of December 31 of each year. Quoted market prices are used to value
investments. Purchases and sales are recorded on a trade-date basis.
(d) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(Continued)
7
<PAGE> 11
THE STRONGSVILLE SAVINGS BANK
401(K) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
- --------------------------------------------------------------------------------
(3) INVESTMENTS
The Plan's investments at December 31, 1997 and 1996, are as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
1997 1996
-------------------------- --------------------------
Fair Fair
Cost Value Cost Value
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Money Market Fund $ 22,867 24,910 21,706 22,867
Government Securities Fund 1,016 1,045 - -
Bond & Mortgage Fund 92,028 115,929 97,826 114,877
Bond Emphasis Balanced Fund 20,280 22,717 8,884 9,267
Stock Emphasis Balanced Fund 25,962 30,195 9,685 10,209
Stock Index 500 Fund 74,143 96,603 34,533 42,416
U.S. Stock Fund 315,481 577,153 280,545 446,584
Medium Company Value Fund 11,840 15,979 6,021 6,657
Medium Company Blend Fund 21,590 23,772 441 457
Small Company Blend Fund 41,498 48,272 13,217 13,790
International Stock Fund 73,956 109,799 56,681 83,615
Real Estate Fund 3,060 3,641 3,920 4,362
Common stock in employer 243,188 478,728 168,188 188,643
--------------------------------------------------------------------------------------------------------------------
$ 946,909 1,548,743 701,647 943,744
--------------------------------------------------------------------------------------------------------------------
</TABLE>
Investments that represent 5 percent or more of the Plan' net assets are
separately identified.
(Continued)
8
<PAGE> 12
THE STRONGSVILLE SAVINGS BANK
401(K) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
- --------------------------------------------------------------------------------
(4) INVESTMENT CONTRACTS WITH INSURANCE COMPANY
Each year since its inception, the Plan has entered into investment
contracts with Principal Mutual Life Insurance Company (Principal),
which maintains these investments in a pooled account. The Plan's
interest in this account is credited with earnings on the underlying
investments and charged for Plan withdrawals and administrative expenses
charged by Principal. The contracts are included in the financial
statements at contract value (which represents contributions made under
the contract, plus earnings, less withdrawals and administrative
expenses) because they are fully benefit-responsive. For example,
participants may ordinarily direct the withdrawal or transfer of all or
a portion of their investment at contract value. There are no reserves
against contract value for credit risk of the contract issuer or
otherwise. In the opinion of management, contract value approximates
fair value. The fair values of the investment contracts at December 31,
1997 and 1996, are set forth in the following table:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
1997
----------------------------------------
Fair Average
Cost Value Yield
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Principal Mutual Life Insurance Company guaranteed
interest contracts
Matures 12/31/97 $ 68,926 68,926 5.47%
Matures 12/31/98 75,479 75,479 7.01
Matures 12/31/99 120,244 120,244 6.77
Matures 12/31/00 99,867 99,842 5.85
Matures 12/31/01 330,558 330,558 5.95
--------------------------------------------------------------------------------------------------------------------
$ 695,074 695,049
====================================================================================================================
1996
----------------------------------------
Fair Average
Cost Value Yield
--------------------------------------------------------------------------------------------------------------------
Principal Mutual Life Insurance Company guaranteed
interest contracts:
Matures 12/31/96 $ 276,010 276,010 6.74%
Matures 12/31/97 68,271 68,017 5.47
Matures 12/31/98 74,454 74,452 7.01
Matures 12/31/99 118,797 118,790 6.74
Matures 12/31/00 102,076 101,691 5.85
--------------------------------------------------------------------------------------------------------------------
$ 639,608 638,960
====================================================================================================================
</TABLE>
The crediting interest rates were approximately 5.85 percent for 1997 and 1996.
Investments that represent 5 percent or more of the Plan's net assets are
separately identified.
(Continued)
9
<PAGE> 13
THE STRONGSVILLE SAVINGS BANK
401(K) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
- --------------------------------------------------------------------------------
(5) PLAN TERMINATION
Although it has not expressed any intent to do so, the Bank has the
right under the Plan to discontinue its contributions and to terminate
the Plan, subject to the provisions of ERISA. In the event of Plan
termination, participants become 100 percent vested in their accounts.
(6) FEDERAL INCOME TAXES
The Internal Revenue Service has determined and informed the Plan by a
letter dated January 25, 1996, that the Plan is qualified and the
related trust established under the Plan is tax-exempt, under the
appropriate sections of the Internal Revenue Code (Code). The Plan has
been amended since receiving the determination letter; however, the plan
administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the Code. Therefore, they believe that the
Plan was qualified and the related trust was tax-exempt as of the
financial statement date.
