<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------
TELMARK INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK
(STATE OF INCORPORATION)
16-0907546
(I.R.S. EMPLOYER IDENTIFICATION NO.)
6159
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NO.)
333 BUTTERNUT DRIVE,
DEWITT, NEW YORK 13214
315-449-7935
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
DAVID M. HAYES, ESQ.
TELMARK INC.
BOX 4943
SYRACUSE, NEW YORK 13221
315-449-6412
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO
THE PUBLIC: AS SOON AS PRACTICABLE ON OR AFTER THE EFFECTIVE DATE
OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
Pursuant to Rule 429, the prospectus contained herein relates to and constitutes
a post-effective amendment to Registration Statement No. 33-84442. A filing fee
relating to the securities being carried over from that registration statement
was previously paid.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Debentures Due 3/31/2000 $22,000,000
(maximum)
Debentures Due 3/31/2002 $22,000,000 100% $22,000,000 $7,586.21
(maximum)
Debentures Under Interest Reinvestment $22,000,000
(maximum)
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</TABLE>
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
CROSS REFERENCE SHEET
TELMARK INC.
<TABLE>
<CAPTION>
FORM S-1
LOCATION OF THE
ITEM NO. REQUIRED IN PROSPECTUS CAPTION IN PROSPECTUS
-------- ---------------------- ---------------------
<S> <C> <C> <C>
1. Forepart of the Registration Statement Outside Front Cover Page
and Outside Front Cover Page of Prospectus
2. Inside Front Cover and Outside Back Inside Front Cover Page
Cover Pages of Prospectus and Outside Back Cover Page
3. Summary Information, Risk Factors, Selected Financial Data
and Ratio of Earnings to Fixed Charges Prospectus Summary, Risk Factors,
and Ratio of Earnings to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Inapplicable
6. Dilution Inapplicable
7. Selling Security Holders Inapplicable
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Registered Description of the Debentures
10. Interests of Named Experts and Counsel Legal Matters
11. Information with Respect to the Registrant Business of Telmark, Selected Financial
Data, Management's Discussion and
Analysis of Financial Condition and
Results of Operations, Legal Proceedings,
Directors and Management, Executive
Compensation, Certain Relationships and
Related Transactions, Principal
Stockholders, Financial Statements
12. Disclosure of Commission Position on Not Required
Indemnification for Securities Act Liability
</TABLE>
<PAGE>
SUBJECT TO COMPLETION DATED
PROSPECTUS
[$28,000,000]
TELMARK INC.
DEBENTURES
The Debentures (the "Debentures") are being issued by Telmark Inc., a New York
Corporation ("Telmark" or the "Company"), which is engaged in the business of
leasing agricultural and related equipment.
The following securities are being offered:
<TABLE>
<CAPTION>
=======================================================================================================================
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC (3) OR COMMISSIONS (1) COMPANY (2) (3)
=======================================================================================================================
<S> <C> <C> <C>
Debentures, $1,000 minimum denomination
and additional multiples of $100
(minimum 7.25% per annum)
due March 31, 2000
Per Unit 100% None
Total * None *
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Debentures, $1,000 minimum denomination
and additional multiples of $100
(minimum 7.50% per annum)
due March 31, 2002
Per Unit 100% None
Total * None *
- -----------------------------------------------------------------------------------------------------------------------
Debentures under the Interest Reinvestment
Option (ranging from minimum of 6.0% to
8.5% per annum) due from December 31,
1997 through March 31, 2002
Per Unit 100% None
Total * None *
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TOTAL [$28,000,000] [$28,000,000]
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</TABLE>
A complete description of the securities offered is set forth on pages 24
through 28 herein.
(1) No salesmen will be employed to solicit the sale of these securities,
and no commission or discount will be paid or allowed to anyone in
connection with their sale.
(2) It is assumed that all securities offered are sold and the amount of
proceeds is before deduction of estimated expenses of $68,586 to be
paid by Telmark, which includes legal fees, state and federal
registration fees, printing, trustee fees, accounting fees and other
miscellaneous expenses. Because there is no underwriting of the
securities offered, there is no assurance that all or any part of the
indicated proceeds will be received by the Company from the offering
of the securities.
(3) Includes [$6 million] of Debentures that were previously registered
with the Commission and offered pursuant to a Prospectus dated
September 14, 1996. Those securities are being offered hereby on the
same terms as the other Debentures being registered. A filing fee
relating to those securities was paid in connection with the filing of
the original registration statement relating to those securities (Reg.
No. 33-84442).
The company may, from time to time prior to the completion of the offering of
the Debentures, change the rate of interest or maturity date offered by filing a
supplement with the Securities and Exchange Commission. The applicable
supplement, if any, will be attached to this Prospectus. Any change in the
interest rate or maturity date offered will not affect the rate of interest on
or maturity date of any Debentures theretofore issued.
The Debentures are unsecured obligations of the Company and subordinated to all
Senior Debt (as defined herein) of the Company. As of July 31, 1996, Senior
Debt of $280,944,445 was outstanding. See "Description of the Debentures -
Subordination Provisions."
There can be no assurance that the Debentures offered hereby will be sold or
that there will be a secondary market for the Debentures.
------------------
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS
<PAGE>
AVAILABLE INFORMATION
Telmark has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act of 1933, as
amended, with respect to the Debentures offered hereby. This Prospectus omits
certain of the information contained in the Registration Statement and the
exhibits and schedules thereto. Reference is hereby made to such Registration
Statement and exhibits and schedules for further information with respect to
Telmark and the Debentures. The Registration Statement, together with its
exhibits and schedules, can be inspected and copied at the offices of the
Commission, at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D. C. 20549 and at the regional offices of the Commission at Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661 and
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D. C. 20549, at
prescribed rates. The Securities and Exchange Commission also maintains a web
site which contains information regarding registrants who file electronically,
the "EDGAR" data base. The web site address for the EDGAR data base is
http://www.sec.gov/edgarhp.htm. A prospectus will also be sent in January of
each year to all holders of securities who have elected the interest
reinvestment option.
Any statements contained herein concerning the provisions of any document
are not necessarily complete, and, in such instance, reference is made to the
copy of such document filed as an exhibit to the Registration Statement. Each
statement is qualified in its entirety by such reference.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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PAGE PAGE
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<S> <C> <C> <C>
Prospectus Summary Information.................. 3 Executive Compensation.................... 21
Risk Factors.................................... 5 Certain Relationships and Related
Use of Proceeds................................. 7 Transactions............................ 22
Business of Telmark............................. 7 Principal Stockholders ................... 22
Selected Financial Data......................... 15 Description of Debentures................. 23
Management's Discussion & Analysis of Financial Legal Matters............................. 27
Condition and Results of Operations........ 15 Experts................................... 27
Legal Proceedings............................... 18 Plan of Distribution...................... 28
Directors and Management........................ 20 Index to Financial Statements............. 30
</TABLE>
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements appearing elsewhere in this Prospectus.
THE COMPANY
Telmark Inc. ("Telmark" or the "Company") is in the business of leasing
agricultural related equipment, vehicles, and buildings. Telmark's customers are
farmers and other rural businesses as well as manufacturers and independent
dealers that serve the agricultural marketplace. Telmark is indirectly owned and
controlled by Agway Inc. ("Agway"), one of the largest agricultural supply and
services cooperatives in the United States, in terms of revenues, based on a
1995 Co-op 100 Index produced by the National Cooperative Bank. Telmark is a
direct wholly-owned subsidiary of Agway Holdings, Inc., a subsidiary of Agway.
There are certain risks that should be carefully reviewed by an investor before
deciding to purchase the Debentures. See "Risk Factors."
NEITHER AGWAY NOR ANY OF ITS OTHER SUBSIDIARIES GUARANTEES THE PAYMENT OF
INTEREST ON OR THE PRINCIPAL OF THE DEBENTURES. SEE "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - LIQUIDITY AND
CAPITAL RESOURCES."
Telmark operates throughout the continental United States. The Company's field
representatives serve customers in 27 states including Alabama, Connecticut,
Delaware, Georgia, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland,
Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New
York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina,
Tennessee, Vermont, Virginia, West Virginia, and Wisconsin. Customers in other
states are served through dealers of equipment distributed by selected farm
equipment manufacturers.
The Company's principal executive office is located at 333 Butternut Drive, New
York 13214 and its telephone number is (315)449-7935.
THE OFFERING
Securities Offered . . . . . [$28,000,000] principal amount of Debentures (the
"Debentures") pursuant to the Indenture dated as
of September 30, 1993 (the "Indenture"), between
Telmark and OnBank & Trust Co. As of July 31,
1996, the Company had debentures in the principal
amount of $25,716,400 issued and outstanding under
the Indenture.
Form and Denomination....... The Debentures will be issued in registered form
in minimum denominations as set forth in the table
on the cover page of this Prospectus. The Company
may, from time to time, change the minimum
denominations offered by filing a supplement with
the Securities and Exchange Commission. The
applicable supplement, if any, will be attached to
this Prospectus. Any change in minimum
denominations offered will not affect the minimum
denominations of any Debentures theretofore
issued. Additional amounts may be added to the
principal of the Debenture pursuant to an election
by the holder thereof to have quarterly interest
payments added to the principal of the Debenture.
Debenture holders who elect the reinvestment
option will receive a statement from the Company
indicating the amounts added to the principal of
the Debentures.
Maturity Date............... Principal on the Debentures will be payable on
the maturity dates for each Debenture as set
forth in the table on the cover page of this
Prospectus. The Company may, from time to time,
change the maturity date offered by filing a
supplement with the Securities and Exchange
Commission. The applicable supplement, if any,
will be attached to this Prospectus. Any change in
maturity date offered will not affect the maturity
date of any Debentures theretofore issued.
3
<PAGE>
PROSPECTUS SUMMARY (CONTINUED)
THE OFFERING (CONTINUED)
Interest.................... Interest on the 7.25% Debentures due March 31,
2000, is payable at a rate per annum equal to the
greater of: (1) the "stated rate" of 7.25% per
annum; and, (2) the "Treasury Bill Rate" as
defined below under "Description of Debentures -
Interest."
Interest on the 7.50% Debentures, due March 31,
2002, is payable at a rate per annum equal to the
greater of: (1) the "stated rate" of 7.50% per
annum; and (2) the "Treasury Bill Rate" as defined
below under "Description of Debentures Interest."
The company may, from time to time prior to the
completion of the offering of the Debentures,
change the rate of interest offered by filing a
supplement with the Securities and Exchange
Commission. The applicable supplement, if any,
will be attached to this Prospectus. Any change in
the interest rate offered will not affect the rate
of interest on any Debentures theretofore issued.
Interest Payment Dates...... Interest will be payable quarterly in arrears on
January 1, April 1, July 1 and October 1 of each
year and on the Maturity Date as set forth in the
table on the cover page of this Prospectus.
Additional amounts may be added to the principal
of the Debenture pursuant to an election by the
holder thereof to have quarterly payments added to
and increase the principal amount of the
Debenture. See "Description of Debentures -
Payments of Principal and Interest."
Optional Redemption......... Upon not less than 30 days written notice, the
Debentures are redeemable on a designated date
(each such date, a "Redemption Date"), in whole or
in part, at the option of the Company, at the
principal amount thereof, together with accrued
but unpaid interest thereon. See "Description of
the Debentures - Redemption Provisions."
Ranking..................... The Debentures are subordinated to all Senior Debt
(as defined herein) of the Company. Therefore, in
the event of any distribution of assets of Telmark
under any total liquidation or reorganization of
Telmark, the holders of all Senior Debt shall be
entitled to receive payment in full before the
holders of the Debentures are entitled to receive
any payment. In addition to its subordination
provisions, the Indenture contains only limited
restrictions on highly leveraged transactions,
reorganizations, restructuring, mergers or similar
transactions involving the Company, which may
adversely affect the holders of the Debentures.
See "Description of the Debentures - Subordination
Provisions."
Use of Proceeds............. The Company intends to ultimately use the entire
net proceeds from this offering to purchase
equipment and buildings for lease. Pending such
application, the net proceeds may be used to (i)
reduce outstanding borrowings, if any, under the
Company's line of credit agreements or (ii) fund
maturing Senior Debt. See "Use of Proceeds."
Settlement and Issue Date .. Persons interested in purchasing Debentures should
forward their completed application and a check
(personal, cashiers or certified) or money order
payable to the Company in an amount equal to the
principal amount of the Debenture to be purchased.
Applications are available at certain Company and
Agway locations. Applications generally will be
processed by the Company within five to ten days
of the date of receipt by the Company, at which
time they will be forwarded to the trustee to
authenticate, who in turn will forward the
Debenture to the applicant. The "Issue Date" is
defined as the first day of the month in which the
application and proceeds are received by the
Company for such Debenture.
4
<PAGE>
RISK FACTORS
GENERAL PORTFOLIO RISK
The principal assets of the Company are its portfolio of outstanding leases and
the residual value of equipment or other property under lease. Investment risks
inherent in any leasing company include the possibility that lessees fail to
make the payments required under a lease and that the equipment or property
leased might be sold at lease expiration for less than the residual value
anticipated at the initiation of the lease. The Company's leasing business may
be affected by general economic conditions, including the level of inflation,
fluctuations in general business conditions, and the availability of financing
to the Company and its customers. The Company's business is dependent upon
continued demand for leases as a financing vehicle and would be adversely
affected by customer use of other finance methods in acquiring the use of
equipment such as the election to purchase equipment.
CREDIT RISK. Bankruptcies, contract disputes, or defaults by lessees could
result in the nonpayment of amounts due to the Company under its leases. The
ultimate collectibility of amounts due under its leases is directly dependent
upon the credit practices employed by Telmark and the creditworthiness of the
individual leases comprising its portfolio. See "Business of Telmark - Credit
Policies." Despite current credit practices and the existence of financial
reserves to anticipate the potential impact of default or nonpayment of leases,
there are other factors that could significantly impact the Company's lease
collection experience and its earnings. These factors include changes in general
economic conditions, government farm policy, adverse weather conditions and
international commodities prices which are beyond the control of the Company.
Some of these risks are related to Telmark's concentration of customers in
particular segments of agriculture or specific geographic areas. Telmark's
business is concentrated in agriculture in the New England, Mid-Atlantic, and
Midwest states with approximately 75% of its leases directly related to
production agriculture. At June 30, 1996, approximately 52% of the Company's net
lease investment was in the states of Michigan, New York, Ohio and Pennsylvania.
Adverse developments in any of these areas of concentration could have a
corresponding adverse effect on the collectibility of its lease receivables. See
"Risk Factors - Agricultural Economy."
RESIDUAL VALUE RISK. Residual values represent the estimated resale value of
leased equipment or other leased property that the Company expects to derive as
leases expire. Residual values of leased assets are estimated at the time that
the leases are written. Realization of residual values depends on several
factors not within the Company's control, such as the condition of the
equipment, the cost of comparable new equipment and technological or economic
obsolescence of the equipment. Telmark has generally not experienced any losses
as a result of the failure to realize estimated residual values on equipment and
property lease expirations. During the past eight years, the Company has
collected slightly over 100% of the net lease receivable for all leases which
terminated. The net lease receivable with respect to a lease equals the sum of
payments due to the Company under the lease, the estimated residual value of the
leased property at the end of the lease and the net costs incurred by the
Company in entering into the lease, less imputed unearned interest and finance
charges with respect to the lease. Although there can be no assurance this
experience will continue in the future, Company management monitors residual
collections and anticipates this trend to continue. Failure to realize residual
values could have a material adverse effect on the Company's earnings. See
"Business of Telmark - Residual Value."
FINANCING
The ongoing availability of adequate financing to maintain the size of the
Company's current lease portfolio and to permit lease portfolio growth is key to
the Company's continuing profitability and stability. Telmark's principal
sources of financing include banks, debt placements with private institutional
investors, and Debentures sold to the public; at June 30, 1996, these financing
sources provided approximately 49%, 43% and 8%, respectively, of the Company's
outstanding debt. Telmark has been successful in arranging its past financing
needs and believes that its current financing arrangements are adequate to meet
its foreseeable operating requirements. There can be no assurance, however, that
Telmark will be able to obtain future financing in amounts that are sufficient
or on terms that are acceptable. The Company's inability to obtain adequate
financing would have a material adverse effect on its operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operation Liquidity and Capital Resources."
INTEREST RATE RISK AFFECTING THE COMPANY
The Company endeavors to limit the effects of changes in interest rates by
matching as closely as possible, on an ongoing basis, the maturity and repricing
characteristics of funds borrowed to finance its leasing activities with the
maturity and repricing characteristics of its lease portfolio. However, a rise
in interest rates would increase the cost of funds borrowed by the Company to
finance its leasing business and could lower the value of the Company's
outstanding leases in the secondary market. See "Management's Discussion and
Analysis of Financial Condition and
5
<PAGE>
RISK FACTORS (CONTINUED)
Results of Operations - Liquidity and Capital Resources." In addition, higher
interest rates, inasmuch as they would increase the cost of funds borrowed by
the Company for financing its leases, would also increase the cost of leases to
potential lessees and could decrease the demand for the Company's leases.
SUBORDINATION
The Debentures are unsecured obligations of the Company and are subordinated to
all Senior Debt (as defined herein) of the Company. Therefore, in the event of
bankruptcy, liquidation or reorganization of the Company, its assets will be
available to pay obligations of the Debentures only after all Senior Debt has
been paid in full, and there may not be sufficient assets remaining to pay
amounts due on any or all of the Debentures then outstanding. As of July 31,
1996, Senior Debt of $280,944,445 was outstanding. See "Description of the
Debentures - Subordination Provisions."
LIMITED PROTECTIONS IN CONNECTION WITH CERTAIN TRANSACTIONS
In addition to its subordination provisions, the Indenture contains only limited
restrictions on highly leveraged transactions, reorganizations, restructuring,
mergers or similar transactions involving the Company, which may adversely
affect the holders of the Debentures. See "Description of Debentures - General"
and "Description of Debentures - Subordination Provisions."
NO UNDERWRITING
The offering of the Debentures is not being underwritten. Accordingly, no
underwriter, such as an investment bank, has undertaken a review of the
corporate records of the Company, evaluated its financial conditions, or
evaluated the terms of the Debentures and this offering, including the Company's
ability to meet its payment obligations on the Debentures. See "Plan of
Distribution."
CONTROL OF THE COMPANY
Agway owns all of the voting stock of the Company through subsidiaries. This
ownership permits Agway to control all corporate actions of the Company
(including the payment of dividends by the Company to Agway) and could result in
the Company taking actions that would adversely affect its ability to make
payments of principal or interest on the Debentures. See "Principal
Stockholder," "Directors and Management," and "Executive Compensation."
AGRICULTURAL ECONOMY
The financial condition of the Company is indirectly affected by factors
influencing the agricultural economy, since these factors impact the demand for
equipment leased by the Company and the ability of its customers to make
payments on leases. These factors include: (i) changes in the level of
government expenditures on farm programs and the elimination of the acreage
reduction programs could adversely affect the level of income of customers of
the Company; (ii) adverse weather-related conditions that negatively impact the
agricultural productivity and income of customers of the Company; and (iii)
oversupply of, or reduced demand for, agricultural commodities produced by
customers of the Company. To the extent that these factors adversely affect the
customers of the Company, the financial condition of the Company and the ability
of the Company to make payments on the Debentures could be adversely affected.
See "Business of Telmark - Agricultural Economy."
LACK OF GUARANTEE
Although Agway owns all of the common stock of the Company through subsidiaries,
neither Agway nor any of its subsidiaries guarantees the payment of interest on
or the principal of the Debentures. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and Capital
Resources."
ABSENCE OF PUBLIC MARKET, REDEMPTION AND MARKET RISK
There is no market for the Debentures and there is no intent on the part of the
Company to create or encourage a trading mechanism for these Debentures. The
Company does not intend to apply for listing of the Debentures on any securities
exchange. The secondary market for, and the market value of, the Debentures will
be affected by a number of factors independent of the creditworthiness of
Telmark, including the level and direction of interest rates, the remaining
period to maturity of the Debentures, Telmark's right to redeem the Debentures,
the aggregate principal amount of the Debentures and the availability of
comparable investments. In addition, the market value of the Debentures may be
affected by numerous other interrelated factors, including factors that affect
the U.S. corporate debt market generally and Telmark specifically.
6
<PAGE>
RISK FACTORS (CONTINUED)
There is no assurance that: (1) a secondary market value of the Debentures will
develop, (2) any secondary market will continue, (3) the price at which an
investor can sell the Debentures will enable the investor to realize a desired
yield on that investment, or (4) in the event of redemption the investor will be
able to reinvest the proceeds in comparable securities at an effective interest
rate as high as that of the Debentures. The market value of the Debentures is
likely to fluctuate; such fluctuations may be significant and could result in
significant losses to investors. Debenture holders should rely solely on the
Company's ability to repay principal at maturity of the offered Debentures as
the source for liquidity in this investment.
COMPETITION
The Company competes with finance affiliates of equipment manufacturers,
agricultural financial institutions, other independent finance and leasing
companies, and commercial banks. Many of these organizations have substantial
financial and other resources and as a consequence are able to compete on a
long-term basis within the market segment that the Company serves. The Company
believes its leasing products and services will effectively serve its intended
markets in the foreseeable future and that existing competition, while
formidable, will not impair prospects for growth. See "Business of Telmark -
Competition."
USE OF PROCEEDS
There is no assurance that all or any of the Debentures will be sold and the
Company has no minimum amount of Debentures which must be sold as a condition to
the sale of the Debentures. The net proceeds of the sale of the offered
securities will be no greater than [$28,000,000]. The Company will use net
proceeds to purchase equipment and buildings for lease. Pending such
application, the net proceeds may be used to (i) reduce outstanding borrowings,
if any, under the Company's line of credit agreements, or (ii) fund maturing
Senior Debt. The Company intends to ultimately use the entire net proceeds of
the sale of the offered securities to purchase equipment and buildings for
lease. See "Notes to Financial Statements - Note 5" with respect to the
outstanding indebtedness of the Company.
BUSINESS OF TELMARK
Telmark was organized in 1964 under the Business Corporation Law of the State of
New York. It is a wholly-owned subsidiary of Agway Holdings, Inc. which is an
indirect wholly-owned subsidiary of Agway. Telmark currently employs 185
persons.
The Company's operations are comprised almost exclusively of direct finance
leasing of agricultural related equipment, vehicles and buildings to farmers or
other rural businesses that serve the agricultural marketplace (herein,
"customers" or "lessees"). The Company's leases offer customers an alternative
to directly purchasing or borrowing to purchase as a means of acquiring the use
of equipment, vehicles or buildings. Telmark has branded its leasing service
with the registered trademark, Agrilease(R). It also uses TFS(SM) to identify
its services through dealers of selected manufacturer products. The Company
highlights its service-oriented approach, using the tagline "The Flexible
Financing Alternative(SM)" in its advertisements and product brochures. Telmark
offers a variety of lease financing packages, with varying payment schedules on
a monthly, quarterly, semiannual or annual basis, depending on the expected
timing of customer cash flows and customer credit quality and the customer's
individual preferences.
With a direct finance lease the customers have use of the leased property over a
specified term for a periodic rental charge: the lease payment. Lease payments
are made in advance of the period and typically the equivalent of two monthly
payments are required in advance at the outset of the lease. Most direct finance
leases offered are for a period which does not exceed the Company's estimate of
the useful life (based on Telmark's estimate of customers use) of the equipment
or the building leased. Equipment leases generally do not exceed eight years.
Building leases are typically offered for longer terms (e.g., 5 to 10 years)
than for equipment leases, up to maximum terms of 15 years. As of June 30, 1996,
the Company's outstanding leases had an average original term of 4.8 years and
average remaining term of 3.8 years.
