<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, 1998
[ ] 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)
1
<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, 1998, 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 LLP,
Independent Auditors, and their report is included therein.
Exhibits
- --------
23.1 Consent of Independent Auditors, KPMG 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, 1998, prepared in accordance
with the financial reporting requirements of ERISA. (To be
filed by amendment).
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.
The Strongsville Savings Bank 401(k) Retirement
Savings Plan
Date: June 30, 1999
By: /s/ John F. Ziegler
John F. Ziegler
Executive Vice President & Chief Financial Officer
2
<PAGE> 1
Exhibit 23.1
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, 1999,
relating to the statements of net assets available for benefits, with fund
information of The Strongsville Savings Bank 401(k) Retirement Savings Plan
as of December 31, 1998 and 1997, and the related statement of changes in
net assets available for benefits, with fund information for the year ended
December 31, 1998, which report appears in Form 11-K of The Strongsville
Savings Bank 401(k) Retirement Savings Plan.
KPMG LLP
Cleveland, Ohio
June 30, 1999
<PAGE> 1
Exhibit 99.1
THE STRONGSVILLE SAVINGS BANK
401(K) RETIREMENT SAVINGS PLAN
Financial Statements and Schedules
December 31, 1998 and 1997
(With Independent Auditors' Report Thereon)
<PAGE> 2
THE STRONGSVILLE SAVINGS BANK
401(K) RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Report 1
Statement of Net Assets Available for Benefits, with Fund Information, December 31, 1998 2
Statement of Net Assets Available for Benefits, with Fund Information, December 31, 1997 3
Statement of Changes in Net Assets Available for Benefits, with Fund Information,
year ended December 31, 1998 4
Notes to Financial Statements 5
SCHEDULES:
1 Line 27(a) - Schedule of Assets Held for Investment Purposes, December 31, 1998 11
2 Line 27(d) - Schedule of Reportable Transactions, year ended December 31, 1998 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> 3
[logo] KPMG
1500 National City Center
1900 East Ninth Street
cleveland, OH 44114-3495
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, with fund information of The Strongsville Savings Bank 401(k)
Retirement Savings Plan (Plan) as of December 31, 1998 and 1997, and the
related statement of changes in net assets available for benefits, with
fund information for the year ended December 31, 1998. 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, 1998 and 1997, and the changes in net assets available
for benefits for the year ended December 31, 1998 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
line 27(a) - assets held for investment purposes as of December 31, 1998
and line 27(d) - reportable transactions for the year ended December 31,
1998 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. These supplemental schedules are the responsibility of the Plan's
management. 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.
KPMG LLP
May 14, 1999
<PAGE> 4
THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN
Statement of Net Assets Available for Benefits, with Fund Information
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-------------------------------------------------------------------------------------
PARTICIPANT-DIRECTED
-------------------------------------------------------------------------------------
GOVERN- BOND STOCK STOCK MEDIUM MEDIUM SMALL