(7) RELATED PARTY TRANSACTION
The Plan engages in investment transactions involving the acquisition or
disposition of Emerald Financial Corp. stock. Emerald Financial Corp. is
the holding company of The Strongsville Savings Bank and is a
party-in-interest. These transactions are covered by an exemption from
the "prohibited transactions" provisions of ERISA and the IRC.
10
<PAGE> 14
Schedule 1
----------
THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN
EIN: 34-0875093
Plan Number: 002
Line 27(a) - Schedule of Assets Held for Investment Purposes (at the end of the
Plan year)
December 31, 1997
<TABLE>
<CAPTION>
===========================================================================================================================
Column A Column B Column C Column D Column E
- ---------------------------------------------------------------------------------------------------------------------------
Identity of Issue, Description of Investment Including
Borrower, Lessor, Maturity Date, Rate of Interest, Current
or Similar Party Collateral, Par or Maturity Value Cost Value
- ---------------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C>
Principal Mutual Life Money Market Fund $ 22,867 24,910
Insurance Company Government Securities Fund 1,016 1,045
Bond & Mortgage Fund 92,028 115,929
Bond Emphasis Balanced Fund 20,280 22,717
Stock Emphasis Balanced Fund 25,962 30,195
Stock Index 500 Fund 74,143 96,603
U.S. Stock Fund 315,481 577,153
Medium Company Value Fund 11,840 15,979
Medium Company Blend Fund 21,590 23,772
Small Company Blend Fund 41,498 48,272
International Stock Fund 73,956 109,799
Real Estate Fund 3,060 3,641
* Emerald Financial Corp. Common stock - 21,641 shares 243,188 478,728
Principal Mutual Life Guaranteed interest contracts:
Insurance Company Maturing 12/31/97, average 68,926 68,926
yield 5.47%
Maturing 12/31/98, average 75,479 75,479
yield 7.01%
Maturing 12/31/99, average 120,244 120,244
yield 6.77%
Maturing 12/31/00, average 99,867 99,842
yield 5.85%
Maturing 12/31/01, average 330,558 330,558
yield 5.95%
* Participant Loans Participant loans with various rates
of interest from 8.25% to 9.75%
and various maturity dates
through 2002 0+ 45,955
- ---------------------------------------------------------------------------------------------------------------------------
Total $ 1,641,983 2,289,747
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
* Party-in-interest
+ Cost of participant loans is $0 as indicated in the instructions to
Form 5500, Line 27(a).
</TABLE>
- --------------------------------------------------------------------------------
See accompanying independent auditors' report.
11
<PAGE> 15
THE STRONGSVILLE SAVINGS BANK Schedule 2
401(K) RETIREMENT SAVINGS PLAN ----------
EIN: 34-0875093
Plan Number: 002
Line 27(d) - Schedule of Reportable Transactions
Year ended December 31, 1997
<TABLE>
<CAPTION>
==========================================================================================================================
Series transactions, when aggregated, involving an amount in excess of 5% of the current value of Plan assets:
- --------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- --------------------------------------------------------------------------------------------------------------------------
Total Total
Dollar Dollar
Identity of Value of Value Lease
Party Involved Description of Assets Purchases of Sales Rental
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Principal Mutual Life Guaranteed Interest; $ 321,157 - -
Insurance Company 58 purchases
Principal Mutual Life Guaranteed Interest; - 305,342 -
Insurance Company 42 sales
Principal Mutual Life U.S. Stock; 57 purchases 62,629 - -
Insurance Company
Principal Mutual Life U.S. Stock; 25 sales - 48,227 -
Insurance Company
* Emerald Financial Common Stock in Employer; 84,741 - -
Corp. 62 purchases
* Emerald Financial Common Stock in Employer; - 13,271 -
Corp. 18 sales
==========================================================================================================================
</TABLE>
[CAPTION]
<TABLE>
======================================================
- ------------------------------------------------------
Column F Column G Column H Column I
- ------------------------------------------------------
Expense Current Value
Incurred of Asset on Net
with Trans- Cost of Transac- Gain or
action Asset tion Date (Loss)
- ------------------------------------------------------
<S> <C> <C> <C>
- 321,157 321,157 -
- - 305,342 -
- 62,629 62,629 -
- - 68,760 20,533
- 84,741 84,741 -
- - 17,072 3,801
- ------------------------------------------------------
* Party-in-interest
======================================================
</TABLE>
See accompanying independent auditors' report.
12