Generally, the lessee selects the supplier of the equipment or other property to
be leased and the Company is not responsible for its suitability, performance,
life, or any other characteristics. In some cases, the financing is offered to
the ultimate customer through a dealer of a selected manufacturer. The Company's
only responsibility is to buy the property from the supplier, lease it to the
lessee, and collect the lease payments. The lessee assumes all obligations of
insurance, repairs, maintenance, service, and property taxes. At the expiration
of the direct finance
7
<PAGE>
BUSINESS OF TELMARK (CONTINUED)
lease term, the lessee has an option to (i) purchase the leased property, (ii)
renew the lease, or (iii) return the leased property to the Company. In 95% of
the Company's lease transactions, the lessee purchases the leased property or
equipment upon termination of the lease.
The Company realizes most of its net earnings (profits) to the extent that
revenues from its leases exceeds the Company's operating expenses and income
taxes. The Company's "revenue" from a lease is the sum of all payments due under
the lease plus the residual value of the leased property, less the cost of
purchasing the leased property. "Operating expenses" include interest expense,
provision for credit losses (the dollar amount the Company sets aside to cover
its estimated losses should a lessee fail to make required payments under a
lease), and selling and general and administrative expenses including the
Company's payroll costs, rent, advertising costs and fees paid for credit
checking and legal and accounting services. "Interest expense" is the single
largest operating cost of the Company and is primarily the interest it must pay
on the amounts borrowed by the Company from banks and other investors to finance
its leases. An example of how a direct finance lease transaction generates
profits for the Company is set forth below.
A potential customer determines that he needs to acquire a machine to harvest
his corn. He selects a harvester and enters into a lease with Telmark for that
particular machine. Telmark purchases the harvester using funds it borrows or
with available cash on hand. Under terms of the lease, the customer agrees to
make lease payments to Telmark. At the end of the lease term, the customer may
(i) purchase the harvester from Telmark for its fair market value, (ii) extend
the lease on terms agreed to by Telmark, or (iii) return the harvester to
Telmark. Telmark makes a profit on the lease to the extent that the sum of the
lease payments collected during the lease term plus the proceeds from the sale
or re-lease of the equipment after the initial lease term exceeds the cost of
the equipment and other operating expenses.
The Company occasionally sells portions of its "net lease receivables" to
provide an additional source of capital for the Company, and such sales may also
produce net earnings for the Company. The net lease receivable with respect to a
lease equals the sum of payments due to the Company under the lease, the
estimated residual value of the leased property at the end of the lease and the
net costs incurred by the Company in entering into the lease, less imputed
unearned interest and finance charges with respect to the lease. During the
fiscal years ended June 30, 1994, 1993, and 1992, Telmark sold $5.5 million,
$10.7 million, and $21.4 million respectively, of certain net lease receivables.
The Company did not sell any lease receivables in 1995 or 1996. Under the terms
of these sales, in the event the purchasers do not receive payment when due with
respect to the receivables purchased, the purchaser has the right to seek
recovery of such unpaid amounts from the Company up to an amount equal to a
maximum of 7.5% of the proceeds from such sales. The lease receivables sold are
not included in the Company's financial statements except to the extent of
proceeds realized from their sale. The Company, however, does include the
outstanding balances of these lease receivables in the term "Leases" discussed
below for statistical purposes. The Company continues to service the leases
relating to such lease receivables on behalf of the purchasers. As of June 30,
1996, the remaining balances on net lease receivables sold was approximated $5.6
million. See "Business of Telmark - Portfolio Mix" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources."
PORTFOLIO MIX
Telmark finances agricultural and related equipment, vehicles and buildings of
both a general and specialized nature. As exemplified by the following four
schedules, the Company has a portfolio of leases which are diverse with respect
to the type of equipment to which they relate, their dollar amount, the industry
involved and their geographic origination. Such diversification helps mitigate
adverse circumstances affecting particular industry, geographic and other
segments of the Company's business, to the extent that such circumstances do not
adversely affect the entire business of the Company.
"Leases" in the Company's portfolio are defined by the Company for the following
statistical purposes as amounts due to it by lessees under all of the Company's
outstanding leases (known as "gross lease receivables") and includes leases sold
(the collection of which is administered by the Company) and excludes imputed
unearned interest and finance charges. As of June 30, 1996, Telmark had
approximately $397.1 million of Leases outstanding.
8
<PAGE>
BUSINESS OF TELMARK (CONTINUED)
PORTFOLIO MIX (CONTINUED)
Equipment which the Company leases includes milking machines, tractors,
combines, feed processing equipment and forestry equipment (e.g., log skidders
and log harvesting equipment); vehicles leased include trucks, trailers and fork
lifts; and buildings leased include barn structures, silos and greenhouses.
Approximately 10% of the equipment leases are for used equipment. The percentage
of leases by equipment type has generally remained constant and the Company does
not anticipate significant changes in the types of equipment to be leased. Given
the nature of the equipment leased and the generally short-term duration of its
leases, the Company has not been adversely affected by, and does not anticipate
being adversely affected by significant technological developments that may
affect the value of the equipment leased to customers. The breakdown of leases
by equipment type is as follows:
SCHEDULE OF LEASES
BY EQUIPMENT TYPE
- --------------------------------------------------------------------------------
June 30, 1996
(Percentages are of dollar amounts due under outstanding Leases)
- --------------------------------------------------------------------------------
Equipment Type %
- -------------- ----
Farm equipment, machinery and tractors..................................... 38%
Highway vehicles........................................................... 16%
Buildings.................................................................. 23%
Forestry related equipment................................................. 13%
Other less than 4% of total................................................ 10%
----
Total................................................................ 100%
Telmark maintains a large customer base which includes over 18,000 customers.
The minimum purchase price of equipment which the Company finances is $1,500.
Approximately 30% of the Company's customers hold more than one lease with the
Company. In order to limit its credit exposure to particular customers,
Telmark's Board of Directors maintains a policy which precludes any one customer
from accounting for more than 2.5% of the dollar amount of the Company's
outstanding Leases, except for Agway and affiliates. Currently, no customer
accounts for more than 1.0% of the dollar amount of the Company's outstanding
Leases. Telmark's average lease size at origination is approximately $24,000.
The breakdown of leases by size is as follows:
SCHEDULE OF LEASES BY SIZE
- --------------------------------------------------------------------------------
Dollar Amounts and Corresponding Percentages are of Leases Entered into During
Year Ended June 30, 1996
- --------------------------------------------------------------------------------
Dollars
Original Size Transaction (In Millions) %
- ------------------------- ---------------- -------------
Under $7,500 $ 8.5 5%
$ 7,500 - $24,999 49.9 29%
$25,000 - $49,999 37.3 21%
$50,000 - $99,999 36.9 21%
$100,000 - $249,999 33.6 19%
$250,000 & Over 8.8 5%
---------------- -------------
Total $ 175.0 100%
================ =============
9
<PAGE>
BUSINESS OF TELMARK (CONTINUED)
PORTFOLIO MIX (CONTINUED)
The largest industry concentrations are in dairy, crops, forestry, livestock,
and transportation. These industries may be impacted differently by various
factors including changing economic conditions, technological advances in the
equipment and agricultural sector, government regulation and subsidies, and
domestic and international consumer demand, among others. Generally, the
diversity of enterprises served by the Company helps keep any single adverse
trend from having an adverse effect on the ability of all customers to meet
their lease obligations. For example, a long period of low grain prices could
reduce the ability of grain farmers to meet their obligations, but the low grain
prices would reduce the feed costs paid by dairy farmers, thereby making it
easier to meet their lease obligations. The breakdown of leases by industry is
as follows:
SCHEDULE OF LEASES
BY INDUSTRY
- --------------------------------------------------------------------------------
June 30, 1996
(Percentages are of dollar amounts due under outstanding Leases)
- --------------------------------------------------------------------------------
Industry %
- -------- ----
Dairy....................................................................... 19%
Crops....................................................................... 19%
Forestry.................................................................... 15%
Livestock................................................................... 14%
Transportation............................................................... 9%
Orchard/Vegetables........................................................... 5%
Landscaping.................................................................. 4%
Other less than 5% of total................................................. 15%
----
Total................................................................ 100%
====
The aforementioned industries are defined as follows: Dairy is the production of
milk; it is sold in the raw state to a processor. Forestry is the harvesting and
initial processing of forest products. The wood is sold in the form of logs or
rough cut lumber. Crops is the production of grain or hay; it is sold in bulk.
Livestock is the production of animals. The animals are generally sold live to a
processor. Transportation is the movement of products by truck. Products being
moved are generally farm input (e.g., fertilizer, feed) items being transported
to farms or farm products going to market. Orchard/Vegetable is the production
of fruits and vegetables. They may be sold in bulk to a processor or sold by the
farmer in smaller quantities directly to consumers. Landscaping is generally the
grooming and design of outdoor decorative plantings. Customers of the landscaper
would generally include both retail and commercial accounts. Miscellaneous is
the aggregate of all other types of accounts.
At June 30, 1996, leases originated in the states of Michigan, New York, Ohio
and Pennsylvania accounted for approximately 52% of the total lease portfolio.
Pennsylvania and New York have historically been the most significant in terms
of lease activity due to the large number of dairy farms located there. However,
the Company's business continues to expand geographically and its concentration
of leases in Pennsylvania and New York has been reduced from approximately 68%
in 1984 to 30% in 1996. The Company's continued expansion into new geographic
markets mitigates the potential adverse effect on the Company of circumstances
which may impact these markets such as state and local regulations, local
economic conditions, and weather conditions (i.e., floods, drought). For
example, if poor growing conditions such as early or late frost, hail, or lack
of rain reduce the apple crop in western New York, the orchard enterprises
located there could lose part of their normal crop; however, the Michigan
orchard enterprises might enjoy higher prices and income because of higher
demand for their apples. The geographic distribution of leases is as follows:
10
<PAGE>
BUSINESS OF TELMARK (CONTINUED)
PORTFOLIO MIX (CONTINUED)
SCHEDULE OF LEASES
BY GEOGRAPHIC DISTRIBUTION
- --------------------------------------------------------------------------------
June 30, 1996
- --------------------------------------------------------------------------------
(Percentages are of dollar amounts due under outstanding Leases)
- --------------------------------------------------------------------------------
State %
- ----- ----
New York.................................................................... 18%
Michigan.................................................................... 13%
Pennsylvania................................................................ 12%
Ohio......................................................................... 9%
Virginia..................................................................... 6%
Maryland..................................................................... 5%
Kentucky..................................................................... 4%
Delaware..................................................................... 4%
Indiana...................................................................... 4%
Illinois..................................................................... 3%
All Others less than 3%.................................................... 22%
----
Total................................................................ 100%
====
CREDIT POLICIES
Potential lessees undergo a thorough credit approval process after a Telmark
field representative completes a financial application. The Telmark
representative is responsible for obtaining the most accurate information
possible for a proper application review. Personal observation and meetings with
the customer assist the Telmark representative in providing a comprehensive
evaluation of the lease application.
The credit search usually begins with electronic credit bureau systems such as
TRW, Inc. and local or regional creditors such as banks. For Agway cooperative
members, the Agway credit system provides additional information. For
contemplated transactions of over $100,000, a county court house search provides
records of any existing liens against the lessee. Telmark retains title to the
equipment or building leased. In addition, Telmark often obtains a second lien
on the real estate owned by the farmer or lessee as collateral for payments
under a building lease. In the event of a default on the lease, the second lien
entitles Telmark to foreclose on the real estate property and take title subject
to any and all prior liens on the property. Upon foreclosure, if this collateral
is insufficient to cover all existing liens, prior lienholders may receive more
than Telmark. Thus, Telmark looks first to the lessee's historical and future
ability to service its debt and lease payments, and then to the mortgage
position of a lease collateralized by real estate.
Credit approvals are made based on the total amount outstanding to the customer.
Lending authority is assigned to members of management depending on position,
training, and experience. Generally amounts up to $200,000 require approval from
one of five Regional Credit Managers. Amounts over $200,000 are approved by the
Director of Credit or a committee of senior management. The Board of Directors
must approve all amounts exceeding $1,000,000.
Telmark maintains monthly delinquency reports which monitor leases that have
been delinquent (i.e., payment due has not been made) for over 30 days, and
non-earning leases. Generally, accounts past due at least 120 days, as well as
accounts in foreclosure or bankruptcy, are transferred to non-earning status.
Non-earning accounts cannot become current unless all past due lease payments
are paid or the lease is amended. As of June 30, 1996, non-earning leases were
.7% of the Company's net investment in leases before allowances for credit
losses. The potential losses from non-earning leases are mitigated by the
ability of the Company to repossess leased property and to foreclose on other
property in which the Company has been granted a security interest. See
"Business of Telmark - Portfolio Mix."
11
<PAGE>
BUSINESS OF TELMARK (CONTINUED)
CREDIT POLICIES (CONTINUED)
Leases may be amended by Telmark and a lessee to change the terms, remaining
amount, and payment schedule for the remaining lease balance. There is a fee
collected for the amendment. All lease amendments are supported by legal
documentation and, as management deems appropriate, a new credit evaluation.
The Company maintains financial reserves (provision for credit losses) to cover
losses in its existing lease portfolio from default or nonpayment. Telmark's
provision for credit losses is determined by a periodic evaluation of the lease
portfolio, including analysis of delinquent accounts, current economic
conditions, estimated residual values and credit worthiness of customers. The
provision reflects management's estimates of the inherent credit risk within the
portfolio.
RESIDUAL VALUE
The Company generally estimates the residual value at the end of a lease to be
10% of the purchase price on a piece of new equipment and 15% of the market
value at inception for a building. It is not possible to forecast with certainty
the value of any equipment upon termination of the lease. The market value of
used equipment depends upon, among other things, its physical condition, the
supply and demand for equipment of its type and its remaining useful life in
relation to the cost of new equipment at the time the lease terminates. Telmark
has generally not experienced any losses as a result of the failure to realize
estimated residual values on equipment and property lease expirations. During
the past eight years, the Company has collected slightly over 100% of the net
lease receivable for all leases which terminated. The net lease receivable with
respect to a lease equals the sum of payments due to the Company under the
lease, the estimated residual value of the leased property at the end of the
lease and the net costs incurred by the Company in entering into the lease, less
imputed unearned interest and finance charges with respect to the lease. This
residual performance can be attributed to the Company's ability to sell the
equipment, vehicle or building to the original lessee at the end of the lease in
over 95% of the Company's transactions. Management believes that obsolescence
factors, such as technological sophistication and computerization have only a
moderate effect on the farming equipment sector and that agricultural equipment
will continue to show strong residual values.
INSURANCE COVERAGE
Under a Company lease, the customer assumes the obligation to insure the leased
property against claims arising from the customer's use of the leased property.
The Company may be exposed to liability from claims by lessees and third parties
including claims due to the lessees' use of the property or defects in the
property. However, in general direct finance lessors such as the Company have
not been held liable for such claims. In addition, the leases provide the
Company protection against such liability claims. Under the terms of each lease
the Company disclaims such liability and the customer agrees to indemnify the
Company for any claim or action arising in connection with the manufacture,
selection, purchase, delivery, possession, use, operation, maintenance, leasing,
and return of the equipment leased. The Company requires the customer to provide
insurance coverage naming the Company as an additional insured in certain
circumstances and has insurance coverage for most liability claims against it
through insurance policies purchased by Agway.
AGRICULTURAL ECONOMY
The Company is indirectly affected by factors that affect the agricultural
economy in which its customers operate. These factors include (i) governmental
agricultural programs, (ii) weather conditions, and (iii) supply and demand
conditions with respect to agricultural commodities. These factors may affect
the economic vitality of the Company's customers and consequently their
decisions to lease equipment or property for their businesses as well as the
ability of these customers to make the required payments on their leases.
Government Subsidies. In the 1990's, federal budgetary constraints have resulted
in decreased government spending programs, including the farm subsidies and
programs participated in by certain Telmark customers. Government program
changes that may affect the Company include elimination of price supports and
acreage reduction programs. Price support programs included the establishment of
minimum prices for certain commodities as well as the purchase by the Government
of excess supplies of such commodities. Under the recently enacted Federal
Agricultural Improvement and Reform (FAIR) Act, farmers of crops covered under
previous programs can utilize "contract acreage" the way they choose as opposed
to having the use dictated by a government subsidy program. This will require
the farmer to have marketing management skills that capitalize on the free
market approach, and could yield both a greater profit potential and greater
risk.
12
<PAGE>
BUSINESS OF TELMARK (CONTINUED)
AGRICULTURAL ECONOMY (CONTINUED)
Generally, FAIR is expected to improve the U.S. farm outlook by providing crop
farmers with more control over their growing plans and provides more opportunity
in the world market based on market demand. Over seven years, farmers will
adjust from past government programs through declining market transition
payments. The dairy portion of FAIR reduces subsidies over four years to avoid a
sudden drop-out of dairy farms and give businesses time to adjust over four
years. Farmers will need to develop management and marketing skills to control
their marketplace.
All the new FAIR programs increase the profit and the risk potential of
participating farmers and the existence and magnitude of these programs may
influence those farmers' decisions to lease equipment and the ability of those
farmer customers to continue to make payments on their Telmark leases.
The overall impact of these programs on Telmark is uncertain. The availability
of these programs varies widely by crop, commodity and geographic region as does
the level of benefits received by a particular farmer. In addition, elimination
of programs, such as acreage reduction programs, may increase demand for
equipment leased by Telmark to the extent that such changes result in farmers
increasing their production of certain crops.
Weather. Adverse weather conditions can have varying effect on the customers of
the Company depending on the region experiencing such conditions. When adverse
conditions occur in the region served by the Company, the effect can be negative
as was the case in 1992 when many parts of the Northeast, the Company's primary
territory, experienced a relatively cold summer and a wet fall. This adversely
impacted grape farmers (whose crops never matured and had poorer sugar content),
as well as potato, vegetable and grain farmers. However, adverse weather
conditions occurring in other regions may be advantageous to the customers of
the Company. For example, the floods occurring in parts of the Midwest and the
droughts which occurred in parts of the West and Southwest in 1993 reduced
output in those areas which increased the demand for crops grown by Telmark
customers. Inclement weather can also benefit Telmark's food processor customers
to the extent that it increases demand for frozen or canned products as opposed
to fresh products.
Commodities Demand. Supply and demand conditions with respect to agricultural
commodities produced by customers of the Company can be affected by a number of
factors. These factors include both national and international economic
conditions, local, national and international weather conditions (e.g., the
floods in the Midwest discussed above), and technological changes which increase
farmer productivity (e.g., the growth hormone BST which increases milk
production in cows). The income of the customers of the Company is in part
determined by the demand for the commodities and the amount of such commodities
they produce. Generally, any of the above factors which increase demand may
increase the income of the customers of the Company to the benefit of the
Company. Conversely, any of the above factors which decrease demand may decrease
such income to the detriment of the Company.
Historically, Telmark customers have produced products which are marketed within
the United States. Domestic demand for these products, in addition to being
affected by the availability and demand for competing products, may be affected
by the state of the United States economy. However, the economic condition of
foreign countries and their demand for the type of products produced by Telmark
customers may also influence the demand for products of Telmark's customers. For
example, economic recessions in Europe and Japan have contributed to soft
foreign demand for U. S. agricultural products, as has the transition to market
economies in Eastern Europe, the republics of the former Soviet Union, and
China. This softened demand has been offset by Government export support
programs. A discontinuation of these export support programs may result in a
surplus of certain commodities due to reduced exports which may reduce the
demand and price of products produced by customers of Telmark.
Telmark customers may also be affected by agreements between the United States
and foreign governments, such as the North American Free Trade Agreement and the
General Agreement on Tariffs and Trade which may impact indirectly demand for
Telmark's customers' products. The impact of these agreements on Telmark's
customers is unclear. To the extent that these agreement's result in an increase
in competing imports or greater domestic supply, Telmark's customers and thus
Telmark may be adversely affected. However, to the extent these agreements
increase demand for commodities of the type produced by Telmark's customers,
Telmark and its customers may be beneficially affected.
13
<PAGE>
BUSINESS OF TELMARK (CONTINUED)
MARKETING AND SALES
Telmark uses both direct mail and advertising campaigns routed through its
parent publications and other agricultural publications as a means of promoting
its leasing products to farmers and other rural businesses that serve the
agricultural marketplace. In addition, leasing product brochures are available
at many equipment dealer franchises. Advertising and communication efforts for
non-Agway businesses are typically targeted towards special market segments such
as forestry and trucking via magazines and trade shows.
Much of Telmark's business comes from referrals to Telmark by equipment
retailers and building contractors of customers wishing to purchase equipment,
vehicles or buildings. The retailer or contractor refers the customer to
Telmark, where a field representative will complete a credit application and
seek credit approval in a day. Upon approval, the retailer or contractor is paid
by Telmark for the equipment, vehicles or buildings which are then "acquired" by
the customer. Using the identification TFS(SM), the Company provides financing
through the dealers of selected manufacturers of equipment. In the cases where
financing is through manufacturer sponsored financing programs, the dealer
rather than a Telmark field representative completes a credit application.
FACILITIES
The Company leases all of the office space it uses from Agway. Telmark does not
own any of the real property it uses for office facilities.
COMPETITION
The Company's main competitors are agricultural financial institutions and other
leasing companies. Many of these organizations have greater financial and other
resources than the Company and as a consequence are able to obtain funds on
terms more favorable than those available to the Company. The Company's
strongest competitors are agricultural financial institutions such as the Banks
of the Farm Credit System and their affiliates, federal government sponsored
enterprises ("GSEs") which are the largest agricultural lenders in the nation,
and local and regional banks servicing the agricultural sector. These
competitors may enjoy a relative advantage in financing their leasing business.
Banks of the Farm Credit System as GSEs may be able to raise funds in the public
debt market at a lower interest rate than the Company can. Similarly, commercial
banks may be able to raise funds more cheaply than the Company through their
offering of Federal Deposit Insurance Corporation insured deposit accounts.
Other leasing companies competing with the Company include equipment
manufacturers with finance subsidiaries, and independent leasing companies.
Finance subsidiaries of equipment manufacturers frequently charge reduced
interest rates on equipment leases to stimulate sales of equipment produced by
their parent companies. Telmark competes with its competitors by focusing on
agricultural equipment financing, service to its customers, and tailoring its
portfolio of products to address the specific needs of farmers and other rural
businesses which serve the agricultural marketplace.
14
<PAGE>
SELECTED FINANCIAL DATA
The following "Selected Financial Data" of the Company have been derived from
financial statements audited by Coopers & Lybrand L.L.P., whose reports for the
periods ended or as of June 30, 1996,1995 and 1994 are included elsewhere in
this Prospectus, and should be read in conjunction with the full financial
statements of the Company and Notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
(Thousands of Dollars)
----------------------------------------------------
Years Ended June 30,
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Total revenues ....................... $ 48,627 $ 41,942 $ 34,642 $ 34,158 $ 35,389
Income before income taxes ........... $ 11,502 $ 9,272 $ 8,485 $ 9,920 $ 5,012
Provision for income taxes ........... $ 4,745 $ 4,240 $ 4,126 $ 4,481 $ 1,905
Net income ........................... $ 6,757 $ 5,032 $ 4,359 $ 5,439 $ 3,936
Leases and notes, net ................ $374,561 $333,091 $277,058 $231,577 $227,636
Total Assets ......................... $398,198 $358,634 $300,093 $249,085 $235,537
Senior Debt .......................... $273,000 $255,467 $215,489 $170,400 $167,200
Debentures (1) ....................... $ 24,258 $ 8,174 $ 3,712
Stockholder's Equity ................. $ 78,514 $ 44,758 $ 40,043 $ 36,908 $ 32,797
Ratio of earnings to fixed charges (2) 1.6 1.5 1.6 1.7 1.3
Ratio of Senior Debt to equity (3) ... 3.8 3.7 3.6 3.1 3.3
</TABLE>
(1) In January 1994 the Company commenced a public offering of Subordinated
Debentures due December 31, 1997. See Note 5 of the Notes to Financial
Statements.
(2) For purposes of this ratio, earnings represents operating income before
(i) income taxes and (ii) interest charges. Fixed charges include interest on
all senior and subordinated debt.
(3) Under a support agreement and Senior Debt agreements, subordinated debt
payable to Agway Holdings, Inc. is included in the definition of equity for
purposes of this ratio. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources."