MONEY MENT BOND & EMPHASIS EMPHASIS INDEX U.S. COMPANY COMPANY COMPANY
MARKET SECURITIES MORTGAGE BALANCED BALANCED 500 STOCK VALUE BLEND BLEND
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 $33,817 - - - - - - - - -
Government Securities Fund - 4,664 - - - - - - - -
Bond & Mortgage Fund - - 137,710 - - - - - - -
Bond Emphasis Balanced Fund - - - 35,483 - - - - - -
Stock Emphasis Balanced Fund - - - - 47,743 - - - - -
Stock Index 500 Fund - - - - - 175,063 - - - -
U.S. Stock Fund - - - - - - 735,439 - - -
Medium Company Value Fund - - - - - - - 26,105 - -
Medium Company Blend Fund - - - - - - - - 57,609 -
Small Company Blend Fund - - - - - - - - - 57,420
International Stock Fund - - - - - - - - - -
Real Estate Fund - - - - - - - - - -
Common stock in employer - - - - - - - - - -
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
33,817 4,664 137,710 35,483 47,743 175,063 735,439 26,105 57,609 57,420
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
Investments, at contract value (note 4):
Principal Mutual Life Insurance
Company guaranteed
interest contracts:
Matures 12/31/98 - - - - - - - - - -
Matures 12/31/99 - - - - - - - - - -
Matures 12/31/00 - - - - - - - - - -
Matures 12/31/01 - - - - - - - - - -
Matures 12/31/02 - - - - - - - - - -
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
- - - - - - - - - -
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
Total investments 33,817 4,664 137,710 35,483 47,743 175,063 735,439 26,105 57,609 57,420
Receivables - loans to employees - - - - - - - - - -
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
Net assets available for benefits $33,817 4,664 137,710 35,483 47,743 175,063 735,439 26,105 57,609 57,420
======= ===== ======= ====== ====== ======= ======= ====== ====== ======
<CAPTION>
DECEMBER 31, 1998
---------------------------------------------------------
PARTICIPANT-DIRECTED
---------------------------------------------------------
INTER- GUARAN- PARTICI-
NATIONAL REAL COMMON TEED PANT
STOCK ESTATE STOCK IN INTEREST LOAN
FUND FUND EMPLOYER FUND FUND TOTAL
------- ----- ------- ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value (note 3):
Money Market Fund - - - - - 33,817
Government Securities Fund - - - - - 4,664
Bond & Mortgage Fund - - - - - 137,710
Bond Emphasis Balanced Fund - - - - - 35,483
Stock Emphasis Balanced Fund - - - - - 47,743
Stock Index 500 Fund - - - - - 175,063
U.S. Stock Fund - - - - - 735,439
Medium Company Value Fund - - - - - 26,105
Medium Company Blend Fund - - - - - 57,609
Small Company Blend Fund - - - - - 57,420
International Stock Fund 136,730 - - - - 136,730
Real Estate Fund - 5,990 - - - 5,990
Common stock in employer - - 529,591 - - 529,591
------- ----- ------- ------- ------ ---------
136,730 5,990 529,591 - - 1,983,364
------- ----- ------- ------- ------ ---------
Investments, at contract value (note 4):
Principal Mutual Life Insurance
Company guaranteed
interest contracts:
Matures 12/31/98 - - - 71,879 - 71,879
Matures 12/31/99 - - - 118,057 - 118,057
Matures 12/31/00 - - - 94,799 - 94,799
Matures 12/31/01 - - - 337,694 - 337,694
Matures 12/31/02 - - - 101,622 - 101,622
------- ----- ------- ------- ------ ---------
- - - 724,051 - 724,051
------- ----- ------- ------- ------ ---------
Total investments 136,730 5,990 529,591 724,051 - 2,707,415
Receivables - loans to employees - - - - 38,067 38,067
------- ----- ------- ------- ------ ---------
Net assets available for benefits 136,730 5,990 529,591 724,051 38,067 2,745,482
======= ===== ======= ======= ====== =========
</TABLE>
See accompanying notes to financial statements.