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FISCAL 1996. Telmark's net income for 1996 increased by $1.7 million (34.3%)
from 1995 to $6.8 million. The increase is due to a larger outstanding portfolio
during the year and a somewhat higher margin on the portfolio.
Revenue is recognized over the term of the leases. Increases in the lease
portfolio from new booked volume of $175.0 million in 1996 and $170.5 million in
1995, in excess of lease reductions from collection, sale of leases, and net bad
debt expense totaling $134 million and $114 million in 1996 and 1995
respectively, have the effect of increasing total revenues. Total revenues in
1996 increased by $6.7 million (15.9%) over 1995, attributable in part to the
$41 million (12.4%) increase in net leases during fiscal 1996. Interest and
finance charges, as a percentage of the notes and leases, increased slightly
from 12.7% in fiscal 1995 to 12.9% in fiscal 1996. During the same period, the
average cost of interest paid on debt remained unchanged at 7.5%.
Selling, general and administrative expenses increased by $1.6 million (20.0%)
to $9.8 million from $8.2 million the previous year. Those increases were
primarily the result of additional people, incentives paid relating to the
additional new business booked, and advertising. Other administrative expenses
remained low due to tight expense control. For fiscal 1996, interest expense
increased by $2.6 million (14.9%) to $20.3 million due to increased borrowings
required to finance the growth of the lease portfolio while the average cost of
interest paid on debt remained unchanged.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS (CONTINUED)
The provision for credit losses increased 2.8% to $7.0 million and is based on
the Company's analysis of reserves required to provide for uncollectible
receivables. Telmark's allowance for credit losses is determined by a periodic
review of the lease portfolio, including analysis of delinquent accounts,
current economic conditions, estimated residual values and credit worthiness of
customers. Reserves are established at a level sufficient to cover all estimated
losses in the portfolio. The basis for the amount is a comprehensive review of
all large and non-earning accounts, and a quantitative and qualitative review of
the entire portfolio based on prior experience. In 1995, Telmark implemented an
aggressive write off policy which resulted in a decrease in the total of
non-earning accounts to $3.8 million. During 1996, the general economy remained
strong and the total of non-earning accounts was further reduced to $2.9
million. However, management believes that it was prudent to increase the level
of reserve to approximately $19.8 million because of the increase in the size of
the overall lease portfolio over the prior year. Accordingly, the provision for
credit losses increased.
FISCAL 1995. Telmark's net income for 1995 increased 15.4% from 1994 to $5.0
million. The increase is due to a larger outstanding portfolio during the year
partially offset by no gain on sale of assets in 1995 versus 1994 and a somewhat
reduced margin on the portfolio.
Revenue is recognized over the term of the leases. Increases in the lease
portfolio from new booked volume of $170.5 million in 1995 and $149.7 million in
1994, in excess of lease reductions from collection, sale of leases, and net bad
debt expense totaling $114 million and $104 million in 1995 and 1994
respectively, have the effect of increasing total revenues. Total revenue
increased by 21.1% compared to a 20.2% increase in net leases. Interest and
finance charges, as a percentage of the notes and leases, decreased slightly
from 12.8% in fiscal 1994 to 12.7% in fiscal 1995. During the same period, the
average cost of interest paid on debt increased slightly from 7.47% in fiscal
1994 to 7.54% in fiscal 1995.
Selling, general and administrative expenses increased 9.7% to $8.2 million from
$7.5 million the previous year. Those increases were primarily the result of
additional people and incentives paid relating to the additional new business
booked. Advertising and other administrative expenses remained low due to tight
expense control. For fiscal 1995, interest expense increased 33.3% to $17.7
million due to increased borrowings required to finance the growth of the lease
portfolio.
The provision for credit losses increased 15.0% to $6.8 million and is based on
the Company's analysis of reserves required to provide for uncollectible
receivables. Telmark's allowance for credit losses is determined by a periodic
review of the lease portfolio, including analysis of delinquent accounts,
current economic conditions, estimated residual values and credit worthiness of
customers. Reserves are established at a level sufficient to cover all estimated
losses in the portfolio. The basis for the amount is a comprehensive review of
all large and non-earning accounts, and a quantitative and qualitative review of
the entire portfolio based on prior experience. In fiscal 1994, total
non-earning accounts decreased to approximately $8 million from approximately
$12 million in 1993 due to a generally strong economy. During 1995, the general
economy remained strong and Telmark implemented a more aggressive write off
policy which resulted in a further decrease in the total of non-earning accounts
to $3.8 million. However, management believes that it was prudent to increase
the level of reserve, to approximately $15.3 million because of the increase in
the size of the overall lease portfolio. Accordingly, the provision for credit
losses increased.
LIQUIDITY AND CAPITAL RESOURCES
The ongoing availability of adequate financing to maintain the size of the
Company's current lease portfolio and to permit lease portfolio growth is key to
the Company's continuing profitability and stability. The Company has
principally financed its operations, including the growth of its lease
portfolio, through borrowings under its lines of credit, private placements of
debt with institutional investors and other term debt, principal collections on
leases and cash provided from operations. Total assets have grown an average
rate of 17% over the past twelve years. This growth has been financed through
growth in retained earnings and additional paid in capital from Agway, in
addition to debt financing. At June 30, 1996, the ratio of Senior Debt to equity
is at 3.8, compared to 3.7 for fiscal 1995. Telmark has been successful in
arranging its past financing needs and believes that its current financing
arrangements are adequate to meet its foreseeable operating requirements. There
can be no assurance, however, that Telmark will be able to obtain future
financing in amounts or on terms that are acceptable. The Company's inability to
obtain adequate financing would have a material adverse effect on its
operations.
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Cash flows from operating activities for fiscal 1996 of $13.2 million and cash
flows from financing activities of $35.7 million were used to fund the net lease
receivable growth and purchasing of investments. Repayment of $27 million of
subordinated debt to Agway Holdings, Inc. ("Holdings") and receipt of $27
million of paid in capital from Holdings was included in cash flow from
financing activities.
In fiscal 1995, cash flows from operations of $12.0 million and cash provided
from debt financing of $52.5 million was used to fund the net lease receivable
growth in addition to purchasing investments.
The following paragraphs summarize the terms of the Company's existing debt
agreements and instruments which the Company believes may be material to
investors. These summaries do not purport to be complete, are subject to the
detailed provisions of those documents, and are qualified in their entirety by
reference to the agreements and instruments filed as exhibits to the
registration statement of which this Prospectus is a part.
Line of Credit and Term Debt Agreements
As of June 30, 1996, the Company had two separate credit facilities available
from banks which allow the Company to borrow up to an aggregate of $204,000,000.
An uncommitted short-term line of credit agreement permits the Company to borrow
up to $4,000,000 on an unsecured basis with interest paid upon maturity. The
line bears interest at money market variable rates. A committed $200,000,000
partially collateralized (see "Investment in Bank Stock") revolving term loan
facility permits the Company to draw short-term funds bearing interest at money
market rates or draw long-term debt at rates appropriate for the term of the
note drawn. The total amount outstanding as of June 30, 1996 under the
short-term line of credit and the revolving term loan facility was $0 and
$146,000,000, respectively.
Telmark borrows under its short-term line of credit agreement and its revolving
term agreement from time to time to fund its operations. Short-term debt serves
as interim financing between the issuances of long-term debt. Telmark renews its
lines of credit annually. The $4,000,000 line of credit has been renewed through
December 1996. The $200,000,000 revolving term agreement loan facility is
available through February 1, 1997. The Company believes it has sufficient lines
of credit in place to meet interim funding needs.
Senior Debt
At June 30, 1996, the Company had balances outstanding on eleven unsecured
senior note private placements totaling $126,844,445. Interest is payable
semiannually on each senior note. Principal payments are both semiannual and
annual. The note agreements are similar to one another and each contain
financial covenants, the most restrictive of which prohibit (i) tangible net
worth, defined as consolidated tangible assets less total liabilities (excluding
notes payable to Agway Holdings, Inc.), from being less than $32,000,000, (ii)
the ratio of total liabilities less subordinated notes payable to Agway
Holdings, Inc. to shareholder's equity plus subordinated notes payable to Agway
Holdings, Inc. from exceeding 5:1, (iii) the ratio of earnings available for
fixed charges from being less than 1.25:1, and (iv) dividend distributions and
restricted investments (as defined) made after December 31, 1994 are prohibited
to the extent they exceed 50% of consolidated net income for the period
beginning on January 1, 1995 through the date of determination, inclusive.
The Company maintains lines of credit with banks (see "Line of Credit and Term
Debt Agreements" above) and has leased equipment on a capital lease. As of June
30, 1996, $146,000,000 was outstanding on the lines of credit and the capital
lease balance was $152,212.
Telmark plans to continue using banks, debt placements with private
institutional investors, and Subordinated Debentures as its principal sources of
financing. In addition, the Company may sell a portion of its "net lease
receivables" to provide additional capital.
Support Agreement
An agreement exists among Agway, Agway Financial Corporation (a wholly-owned
subsidiary of Agway), Agway Holdings, Inc. (a wholly-owned subsidiary of Agway
Financial Corporation) and Telmark, whereby Agway Financial Corporation and/or
Agway Holdings, Inc. agree to advance funds to Telmark, to the extent necessary
to insure that Telmark's debt to equity ratio, as defined in such agreement,
will be maintained at no greater than 5 to 1. Any funds advanced by Agway
Financial Corporation and/or Agway Holdings, Inc. are regarded as subordinated
debt. The agreement is in effect for one year periods, renewed annually, unless
terminated by any party upon 30 days written notice.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Debentures
At July 31, 1996, the Company had an aggregate principal amount of $25,716,400
of debentures issued and outstanding under the Indenture. These debentures are
unsecured and are subordinated to all Senior Debt of the Company. Of the total
outstanding, $4,692,000 bear interest at a rate of 6% per annum, and are due
December 31, 1997; $6,226,000 bear interest at the rate of 8.25% per annum and
are due March 31, 2000; $3,446,800 bear interest at the rate of 8.25% per annum
and are due March 31, 1998; $6,668,500 bear interest at the rate of 8.50% per
annum and are due March 31, 2000; $2,187,100 bear interest at the rate of 8.00%
per annum and are due March 31, 2000; and $2,496,000 bear interest at the rate
of 7.75% and are due March 31, 1998.
Lease Sales
The Company has entered into lease sale transactions with banks over the years,
four of which have remaining balances as of June 30, 1996. The Company sold
approximately $10.6 million in lease receivables in September 1991, $10.8
million in June 1992, $10.7 million in June 1993, and $5.5 million in February
1994. The outstanding balance of receivables sold was $5.6 million as of June
30, 1996. See "Business of Telmark."
The Company is restricted under its private placement debt note agreements from
selling leases in an amount (i) greater than 10% of the previous year end total
assets or (ii) in excess of the sum of 30% of leases originated prior to May
1992 and 35% of leases originated during and after May 1992. Currently, the
Company's maximum cumulative percentage of sold leases under its oldest note
agreement is 15.5%.
Investment in Bank Stock
In accordance with the Federal Farm Credit Act, the Company, as a condition of
its borrowings (lines of credit both short-term and long term debt) from CoBank,
ACB (the "Bank") is required to invest in the capital stock of the Bank. The
initial statutory minimum amount of capital investment required for borrowers is
two percent of the aggregate loan funds advanced or one thousand dollars,
whichever is less. As of June 30, 1996, the Company holds $10,038,421 of capital
stock of the Bank. The Bank has a first lien on this capital stock as collateral
for the repayment of the Company's loan and the Company does not have access to
these funds. There is no market for the Bank's stock.
Federal regulations concerning capitalization bylaws and the issuance and
retirement of Bank stock provide that stock issued on or after October 6, 1988
must qualify as at-risk capital of the Bank. All of the Company's investment in
capital stock represents at-risk capital of the Bank. The retirement of at-risk
capital must be solely at the discretion of the Bank's board of directors and
not upon a date certain or upon the happening of any event, such as the
repayment of the related loan. In addition, the Bank is prohibited from reducing
its capital by retiring stock (other than protected stock), if after or due to
such retirement, the institution would not meet its at-risk capital standard set
by federal regulations.
The boards of directors of the Bank generally may authorize the payment of
patronage refunds as provided for in its bylaws. Such payment of dividends
and/or distribution of earnings are also subject to federal regulations that
establish minimum at-risk capital standards for the Bank.
OTHER
Impairment of Long Lived Assets
In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which requires
impairment losses to be measured and recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets'
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. Based on presently available
estimates, there will be no effect when the Company adopts Statement 121 in the
first quarter of fiscal 1997.
LEGAL PROCEEDINGS
The Company is not a party to any litigation or legal proceedings pending, or to
the best of its knowledge threatened, which in the opinion of its management,
individually or in the aggregate, would have a material adverse affect on its
operations or financial condition.
18
<PAGE>
DIRECTORS AND MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND
SIGNIFICANT MEMBERS OF MANAGEMENT OF THE REGISTRANT
The Directors of the Company determine Company policy and are elected by the
stockholders at each annual meeting to serve until the next annual meeting or
until their successors are elected and qualified. The following table sets forth
certain information regarding the Company's Directors, executive officers and
significant members of management:
<TABLE>
<CAPTION>
Years served Year Became Term
Name Age Position as Officer a Director Expires
---- --- -------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
Peter J. O'Neill 49 Treasurer,
Chairman of the
Board and Director 2 1995 July, 1997
Gary K. Van Slyke 53 Director 1996 July, 1997
Stanley A. Weeks 58 Director 1995 July, 1997
Christian F. Wolff, Jr. 71 Director 1995 July, 1997
Samuel F. Minor 58 Director 1989 July, 1997
William W. Young 43 Director 1992 July, 1997
Daniel J. Edinger 45 President and Director 8 1988 July, 1997
Herbert E. Gerhart 51 Secretary and
Financial Manager 19
Raymond G. Fuller 45 Collection Manager 2
Richard A. Kalin 47 Controller 2
George F. Lott 52 Director of Manufacturer
Programs 2
Kipp R. Weaver 46 Director of Credit 2
</TABLE>
The Board of Directors, except for Messrs. O'Neill, Edinger, and Weeks, are paid
an annual retainer fee of $1,000 for their services on the Telmark Board. The
executive officers and significant members of management of the Company provide
operating control to carry out the policies established by the Board of
Directors and serve at the discretion of the Board with no guarantee of
employment. Telmark is organized with nine functional managers and six region
managers reporting to the President, Daniel J. Edinger. The nine functional
managers who directly report include the Director of Manufacturer Programs, the
Director of Credit, the Collections Manager, Planning and Product Manager,
Business Analyst, Director of Customer Operations, Director of Human Resources,
Financial Manager, and the Controller. More detailed biographies of each person
are set forth below.
PETER J. O'NEILL - Mr. O'Neill has been employed by Agway for more than five
years, as Group Vice President, General Services from July 1991 to June 1992, as
Group Vice President, Engergy from July 1992 through September 1992, and as
Senior Vice President, Finance and Control since October 1992.
GARY K. VAN SLYKE - Mr. Van Slyke is a member of the Agway Board of Directors.
He has been engaged in full-time farming for more than five years.
STANLEY A. WEEKS - Mr. Weeks has been employed by Agway for more than five years
as Director of Farm Systems Research and Applied Technology from January 1990
through December 1994, and as Director Research Farm Operations since January
1995.
CHRISTIAN F. WOLFF, JR. - Mr. Wolff is a member of the Agway Board of Directors.
He has been engaged in full-time farming for more than five years.
WILLIAM W. YOUNG - Mr. Young is a member of the Agway Board of Directors. He has
been engaged in full-time farming for more than five years.
RAYMOND G. FULLER - Mr. Fuller has been Collection Manager since 1985.
RICHARD A. KALIN - Mr. Kalin was named Controller in July 1995. He served as
Accounting Manager for the prior four years.
19
<PAGE>
GEORGE F. LOTT - Mr. Lott was named Director of Manufacturer Programs in
1994. He served as Planning and Marketing Manager for the prior three years.
KIPP R. WEAVER - Mr. Weaver was named Director of Credit in May 1995. During
the prior four years he was employed as an officer of the Farm Credit Bank of
Baltimore.
20
<PAGE>
EXECUTIVE COMPENSATION
Employees of Telmark are eligible to participate in Agway Inc.'s benefits and
compensation plans. The following table sets forth information regarding annual
and long-term compensation for services in all capacities to the Company for the
fiscal years ended June 1996, 1995, and 1994, of the chief executive officer. In
accordance with the rules on executive officer compensation adopted by the
Securities and Exchange Commission, compensation information is not provided for
any executive officers of the Company receiving aggregate total compensation of
less than $100,000.
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
ANNUAL COMPENSATION
----------------------------
<TABLE>
<CAPTION>
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS(2) (3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Daniel J. Edinger .......... 1996 $120,016 $ 90,000 $ 2,513
President ................. 1995 96,798 - 0 - 862
1994 95,398 33,686 787
</TABLE>
- ------------------
(1) Total compensation (defined as base salary or wages, overtime and bonus
or incentive compensation) is used in determining the average annual
compensation pursuant to the Agway Inc. Retirement Plan. This amount includes
all deferred amounts under the Agway Inc. Employees' Thrift Investment Plan and
Benefits Equalization Plan.
(2) Bonuses are payable in cash or executives may elect to defer their
awards for payments at a later date, subject to certain contingencies. During
fiscal 1996 and 1995, members of the Agway Inc. Chief Executive Officer's Staff
and other executives designated by the Agway Inc. executive officer were
eligible for participation in the Agway Inc. Management Incentive Plan (the
"Plan"). Within Telmark, the President qualified for this program. Contingent
upon each individual's performance, Telmark's net margin, and other performance
factors, each eligible Telmark executive may be paid a bonus. Bonuses are
reflected in the fiscal year earned regardless of payment date.
(3) Amounts shown include contributions made by the Company to the Agway
Inc. Employees' Thrift Plan and the Agway Inc. Employees' Benefits Equalization
Plan.
The Employees Retirement Plan of Agway Inc. (the "Retirement Plan") is a
non-contributory defined benefit plan covering substantially all employees. The
Retirement Plan provides for retirement benefits, at a normal retirement age of
65, based upon average annual compensation received during the highest 60
consecutive months in the last 10 years of service and credited years of
service. Optional earlier retirement and other benefits are also provided. The
Retirement Plan pays a monthly retirement benefit based on the greater amount
calculated under two formulas. The benefit amount under one formula is subject
to an offset for Social Security benefits.
21
<PAGE>
EXECUTIVE COMPENSATION (CONTINUED)
The following table shows estimated annual benefits payable upon
retirement based on certain 5 year remuneration levels and years-of-service
classifications. The table was developed assuming a normal retirement at age 65.
PENSION PLAN TABLE
YEARS OF CREDITED SERVICE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
REMUNERATION 5 15 25 35 45
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $ 8,000 $ 24,000 $ 40,000 $ 56,000 $ 72,000
$125,000 $ 10,000 $ 30,000 $ 50,000 $ 70,000 $ 90,000
$150,000 $ 12,000 $ 36,000 $ 60,000 $ 84,000 $108,000
$200,000 $ 16,000 $ 48,000 $ 80,000 $112,000 $144,000
$225,000 $ 18,000 $ 54,000 $ 90,000 $126,000 $162,000
</TABLE>
Amount under the Retirement Plan may be subject to reduction because of the
limitations imposed under the Internal Revenue Code; however, the extent of any
reduction will vary in individual cases according to circumstances existing at
the time pension payments commence. The Company's Employees' Benefit
Equalization Plan of Agway Inc. has been established to provide for the amount
of any such reduction in annual pension benefits under the Retirement Plan.
The benefits shown are computed on a straight life basis and do not reflect an
offset for up to 50% of the Social Security benefits, subject to certain minimum
benefits. Also, the benefits are based on continuing the Plan's benefits
formulas as in effect on June 30, 1996. The number of credited years of service
under the Retirement Plan for Mr. Edinger was 17.
COMPENSATION COMMITTEE
The Company has no compensation committee. Executive Compensation is set by the
Board of Directors in consultation with the management of Agway, Inc.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is an indirect wholly-owned subsidiary of Agway and as such, had
intercompany transactions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Note 7 to the Financial
Statement for further information.
PRINCIPAL STOCKHOLDERS
Telmark is a wholly-owned subsidiary of Agway Holdings, Inc. Agway Holdings,
Inc. is a wholly-owned subsidiary of Agway Financial Corporation which in turn
is a wholly-owned subsidiary of Agway. Agway is one of the largest supply and
services cooperatives in the United States.
22
<PAGE>
DESCRIPTION OF THE DEBENTURES
GENERAL. Telmark is authorized to issue the Debentures pursuant to the
Indenture dated as of September 30, 1993, (the "Indenture"), between Telmark and
OnBank & Trust Co., as Trustee. The statements under this heading, "Description
of Debentures," are completely qualified by and subject to the terms of the
Indenture. The Indenture is filed as an exhibit to the Registration Statement
and reference is made thereto for a complete statement of the terms and
provisions of these Debentures. The Debentures to be issued under this
Prospectus are limited to [$22,000,000] aggregate principal amount, but the
Indenture does not limit the amount of the Debentures or other securities which
may be issued by the Company thereunder. As of July 31, 1996, there was
$25,716,400 principal amount of debentures issued and outstanding under the
Indenture. (The Debentures and any other securities issued and outstanding under
the Indenture are referred to herein as "Outstanding Debentures"). The
Debentures will be issued at 100% of their principal amount. The Debentures will
be issued in registered form in minimum denominations and multiples in excess
thereof as set forth in the table on the cover page of this Prospectus. The
following securities are being offered:
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
Title of Class PUBLIC OR COMMISSIONS COMPANY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Debentures, $1,000 minimum denomination
and additional multiples of $100
(minimum 7.25% per annum)
due March 31, 2000
Per Unit 100% None
Total * None *
- ------------------------------------------------------------------------------------------------------------------------------------
Debentures, $1,000 minimum denomination
and additional multiples of $100
(minimum 7.50% per annum)
due March 31, 2002
Per Unit 100% None
Total * None *
- ------------------------------------------------------------------------------------------------------------------------------------
Debentures under the Interest Reinvestment
Option (ranging from minimum of 6.0% to
8.5% per annum) due from December 31,
1997 through March 31, 2002
Per Unit 100% None
Total * None *
- ------------------------------------------------------------------------------------------------------------------------------------
Total [28,000,000] [28,000,000]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
INTEREST. Not withstanding the term of the Debentures set forth in the
Indenture, the Debentures will bear interest from their respective Issue Dates
at the per annum rate described below (on the basis of a 360-day year of twelve
30-day months). The Company may, from time to time prior to the completion of
the offering of the Debentures, change the rate of interest or maturity date
offered by filing a supplement with the Securities and Exchange Commission. The
applicable supplement, if any, will be attached to this Prospectus. Any change
in the interest rate or maturity date offered will not affect the rate of
interest on or maturity date of any Debentures theretofore issued. The interest
rates on the Debentures offered hereby is as follows:
Interest on the 7.25% Debentures due March 31, 2000, is payable quarterly
on January 1, April 1, July 1 and October 1, and at maturity, at a rate
per annum for each quarterly period equal to the greater of: (1) the
"stated rate" of 7.25% per annum; and, (2) the "Treasury Bill Rate" (as
defined below).
Interest on the 7.50% Debentures, due March 31, 2002, is payable quarterly
on January 1, April 1, July 1 and October 1, and at maturity, at a rate
per annum for each quarterly period equal to the greater of: (1) the
"stated rate" of 7.50% per annum; and, (2) the "Treasury Bill Rate" (as
defined below).
U.S. Treasury bills are issued and traded on a discount basis, the amount
of the discount being the difference between their face value at maturity and
their sales price. The per annum discount rate on a U.S. Treasury bill is the
percentage obtained by dividing the amount of the discount on such U.S. Treasury
bill by its face value at maturity and annualizing such percentage on the basis
of a 360-day year. The Federal Reserve Board currently publishes such rates
weekly in its Statistical Release H.15 (519). Unlike the interest on U.S.
Treasury bills, interest on the certificates will not be exempt from state and
local income taxation.
23
<PAGE>
DESCRIPTION OF THE DEBENTURES (CONTINUED)
The "Treasury Bill Rate" for each quarterly interest payment date is the
arithmetic average of the weekly per annum auction average discount rates at
issue date for U.S. Treasury bills with maturities of 26 weeks (which may vary
from the market discount rates for the same weeks), as published for each week
by the Federal Reserve Board, during the period September 1 to November 30,
inclusive, for the January 1 interest payment date, during the period December 1
to February 28 inclusive, for the April 1 interest payment date, during the
period March 1 to May 31, for the July 1 interest payment date, during the
period June 1 to August 31 for the October 1 interest payment date, or during
the period December 1 to February 28 for interest payable on the maturity date
(each such period, an "Interest Determination Period"). In the event that the
Federal Reserve Board does not publish the weekly per annum auction average
discount rate for a particular week, Telmark shall select a publication of such
rate by any Federal Reserve Bank or any U.S. Government department or agency to
be used in computing the arithmetic average. The Treasury Bill Rate will be
rounded to the nearest one hundredth of a percentage point.
In the event that Telmark in good faith determines that for any reason a
Treasury Bill Rate is not published for a particular week in an Interest
Determination Period with respect to a particular interest payment date or the
maturity date, as applicable, an "Alternate Rate" will be substituted for the
Treasury Bill Rate for such period and date. The Alternate Rate will be the
arithmetic average of the weekly per annum auction average discount rates for
those weeks in the relevant Interest Determination Period for which rates are
published as described above, if any, and the weekly per annum auction average
discount rates or market discount rates or stated interest rates for comparable
issue(s) of securities as is selected by Telmark, for those weeks in the
Interest Determination Period for which no rate is published as described above.
The Alternate Rate will be rounded to the nearest one hundredth of a percentage
point.
In the further event that Telmark in good faith determines that neither
the Treasury Bill Rate nor Alternate Rate can be computed for the period
September 1 to November 30, inclusive, for the January 1 interest payment date,
for the period December 1 to February 28, inclusive, for the April 1 interest
payment date, for the period March 1 to May 31, inclusive, for the July 1
interest payment date, or for the period June 1 to August 31, inclusive, for the
October 1 interest payment date, the rate of interest payable with respect to
any Debentures will be the rate stated thereon.
The following chart sets forth for the periods indicated:
(1) The "Treasury Bill Rate", as defined above.
(2) The highest per annum discount rate on six month U.S. Treasury Bills
at one of the 26 auctions during the period used to calculate the
"Treasury Bill Rate".
(3) The lowest per annum discount rate on six month U.S. Treasury Bills
at one of the 26 auctions during the period used to calculate the
"Treasury Bill Rate".
<TABLE>
<CAPTION>
PAYMENT AVERAGE
DATE "TREASURY BILL RATE" HIGH LOW
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jan.-92 5.32% 5.47% 4.50%
Apr.-92 3.98% 4.39% 3.80%
Jul.-92 6.97% 4.27% 3.71%
Oct.-92 3.46% 3.90% 3.18%
Jan.-93 3.28% 3.45% 2.78%
Apr.-93 3.23% 3.46% 3.06%
Jul.-93 3.14% 3.19% 2.95%
Oct.-93 3.18% 3.30% 3.10%
Jan.-94 3.16% 3.30% 3.02%
Apr.-94 3.27% 3.53% 3.14%
Jul.-94 3.71% 4.81% 3.61%
Oct.-94 4.75% 4.99% 4.53%
Jan.-95 5.04% 5.85% 4.89%
Apr.-95 6.20% 6.42% 5.86%
Jul.-95 6.01% 6.00% 5.65%
Oct.-95 5.43% 5.61% 5.30%
Jan.-96 5.37% 5.38% 5.22%
Apr.-96 4.99% 5.25% 4.71%
Jul.-96 5.01% 5.19% 4.80%
</TABLE>
24
<PAGE>
DESCRIPTION OF THE DEBENTURES (CONTINUED)
If the Debentures currently being offered had been outstanding on July 1,
1996, the stated interest rates would have been paid. Although the period
September 1, 1996 to November 30, 1996, is not complete as of the date of this
Prospectus (and hence the Treasury Bill Rate for the January 1, 1997 interest
payment date cannot yet be determined), the Treasury Bill Rate as of August 20,
1996 was 5.24%.
The six-month U.S. Treasury bill rate has fluctuated widely during the
periods shown in the chart. This rate can be expected to fluctuate in the
future. These fluctuations will cause the rate of interest payable on the
Debentures to exceed the stated rate whenever the Treasury Bill Rate exceeds the
stated rate. See "Risk Factors - Absence of Public Market, Redemption and Market
Risk."
PAYMENTS OF PRINCIPAL AND INTEREST. Principal amounts of the Debentures
will be due and payable, together with interest accrued but unpaid thereon, on
the maturity date (the "Maturity Date") for the Debentures. The Maturity Date
for the Debentures offered will be as set forth in the table on the cover page
of this Prospectus. Interest on the Debentures will be payable quarterly on
January 1, April 1, July 1, and October 1 and on the Maturity Date as set forth
in the table on the cover page of this Prospectus (each, an "Interest Payment
Date"). Principal and interest on the Debentures will be payable at the office
of the transfer agent, Agway, in DeWitt, New York. Additional amounts may be
added to the principal of the Debenture pursuant to an election by the holder
thereof to have quarterly interest payments added to and increase the principal
amount of the Debenture. In such a case, the Debenture holder will receive a
statement from the Company indicating the amounts added to principal of the
Debenture. In any case in which an Interest Payment Date, a Redemption Date (as
defined below), the Maturity Date or other payment date is not a Business Day,
payment of interest or principal, as the case may be, shall be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, Redemption Date, Maturity Date or other payment date.
"Business Day" means any day other than a Saturday or Sunday or a day on which
the Federal Reserve Bank of New York or commercial banking institutions in New
York City are authorized or required by law or executive order to close.
SUBORDINATION AND COVENANTS. The Debentures are unsecured obligations of
Telmark, and the payment thereof is subordinated to other debt (except debts
similarly subordinated) as hereinafter mentioned. There is no provision in the
Indenture that would prevent Telmark from incurring additional debt or which
would restrict the interest rate or other terms of such other debt. In addition
to its subordination provisions, the Indenture contains only limited
restrictions on highly leveraged transactions, reorganizations, restructuring,
mergers or similar transactions involving the Company, which may adversely
affect the holders of the Debentures. The Company is not limited in its ability
to merge into or transfer or lease all or substantially all of its assets to a
corporation as long as such corporation assumes the obligations of the Company
under the Debentures and the Indenture and, after the transaction, there exists
no event of default under the Indenture.
TRANSFER. The terms of the Debentures include no restrictions on transfer.
SETTLEMENT AND ISSUE DATE. Persons interested in purchasing Debentures
should forward their completed application and a check (personal, cashiers or
certified) or money order payable to the Company in an amount equal to the
principal amount of the Debenture to be purchased. Applications are available at
certain Company and Agway locations. Applications generally will be processed by
the Company within five to ten days of the date of receipt by the Company, at
which time they will be forwarded to the trustee to authenticate, who in turn
will forward the Debenture to the applicant. The "Issue Date" is defined as the
first day of the month in which the application and proceeds are received by the
Company for such Debenture.
REDEMPTION PROVISIONS. Upon not less than 30 days written notice, Telmark
may, at its option, redeem all, or by lot, from time to time any part of the
Debentures at the principal amount thereof, together with accrued but unpaid
interest from the last Interest Payment Date to the date fixed for redemption at
the stated rate. Should the Debentures be redeemed by lot, all Debentures not
redeemed will be accorded equal treatment in any subsequent redemption.
INTEREST REINVESTMENT OPTION. At the time of application for purchase of
the Debentures, or at any time thereafter, the holder may elect to have all
interest paid on the certificates reinvested automatically. In the event that
the automatic reinvestment option is elected, the interest due on each quarterly
payment date will be added to the principal amount of the Debenture and will
earn interest thereafter on the same basis as the original principal amount.
This election may be revoked only as to future interest payments at any time by
notice to Telmark, effective on the date such notification is received by
Telmark. Interest reinvested will be subject to income tax as if it had been
received by the Debenture holder at the time reinvested.
25
<PAGE>
DESCRIPTION OF THE DEBENTURES (CONTINUED)
SUBORDINATION PROVISIONS. The payment of the principal and interest on the
Debentures is subordinated in right of payment, to the extent set forth in the
Indenture, to the amounts of principal and interest due on "Senior Debt". Senior
Debt is defined as the principal of, and interest on indebtedness of Telmark for
money borrowed from or guaranteed to banks, trust companies, insurance
companies, and other financial institutions, including dealers in commercial
paper, charitable trusts, pension trusts, and other investing organizations,
evidenced by notes or similar obligations unless the instrument creating or
evidencing the indebtedness provides that such indebtedness is not superior or
is subordinate in right of payment to the Debentures. Senior Debt, as thus
defined, includes all interest-bearing debt presently outstanding except
indebtedness with respect to the Outstanding Debentures. As of July 31, 1996,
Senior Debt of $280,944,445 was outstanding.
In the event of any distribution of assets of Telmark under any total
liquidation or reorganization of Telmark, the holders of all Senior Debt shall
be entitled to receive payment in full before the holders of the Outstanding
Debentures are entitled to receive any payment. After payment in full of the
Senior Debt, the holders of the Outstanding Debentures will be entitled to
participate in any distribution of assets, both as such holders and by virtue of
subrogation to the rights of the holders of Senior Debt, to the extent that the
Senior Debt was benefited by the receipt of distributions to which the holders
of the Outstanding Debentures would have been entitled if there had been no
subordination. By reason of such subordination, in the event of Telmark's
insolvency, holders of Senior Debt may receive more, ratably, and holders of the
Outstanding Debentures may receive less, ratably, than other creditors of
Telmark.
MODIFICATION OF INDENTURE. The Indenture permits the Trustee and Telmark
to make non-material modifications and amendments to the Indenture without the
consent of any holder of Outstanding Debentures. The Indenture permits the
Trustee and Telmark to make other modifications and amendments to the Indenture
with the written consent of holders of 66-2/3% in aggregate principal amount of
Outstanding Debentures, provided that, without the consent of each holder of an
Outstanding Debenture affected, no such amendment or modification may (i) reduce
the amount of Outstanding Debentures required to amend the Indenture, (ii)
reduce the interest rate or time for payment thereof applicable to any
Outstanding Debenture, (iii) reduce the principal or change the Maturity Date of
any Outstanding Debenture, (iv) make any changes to the Indenture with respect
to the waiver of past defaults thereunder or the rights of holders of
Outstanding Debentures to receive payments, or (v) make any changes to the
subordination provisions contained in the Indenture.
COVENANTS. Under the Indenture, Telmark covenants to make payments on the
Outstanding Debentures, and to file all required reports and other documents
with the Securities and Exchange Commission. The indenture contains no
provisions restricting the declaration of payment of dividends by Telmark or
requiring the maintenance of any ratios or reserves by Telmark.
EVENTS OF DEFAULT AND WITHHOLDING OF NOTICE THEREOF TO DEBENTURE HOLDERS.
The Indenture provides for the following Events of Default: (i) failure to pay
interest upon any of the Outstanding Debentures when due, continued for a period
of 30 days; (ii) failure to pay principal of the Outstanding Debentures when due
and payable at maturity, upon redemption or otherwise; (iii) failure to perform
any other covenant of Telmark as set forth in the Indenture, continued for 60
days after written notice by the Trustee or the holders of at least 25% in
aggregate principal amount of the Outstanding Debentures.
The Trustee, within 60 days after the occurrence of the default, is
required to give the Outstanding Debenture holders notice of all defaults known
to Trustee, unless cured prior to the giving of such notice, provided that,
except in the case of default in the payment of principal or interest on any of
the Outstanding Debentures, the Trustee may withhold such notice if and so long
as it in good faith determines that the withholding of such notice is in the
interest of the Outstanding Debenture holders.
Upon the happening and during the continuance of a default, the Trustee or
the holders of 25% in aggregate principal amount of the Outstanding Debentures
then outstanding may declare the principal of all the Outstanding Debentures and
the interest accrued thereon due and payable, but the holders of a majority of
the aggregate principal amount of the Outstanding Debentures then outstanding
may waive all defaults and rescind such declaration if the default is cured.
Subject to the provisions of the Indenture relating to the duties of the Trustee
in case any such default shall have occurred and be continuing, the Trustee will
be under no obligation to exercise any of its rights or powers at the request,
order or direction of any holders of Outstanding Debentures unless they shall
have offered to the Trustee reasonable security or indemnity. Subject to such
26
<PAGE>
DESCRIPTION OF THE DEBENTURES (CONTINUED)
provisions for security or indemnity, a majority of the holders of a majority of
the aggregate principal amount of the Outstanding Debentures then outstanding
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee.
NO GUARANTEE BY AGWAY. Neither Agway nor any of its other subsidiaries
have guaranteed the payment of principal of or interest on the Debentures. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Support Agreement."
THE TRUSTEE. The Indenture contains certain limitations on the right of
the Trustee, as a creditor of Telmark, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of any such claim
as security or otherwise.
AUTHENTICATION AND DELIVERY. The Debentures may be authenticated and
delivered upon the written order of Telmark without any further corporate
action.
SATISFACTION AND DISCHARGE OF INDENTURE. The Indenture may be discharged
upon payment or redemption of all Outstanding Debentures or upon deposit with
the Trustee of funds sufficient therefor.
EVIDENCE AS TO COMPLIANCE WITH CONDITIONS AND COVENANTS. As evidence of
compliance with the covenants and conditions provided for in the Indentures,
Telmark is to furnish to the Trustee Officer's Certificates each year stating
that such covenants and conditions have been complied with.
DESCRIPTION OF THE INTEREST REINVESTMENT OPTION
GENERAL. If the Certificate holder has elected to have all interest paid
on the Certificate reinvested automatically, the interest due on each quarterly
interest payment date will be added to the principal amount of the certificate
and will earn interest thereafter on the same basis as the original principal
amount. This election may be revoked - as to future interest payments only - by
written notice to Telmark, effective on the date when the revocation notice is
duly received by Telmark. Interest reinvested will be subject to federal income
tax as if it had been received by the certificate holder at the time reinvested.
RATES ON PREVIOUSLY ISSUED CERTIFICATES. The stated rates of interest on
Certificates previously issued by Telmark that remain outstanding (and upon
which the interest reinvestment option might be exercised by any holder thereof)
are as follows:
STATED RATE OF INTEREST DUE
----------------------- ---
6.00% December 31, 1997
7.75% March 31, 1998
8.25% March 31, 1998
8.00% March 31, 2000
8.25% March 31, 2000
8.50% March 31, 2000
Interest on these outstanding certificates is payable quarterly on January
1, April 1, July 1 and October 1, and at maturity, at the rate per annum for
each quarterly period equal to the greater of the certificates' "Stated Rate";
or the "Treasury Bill Rate," as defined above.
LEGAL MATTERS
Legal matters in connection with the securities offered hereby have been
passed upon for the Company by David M. Hayes, Esq., Telmark Legal Counsel.
EXPERTS
The balance sheets as of June 30, 1996 and 1995 and the statements of
income, retained earnings, and cash flows for each of the three years in the
period ended June 30, 1996, have been included herein in reliance on the report
of Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
27
<PAGE>
PLAN OF DISTRIBUTION
The Debentures may be sold to Agway Members, non-member patrons of Agway,
Telmark customers, Telmark and Agway employees and former employees, and the
general public. Sale of the securities offered hereby will be solicited through
direct mailings and/or availability of applications and Prospectuses through
Agway retail stores, Agway franchises, certain Agway affiliate locations and
Telmark locations. See "Description of Debentures Settlement." All employees of
Agway and Telmark offering the Debentures have other duties in connection with
the business of Agway or Telmark, as the case may be, and are not otherwise
engaged in the sale of securities. No salesperson will be employed to solicit
the sale of these securities, and no commission or discount will be paid or
allowed to anyone in connection with their sale. The individual Agway and
Telmark employees who participate in the sale of these securities may be deemed
to be underwriters of this offering within the meaning of that term as defined
in Section 2(11) of the Securities Act of 1933, as amended.
28
<PAGE>
TELMARK INC.
PROSPECTUS
Until all dealers effecting trans-
actions in the registered securities, whether
or not participating in this distribution,
may be required to deliver a Prospectus. This
is in addition to the obligations of dealers
to deliver a Prospectus when acting as
underwriters and with respect to their
unsold allotments or sub scriptions.
29
<PAGE>
ITEM 8. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGES
-----
<S> <C> <C>
TELMARK INC.:
Independent Auditor's Report............................................................................ 31
Balance Sheets, June 30, 1996 and 1995.................................................................. 32
Statements of Income and Retained Earnings,
for the years ended June 30, 1996, 1995 and 1994............................................... 33
Statements of Cash Flows for the fiscal years ended June 30, 1996, 1995 and 1994........................ 34
Notes to Financial Statements........................................................................... 35
</TABLE>
30
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors of
Telmark Inc.:
We have audited the accompanying balance sheets of TELMARK INC. (a wholly-owned
subsidiary of Agway Holdings, Inc.) as of June 30, 1996 and 1995, and the
related statements of income and retained earnings and cash flows for the years
ended June 30, 1996, 1995 and 1994. These financial statements are the
responsibility of the Company'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 financial position of Telmark Inc. as of June 30,
1996 and 1995, and the results of its operations and its cash flows for the
years ended June 30, 1996, 1995 and 1994 in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Syracuse, New York
August 6, 1996
31
<PAGE>
TELMARK INC.
BALANCE SHEETS
JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
ASSETS
1996 1995
------------ ------------
<S> <C> <C>
Leases and notes, net ....................................................... $374,561,114 $333,091,287
Investments ................................................................. 10,038,421 9,378,727
Equipment, net .............................................................. 1,061,672 1,471,982
Deferred income taxes ....................................................... 11,903,065 13,796,180
Other assets ................................................................ 634,018 895,984
------------ ------------
Total Assets ................................................................ $398,198,290 $358,634,160
============ ============
LIABILITIES AND SHAREHOLDER'S EQUITY
1996 1995
------------ ------------
Borrowings under lines of credit ............................................ $ 0 $ 10,000,000
Term Debt ................................................................... 273,000,427 245,466,667
Subordinated Debentures ..................................................... 24,258,200 8,174,000
Subordinated notes payable
to Agway Holdings Inc. ................................................ 0 27,000,000
Accounts payable ............................................................ 4,645,459 6,823,754
Payable to Agway Inc. ....................................................... 9,521,703 7,191,968
Income taxes payable to Agway Inc. .......................................... 2,135,917 4,013,691
Accrued expenses, including interest of
$4,061,387 - 1996 and $3,683,417 - 1995 ............................... 6,122,135 5,206,465
------------ ------------
Total Liabilities ........................................................... 319,683,841 313,876,545
------------ ------------
Commitments & Contingencies
Common Stock, $1 par value;
authorized 1,000,000 shares;
issued and outstanding 400,000 shares ................................. 400,000 400,000
Additional paid-in capital .................................................. 31,600,000 4,600,000
Retained earnings ........................................................... 46,514,449 39,757,615
------------ ------------
Total Shareholder's Equity .................................................. 78,514,449 44,757,615
------------ ------------
$398,198,290 $358,634,160
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
TELMARK INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FISCAL YEARS ENDED JUNE 30, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Interest and finance charges ....... $ 47,241,547 $ 40,668,073 $ 33,457,441
Other service fees and other income 1,385,011 1,273,999 1,185,009
------------ ------------ ------------
Total revenues ................. 48,626,558 41,942,072 34,642,450
------------ ------------ ------------
Expenses:
Interest expense ................... 20,305,365 17,674,736 13,258,635
Provision for credit losses ........ 7,000,000 6,812,695 5,926,253
Selling, general and administrative 9,819,581 8,182,331 7,458,929
------------ ------------ ------------
Total expenses ................. 37,124,946 32,669,762 26,643,817
------------ ------------ ------------
Income from operations ......... 11,501,612 9,272,310 7,998,633
Gain from portfolio sale ................ 0 0 485,908
------------ ------------ ------------
Income before income taxes ..... 11,501,612 9,272,310 8,484,541
Provision for income taxes .............. 4,744,778 4,239,990 4,125,581
------------ ------------ ------------
Net income ..................... 6,756,834 5,032,320 4,358,960
Retained earnings, beginning of year .... 39,757,615 35,043,295 31,908,335
Dividends to parent ..................... 0 (318,000) (1,224,000)
------------ ------------ ------------
Retained Earnings, End of Year .......... $ 46,514,449 $ 39,757,615 $ 35,043,295
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
TELMARK INC.
STATEMENTS OF CASH FLOWS
FISCAL YEARS ENDED JUNE 30, 1996, 1995, AND 1994
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................. $ 6,756,834 $ 5,032,320 $ 4,358,960
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization ...... 450,453 256,992 191,024
Deferred taxes ..................... 1,893,115 (929,732) (3,338,207)
Provision for doubtful accounts .... 7,000,000 6,812,695 5,926,253
Gain from portfolio sale ........... (485,908)
Changes in assets and liabilities:
Other assets .................. 261,966 (120,365) (325,946)
Payables ...................... (2,178,295) 1,106,381 1,004,139
Income taxes payable .......... (1,877,774) (751,267) (5,698,440)
Accrued expenses .............. 915,670 631,633 483,275
------------- ------------- -------------
Net cash flow provided by
operating activities .......... 13,221,969 12,038,657 2,115,150
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Leases originated ...................... (174,998,949) (170,494,948) (149,659,398)
Leases repaid .......................... 126,529,122 107,648,633 92,312,814
Proceeds from lease sales .............. 6,425,781
Purchases of equipment ................. (1,127,445) (735,302) (643,538)
Proceeds from sale of equipment ........ 1,290,252
Purchase of investments ................ (659,694) (1,436,651) (1,868,349)
Proceeds from sale of investments ...... 0 457,948 457,108
------------- ------------- -------------
Net cash flow used
in investing activities ....... (48,966,714) (64,560,320) (52,975,582)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in borrowings under
lines of credit .................... (10,000,000) 10,000,000 (7,000,000)
Proceeds from notes payable ............ 62,000,000 88,000,000 112,000,000
Repayment of notes payable ............. (34,622,222) (58,022,222) (59,911,111)
Repayment of capital lease ............. (46,968)
Repayment of subordinated notes payable (27,000,000)
Proceeds from subordinated notes payable 0 6,500,000 2,500,000
Net change in payable to Agway Inc. .... 2,329,735 1,899,885 783,543
Proceeds from sale of debentures ....... 16,084,200 4,462,000 3,712,000
Proceeds from capital contribution ..... 27,000,000
Cash dividends paid .................... 0 (318,000) (1,224,000)
------------- ------------- -------------
Net cash flow provided by
financing activities ............. 35,744,745 52,521,663 50,860,432
------------- ------------- -------------
Net change in cash .......................... 0 0 0
Cash at beginning of year ................... 0 0 0
Cash at end of year ......................... $ 0 $ 0 $ 0
============= ============= =============
Cash paid during period for:
Interest ........................... $ 19,927,395 $ 16,983,499 $ 13,143,190
Taxes .............................. $ 4,729,205 $ 5,941,459 $ 12,844,639
</TABLE>
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
TELMARK INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Operations
Telmark Inc. ("The Company") is in the business of leasing agricultural
related equipment, vehicles, and buildings. Telmark's customers are farmers and
other rural businesses as well as manufacturers and independent dealers that
serve the agricultural marketplace. The Company is indirectly owned and
controlled by Agway Inc. ("Agway"), one of the largest agricultural supply and
services cooperatives in the United States. Telmark is a direct wholly-owned
subsidiary of Agway Holdings, Inc. ("Holdings"), a subsidiary of Agway. Telmark
operates in 27 states including Alabama, Connecticut, Delaware, Georgia,
Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Missouri, New Hampshire, New Jersey, New York, North Carolina, Ohio,
Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West
Virginia and Wisconsin.