2
<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 SMALL
MONEY MENT BOND & EMPHASIS EMPHASIS INDEX U.S. COMPANY COMPANY COMPANY
MARKET SECURITIES MORTGAGE BALANCED BALANCED 500 STOCK VALUE BLEND BLEND
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 $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
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 48,272
------- ----- ------- ------ ------ ------ ------- ------ ------ ------
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 48,272
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 48,272
======= ===== ======= ====== ====== ====== ======= ====== ====== ======
<CAPTION>
DECEMBER 31, 1997
--------------------------------------------------------
PARTICIPANT-DIRECTED
--------------------------------------------------------
INTER- GUARAN- PARTICI-
NATIONAL REAL COMMON TEED PANT
STOCK ESTATE STOCK IN INTEREST LOAN
FUND FUND EMPLOYER FUND FUND TOTAL
------- ----- ------- ------- ------ ---------
<S> <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
International Stock Fund 109,799 - - - - 109,799
Real Estate Fund - 3,641 - - - 3,641
Common stock in employer - - 478,728 - - 478,728
------- ----- ------- ------- ------ ---------
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 109,799 3,641 478,728 695,049 - 2,243,792
Receivables - loans to employees - - - - 45,955 45,955
------- ----- ------- ------- ------ ---------
Net assets available for benefits 109,799 3,641 478,728 695,049 45,955 2,289,747
======= ===== ======= ======= ====== =========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 6
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, 1998
-----------------------------------------------------------------------------------------
PARTICIPANT-DIRECTED
-----------------------------------------------------------------------------------------
GOVERN- BOND STOCK STOCK MEDIUM MEDIUM SMALL
MONEY MENT BOND & EMPHASIS EMPHASIS INDEX U.S. COMPANY COMPANY COMPANY
MARKET SECURITIES MORTGAGE BALANCED BALANCED 500 STOCK VALUE BLEND BLEND
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------- ------- ------- ------- ----------------------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Additions:
Investment income:
Net appreciation (depre-
ciation) in value of
investments $ 770 157 7,581 2,384 4,292 29,005 64,592 472 2,588 (6,330)
Interest 763 56 2,035 403 564 4,446 24,888 31 860 (553)
Dividends - - - - - - - - - -
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
1,533 213 9,616 2,787 4,856 33,451 89,480 503 3,448 (6,883)
Employer contributions 256 946 1,055 1,120 1,339 4,641 5,736 229 4,294 3,274
Employee contributions 4,163 2,568 10,387 7,315 9,015 30,246 54,998 4,838 10,593 20,872
Other 153 27 1,571 49 8 237 (3) 16 (344) (988)
Repayments of loans 173 - 1,685 214 1,021 2,916 5,842 747 1,196 62
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
Total additions 6,278 3,754 24,314 11,485 16,239 71,491 156,053 6,333 19,187 16,337
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
Deductions:
Loans to employees - - 302 571 1,594 1,753 2,828 - 13 159
Benefits paid directly to
participants 270 359 1,295 - 618 1,063 2,513 229 - 557
Administrative expenses 26 1 85 16 58 57 125 15 20 7
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
Total deductions 296 360 1,682 587 2,270 2,873 5,466 244 33 723
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
Net increase prior to
interfund transfers 5,982 3,394 22,632 10,898 13,969 68,618 150,587 6,089 19,154 15,614
Interfund transfers 2,925 225 (851) 1,868 3,579 9,842 7,699 4,037 14,683 (6,466)
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
Increase (decrease)
in net assets available
for benefits 8,907 3,619 21,781 12,766 17,548 78,460 158,286 10,126 33,837 9,148
Net assets available for benefits:
Beginning of year 24,910 1,045 115,929 22,717 30,195 96,603 577,153 15,979 23,772 48,272
------- ----- ------- ------ ------ ------- ------- ------ ------ ------
End of year $33,817 4,664 137,710 35,483 47,743 175,063 735,439 26,105 57,609 57,420
======= ===== ======= ====== ====== ======= ======= ====== ====== ======
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
------------------------------------------------
PARTICIPANT-DIRECTED
------------------------------------------------ ---------
INTER- GUARAN- PARTICI-
NATIONAL REAL COMMON TEED PANT
STOCK ESTATE STOCK IN INTEREST LOAN
ACCOUNT ACCOUNT EMPLOYER ACCOUNT ACCOUNT Total
------- ------- -------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Investment income:
Net appreciation (depre-
ciation) in value of
investments 10,181 435 (1,088) 37,021 - 152,060
Interest 2,638 13 (14,802) 4,781 3,862 29,985
Dividends - - 8,890 - - 8,890
------- ----- ------- ------- ------ ---------
12,819 448 (7,000) 41,802 3,862 190,935
Employer contributions 1,367 147 60,033 6,904 - 91,341
Employee contributions 13,719 1,343 6,729 59,511 - 236,297
Other (445) (93) 185 (412) (3,359) (3,398)
Repayments of loans 2,891 146 1,601 7,597 (26,091) -
------- ----- ------- ------- ------ ---------
Total additions 30,351 1,991 61,548 115,402 (25,588) 515,175
------- ----- ------- ------- ------ ---------
Deductions:
Loans to employees 4,491 - - 5,989 (17,700) -
Benefits paid directly to
participants - - 14,730 37,164 - 58,798
Administrative expenses 54 3 1 174 - 642
------- ----- ------- ------- ------ ---------
Total deductions 4,545 3 14,731 43,327 (17,700) 59,440
------- ----- ------- ------- ------ ---------
Net increase prior to
interfund transfers 25,806 1,988 46,817 72,075 (7,888) 455,735
Interfund transfers 1,125 361 4,046 (43,073) - -
------- ----- ------- ------- ------ ---------
Increase (decrease)
in net assets available
for benefits 26,931 2,349 50,863 29,002 (7,888) 455,735
Net assets available for benefits:
Beginning of year 109,799 3,641 478,728 695,049 45,955 2,289,747
------- ----- ------- ------- ------ ---------
End of year 136,730 5,990 529,591 724,051 38,067 2,745,482
======= ===== ======= ======= ====== =========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 7
THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(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% 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% of the employee's contributions
limited to 5% 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:
YEARS OF SERVICE VESTING PERCENTAGE
------------------------- -------------------------
2 20%
3 40%
4 60%
5 80%
6 or more 100%
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.
5
<PAGE> 8
THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(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.
(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% 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.
6
<PAGE> 9
THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
- 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.
- 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 Fund (maturity dates of December 31,
1998, 1999, 2000, 2001, and 2002) - 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 fair 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. Investments in guaranteed investment contracts are recorded
at contract value. Purchases and sales are recorded on a
trade-date basis.
(D) PAYMENT OF BENEFITS
Benefits are recorded when paid.
7
<PAGE> 10
THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(3) INVESTMENTS
The Plan's investments at December 31, 1998 and 1997, are as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------- -----------------------
COST FAIR VALUE COST FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Money Market Fund $ 30,300 33,817 22,867 24,910
Government Securities Fund 4,413 4,664 1,016 1,045
Bond & Mortgage Fund 103,636 137,710 92,028 115,929
Bond Emphasis Balanced Fund 30,287 35,483 20,280 22,717
Stock Emphasis Balanced Fund 39,514 47,743 25,962 30,195
Stock Index 500 Fund 119,728 175,063 74,143 96,603
U.S. Stock Fund 387,005 735,439 315,481 577,153
Medium Company Value Fund 21,492 26,105 11,840 15,979
Medium Company Blend Fund 53,006 57,609 21,590 23,772
Small Company Blend Fund 57,701 57,420 41,498 48,272
International Stock Fund 91,409 136,730 73,956 109,799
Real Estate Fund 4,911 5,990 3,060 3,641
Common stock in employer 319,925 529,591 243,188 478,728
---------- ---------- ---------- ----------
$1,263,327 1,983,364 946,909 1,548,743
========== ========== ========== ==========
</TABLE>
Investments that represent 5% or more of the Plan's net assets are
separately identified.
8
<PAGE> 11
THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(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,
1998 and 1997, are set forth in the following table:
<TABLE>
<CAPTION>
1998
------------------------------
AVERAGE
COST FAIR VALUE YIELD
--------- ---------- -------
<S> <C> <C> <C>
Principal Mutual Life Insurance Company guaranteed
interest contracts:
Matures 12/31/98 $ 71,879 71,879 7.00%
Matures 12/31/99 118,057 118,057 6.79
Matures 12/31/00 94,799 94,799 5.85
Matures 12/31/01 337,694 337,694 5.95
Matures 12/31/02 101,667 101,622 5.17
--------- -------
$ 724,096 724,051
========= =======
1997
------------------------------
AVERAGE
COST FAIR VALUE YIELD
--------- ---------- -------
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
========= =======
</TABLE>
The crediting interest rates were approximately 5.85% for 1998 and 1997.