Cash and Equivalents
The Company considers all investments with a maturity of three months or
less when purchased to be cash equivalents.
Leases
Leases are made on a precomputation basis (finance charges included in the
face amounts of the notes). Finance charges are taken into income using the
interest method over the terms of the lease, which for most commercial and
agricultural leases is 60 months or less with a maximum of 180 months for
buildings. Income recognition is suspended on all leases and loans which become
past due greater than 120 days.
Gains on lease sales are reduced for estimated future servicing fees and
estimated losses under the recourse provisions of the sale (limited to 7.5% of
the sale proceeds). Servicing amounts are amortized over the life of the sold
leases.
Credit Losses
Provisions for credit losses are charged to income in amounts sufficient
to maintain the allowance at a level considered adequate to cover losses in the
existing portfolio. The net investment of a lease is charged against the
allowance for credit losses when determined to be uncollectible.
Investments
Investments comprise capital stock of a cooperative bank acquired from the
bank at par or stated value. This stock is not traded and is historically
redeemed on a periodic basis by the bank at cost. By its nature, this stock is
held for redemption and is reported at cost. Dividends on this stock are
recorded as a reduction of interest expense and total $942,420, $635,298 and
$848,810 for the years ended June 30, 1996, 1995 and 1994, respectively.
Impairment of Long Lived Assets
In March 1995, the FASB issued Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
which requires impairment losses to be measured and recorded on long-lived
assets used in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount. Statement 121 also addresses the accounting for
long-lived assets that are expected to be disposed of. Based on presently
available estimates, there will be no effect when the Company adopts Statement
121 in the first quarter of fiscal 1997.
Origination Fees and Costs
Fees received and direct costs incurred for the origination of leases and
notes are deferred and amortized to interest income over the contractual lives
of the instruments using the interest method, adjusted for estimated prepayment
experience.
Equipment
Depreciation is calculated using the straight-line method over the
estimated useful lives of the equipment.
35
<PAGE>
TELMARK INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Advertising Costs
The Company generally expenses advertising costs as incurred. Advertising
expense for the years ended June 30, 1996, 1995 and 1994, was approximately
$607,500, $216,800, and $202,300.
Income Taxes
The Company provides for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." Under the liability method specified by SFAS No. 109, deferred
tax assets and liabilities are based on the difference between the financial
statement and tax basis of assets and liabilities as measured by the tax rates
which are anticipated to be in effect when these differences reverse. The
deferred tax provision represents the net change in the assets and liabilities
for deferred tax.
The Company is included in a consolidated federal tax return filed by
Agway Inc. Under the Agway/Telmark tax sharing agreement, the provision for
income taxes and related credits and carry forwards are calculated on a separate
company basis. The Company files a separate state tax return.
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 assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
36
<PAGE>
TELMARK INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. LEASES, NOTES AND ALLOWANCE FOR CREDIT LOSSES
Net investment in leases and notes at June 30 are summarized as follows:
1996 1995
------------- -------------
Leases and notes $ 510,925,527 $ 451,840,085
Unearned interest and finance charges (124,230,756) (110,321,837)
Net deferred origination costs 7,642,305 6,904,047
------------- -------------
Net investment 394,337,076 348,422,295
Allowance for credit losses (19,775,962) (15,331,008)
------------- -------------
$ 374,561,114 $ 333,091,287
============= =============
Leases and notes as of June 30 were as follows:
1996 1995
------------- -------------
Leases:
Commercial and agricultural $ 505,563,322 $ 446,485,259
Leasing to Agway Inc.
and subsidiaries 591,255 2,894,265
------------- -------------
506,154,577 449,379,524
Retail installment loans 4,770,950 2,460,561
------------- -------------
Total leases and notes $ 510,925,527 $ 451,840,085
============= =============
Included within the above is unguaranteed estimated residual values of leased
property approximating $54,400,000 and $49,900,000 at June 30, 1996 and 1995,
respectively.
Contractual maturities of leases and notes were as follows at June 30, 1996:
Leases Retail
Commercial To Agway Installment
and Inc. and Loans and
Agricultural Subsidiaries Miscellaneous Total
------------ ------------ ------------- -----
1997 $157,352,862 $ 210,034 $ 1,935,054 $159,497,950
1998 123,148,522 92,047 1,268,764 124,509,333
1999 91,368,558 71,133 579,580 92,019,271
2000 56,072,787 66,144 354,612 56,493,543
2001 29,028,508 73,984 280,133 29,382,625
Thereafter 48,592,085 77,913 352,807 49,022,805
------------ ------------ ------------ ------------
Totals $505,563,322 $ 591,255 $ 4,770,950 $510,925,527
============ ============ ============ ============
Changes in the allowance for credit losses for the years ended June 30
were as follows:
1996 1995 1994
----------- ----------- -----------
Balance, beginning of year $15,331,008 $12,433,825 $12,080,376
Provision charged to operations 7,000,000 6,812,695 5,926,253
Charge-offs (4,611,546) (6,104,708) (6,471,583)
Recoveries 2,056,500 2,189,196 898,779
----------- ----------- -----------
Balance, end of year $19,775,962 $15,331,008 $12,433,825
=========== =========== ===========
As of June 30, 1996 and 1995, the recognition of interest income was suspended
on $2,890,791 and $3,814,034 respectively, of net leases and notes.
37
<PAGE>
TELMARK INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. EQUIPMENT
Equipment, at cost, including capital leases, consisted of the following
at June 30:
<TABLE>
<CAPTION>
1996 Owned Leased Combined
---- ---------- ---------- ----------
<S> <C> <C> <C>
Office equipment ......................... $1,698,135 $ 202,950 $1,901,085
Other equipment .......................... 37,121 37,121
---------- ---------- ----------
Total .............................. 1,735,256 202,950 1,938,206
Less accumulated depreciation
and amortization ................... 825,796 50,738 876,534
---------- ---------- ----------
$ 909,460 $ 152,212 $1,061,672
========== ========== ==========
1995
----
Office equipment ......................... $1,375,569 $1,375,569
Other equipment .......................... 1,370,282 1,370,282
---------- ----------
Total .............................. 2,745,851 2,745,851
Less accumulated depreciation
and amortization ................... 1,273,869 1,273,869
---------- ----------
$1,471,982 $1,471,982
========== ==========
</TABLE>
4. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ----------- -----------
<S> <C> <C> <C>
Currently payable:
Federal ...... $ 1,998,193 $ 4,373,703 $ 5,832,371
State ........ 853,470 796,019 1,631,417
Deferred ......... 1,893,115 (929,732) (3,338,207)
----------- ----------- -----------
$ 4,744,778 $ 4,239,990 $ 4,125,581
=========== =========== ===========
</TABLE>
The Company's effective income tax rate on pre-tax income differs from the
federal statutory tax rate as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate ..... 34.0% 35.0% 35.0%
Tax effects of:
State taxes, net of federal benefit 6.7 7.2 10.1
Adjustment of prior years accruals .2 4.0 2.1
Other items ....................... .4 (.5) 1.4
---- ---- ----
Effective income tax rate ............. 41.3% 45.7% 48.6%
===== ===== =====
</TABLE>
38
<PAGE>
TELMARK INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INCOME TAXES (CONT.)
The components of the net deferred tax asset as of June 30 were as follows:
1996 1995
------------- -------------
Deferred tax assets:
Lease receivable reserves...... $ 7,356,164 $ 6,074,144
Difference between book and
tax treatment of leases..... 3,582,485 6,575,940
Other reserves................. 717,038 558,142
Other.......................... 430,887 587,954
------------- -------------
Total deferred tax assets. $ 12,086,574 $ 13,796,180
------------- -------------
Deferred tax liabilities:
Other.......................... 183,509 0
------------- -------------
Net deferred tax asset.... $ 11,903,065 $ 13,796,180
============= =============
Based on the Company's history of taxable earnings and its expectations for the
future, management has determined that operating income will more likely than
not be sufficient to recognize its deferred tax assets.
5. BORROWINGS UNDER LINES OF CREDIT AND TERM DEBT
As of June 30, 1996, the Company had two separate credit facilities
available from banks which allow the Company to borrow up to an aggregate of
$204,000,000. An uncommitted short-term line of credit agreement permits the
Company to borrow up to $4,000,000 on an unsecured basis with interest paid upon
maturity. The line bears interest at money market variable rates. A committed
$200,000,000 partially collateralized revolving term loan facility permits the
Company to draw short-term funds bearing interest at money market rates or draw
long-term debt at rates appropriate for the term of the note drawn. The total
amount outstanding as of June 30, 1996 under the short-term line of credit and
the revolving term loan facility was $0 and $146,000,000, respectively.
Telmark borrows under its short-term line of credit agreement and its
revolving term agreement from time to time to fund its operations. Short-term
debt serves as interim financing between the issuances of long-term debt.
Telmark renews its lines of credit annually. The $4,000,000 line of credit has
been renewed through December 1996. The $200,000,000 revolving term agreement
loan facility is available through February 1, 1997. The Company believes it has
sufficient lines of credit in place to meet interim funding needs.
39
<PAGE>
TELMARK INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. BORROWINGS UNDER LINES OF CREDIT AND TERM DEBT (CONT.)
At June 30, term debt consisted of the following:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Notes payable to bank due in varying amount and
dates through July 15, 2000 with interest
ranging from 5.95% to 8.49% ................................................. $146,000,000 $ 94,000,000
Notes payable to insurance companies due in varying
amount and dates through 2000 with interest
ranging from 5.9% to 9.17% .................................................. 126,844,445 151,466,667
Capital lease payable in annual installments
of $78,720 due in 1999 ...................................................... 155,982 0
------------ ------------
Total Term Debt ........................................................... 273,000,427 245,466,667
Subordinated debentures due in varying amount
and dates through 2000 with interest ranging
from 6% to 8.5% ............................................................. 24,258,200 8,174,000
Subordinated non-interest bearing notes payable to Holdings .................... 0 27,000,000
------------ ------------
Total Debt ................................................................ $297,258,627 $280,640,667
============ ============
</TABLE>
The notes payable to bank represents the portion of a $200,000,000 and
$125,000,000 credit facility outstanding at June 30, 1996 and 1995,
respectively. The notes are partially collateralized by the Company's investment
in a cooperative bank having a book value of $10,038,421 and $9,378,727 at June
30, 1996 and 1995, respectively.
Pursuant to the debt agreements between the Company, Holdings and the insurance
companies, Holdings guarantees it will advance funds (in the form of
subordinated notes payable) or otherwise cause the Company to maintain its debt
to equity ratio (as defined) at no greater than five to one. Holdings reserves
the right to withdraw the advances whenever the Company's debt and borrowing
ratios are lower than five to one, provided the withdrawal would not increase
the ratios above five to one and the Company is not in default of any
obligation.
The subordinated debentures represent the outstanding balance of registered
debentures offered to and held by the general public. The debentures are
unsecured and are subordinate to all senior debt of the Company.
On June 19, 1996, the Board of Directors of Telmark approved the repayment of
$27,000,000 of indebtedness owned by Telmark to Holdings.
Based on a discounted cash flow calculation using current prevailing borrowing
rates available to the Company for notes payable with similar terms and
maturities, the fair value of the Company's outstanding term debt approximates
it's carrying value at June 30, 1996 and 1995.
The aggregate amounts of notes payable and capital leases maturing after June
30, 1996 are as follows:
<TABLE>
<CAPTION>
Notes Payable
--------------------------------- Capital Subordinated
Fiscal Year Ending June 30, Bank Ins. Companies Lease Debentures Total
------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1997 $ 43,000,000 $ 45,122,222 $ 78,720 $ 0 $ 88,200,942
1998 40,000,000 50,222,223 78,720 10,244,900 100,545,843
1999 23,000,000 23,500,000 19,680 0 46,519,680
2000 36,000,000 4,000,000 0 14,013,300 54,013,300
2001 4,000,000 4,000,000 0 0 8,000,000
Thereafter 0 0 0 0 0
------------- ------------- ------------- ------------- -------------
$ 146,000,000 $ 126,844,445 $ 177,120 $ 24,258,200 $ 297,279,765
Imputed Interest 0 0 (21,138) 0 (21,138)
------------- ------------- ------------- ------------- -------------
$ 146,000,000 $ 126,844,445 $ 155,982 $ 24,258,200 $ 297,258,627
============= ============= ============= ============= =============
</TABLE>
The Company has various loan covenants, of which the most restrictive is to
maintain a tangible net worth of at least $32,000,000, and the debt to equity
ratio (as defined) no greater than five to one. In addition, dividend
distributions and restricted investments (as defined) made after December 31,
1994 are prohibited to the extent they exceed 50% of net income for the period
beginning on January 1, 1995 through the date of determination, inclusive. As of
June 30, 1996, $4,804,940 of retained earnings were free of this restriction.
40
<PAGE>
TELMARK INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. EMPLOYEE BENEFIT PLANS
Employees of Telmark participate in Agway's employee benefit plans, which
include a defined benefit retirement plan, a defined contribution 401(K) plan, a
medical and dental benefit plan, a postretirement medical plan expense, and a
life and health insurance plan. Total benefit costs under these plans are
allocated by Agway to Telmark primarily based on payroll costs. Benefit costs
included in selling, general and administrative expense were approximately
$820,000, $649,000, and $610,000 for the periods ended June 30, 1996, 1995 and
1994, respectively.
7. RELATED PARTY TRANSACTIONS
Cash Management
- ---------------
In lieu of having its own cash account the Company utilizes the depository
accounts of its parent, Agway Inc., drawing checks against these accounts and
making deposits to them. At June 30, 1996 and 1995, the payable to Agway Inc.
includes approximately $4,897,000 and $2,187,000 respectively of checks drawn
that have not yet cleared the banking system.
Inter-Company Transactions
- --------------------------
Selected amounts related to transactions with Agway Inc. and Subsidiaries are
separately disclosed in the financial statements. Certain other transactions for
the years ended June 30 with Agway Inc. and Subsidiaries were approximately:
(Revenue) Expense 1996 1995 1994
----------------- ---------- ---------- ----------
Interest and finance charges............. $ (52,000) $ (259,000) $ (413,000)
Administrative and general expense....... 1,828,000 3,034,000 2,852,000
Interest and finance charges are earned on equipment leases to Agway Inc. and
subsidiaries. The administrative and general expense caption described above
includes certain expenses incurred by Agway Inc. on behalf of the Company,
including rent, data processing, personnel, legal, tax reporting, corporate
management, treasury and auditing. A portion of these expenses were allocated to
the Company and management believes the methodology used to allocate these
expenses is reasonable.
On June 19, 1996, the Board of Directors of Agway Inc. approved a capital
contribution of $27,000,000 from Holdings to Telmark. There were no other
changes in paid in capital or common stock in the three years ended June 30,
1996.
8. COMMITMENTS & CONTINGENCIES
COMMITMENTS
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses. Since some
of the commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements.
Outstanding commitments to extend lease financing at June 30, 1996 and 1995,
approximated $14,800,000 and $27,600,000 respectively.
During 1994 and prior, the Company entered into lease sale contracts which
contain limited recourse provisions which are limited to 7.5% of the sale
proceeds. At June 30, 1996, the Company was contingently liable for
approximately $2,000,000 under the limited recourse provisions. The Company
includes this potential liability in establishing its allowance for credit
losses.
LEGAL PROCEEDINGS
The Company is not a party to any litigation or legal proceedings pending, or to
the best of its knowledge threatened, which, in the opinion of its management,
individually or in the aggregate, would have a material adverse affect on its
operations or financial condition.
41
<PAGE>
TELMARK INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. FINANCIAL INSTRUMENTS
The Company is a party to financial instruments with off-balance sheet risk in
the normal course of its business to meet the financing needs of its customers.
These financial instruments consist of commitments to extend credit not
recognized in the balance sheet. The contract amounts of those instruments
reflect the extent of involvement the Company has in particular classes of
financial instruments.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit is
represented by the contractual amount of the instrument. The Company uses the
same credit and collateral policies in making commitments as it does for
on-balance sheet instruments.
10. CONCENTRATIONS
Telmark's business is concentrated in agriculture in the New England,
Mid-Atlantic, and Midwest states with approximately 75% of its leases directly
related to production agriculture. At June 30, 1996, approximately 52% of the
Company's net lease investment was in the states of Ohio, Pennsylvania, Michigan
and New York. Adverse developments in any of these areas of concentration could
affect operating results adversely.
The Company endeavors to limit the effects of changes in interest rates by
matching as closely as possible, on an ongoing basis, the maturity and repricing
charateristics of funds borrowed to finance its leasing activities with the
maturity and repricing characteristics of its lease portfolio. However, a rise
in interest rates would increase that portion of the debt which is not precisely
matched to the characteristics of the portfolio and could lower the value of the
Company's outstanding leases in the secondary market.
42
<PAGE>
<TABLE>
<CAPTION>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<S> <C> <C>
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*:
Registration Fee......................................................................... $ 7,586
Printing and Engraving................................................................... 10,000
Registration Service and Trustee Expense................................................. 10,000
Accounting Fees and Expenses............................................................. 7,000
"Blue Sky" Fees and Expenses............................................................. 15,000
Mailing Costs .......................................................................... 5,000
Legal Fees and Expenses.................................................................. 10,000
Miscellaneous Expenses................................................................... 4,000
---------
$68,586
=========
*Approximate
</TABLE>
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS
(a) Article 9 of Telmark Inc.'s Certificate of Incorporation
states as follows: "Subject to conditions and qualifications set
forth in the Business Corporation Law of the State of New York,
the corporation shall indemnify any person made a party to an
action individually or in the name of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director or officer of the corporation against the reasonable
expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense of such action, or
in connection with an appeal therein except in relation to matters
as to which such director or officer is adjudged to have breached
his duty to the corporation. Subject to the conditions and
qualifications set forth in the Business Corporation Law of the
State of New York, the corporation shall also indemnify any person
made or threatened to be made, a party to an action or proceeding
other than one by or in the right of the corporation to procure a
judgment in its favor brought to impose a liability on such person
for an act alleged to have been committed by such person as a
director or officer of the corporation, or of any other
corporation which he served at the request of the corporation,
against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and
necessarily incurred in such action or proceeding if such director
or officer acted, in good faith, for a purpose which he reasonably
believed to be in the best interests of the corporation and, in
addition, had no reasonable cause to believe that his conduct was
unlawful." (b) Article 7 of the New York Business Corporation Law
permits a corporation to indemnify its officers and directors
against liabilities as provided for in the By-laws of Telmark Inc.
Under the terms of a Directors and Officers Liability and
Corporation Reimbursement Policy purchased for Telmark Inc., each
of the directors and officers of Telmark Inc. is insured against
loss arising from any claim or claims which may be made during the
policy period by reason of any wrongful act (as defined in the
policy) in their capacities as directors or officers. In addition,
Telmark Inc. is insured against loss arising from any claim or
claims which may be made during the policy period against any
director or officer of Telmark Inc. by reason of any wrongful act
(as defined in the policy) in their capacities as directors or
officers, but only when the directors or officers shall have been
entitled to indemnification by Telmark Inc.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
(a) Telmark issued $8,500,000, $6,000,000 and $17,500,000
principal amount of Senior Notes Series A, Series B and Series C,
respectively: on May 15, 1995. Such notes were sold to insurance
companies and no underwriters were used. The aggregate offering
price of these issues was $32,000,000. An aggregate placement
agent's fee of $144,000 was paid to Merrill, Lynch, Pierce, Fenner
& Smith Incorporated. Offers and sales of such Senior Notes were
made in reliance of the exemption provided in Section 4(2) of the
Securities Act of 1933. (b) Telmark issued $20,000,000 principal
amount of Senior Notes on November 1, 1994. Such notes were sold
to an insurance company and no underwriters were used. The
offering price of this issue was $20,000,000. A placement agent's
fee of $90,000 was paid to Merrill, Lynch, Pierce, Fenner & Smith
Incorporated. Offers and sales of such Senior Notes were made in
reliance of the exemption provided in Section 4(2) of the
Securities Act of 1933.
43
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS (CONTINUED)
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES (CONTINUED)
(c) Telmark issued $15,000,000 and $5,000,000 principal amount of
Senior Notes - Series A and Series B, respectively; for a total
principal amount of $20,000,000, on June 1, 1994. Such Senior
Notes were sold to two insurance companies and no underwriters
were used. The aggregate offering price of these issuances was
$20,000,000. An aggregate placement agent's fee of $90,000 was
paid to Merrill, Lynch, Pierce, Fenner & Smith Incorporated.
Offers and sales of such Senior Notes were made in reliance of the
exemption provided in Section 4(2) of the Securities Act of 1933.
(d) Telmark issued $15,000,000 and $20,000,000 principal amount of
Senior Notes - Series A and Series B, respectively; for a total
principal amount of $35,000,000, on November 1, 1993. Such Senior
Notes were sold to three insurance companies and no underwriters
were used. The aggregate offering price of these issuances was
$35,000,000. An aggregate placement agent's fee of $175,000 was
paid to Merrill, Lynch, Pierce, Fenner & Smith Incorporated.
Offers and sales of such Senior Notes were made in reliance on the
exemption provided in Section 4(2) of the Securities Act of 1933.
(e) On March 1, 1993, Telmark issued $10,000,000 principal amount
of Senior Notes - Series A and B; for a total principal amount of
$20,000,000. Such Senior Notes were sold to four insurance
companies and no underwriters were used. The aggregate offering
price of these issuances was $20,000,000. An aggregate placement
agent's fee of $100,000 was paid to Merrill, Lynch, Pierce, Fenner
& Smith Incorporated. Offers and sales of such Senior Notes were
made in reliance on the exemption provided in Section 4(2) of the
Securities Act of 1933.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(i) The following required exhibits are hereby incorporated by
reference to the previously filed Registration Statements
filed as specified.
3 - ARTICLES OF INCORPORATION AND BY-LAWS
3(a) - Certificate of Incorporation of Telmark Inc.
dated June 4, 1964, as amended September 8, 1964;
January 15, 1975; and June 16, 1987, filed by
reference to Exhibit 3 of the Registration
Statement (Form S-1), File No. 33-70732, dated
October 22, 1993.
3(b) - Bylaws of Telmark Inc., as Amended September 19,
1995, filed by reference to Exhibit 3 of the
Registration Statement (Form 10-K) dated August 23,
1996.
4 - INSTRUMENT DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4(a) - The Indenture dated as of September 30, 1993,
between Telmark Inc. and OnBank & Trust Co. of
Syracuse, New York, Trustee, filed by reference to
Exhibit 4 of the Registration Statement (Form S-1),
File No. 33-70732, dated October 22, 1993.
4(b) - Telmark Inc. Board of Directors resolutions
authorizing the issuance of Debentures under the
Indenture dated as of June 21, 1995, filed by
reference to Exhibit 4 of the post effective
Amendment No. 1 to the Registration Statement (Form
S-1), File No. 33-84442, dated August 28, 1995.
10 - MATERIAL CONTRACTS
10(a) - The Agreement dated as of October 1, 1986 among
Agway Inc., Agway Financial Corporation, Telmark
Inc., and Agway Holdings, Inc., as amended by
Addendum to Agreement effective June 29, 1990,
filed by reference to Exhibit 10 of the
Registration Statement (Form S-1), File No.
33-70732, dated October 22, 1993.
(ii) The following required exhibits are hereby attached to this
Registration Statement on Form S-1.
5 - OPINION REGARDING LEGALITY, FILED HEREIN.
12 - STATEMENTS REGARDING COMPUTATION OF RATIOS, FILED HEREIN.
44
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS (CONTINUED)
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED)
23 - CONSENT OF EXPERTS AND COUNSEL, FILED HEREIN.
25 - STATEMENT OF ELIGIBILITY AND QUALIFICATION OF TRUSTEE ON
FORM T-1
(iii)Financial Statement schedules have been omitted as they are
not required, inapplicable, or the required information is
provided in the financial statements including the notes
thereto.