Investments that represent 5% or more of the Plan's net assets are
separately identified.
9
<PAGE> 12
THE STRONGSVILLE SAVINGS BANK
401(k) RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(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% vested in their accounts.
(6) FEDERAL INCOME TAXES
The Internal Revenue Service has determined and informed the Plan by a
letter dated May 19, 1999, 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.
(8) SUBSEQUENT EVENT
Emerald Financial Corp., parent of The Strongsville Savings Bank, signed
an agreement with Fifth Third Bancorp on February 27, 1999, to be
purchased by and merged into Fifth Third. The merger is expected to
become effective in the third quarter of 1999 at which time The
Strongsville Savings Bank 401(k) Retirement Savings Plan is expected to
be combined with Fifth Third Bancorp's employee benefit plans.
10
<PAGE> 13
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
December 31, 1998
<TABLE>
<CAPTION>
(A) (B) (C) (D) (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> <C> <C> <C> <C>
Principal Mutual Life Money Market Fund $ 30,300 33,817
Insurance Company Government Securities Fund 4,413 4,664
Bond & Mortgage Fund 103,636 137,710
Bond Emphasis Balanced Fund 30,287 35,483
Stock Emphasis Balanced Fund 39,514 47,743
Stock Index 500 Fund 119,728 175,063
U.S. Stock Fund 387,005 735,439
Medium Company Value Fund 21,492 26,105
Medium Company Blend Fund 53,006 57,609
Small Company Blend Fund 57,701 57,420
International Stock Fund 91,409 136,730
Real Estate Fund 4,911 5,990
* Emerald Financial Corp. Common stock - 21,641 shares 319,925 529,591
Principal Mutual Life Guaranteed interest contracts:
Insurance Company Maturing 12/31/98, average
yield 7.0% 71,879 71,879
Maturing 12/31/99, average
yield 6.79% 118,057 118,057
Maturing 12/31/00, average
yield 5.85% 94,799 94,799
Maturing 12/31/01, average
yield 5.95% 337,694 337,694
Maturing 12/31/02, average
yield 5.17% 101,667 101,622
* Participant Loans Participant loans with various rates
of interest from 8.25% to 9.75%
and various maturity dates
through 2002 -- 38,067
----------- ---------
Total $ 1,987,423 2,745,482
=========== =========
</TABLE>
* Party-in-interest
+ Cost of participant loans is $0 as indicated in the instructions to Form 5500,
Line 27(a).
See accompanying independent auditors' report.
11
<PAGE> 14
SCHEDULE 2
THE STRONGSVILLE SAVINGS BANK
401(K) RETIREMENT SAVINGS PLAN
EIN: 34-0875093
Plan Number: 002
Line 27(d) - Schedule of Reportable Transactions
Year ended December 31, 1998
Series transactions, when aggregated, involving an amount in excess of 5% of the
current value of Plan assets:
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G) (H) (I)
TOTAL TOTAL EXPENSE CURRENT VALUE
DOLLAR DOLLAR INCURRED OF ASSET ON NET
IDENTITY OF VALUE OF VALUE OF LEASE WITH TRANS- COST OF TRANS- GAIN OR
PARTY INVOLVED DESCRIPTION OF ASSETS PURCHASES SALES RENTAL ACTION ASSET ACTION DATE (LOSS)
- --------------------- --------------------- --------- -------- ------- ---------- ------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Mutual Life Guaranteed Interest;
Insurance Company 64 purchases $ 134,995 -- -- -- 134,995 134,995 --
Principal Mutual Life Guaranteed Interest;
Insurance Company 35 sales -- 147,773 -- -- 147,773 147,773 --
========= ======= ======= ========= ======= ======= =======
</TABLE>
See accompanying independent auditors' report.
12