ITEM 17. UNDERTAKINGS
The undersigned registrants hereby undertake:
A. 1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this regis-
tration statement:
a. To include any Prospectus required by section
10(a)(3) of the Securities Act of 1933;
b. To reflect in the Prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the registration statement;
c. To include any material information with respect
to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement, including (but not limited
to) any addition or deletion of a managing
underwriter;
2. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof;
B. That, for purposes of determining liability under the
Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be
a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrants pursuant
to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by either of
the registrants of expenses incurred or paid by a director,
officer or controlling person of such registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the questions whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
45
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of DeWitt, and the State of
New York.
TELMARK INC.
(Registrant)
By DANIEL J. EDINGER
President
(Principal Executive Officer)
Date 8/27/96
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons on behalf of the
registrant in the capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
DANIEL J. EDINGER President 08/27/96
(Principal Executive Officer)
PETER J. O'NEILL Treasurer and Chairman of the 08/27/96
Board and Director
(Principal Financial Officer
& Principal Accounting Officer)
GARY K. VAN SLYKE Director 08/27/96
SAMUEL F. MINOR Director 08/27/96
WILLIAM W. YOUNG Director 08/27/96
STANLEY A. WEEKS Director 08/27/96
CHRISTIAN F. WOLFF, JR. Director 08/27/96
46
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
EXHIBITS
FILED WITH
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
TELMARK INC.
<PAGE>
EXHIBIT 5
<PAGE>
(315) 449-6436
August 27, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Subordinated Debentures: $22,000,000
Registration Statement on Form S-1
Gentlemen:
Reference is made to a registration statement on Form S-1 (such
registration statement and all amendments thereto hereinafter referred to as the
"Registration Statement") of Telmark Inc., a New York corporation (the
"Company") filed herewith the Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "Act"), in connection with a
proposed sale by the Company of $22,000,000 aggregate principal amount of its
debentures, with such maturity dates and interest rates as set forth in the
prospectus included in the Registration Statement or as established by the
Company's Board of Directors or a duly authorized committee thereof and
reflected in a prospectus supplement filed with the SEC (the "Debentures"). The
Debentures are to be issued pursuant to an Indenture dated as of September 30,
1993 (the "Indenture") between the Company and OnBank and Trust Company, as
Trustee.
As legal counsel to the Company, I have examined the corporate
proceedings and such other legal matters relating to the Indenture and the
Debentures as I deemed relevant to the opinions expressed below.
Based on such examination, I am of the opinion that:
1. The Company is a corporation duly organized and existing under
the laws of the State of New York.
2. The Company has corporate power to execute and deliver the
Indenture and to authorize and sell the Debentures.
<PAGE>
Securities and Exchange Commission
August 27, 1996
Page 2
3. The Debentures will be legally issued and binding obligations of the
Company (except as may be limited by bankruptcy, insolvency, reorganization, or
other laws of general applicability relating to or affecting creditors' rights
or by general equity principles) (i) so long as the Registration Statement
remains effective under the Act and the Indenture continues to qualify under the
Trust Indenture Act of 1939, as amended, and (ii) the Debentures shall have been
duly executed and authenticated as provided in the Indenture and shall have been
duly delivered to the purchasers thereof against payment of the agreed
consideration therefor.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to my name under the caption "Legal
Matters" in the Prospectus.
Very truly yours,
David M. Hayes
Legal Counsel
DMH/jw
bcc: H.E. Gerhart
J.M. Cain, Esq., Sutherland, Asbill & Brennan, via Fax: (202) 637-3592
<PAGE>
EXHIBIT 12
<PAGE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
TELMARK INC.
FOR THE FIVE YEARS ENDED JUNE 30, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Income before income taxes $11,502 $ 9,272 $ 8,485 $ 9,920 $ 5,012
Fixed charges - Interest 20,305 16,986 13,259 13,215 14,616
Rentals 145 130 58 57 56
------- ------- ------- ------- -------
Total fixed charges 20,450 17,116 13,317 13,272 14,672
------- ------- ------- ------- -------
Adjusted earnings $31,952 $26,388 $21,802 $23,192 $19,684
======= ======= ======= ======= =======
Ratio of earnings to fixed charges* 1.6 1.5 1.6 1.7 1.3
</TABLE>
* REPRESENTS ADJUSTED EARNINGS DIVIDED BY FIXED CHARGES.
<PAGE>
EXHIBIT 23
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-1
of our report dated August 6, 1996, on our audits of the financial statements of
Telmark Inc. We also consent to the references to our firm under the captions
"Experts" and "Selected Financial Data."
COOPERS & LYBRAND L.L.P.
Syracuse, New York
August 27, 1996
<PAGE>
CONSENT OF COUNSEL
The consent of David M. Hayes, legal counsel to the Company, is
included in his opinion, a copy of which is filed as Exhibit 5.
<PAGE>
EXHIBIT 25
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)
<TABLE>
<CAPTION>
<S> <C>
ONBANK & TRUST CO.
- ----------------------------------------------------------------------------------------------------------------------------------
(Exact name of trustee as specified in its charter)
NEW YORK 15-038555
- ----------------------------------------------------------------------------------------------------------------------------------
(Jurisdiction of incorporation or organization if not a U.S. national bank) (I.R.S. Employer Identification Number)
101 SOUTH SALINA STREET, SYRACUSE, NEW YORK 13202
- ----------------------------------------------------------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
- ----------------------------------------------------------------------------------------------------------------------------------
(Name, address and telephone number of agent for service)
TELMARK, INC.
- ----------------------------------------------------------------------------------------------------------------------------------
(Exact name of obligor as specified in its charter)
NEW YORK 16-090546
- ----------------------------------------------------------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
333 BUTTERNUT DRIVE, DEWITT, NEW YORK 13214
- ----------------------------------------------------------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
SUBORDINATED DEBENTURES ISSUED UNDER INDENTURE DATED AS OF
SEPTEMBER 30, 1993 DUE MARCH 31, 2000 (7.25% PER ANNUM) AND
- ----------------------------------------------------------------------------------------------------------------------------------
DUE MARCH 31, 2003 (7.50% PER ANNUM)
- ----------------------------------------------------------------------------------------------------------------------------------
(Title of the indenture securities)
</TABLE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee--
(a) Name and address of each examining or supervising authority
to which it is subject.
THE TRUSTEE IS SUBJECT TO SUPERVISION AND EXAMINATION BY:
FEDERAL DEPOSIT INSURANCE CORPORATION
452 FIFTH AVENUE
NEW YORK, NEW YORK 10008 AND
NEW YORK STATE BANKING DEPARTMENT
2 RECTOR STREET
NEW YORK, NEW YORK 10006
(b) Whether it is authorized to exercise corporate trust powers.
THE TRUSTEE IS AUTHORIZED BY ITS CHARTER TO EXERCISE
CORPORATE TRUST POWERS.
<PAGE>
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such affiliation.
NOT APPLICABLE
ITEM 3. VOTING SECURITIES OF THE TRUSTEE.
Furnish the following information as to each class of voting securities of the
trustee:
AS OF AUGUST 1, 1996.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Col.A. Col.B.
Title of Class Amount Outstanding
- --------------------------------------------------------------------------------
<S> <C>
$1.00 PAR VALUE COMMON 3,358,000 SHARES
</TABLE>
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.
If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:
(a) Title of the securities outstanding under each such other
indenture.
NOT APPLICABLE
(b) A brief statement of the facts relied upon as a basis for the claim that
no conflicting interest within the meaning of Section 310(b)(1) of the
Act arises as a result of the trusteeship under any such other
indenture, including a statement as to how the indenture securities will
rank as compared with the securities issued under such other indenture.
NOT APPLICABLE
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH
THE OBLIGOR OR UNDERWRITERS.
If the trustee or any of the directors or executive officers of the trustee is
a director, officer, partner, employee, appointee, or representative of the
obligor or of any underwriter for the obligor, identify each such person
having any such connection and state the nature of each such connection.
NONE
ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS.
Furnish the following information as to the voting securities of the trustee
owned beneficially by the obligor and each director, partner, and executive
officer of the obligor:
AS OF AUGUST 1, 1996.
2
<PAGE>
SO FAR AS IS KNOWN TO THE TRUSTEE, AND BASED UPON INFORMATION SUPPLIED BY THE
OBLIGOR, THE AMOUNT OF VOTING SECURITIES OF THE TRUSTEE, OWNED BENEFICIALLY BY
THE OBLIGOR AND ITS RESPECTIVE DIRECTORS AND EXECUTIVE OFFICERS, TAKEN AS A
GROUP, DOES NOT EXCEED ONE PERCENT (1%) OF THE OUTSTANDING VOTING SECURITIES
OF THE TRUSTEE.
- --------------------------------------------------------------------------------
Col.A Col.B Col.C Col.D
Percentage of Voting
Securities Represented
Name of Title of Amount Owned by Amount Given in
Owner Class Beneficially Col.C
- --------------------------------------------------------------------------------
NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE
ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.
Furnish the following information as to the voting securities of the trustee
owned beneficially by each underwriter for the obligor and each director,
partner, and executive officer of each such underwriter: AS OF AUGUST 1, 1996.
NONE
- --------------------------------------------------------------------------------
Col.A Col.B Col.C Col.D
Percentage of Voting
Securities Represented
Name of Title of Amount Owned by Amount Given in
Owner Class Beneficially Col.C
- --------------------------------------------------------------------------------
NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE
ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE. Furnish the
following information as to securities of the obligor owned beneficially or
held as collateral security for obligations in default by the trustee:
AS OF AUGUST 1, 1996. TRUSTEE DID NOT OWN BENEFICIALLY OR HOLD AS COLLATERAL
ANY SECURITIES OF OBLIGOR.
3
<PAGE>
- --------------------------------------------------------------------------------
Col.A Col.B Col.C Col.D
- --------------------------------------------------------------------------------
NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE
ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE. If the trustee
owns beneficially or holds as collateral security for obligations in default
any securities of an underwriter for the obligor, furnish the following
information as to each class of securities of such underwriter any of which
are so owned or held by the trustee: AS OF AUGUST 1, 1996.
NONE
- --------------------------------------------------------------------------------
Col.A Col.B Col.C Col.D
- --------------------------------------------------------------------------------
NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE
ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.
If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10 percent or more of the voting securities of the
obligor or (2) is an affiliate, other than a subsidiary, of the obligor,
furnish the following information as to the voting securities of such person:
AS OF AUGUST 1, 1996, THE TRUSTEE DID NOT OWN MORE THAN ONE PERCENT OF ANY
CLASS OF THE VOTING SECURITIES OF AFFILIATES OR SECURITY HOLDERS OF THE
OBLIGOR.
- --------------------------------------------------------------------------------
Col.A Col.B Col.C Col.D
- --------------------------------------------------------------------------------
NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.
If the trustee owns beneficially or holds as collateral security
4
<PAGE>
for obligations in default any securities of a person who, to the knowledge of
the trustee, owns 50 percent or more of the voting securities of the obligor,
furnish the following information as to each class of securities of such
person any of which are so owned or held by the trustee: AS OF AUGUST 1, 1996.
THE TRUSTEE DID NOT OWN MORE THAN ONE PERCENT OF ANY CLASS OF THE VOTING
SECURITIES OF A PERSON OBTAINING MORE THAN 50 PERCENT OF THE VOTING SECURITIES
OF THE OBLIGOR.
- --------------------------------------------------------------------------------
Col.A Col.B Col.C Col.D
- --------------------------------------------------------------------------------
NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE NOT APPLICABLE
ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.
Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information:
AS OF AUGUST 1, 1996.
NONE
- --------------------------------------------------------------------------------
Col.A Col.B Col.C
Nature of Indebtedness Amount Outstanding Data Due
- --------------------------------------------------------------------------------
ITEM 13. DEFAULTS BY THE OBLIGOR.
(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.
THERE HAS BEEN NO DEFAULT.
(b) If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
NOT APPLICABLE
5
<PAGE>
ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
NOT APPLICABLE
ITEM 15. FOREIGN TRUSTEE.
Identify the order or rule pursuant to which the foreign trustee is authorized
to act as sole trustee under indentures qualified or to be qualified under the
Act.
NOT APPLICABLE
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of eligibility.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW
IN EFFECT.
2. A COPY OF THE EXISTING BYLAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
3. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE
PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS OF ITS
SUPERVISING OR EXMAINING AUTHORITY.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the trustee,
OnBank & Trust Co., a New York Trust Company organized and existing under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Syracuse, and State of New York, on the ________ day of August 1996.
ONBANK & TRUST CO.
By: /s/ Thomas F. Ferguson
--------------------------------------
Thomas F. Ferguson
Senior Vice President
6
<PAGE>
SECRETARY'S CERTIFICATION
I, David M. Dembowski, Secretary of OnBank & Trust Co., do hereby
certify that the attached Organization Certificate of OnBank & Trust Co. is a
true and correct copy of the original.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
August, 1996.
/s/ David M. Dembowski
------------------------
David M. Dembowski
Secretary
[SEAL]
<PAGE>
ORGANIZATION CERTIFICATE
OF
ONBANK & TRUST CO.
We, the undersigned, all being of full age, all of us being citizens of
the United States and all of us being residents of the State of New York,
having associated ourselves together for the purpose of forming a trust company
under and pursuant to the Banking Law of the State of New York, do hereby
certify that:
ARTICLE I
NAME
The name by which the Corporation is to be known is OnBank & Trust Co.
ARTICLE II
PRINCIPAL OFFICE
The principal office of the Corporation is to be located at 216-220
South Warren Street, in the City of Syracuse, County of Onondaga.
ARTICLE III
AUTHORIZED CAPITAL STOCK
The total amount of the Corporation's capital stock is to be twenty
million dollars ($20,000,000) and the total number of shares into which such
capital stock is to be divided is 20,000,000 shares with a par value of $1.00
each ("Capital Stock").
ARTICLE IV
CLASSIFICATION OF CAPITAL STOCK
SECTION 1. CLASSIFICATION OF CAPITAL STOCK. The shares of Capital
Stock are to be classified as preferred and common shares, as follows:
10,000,000 shares shall be preferred stock, par value $1.00 per share
("Preferred Stock"), and 10,000,000 shares shall be common stock, par value
$1.00 per share ("Common Stock").
SECTION 2. DESIGNATIONS, POWERS, PREFERENCES, RIGHTS,
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS RELATING TO THE CAPITAL STOCK.
The following is a statement of the designations, powers, preferences and
rights in respect of the classes of Capital Stock, and the
<PAGE>
qualifications, limitations or restrictions thereof, and of the authority with
respect thereto expressly vested in the Board of Directors of the Corporation
(the "Board of Directors"):
(a) Preferred Stock. The Preferred Stock may be issued from time
to time in one or more series, the number of shares and any designation of each
series and the powers, preferences and rights of the shares of each series, and
the qualifications, limitations or restrictions thereof, to be as stated and
expressed in a resolution or resolutions providing for the issue of such series
adopted by the Board of Directors, subject to the limitations prescribed by
law. The Board of Directors in any such resolution or resolutions is expressly
authorized to state for each such series:
(i) the voting powers, if any, of the holders of shares of
such series in addition to any voting rights affirmatively
required by law;
(ii) the rights of stockholders in respect of dividends,
including, without limitation, the rate or rates per annum and
the time or times at which (or the formula or other method
pursuant to which such rates and such time or times may be
determined) and conditions upon which the holders of stock of
such series shall be entitled to receive dividends and other
distributions, and whether any such dividends shall be
cumulative or non-cumulative and, if cumulative, the terms upon
which such dividends shall be cumulative;
(iii) whether the stock of each such series shall be
redeemable by the Corporation at the option of the Corporation
or the holder thereof, and, if redeemable, the terms and
conditions upon which the stock of such series may be redeemed;
(iv) the amount payable and the rights or preferences to
which the holders of the shares of stock of such series shall be
entitled upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;
(v) the terms, if any, upon which shares of stock of such
series shall be convertible into, or exchangeable for, shares of
stock of any other class or classes or of any other series of
the same or any other class or classes, including the price or
prices or the rate or rates of conversion or exchange and the
terms of adjustment, if any; and
(vi) any other designations, preferences, and relative,
participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, insofar as
they are not inconsistent with the provisions of this
Organization Certificate and to the full extent now or hereafter
permitted by the laws of the State of New York.
All shares of the Preferred Stock of any one series shall be identical
to each other in all respects, except that shares of any one series issued at
different times may differ as to the dates from which dividends thereon, if
cumulative, shall be cumulative.
- 2 -
<PAGE>
Subject to any limitations or restrictions stated in the resolution or
resolutions of the Board of Directors originally fixing the number of shares
constituting a series, the Board of Directors may by resolution or resolutions
likewise adopted increase (but not above the total number of authorized shares
of that class) or decrease (but not below the number of shares of the series
then outstanding) the number of shares of the series subsequent to the issue of
shares of that series; and in case the number of shares of any series shall be
so decreased, the shares constituting the decrease shall resume that status
that they had prior to the adoption of the resolution originally fixing the
number of shares constituting such series.
(b) Common Stock. All shares of Common Stock shall be identical to each
other in every respect. The shares of Common Stock shall entitle the holders
thereof to one vote for each share on all matters upon which stockholders have
the right to vote. The holders of Common Stock shall not be permitted to
cumulate their votes for the election of directors.
Subject to the preferences, privileges and powers with respect to each
class of Capital Stock of the Corporation having any priority over the Common
Stock, and the qualifications, limitations, or restrictions thereof, the
holders of the Common Stock shall have and possess all rights pertaining to the
Capital Stock.
No holder of shares of Common Stock shall be entitled as such, as a
matter of preemptive right, to subscribe for, purchase or otherwise acquire any
part of any new or additional issue of stock of any class or series whatsoever
of the Corporation, or of securities convertible into shares of any class or
series whatsoever of the Corporation, or of any warrants or other instruments
evidencing rights or options to subscribe for, purchase or otherwise acquire
such shares or securities, whether now or hereafter authorized or whether
issued for cash or other consideration or by way of dividend.
Section 3. RESERVATION OF SHARES. No shares of Common Stock are to be
reserved for issuance in exchange for shares of Preferred Stock or otherwise to
replace any Capital Stock represented by shares of Preferred Stock.
ARTICLE V
INCORPORATORS
The name and place of residence of each incorporator of the
Corporation, each of whom is a United States citizen and a citizen of the State
of New York, are set forth below. None of the incorporators has subscribed for
any shares of the Capital Stock of the Corporation.
Name Residence
- ---- ---------
William F. Allyn 50 State Street, Skaneateles, NY 13152
Robert J. Bennett 8407 Pewter Lane, Manlius, NY 13104
Glenn A. Brodock RD #1, Ava, NY 13303
Russell C. Carlson 41 Lynacres Boulevard, Fayetteville, NY 13066
William J. Donlon 4824 Cavalry Green Drive, Manlius, NY 13104
-3-
<PAGE>
Russell A. King Red Pine Road, Manlius, NY 13104
Henry G. Lavarnway, Jr. 2604 Carolwood Lane, Phoenix, NY 13135
John D. Marsellus 5020 Bridle Path Road, Fayetteville, NY 13066
J. Kemper Matt 5 Meadow Drive, Fayetteville, NY 13066
Peter J. Meier 4633 East Lake Road, Cazenovia, NY 13035
Peter L. Meyers 4922 Manor Hill Drive, Syracuse, NY 13215
Dr. Patti McGill Peterson 54 East Main Street, Canton, NY 13617
T. David Stapleton, Jr. 100 Teller Avenue, Auburn, NY 13021
John L. Vensel 5080 Pine Valley Drive, Fayetteville, NY 13066
Joseph N. Walsh, Jr. 51 Quarry Lane, Bedford, NY 10506
Dr. Henry P. Williams 303 Hurlburt Road, Syracuse, NY 13224
ARTICLE VI
TERM OF EXISTENCE
The term of existence of the Corporation is to be perpetual.
ARTICLE VII
NUMBER OF DIRECTORS
The number of directors of the Corporation shall not be less than seven
(7) nor more than thirty (30). Within such limitations, the number of directors
shall be determined from time to time by resolution of the Board of Directors.
Unless and to the extent that the By-laws so provide, the election of directors
need not be by written ballot.
ARTICLE VIII
INITIAL BOARD OF DIRECTORS
The names of the incorporators who shall be the directors of the
Corporation until the first annual meeting of stockholders are as follows:
William F. Allyn
Robert J. Bennett
Glenn A. Brodock
Russell C. Carlson
William J. Donlon
Russell A. King
Henry G. Lavarnway, Jr.
John D. Marsellus
J. Kemper Matt
Peter J. Meier
Peter L. Meyers
Dr. Patti McGill Peterson
-4-
<PAGE>
T. David Stapleton, Jr.
John L. Vensel
Joseph N. Walsh, Jr.
Dr. Henry P. Williams
ARTICLE IX
FIDUCIARY POWERS
The Corporation shall possess, and shall have authority to exercise,
all of the fiduciary and other powers conferred upon trust companies by Section
100 of the New York Banking Law.
ARTICLE X
AMENDMENTS
Section 1. Amendments of Organization Certificate. The Corporation
reserves the right to amend this Organization Certificate from time to time in
any and as many respects as may be desired and as may be lawfully contained in
an original organization certificate filed at the time of making such amendment.
Section 2. Amendments of Bylaws. In furtherance and not in limitation
of the powers conferred by statute, the Board of Directors of the Corporation
is expressly authorized to make, alter, amend, rescind or repeal from time to
time any of the By-laws of the Corporation in accordance with the terms
thereof; provided, however, that any By-law made by the Board may be altered,
amended, rescinded, or repealed by the holders of shares of Capital Stock
entitled to vote thereon at any annual meeting or at any special meeting called
for that purpose.
- 5 -
<PAGE>
IN WITNESS WHEREOF, we have made, signed and acknowledged this
certificate in duplicate, as of this 27th day of July, 1992.
/s/ Robert J. Bennett /s/ J. Kemper Matt
- ------------------------------------ ------------------------------------
Robert J. Bennett J. Kemper Matt
/s/ William F. Allyn /s/ Peter J. Meier
- ------------------------------------ ------------------------------------
William F. Allyn Peter J. Meier
/s/ Glenn A. Brodock /s/ Peter L. Meyers
- ------------------------------------ ------------------------------------
Glenn A. Brodock Peter L. Meyers
/s/ Russell C. Carlson /s/ Dr. Patti McGill Peterson
- ------------------------------------ ------------------------------------
Russell C. Carlson Dr. Patti McGill Peterson
/s/ William J. Donlon /s/ T. David Stapleton, Jr.
- ------------------------------------ ------------------------------------
William J. Donlon T. David Stapleton, Jr.
/s/ Russell A. King /s/ John L. Vensel
- ------------------------------------ ------------------------------------
Russell A. King John L. Vensel
/s/ Henry G. Lavarnway, Jr. /s/ Joseph N. Walsh, Jr.
- ------------------------------------ ------------------------------------
Henry G. Lavarnway, Jr. Joseph N. Walsh, Jr.
/s/ John D. Marsellus /s/ Dr. Henry P. Williams
- ------------------------------------ ------------------------------------
John D. Marsellus Dr. Henry P. Williams
- 6 -
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF ONONDAGA )
On this 27th day of July, 1992, before me personally appeared each of
ROBERT J. BENNETT, WILLIAM F. ALLYN, GLENN A. BRODOCK, RUSSELL C. CARLSON,
WILLIAM J. DONLON, RUSSELL A. KING, HENRY G. LAVARNWAY, JR., JOHN D. MARSELLUS,
PETER J. MEIER, DR. PATTI MC GILL PETERSON, T. DAVID STAPLETON, JR., JOHN L.
VENSEL, JOSEPH N. WALSH, JR. AND DR. HENRY P. WILLIAMS, to me known to be the
individuals described in and who executed the foregoing certificate, and each
of them duly acknowledged to me that he has read the foregoing certificate and
is familiar with the contents thereof and has executed the same.
/s/ Marion Ellen Fay (Cook)
- -----------------------------
Notary Public
MARION ELLEN FAY (COOK)
Notary Public in the State of New York
Qualified in Onondaga County No. 4579047
My Commission Expires January 31, 1993
[Seal]
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF ONONDAGA )
On this 27th day of July, 1992, before me personally appeared each of
J. KEMPER MATT AND PETER L. MEYERS, to me known to be the individuals
described in and who executed the foregoing certificate, and each of them duly
acknowledged to me that he has read the foregoing certificate and is familiar
with the contents thereof and has executed the same.
/s/ Marion Ellen Fay (Cook)
- ---------------------------
Notary Public
MARION ELLEN FAY (COOK)
Notary Public in the State of New York
Qualified in Onondaga County No. 6879047
[Seal] My Commission Expires January 31, 1993
<PAGE>
APPENDIX B
ONBANK & TRUST CO. EXECUTIVE OFFICERS
<TABLE>
<S> <C>
Robert J. Bennett Chairman of the Board, President & Chief Executive Officer
Peter L. Meyers Vice Chairman of the Board
Howard W. Sharp Executive Vice President
David M. Dembowski Executive Vice President Residential Lending & Secretary
Robert J. Berger Senior Vice President, Treasurer & Chief Financial Officer
William M. Le Beau Senior Vice President Loan & Asset Review
Thomas F. Ferguson Senior Vice President & Senior Trust Officer
Kevin M. Considine Senior Vice President Systems & Operations
Randy J. Wiley Vice President Investments & Funds Management
</TABLE>
<PAGE>
APPENDIX C
<TABLE>
<S> <C> <C> <C> <C> <C>
Branch Main Branch Liverpool Branch Skaneateles
216 S Warren Street 208 First Street 32 Fennell Street
City of Syracuse, NY 13221 Village of Liverpool, NY 13088 Village of Skaneateles, NY
County of Onondaga County of Onondaga 13152
County of Onondaga
Branch Eastwood Branch Baldwinsville Branch Moravia
3640 James Street 34 E Genesee Street 31-33 Main Street
City of Syracuse, NY 13206 Village of Baldwinsville, NY 13027 Village of Moravia, NY 13138
County of Onondaga County of Onondaga County of Cayuga
Branch Western Lights Branch Fairmount Hills Branch Lacona
4726 Onondaga Blvd 4131 W Genesee Street 8330 Harwood Drive
Town of Onondaga, NY 13219 Town of Camillus, NY 13219 Town of Sandy Creek, NY 13083
County of Onondaga County of Onondaga County of Oswego
Branch Regional Market Branch Bayberry (Liverpool) Branch Lansing
2100 Park Street 7538 Oswego Road 1935 E. Shore Drive
City of Syracuse, NY 13208 Town of Clay, NY 13090 Lansing Plaza
County of Onondaga County of Onondaga Town of Lansing, NY 14882
County of Tompkins
Branch Elmwood Branch Lafayette ATM Camillus Mall
1621 South Avenue Rte 11 & Rte 20 5300 W. Genesee Street
City of Syracuse, NY 13207 Town of Lafayette, NY 13084 Town of Camillus, NY 13031
County of Onondaga County of Onondaga County of Onondaga
Branch Court Street Branch Jamesville ATM Galleries
2901 Court Street 6499 West Seneca Turnpike 440 S. Warren Street
Town of Salina, NY 13208 Town of DeWitt, NY 13078 City of Syracuse, NY 13201
County of Onondaga County of Onondaga County of Onondaga
Branch Thompson Road Branch Manlius ATM Carousel Center
5858 Thompson Road 201 Fayette Street 330 W. Hiawatha Blvd.
Town of DeWitt, NY 13214 Village of Manlius, NY 13104 City of Syracuse, NY 13204
County of Onondaga County of Onondaga County of Onondaga
Branch Powelson Building Branch Taft Road Branch Cazenovia
400 Montgomery Street 5170 W Taft Road 43 Albany Street
City of Syracuse, NY 13202 Town of Clay, NY 13212 Village of Cazenovia, NY 13035
County of Onondaga County of Onondaga County of Madison
Branch Erie Blvd. East Branch Fremont Branch Canastota
444 Erie Blvd East 7095 Manlius Center Road NW Corner of Seneca Avenue
City of Syracuse, NY 13202 Town of Manlius, NY 13057 and Route 13
County of Onondaga County of Onondaga Town of Canastota, NY 13032
County of Madison
Branch Fayetteville Branch Elbridge
500 E Genesee Street 239 East Main Street
Village of Fayetteville, NY 13066 Village of Elbridge, NY 13060
County of Onondaga County of Onondaga
Branch North Syracuse Branch Molloy Road
507 S Main Street 6195 East Molloy Road
Village of North Syracuse, NY 13212 Town of DeWitt, NY 13057
County of Onondaga County of Onondaga
Branch Cicero Branch Jordan
8304 South Main Street 2 North Main Street
Town of Cicero, NY 13039 Village of Jordan, NY 13080
County of Onondaga County of Onondaga
</TABLE>
<PAGE>
<PAGE>
SECRETARY'S CERTIFICATION
I, David M. Dembowski, Secretary of OnBank & Trust Co., do hereby
certify that the attached By-Laws of OnBank & Trust Co. effective January 4,
1993 and last amended on March 28, 1994 is a true and correct copy of the
original.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
August, 1996.
/s/ DAVID M. DEMBOWSKI
----------------------
David M. Dembowski
Secretary
[SEAL]
<PAGE>
=================================================================
BY-LAWS
OF
OnBank & Trust Co.
EFFECTIVE JANUARY 4, 1993
=================================================================
Amended June 28, 1993
Amended March 28, 1994
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
OFFICES
..................................................................... 1
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meetings...................................... 1
Section 2. Special Meetings..................................... 1
Section 3. Notice of Meetings................................... 1
Section 4. Waiver of Notice..................................... 2
Section 5. Quorum............................................... 2
Section 6. Voting............................................... 2
Section 7. Proxies.............................................. 3
Section 8. Written Consent of Stockholders Without a Meeting.... 3
ARTICLE III
CAPITAL STOCK
Section 1. Certificates of Stock................................ 3
Section 2. Registration and Transfer of Shares.................. 3
Section 3. Lost, Destroyed and Mutilated Certificates........... 4
Section 4. Holder of Record..................................... 4
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Responsibilities; Number of Directors................ 4
Section 2. Election............................................. 4
Section 3. Qualification........................................ 4
Section 4. Mandatory Retirement................................. 4
Section 5. Regular and Annual Meetings.......................... 5
Section 6. Special Meetings..................................... 5
Section 7. Notice of Special Meetings........................... 5
Section 8. Waiver of Notice..................................... 5
Amended June 28, 1993
Amended March 28, 1994
<PAGE>
Section 9. Presence at Meetings by Conference Telephone ................... 6
Section 10. Quorum and Voting Requirements ................................. 6
ARTICLE IV CONT.
BOARD OF DIRECTORS
Section 11. Compensation ................................................... 6
Section 12. Removal ........................................................ 6
Section 13. Advisory Boards ................................................ 6
ARTICLE V
COMMITTEES
Section 1. Committees ..................................................... 7
Section 2. Executive Committee ............................................ 7
Section 3. Examining and Audit Committee .................................. 7
Section 4. Trust Committee ................................................ 8
Section 5. Meetings of Committees ......................................... 9
Section 6. Term; Removal .................................................. 9
Section 7. Ex-Officio Committee Members ................................... 9
ARTICLE VI
OFFICERS
Section 1. Number ......................................................... 9
Section 2. Term; Removal .................................................. 10
Section 3. Chairman of the Board .......................................... 10
Section 4. Vice Chairman .................................................. 10
Section 5. President ...................................................... 10
Section 6. Vice Presidents ................................................ 10
Section 7. Treasurer ...................................................... 11
Section 8. Secretary ...................................................... 11
Section 9. Auditor ........................................................ 11
Section 10. Trust Officers ................................................. 12
Section 11. Other Officers ................................................. 12
ARTICLE VII
DIVIDENDS
............................................................................ 12
ARTICLE VIII
Amended June 28, 1993
Amended March 28, 1994
<PAGE>
INDEMNIFICATION
Section 1. Right To Indemnification ....................................... 12
Section 2. Accrual of Right to Indemnification ............................ 13
Section 3. Individual Indemnification Agreements .......................... 13
Section 4. Insurance ...................................................... 13
ARTICLE VIII CONT.
INDEMNIFICATION
Section 5. Subsequent Amendment and Subsequent Legislation ................ 14
ARTICLE IX
TRUST POWERS OF OFFICERS
............................................................................ 14
ARTICLE X
MISCELLANEOUS
Section 1. Officers' Authority ............................................ 14
Section 2. Bank Funds ..................................................... 14
ARTICLE XI
ACUTE EMERGENCIES
............................................................................ 15
ARTICLE XII
AMENDMENTS
............................................................................ 15
Amended June 28, 1993
Amended March 28, 1994
<PAGE>
BY-LAWS
OF
ONBANK & TRUST CO.
ARTICLE I
OFFICES
The principal office of OnBank & Trust Co. (the "Bank") shall be located in the
State of New York, in the City of Syracuse, County of Onondaga. Subject to
applicable banking laws and any required approvals of the Superintendent of
Banks of the State of New York, the Bank may also have other offices at such
other places as the Board of Directors (the "Board") may from time to time
designate or the business of the Bank may require.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meetings. The annual meeting of stockholders of the Bank for
the election of directors and the transaction of any other business as may
properly come before such meeting shall be held each year in the board meeting
room following the organizational meeting of the Board of Directors of
ONBANCorp, Inc., the Bank's parent corporation, or at such other time or place
as may be fixed by the Board, but in no event later than April 30th of any year.
Section 2. Special Meetings. Special meetings of the stockholders, for any
purpose, may be called at any time by the Chairman of the Board or by
resolution of at least three-fourths of the entire Board. Special meetings
shall be held at such time and at such place as may be designated by the Board.
At a special meeting, no business shall be transacted and no corporate action
shall be taken other than that stated in the notice of meeting.
Section 3. Notice of Meetings. Written notice stating the place, day and hour
of any meeting of stockholders and the purpose or purposes for which the
meeting is called shall be delivered to each stockholder of record entitled to
vote at such meeting, either personally or by mail not less than ten (10) nor
more than fifty (50) days before the date of such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the U.S. mail, with
postage thereon prepaid, addressed to the stockholder at his or her address as
it appears on the stock transfer books or records of the Bank as of the record
date, or at such other address as the stockholder shall have furnished in
writing to the Secretary of the
Amended March 28, 1994
<PAGE>
Bank. Notice of any special meeting shall indicate that the notice is being
issued by or at the direction of the person or persons calling such meeting.
When any meeting of stockholders, either annual or special, is adjourned to
another time or place, no notice of the adjourned meeting must be given, other
than an announcement at the meeting at which such adjournment is taken giving
the time and place to which the meeting is adjourned. However, if after
adjournment the Board has fixed a new record date for the adjourned meeting,
notice of the adjourned meeting shall be given to each stockholder of record on
the new record date.
Section 4. Waiver of Notice. Notice of any annual or special meeting need not
be given to any stockholder who submits a signed waiver of notice, in person or
by proxy, whether before or after the meeting. The attendance of any
stockholder at a meeting, in person or by proxy, without protesting prior to
the conclusion of the meeting the lack of notice of such meeting, shall
constitute a waiver of notice by such stockholder.
Section 5. Quorum. The holders of a majority of the outstanding shares of the
capital stock of the Bank issued and outstanding and entitled to vote thereat,
represented in person or by proxy, shall constitute a quorum at a meeting of
stockholders, except as otherwise provided herein, by law or by the Bank's
Organization Certificate. If less than a majority of such shares are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. At such adjourned meeting at which a
quorum shall be represented, any business may be transacted which might have
been transacted at the meeting as originally notified. When a quorum is once
present to organize a meeting, such quorum is not broken by the subsequent
withdrawal of any stockholders.
Section 6. Voting. Each stockholder entitled to vote at any meeting, or to
express consent or dissent without a meeting, may vote or express consent or
dissent either in person or by proxy. Except as may be otherwise provided by
law or the Organization Certificate, each stockholder entitled to vote or
express consent or dissent shall be entitled to one vote for each share of
voting stock registered in his or her name on the books of the Bank on the date
fixed as a record date for the determination of stockholders entitled to vote
or to express consent or dissent. Except for the election of directors or as
otherwise provided by law, by these By-Laws, or by the Organization
Certificate, at all meetings of stockholders all matters shall be determined by
a majority vote of the stockholders present in person or by proxy and entitled
to vote thereat. Directors shall, except as otherwise required by law or by the
Organization Certificate, be elected by a plurality of the votes cast by the
holders of each class of shares entitled to vote at a meeting of stockholders
present in person or by proxy and entitled to vote in the election.
Amended March 28, 1994 2
<PAGE>
Section 7. Proxies. All proxies shall be in writing, signed by the stockholder
or by his or her duly authorized attorney-in-fact, and shall be filed with the
Secretary of the Bank before being voted. No proxy shall be valid after eleven
(11) months from the date of its execution unless otherwise provided in the
proxy.
Section 8. Written Consent of Stockholders Without a Meeting. Any stockholder
action required or permitted to be taken by vote may be taken without a meeting
on written consent, setting forth the action so taken, signed by the holders of
all outstanding shares of capital stock entitled to vote thereon.
ARTICLE III
CAPITAL STOCK
Section 1. Certificates of Stock. Certificates of stock shall be in such form
as shall be approved by the Board, provided that each certificate shall when
issued state upon the face thereof (a) that the Bank is a corporation organized
under the laws of the State of New York; (b) the name of the person to whom the
certificate is issued; (c) the number, class and series, if any, which the
certificate represents; and (d) the par value of each share represented by the
certificate. Each certificate shall further state that the Bank will furnish to
any stockholder upon request and without charge a statement of the rights and
preferences of shares of each class or series of stock, or shall set forth such
statement on the certificate itself. The certificates shall be numbered in the
order of their issue, and shall be signed by the Chairman of the Board or the
President or any Vice Chairman or any Vice President and the Secretary or any
Assistant Secretary, and the seal of the Bank or a facsimile thereof shall be
impressed, affixed or reproduced thereon.
Section 2. Registration and Transfer of Shares. The name of each person owning
a share of the capital stock of the Bank shall be entered on the books of the
Bank together with the number of shares held by him or her, the numbers of the
certificates covering such shares and the dates of issue of such certificates.
The shares of stock of the Bank shall be transferable on the books of the Bank
by the holders thereof in person, or by their duly authorized attorneys or
legal representatives, on surrender and cancellation of certificates for a like
number of shares, accompanied by an assignment or power of transfer endorsed
thereon or attached thereto, duly executed, with such proof of the authenticity
of the signature as the Bank or its agents may reasonably require and with
proper evidence of payment of all applicable transfer taxes. A record shall be
made of each transfer.
Amended March 28, 1994 3
<PAGE>
Section 3. Lost, Destroyed and Mutilated Certificates. The holder of any stock
of the Bank shall immediately notify the Bank of any loss, theft, destruction
or mutilation of the certificates therefor. The Bank may issue a new
certificate of stock in the place of any certificate theretofore issued by it
alleged to have been lost, stolen or destroyed, and the Board may, in its
discretion, require the owner of the lost, stolen or destroyed certificate, or
his or her legal representatives, to give the Bank a bond, in such sum not
exceeding double the value of the stock and with such surety or sureties as
they may require, to indemnify it against any claim that may be made against it
by reason of the issue of such new certificate and against all other liability
in the premises, or may refer such owner to such remedy or remedies as he or
she may have under the laws of the State of New York.
Section 4. Holder of Record. The Bank shall be entitled to treat the holder of
record of any share or shares of stock as the holder thereof in fact and shall
not be bound to recognize any equitable or other claim to or interest in such
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise expressly provided by law.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. Responsibilities; Number of Directors. The affairs of the Bank
shall be managed and directed by a Board of Directors. The Board shall consist
of not less than seven (7) nor more than thirty (30) directors. Within the
foregoing limits, the number of directors shall be determined by resolution of
the Board. Until otherwise provided by the Board, effective April 26, 1994, the
number of directors shall be thirteen (13).
Section 2. Election. At each annual meeting of stockholders, directors shall
be elected to serve until the next following annual meeting of stockholders and
until their successors shall be elected and shall qualify.
Section 3. Qualification. Each director shall be at least 25 years of age and
at least one-half of the directors shall be citizens of the United States. Not
more than one-third of the total number of directors may be officers of the
Bank or its subsidiaries or its parent or its subsidiaries.
Section 4. Mandatory Retirement. No person who is seventy (70) years of age or
more shall be eligible for election as a director. No person shall continue to
serve as a director beyond the next annual meeting of stockholders of the Bank
following such person's attainment of seventy (70) years of age.
Amended March 28, 1994
4
<PAGE>
Section 5. Regular and Annual Meetings. Regular meetings of the Board shall be
held, without notice other than these By-Laws, on the fourth (4th) Monday of
each month, at 6350 Court Street Road, Syracuse, New York, at 11:00 A.M., or at
such other time or place as the Board may direct; provided, however, that a
regular monthly meeting of the Board may be cancelled or rescheduled by the
Chairman of the Board to another day within the same month, not more than seven
days prior to nor more than seven days subsequent to the regularly scheduled
meeting; and provided further that at least ten (10) regular meetings are held
in each calendar year and at least two (2) regular meetings are held during any
three (3) consecutive calendar months. At least two (2) days notice of any
rescheduled regular meeting shall be given to each director if given in person
or by telephone, telefacsimile or telegraph. Five (5) days notice of the
rescheduled meeting is required if notice is given by mail. Such notice shall
be deemed to be given when deposited in the U.S. Mail addressed to the director
at such address as the director shall have furnished in writing to the
Secretary of the Bank, with postage thereon prepaid if mailed, when transmitted
by telefacsimile equipment if sent by telefacsimile or when delivered to the
telegraph company if sent by telegram. An annual meeting for the election of
officers shall be held each year within twenty-five (25) days after the annual
meeting of the stockholders, at such time and place as the Board shall
designate by resolution.
Section 6. Special Meetings. Special meetings of the Board, for any purpose,
may be called at any time by or at the request of the Chairman of the Board.
Special meetings of the Board may also be convened upon the written request of
at least three-fourths of the entire Board. The persons authorized to call
special meetings of the Board may fix any place, within or without the Bank's
regular business area, as the place for holding any special meeting of the
Board called by such persons.
Section 7. Notice of Special Meetings. At least two (2) days notice of special
meetings shall be given to each director if given in person or by telephone,
telefacsimile or telegraph. Five (5) days notice of special meetings is
required if notice is given by mail. The object of the special meeting need not
be stated in the notice. Such notice shall be deemed to be given when deposited
in the U.S. mail so addressed, with postage thereon prepaid if mailed, when
transmitted by telefacsimile equipment if sent by telefacsimile or when
delivered to the telegraph company if sent by telegram.
Section 8. Waiver of Notice. Notice of a rescheduled regular or special meeting
need not be given to any director who submits a signed waiver of notice,
whether before or after the meeting. The attendance of a director at a special
meeting or rescheduled regular meeting shall constitute a waiver of notice of
such meeting, except where a director attends the meeting for the
Amended March 28, 1994 5
<PAGE>
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
Section 9. Presence at Meetings by Conference Telephone. Any member of the
Board or of any committee thereof may participate in a meeting of the Board or
of such committee as the case may be by means of a conference telephone or
similar communications equipment allowing all persons participating in the
meeting to hear each other at the same time. Participation in a meeting by such
means shall constitute presence at the meeting.
Section 10. Quorum and Voting Requirements. A quorum at any meeting of the
Board shall consist of a majority of the directors then in office or such
greater number as shall be required by law. If less than a required quorum is
present, the majority of those directors present may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a
quorum shall be represented, any business may be transacted which might have
been transacted at the meeting as originally notified. Except as otherwise
required by law or as otherwise provided herein or in the Organization
Certificate, all matters shall be determined by a majority vote of those
present at the time of the vote, if a quorum is present at such time.
Section 11. Compensation. From time to time, as the Board deems necessary, the
Board may set its compensation and provide for reasonable expenses for its
members.
Section 12. Removal. Notwithstanding any other provision of these By-Laws, any
director or the entire Board of the Bank may be removed at any time, with or
without cause, by the affirmative vote of the holders of record of not less
than three-fourths of the outstanding shares of capital stock of the Bank
entitled to vote generally in the election of directors at a meeting of the
stockholders called for that purpose.
Section 13. Advisory Boards. From time to time, as the Board deems necessary,
the Board may appoint an Advisory Board or Advisory Boards, to assist the Board
in the development of business in designated geographic areas serviced by a
branch or branches of the Bank and to assist the Board in such manner as may be
permitted by law or by these By-Laws. Any resolution establishing an Advisory
Board shall set forth the geographic area in which such Advisory Board is to
function, the number of members of such Advisory Board, the term of office of
the members, the Chairman, and the compensation (which shall be in the form of
fees for attendance at meetings) to be received for services by the members and
the Chairman of such Advisory Board. The compensation paid each member of the
Advisory Board may not be greater than the fee paid to directors of the Bank
for their attendance at meetings of the Board of Directors of the Bank. The
Chairman of the Advisory Board may receive a reasonably higher fee for each
meeting attended
Amended March 28, 1994 6
<PAGE>
than that provided for other members of the Advisory Board.
ARTICLE V
COMMITTEES
Section 1. Committees. At the annual meeting of the Board or as soon
thereafter as may be convenient, the Board shall elect from their own number
the Executive Committee, the Examining and Audit Committee, and the Trust
Committee. From time to time, as the Board deems necessary, the Board may
appoint such other committees as it shall determine and designate it as either
a standing committee or an ad hoc committee. The Board may at any time appoint
a director to fill any vacancy on any committee of the Board.
Section 2. Executive Committee. The Executive Committee shall consist of not
more than eight and not less than five regular members and shall include the
Chairman of the Board and President. The Board may also elect alternate members
who, in the order designated by the Board, may act with the powers of regular
members in the absence or disability of a regular member. A quorum shall
consist of the Chairman of the Board or his designate and three other members
including regular members and alternate members empowered to act as regular
members. The Executive Committee, when the Board is not in session, may
exercise all such powers of the Board as may be permitted by law. It shall have
the power to direct the officers of the Bank in the general investment policy
and general lending policy to be followed and shall also have the power to give
specific directions, within the Board-prescribed authority limits, for loan or
investment policy(ies) regarding the purchase, sale or exchange of loan
collateral or any security or securities, including real estate and mortgages,
and to authorize any officer or employee to do whatever may be necessary and
proper to complete any purchase, sale or exchange of securities or other
investment.
Section 3. Examining and Audit Committee. The Audit Committee shall consist
of not less than ___ regular members. The Board may also elect alternate
members who, in the order designated by the Board, may act with the powers of
regular members in the absence or disability of a regular member. No regular or
alternate member of the Audit Committee shall be an officer or salaried
employee of the Bank or an attorney who receives any fee, compensation or any
other form of emolument for legal services rendered to the Bank. A quorum shall
consist of a majority of the authorized number of regular members of the
committee. The Audit Committee shall conduct an annual examination of the
Bank's records and affairs in accordance with the provisions of the New York
Banking Law and report thereon to the Board and the Superintendent of Banks, as
required. The Audit Committee shall also make, or cause to be
Amended March 28, 1994
7
<PAGE>
made, such other examinations as it may deem advisable or whenever so directed
by the Board and shall report the results of any such examination to the Board
at any regular or special meeting called for such purpose. The Audit Committee
shall receive, review and approve the Auditor's annual audit program and
monitor its performance. It shall also receive the Auditor's periodic reports
and report at least annually to the Board as to the adequacy of the internal
audit function.
Section 4. Trust Committee. The Trust Committee shall consist of such number
of directors, not less than four, as the Board from time to time shall appoint
and shall include the senior officer in charge of the fiduciary division and
may include another trust officer whose rank is at least Vice President of the
Trust Department, the Chairman of the Board and the President. The Board may
also elect alternate members who, in the order designated by the Board, may act
with the powers of regular members in the absence or disability of a regular
member. A quorum shall consist of a majority of the number of authorized
regular members of the committee.
The Trust Committee shall meet at least once each month or as often as the
business of the Trust Department shall require. The Trust Committee shall
select one of its members as Chairman. Special meetings shall be held at any
time on call of the Chairman of the Trust Committee, the Chairman of the Board
or the President. Any vacancy shall be filled by the Chairman of the Board or
the President subject to the approval by the Board at its next regular meeting.
The officer in charge of the Trust Department shall be the Secretary of the
Trust Committee and shall keep and preserve minutes of its proceedings. The
Committee shall, at each regular meeting of the Board, submit a report in
writing which the Board shall approve or disapprove, and such action shall be
recorded in the minutes of the Board meeting.
The Trust Committee shall have general supervisory power over the Trust
Department and all fiduciary and other matters committed to it. The acceptance
of and the closing out and relinquishment of all trusts and other fiduciary
matters shall be approved or ratified by the Trust Committee. All investments
of trust funds and all other funds held in any fiduciary capacity shall be
made, retained or disposed of only under the supervision of the Trust
Committee. The Trust Committee shall, at least once during each period of
twelve months, have reviewed all the assets held in and for each fiduciary
account to determine their safety and current value and the advisability of
retaining or disposing of them; and a report of all such review, together with
the action taken as a result thereof, shall be noted in the minutes of the
Trust Committee.
Amended March 28, 1994 8
<PAGE>
The Trust Committee shall have authority to act on any matter relating to the
Trust Department (the "Department") of the Bank which can lawfully be delegated
by the Board to a committee for final action. The Trust Committee's functions
shall include the review and approval of policies governing the affairs of the
Department, the investment and disposition of property held in a fiduciary
capacity and the direction and review of all actions of all officers, employees
and committees utilized by the Bank in the exercise of its trust fiduciary
powers. The Board may appoint additional committees which may include officers
of the Bank who are not members of the Board to direct certain aspects of the
Trust Department, which committees shall regularly report their activities to
the Trust Committee. The Trust Committee shall report to the Board of Directors
on its activities.
Section 5. Meetings of Committees. Regular meetings of any committee may be
held without notice at such times and places as the committee or the Board may
fix from time to time by resolution. Additional meetings may be held at the
call of the Chairman of the Board, the President or the chairman of the
committee. Notice of additional meetings may be given by mail, telephone or
otherwise. Notice of an additional meeting need not be given to any director
who submits a signed waiver of notice, whether before or after the meeting. The
attendance of a director at an additional meeting shall constitute a waiver of
notice of such meeting, except where a director attends the additional meeting
for the purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Each committee shall keep minutes
of each meeting which shall be presented at the next meeting of the Committee.
Section 6. Term; Removal. Each member of a committee shall serve for the term
specified by the Board and until his or her successor has been elected. Unless
otherwise specified herein, any member of any committee may be removed at any
regular meeting of the Board by an affirmative vote of a majority of the Board.
Section 7. Ex-Officio Committee Members. Ex-officio members of a committee
shall be counted in the determination of a quorum and shall have the right to
vote.
ARTICLE VI
OFFICERS
Section 1. Number. The Board, at its annual meeting, shall elect a Chairman
of the Board, one or more Vice Presidents, a Treasurer, a Secretary, one or
more Trust Officers and an Auditor and may elect one or more Vice Chairmen of
the Board and such other officers as they deem necessary. Any two or more
offices may be held by the same person, except the offices of President and
Amended March 28, 1994 9
<PAGE>
Secretary may not be held by the same person and the Auditor may not hold any
other office. The Board of Directors shall annually designate the Executive
Officers of the Bank at its annual meeting and may so designate additional
individuals upon their election to an Executive position.
Section 2. Term; Removal. Each officer shall serve until his or her successor
is elected, the office is abolished, or he or she dies, resigns or is removed.
Any officer may be removed at any time with or without cause by the affirmative
vote of a majority of the Board.
Section 3. Chairman of the Board. The Chairman of the Board shall be the Chief
Executive Officer of the Bank and shall have general charge and supervision of
its affairs, subject to the direction of the Board. He or she shall preside at
all annual and special meetings of the stockholders and any adjournments
thereof, at all meetings of the Board and, unless otherwise determined by
resolution of a majority of the Board, at all meetings of the Executive
Committee. He or she shall be a member, ex-officio, of each standing committee
of the Board except the Examining and Audit Committee and except as may be
otherwise provided or prescribed by law, these By-Laws or resolution of the
Board. He or she shall serve in such other capacities and perform such other
functions as the Board may determine. In the event of the absence or disability
of the Chairman, the Chairman of the Board may designate another member of the
Board of Directors to act in his stead as Chairman of the Executive Committee.
Section 4. Vice Chairman. There may be such number of Vice Chairmen as may be
determined by the Board, who shall perform such duties as may be prescribed by
the Chairman of the Board. Vice Chairmen may be assigned priorities in status,
and any one may be designated by the Chairman of the Board or the Board to
perform such duties and exercise such powers of the Chairman of the Board in
the absence or disability of the Chairman.
Section 5. President. The President shall be the Chief Operating Officer of the
Bank and shall assist the Chairman of the Board in the general charge and
supervision of the Bank's affairs, subject to the direction of the Board and
the Chairman of the Board. He or she shall be a member, ex-officio, of each
standing committee of the Board except any Examining and Audit Committee, the
Trust Committee or any Compensation Committee that is appointed by the Board
and except as may be otherwise provided or prescribed by law, these By-Laws or
resolution of the Board. He or she shall serve in such other capacities and
perform such other functions as the Board or Chairman of the Board may
determine.
Section 6. Vice Presidents. There may be such number of Vice Presidents as may
be determined by the Board, who shall perform such duties as may be prescribed
by the Board and such other duties
Amended March 28, 1994 10
<PAGE>
as may be prescribed by the Chairman of the Board or the President. The Vice
Presidents may be assigned priorities in status and one or more of them may be
designated as Executive Vice Presidents, Senior Vice Presidents or
Administrative Vice Presidents.
Section 7. Chief Financial Officer. The Chief Financial Officer shall have the
care and custody of the corporate capital funds and other valuable effects, and
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Bank, and shall deposit all money and other valuable effects
in the name and to the credit of the Bank in such depositories as may be
designated by the Board of Directors. The Chief Financial Officer shall
disburse the funds of the Bank under the direction of the Chairman of the
Board, the President or the Board, taking proper vouchers for such
disbursements, and render to the Chairman of the Board, the President or any
director who may require it, an account of all his or her transactions as Chief
Financial Officer and of the financial condition of the Bank. The Chief
Financial Officer shall also perform such other duties as are required by these
By-Laws, as may be directed by the Chairman of the Board, the President or as
the Board may from time to time prescribe.
Section 8. Secretary. The Secretary shall attend all meetings of the Board and
of the shareholders, shall record, or cause to be recorded, all votes and
minutes of all proceedings in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, notice of all meetings of shareholders and
meetings of the Board of Directors as required by statute or by these By-Laws.
The Secretary shall keep, or cause to be kept, accurate and complete records of
the ownership of shares of the Bank. The Secretary shall be the custodian of
the seal of the Bank, if any, and shall affix it to any document requiring it
when authorized by the Board to do so and, when so affixed, it may be attested
by his or her signature. The Secretary shall also perform such other duties as
are required by these By-Laws, as may be directed by the Chairman of the Board,
the President or as the Board may from time to time prescribe.
Section 9. Auditor. The Auditor shall be appointed by, and shall be directly
responsible to, the Board and, unless otherwise determined by resolution of the
Board, shall report through the Examining and Audit Committee thereof. The
Auditor shall have the full authority to audit, examine and investigate any and
all accounts, records and transactions of any department, officer, employee or
agent of the Bank, and shall ascertain whether the accounting and related
records are being maintained suitably for purposes of audit and internal
control, and whether the procedures, practices and rules and regulations of the
Bank, established for the proper conduct of the Bank's business and the
safeguarding of its assets, are being properly followed. Neither the Auditor nor
any assistant thereto shall have any operational powers or
Amended March 28, 1994 11
<PAGE>
responsibilities with respect to any department of the Bank, other than the
Auditing Department. At least once in each year, or at such other times as the
Chairman of the Examining and Audit Committee deems necessary, the Auditor
shall report to the Examining and Audit Committee the results of internal
audits, examinations and investigations and make such recommendations as deemed
necessary.
Section 10. Trust Officers. There shall be such number of Trust Officers as
shall be determined by the Board, who shall perform such duties as the Chairman
of the Board or Board of Directors may prescribe, and shall have and exercise
such powers as are conferred on a trust officer by the laws of the State of New
York. The Trust Officers may be assigned priorities in status and one or more
of them may be designated as Senior Trust Officers or Assistant Trust Officers.
Section 11. Other Officers. Other officers shall perform such duties as may be
prescribed by the Board, and such other duties as may be prescribed by the
Chairman of the Board or the President.
ARTICLE VII
DIVIDENDS
The Board of Directors shall have power, subject to the requirements of the
Organization Certificate, the Banking Law and the regulations of the New York
Banking Board, to declare and pay dividends out of surplus or net profits of
the Bank except where there is any impairment of capital stock, and to pay such
dividends to the stockholders, and to fix the date or dates for the payment of
such dividends.
ARTICLE VIII
INDEMNIFICATION
Section 1. Right to Indemnification. The Bank shall, to the maximum extent
authorized or permitted and in the manner provided by Article XV of the New
York Banking Law, indemnify any person who is made, or threatened to be made, a
party to any action or proceeding, whether civil, criminal or administrative,
by reason of the fact that such person, or such person's testator or intestate,
is or was a trustee, director or officer of the Bank or one of the Bank's
subsidiary corporations, or any predecessor of the Bank, or serves or served
any other corporation, or any partnership, association, joint venture, trust,
employee benefit plan, conference or other group or enterprise in any capacity
at the request of the Bank or one of the Bank's subsidiary corporations, or any
predecessor of the Bank, against judgments, fines, amounts paid in settlement
and reasonable expenses, including attorneys'
Amended March 28, 1994 12
<PAGE>
fees actually and reasonably incurred, and the Bank shall advance any related
expense in full. Employees or agents of the Bank may be similarly indemnified.
Such right of the indemnification and advancement shall be in addition to and
not exclusive of any other rights or remedies to which such person may be or
become entitled under any statue, insurance policy, agreement, by-law or
otherwise.
Section 2. Accrual of Right to Indemnification. In addition to the Bank's
obligation to indemnify under Article VIII, Section 1 of these By-laws, the
Bank's obligation to indemnify and any person's right to indemnification, under
this Article VIII shall accrue as of the time of the accrual of the cause of
action asserted in the threatened or pending action, suit, or proceeding, and no
subsequent change in the Organization Certificate or the By-laws of the Bank
shall have any effect on the Bank's obligation to indemnify or a person's right
to indemnification. The provisions of this Article VIII shall be deemed to be a
contract between the Bank and each director, trustee, officer, and employee of
the Bank who serves in such capacity at any time while this Article VIII is in
effect, and any subsequent change of this Article VIII shall not affect the
rights or obligations then existing with respect to any state of facts then or
theretofore existing as it relates to any action or proceeding theretofore or
thereafter brought or threatened based in whole or in part upon any such state
of facts.
Section 3. Individual Indemnification Agreements. In addition to the Bank's
obligation to indemnify under Article VIII, Sections 1 and 2 of these By-laws,
the Board may also, to the maximum extent permitted by law, in its discretion,
approve agreements between the Bank and one or more directors, officers or
employees of the Bank under which the Bank would indemnify such directors,
officers and employees in the event that any such person is made, or threatened
to be made, a party to any action or proceeding, whether civil, criminal or
administrative, by reason of the fact that such person is or was a trustee,
director, officer, or employee of the Bank or one of the Bank's subsidiary
corporations, or any predecessor of the Bank, or serves or served any other
corporation, or any partnership, association, joint venture, trust, employee
benefit plan, conference or other group or enterprise in any capacity at the
request of the Bank or one of the Bank's subsidiary corporations, or any
predecessor of the Bank, against judgments, fines, amounts paid in settlement
and reasonable expenses, including attorney's fees actually and reasonably
incurred.
Section 4. Insurance. The Bank may, but shall not be obliged to, purchase and
maintain insurance on behalf of any person who is or was a director, trustee or
officer of the Bank or is or was serving at the request of the Bank as a
director, trustee or officer of another corporation of any type or kind,
domestic or foreign, against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether or not
the Bank would have the power to indemnify him against such
Amended March 28, 1994 13
<PAGE>
liability under the provisions of this Article VIII.
Section 5. Subsequent Amendment and Subsequent Legislation. Neither the
amendment, termination or repeal of this Article VIII or of relevant provisions
of the Banking Law of the State of New York or any other applicable laws, nor
the adoption of any provision of the Organization Certificate or the By-laws of
the Bank or of any statute inconsistent with this Article VIII shall eliminate,
affect or diminish in any way the rights of any director, officer, employee or
agent of the Bank to indemnification under the provisions of this Article VIII
with respect to any action, suit or proceeding arising out of, or relating to,
any actions, transactions or facts occurring prior to the final adoption of
such amendment, termination or repeal.
If the Banking Law of the State of New York is amended to expand further the
indemnification permitted to directors, officers, employees or agents of the
Bank, then the Bank shall indemnify such persons to the fullest extent
permitted by the Banking Law of the State of New York as so amended.
ARTICLE IX
TRUST POWERS OF OFFICERS
Whenever the Bank, acting in its fiduciary capacity, is appointed executor,
administrator, guardian, assignee, depositary, or trustee, the Chairman of the
Board and Chief Executive Officer, the Senior Trust Officer, or the Secretary,
or the Trust Officers, or the assistant trust officers shall take and subscribe
all oaths, and make all certificates or affidavits on behalf of the Bank as may
be required by law, or any order of any court, or required by an agreement
relative to the administration and settlement of estates, guardianships,
assignments, receiverships, or trusts, or trust property of any description.
ARTICLE X
MISCELLANEOUS
Section 1. Officers' Authority. Such officers of the Bank as may be
designated by the Board or the Executive Committee shall have power to execute
for and in the name of the Bank, with or without its corporate seal, all such
documents as may be necessary or proper to be executed in and about the
business of the Bank.
Section 2. Bank Funds. Except as otherwise authorized by the Board, all
moneys of the Bank shall be deposited and invested in the name of the Bank.
Amended March 28, 1994
14
<PAGE>
ARTICLE XI
ACUTE EMERGENCIES
In the event of an acute emergency as defined in Article Seven of the New York
State Defense Emergency Act (as enacted by Chapter 654 of the Laws of 1961 and
as the same may be amended from time to time) the following special provisions
of these By-Laws apply:
1. The directors and the officers shall have the additional powers
prescribed by the Defense Emergency Act.
2. Meetings of the Board may be called by the Chairman of the Board, the
President, any two directors, or, in the event of the inability of the Chairman
or the President to act, by any officer designated by resolution of the Board.
Such meetings may also be called as authorized by the Defense Emergency Act.
3. A preparedness program for the continued operation of the Bank in the
event of an emergency shall be prepared and maintained by the officers, subject
to the approval of the Board. The plan shall be reviewed periodically by the
officers and directors.
4. The Board shall provide by resolution for the implementation of these
By-Laws and of the preparedness plan.
ARTICLE XII
AMENDMENTS
These By-Laws may be amended at any special meeting of the Board called for
such purpose or any regular meeting of the Board by the vote of the majority of
the Board; provided, however, that any by-law made by the Board may be altered,
amended, rescinded, or repealed by the holders of shares of capital stock
entitled to vote thereon at any annual meeting or at any special meeting called
for that purpose. Notwithstanding the foregoing, any provision of these By-laws
which contains a super-majority voting requirement shall only be altered,
amended, rescinded, or repealed by a vote of the Board or holders of capital
stock entitled to vote thereon that is not less than the super-majority
specified in such provision.
Amended March 28, 1994
15
<PAGE>
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Federal Financial Institutions Examination Council Expires March 31, 1999
- -------------------------------------------------------------------------------------------------------------------------
1
[LOGO] Please Refer to Page i,
Table of Contents, for
the required disclosure
of estimated burden
- -------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC OFFICES ONLY AND
TOTAL ASSETS OF $300 MILLION OR MORE - FFIEC 032
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1996 (960630)
-----------
(RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State This report form is to be filed by banks with
member banks); 12 U.S.C. Section 1817 (State nonmember domestic offices only. Banks with branches and
banks); and 12 U.S.C. Section 161 (National banks). consolidated subsidiaries in U.S. territories and
possessions, Edge or Agreement subsidiaries, foreign
branches, consolidated foreign subsidiaries, or
International Banking Facilities must file FFIEC 031.
- -------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by The Reports of Condition and Income are to be
an authorized officer and the Report of Condition must be prepared in accordance with Federal Regulatory
attested to by not less than two directors (trustees) for authority instructions. NOTE: These instructions may
State nonmember banks and three directors for State member in some cases differ from generally accepted
and National banks. accounting principles.
I, Robert J. Berger, Sr. V.P. Treas & CFO We, the undersigned directors (trustees), attest to
-------------------------------------------------------- the correctness of this Report of Condition
Name and Title of Officer Authorized to Sign Report (including the supporting schedules) and declare that
it has been examined by us and to the best of our
of the named bank do hereby declare that these Reports of knowledge and belief has been prepared in conformance
Condition and Income (including the supporting schedules) with the instructions issued by the appropriate
have been prepared in conformance with the instructions Federal regulatory authority and is true and correct.
issued by the appropriate Federal regulatory authority and
are true to the best of my knowledge and belief. /s/ Robert J. Bennett
-----------------------------------------------------
Director Robert J. Bennett
/s/ Robert J. Berger
- ------------------------------------------------------------- /s/ Joseph N. Walsh
Signature of Officer Authorized to Sign Report -----------------------------------------------------
Director Joseph N. Walsh
July 30, 1994 /s/ Russell A. King
- ------------------------------------------------------------- -----------------------------------------------------
Date of Signature Director Russell A. King
- -------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to the NATIONAL BANKS: Return the original only in the
appropriate Federal Reserve District Bank. special return address envelope provided. If express
mail is used in lieu of the special return address
STATE NONMEMBER BANKS: Return the original only in the envelope, return the original only to the FDIC, c/o
special return address envelope provided. If express mail is Quality Data Systems, 2127 Espey Court, Suite 204,
used in lieu of the special return address envelope, return Crofton, MD 21114.
the original only to the FDIC, c/o Quality Data Systems,
2127 Espey Court, Suite 204, Crofton, MD 21114.
- -------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number 06-30-96
----------- Banks should affix the address label in this space.
(RCRI 9050)
ONBANK & TRUST CO.
-----------------------------------------------------
Legal Title of Bank (TEXT 9010)
101 SOUTH SALINA STREET
-----------------------------------------------------
City (TEXT 9130)
SYRACUSE, NY 13221
-----------------------------------------------------
State Abbrev. (TEXT 9200) ZIP Code (TEXT 9220)
Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
FFIEC 032
Page i
2
Consolidated Reports of Condition and Income for
A Bank With Domestic Offices Only and Total Assets of $300 Million or More
- ---------------------------------------------------------------------------------------------------------------------
TABLE OF CONTENTS
SIGNATURE PAGE COVER REPORT OF CONDITION
REPORT OF INCOME
Schedule RI-Income Statement . . . . . . . . . . RI-1, 2, 3 Schedule RC-Balance Sheet . . . . . . . . . . RC-1, 2
Schedule RI-A-Changes in Equity Capital . . . . . . . . RI-3 Schedule RC-A-Cash and Balances Due
Schedule RI-B-Charge-offs and Recoveries and From Depository Institutions . . . . . . . . RC-3
Changes in Allowance for Loan and Lease Schedule RC-B-Securities . . . . . . . . RC-3, 4, 5
Losses . . . . . . . . . . . . . . . . . . . . . RI-4, 5 Schedule RC-C-Loans and Lease Financing
Schedule RI-C--Applicable Income Taxes by Receivables:
Taxing Authority . . . . . . . . . . . . . . . . . . RI-5 Part I. Loans and Leases . . . . . . . . . RC-6, 7
Schedule RI-E--Explanations . . . . . . . . . . . . RI-5, 6 Part II. Loans to Small Businesses and
Small Farms (including in the forms for
June 30 only) . . . . . . . . . . . . . RC-7a, 7b
Schedule RC-D-Trading Assets and Liabilities
(to be completed only by selected banks) . . RC-8
Schedule RC-E-Deposit Liabilities . . . . . RC-9, 10
Disclosure of Estimated Burden Schedule RC-F-Other Assets . . . . . . . . . . RC-11
Schedule RC-G-Other Liabilities . . . . . . . . RC-11
The estimated average burden associated with this Schedule RC-K-Quarterly Averages . . . . . . . RC-12
information collection is 30.7 hours per respondent and is Schedule RC-L-Off Balance Sheet
estimated to vary from 15 to 200 hours per response, Items . . . . . . . . . . . . . . . . RC-12, 14, 15
depending on individual circumstances. Burden estimates Schedule RC-M-Memoranda . . . . . . . . . . RC-16, 17
include the time for reviewing instructions, gathering and Schedule RC-N-Past Due and Nonaccrual
maintaining data in the required form, and completing the Loans, Leases, and Other Assets . . . . . RC-18, 19
information collection, but exclude the time for compiling Schedule RC-O-Other Data for Deposit
and maintaining business records in the normal course of a Insurance Assessments . . . . . . . . . . RC-20, 21
respondent's activities. Comments concerning the accuracy of Optional narrative Statement Concerning the
this burden estimate and suggestions for reducing this Amounts Reported in the Reports
burden should be directed to the Office of Information and of Condition and Income . . . . . . . . . . . RC-24
Regulatory Affairs, Office of Management and Budget,
Washington, D.C. 20503, and to one of the following: SPECIAL REPORT (TO BE COMPLETED BY ALL BANKS)
Secretary Schedule RC-J-Repricing Opportunities (Sent only to
Board of Governors of the Federal Reserve System and to be completed only by savings banks)
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
For information or assistance, national and state nonmember banks should contact the FDIC's Call Reports Analysis
Unit, 550 17th Street, NW, Washington D.C. 20429, toll free on (800) 688-FDIC (3342), Monday through Friday between
8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their Federal Reserve District Bank.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RI-1
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
3
Transit Number: 11300106
</TABLE>
Consolidated Report of Income
For the period January 1, 1996 -- June 30, 1996
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
Schedule RI -- Income Statement
<TABLE>
<CAPTION>
I380 {-
Dollar Amounts in Thousands
----------------------------------------------------------------------------------------------------------------------
RIAD
----
<S> <C> <C> <C>
Interest income:
a. Interest and fee income on loans:
(1) Loans secured by real estate...................................................... 4011 36,152 1.a.1
(2) Loans to finance agricultural production and other loans to farmers............... 4024 174 1.a.2
(3) Commercial and industrial loans................................................... 4012 11,??1 1.a.3
(4) Loans to individuals for household, family and other personal expenditures;
(a) Credit cards and related plans................................................ 4054 1,457 1.a.4a
(b) Other......................................................................... 4055 6,581 1.a.4b
(5) Loans to foreign governments and official institutions............................ 4056 0 1.a.5
(6) Obligations (other than securities and leases) of states and political subdivisions
in the U.S.:
(a) Taxable obligations........................................................... 4503 0 1.a.6a
(b) Tax-exempt obligations........................................................ 5404 131 1.a.6b
(7) All other loans................................................................... 4058 74 1.a.7
b. Income from lease financing receivables:
(1) Taxable leases.................................................................... 4505 118 1.b.1
(2) Tax-exempt leases................................................................. 4307 0 1.b.2
c. Interest income on balances due from depository institutions(1)....................... 4115 95 1.c
d. Interest and dividend income on securities:
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations... 4027 40,319 1.d.1
(2) Securities issued by states and political subdivisions in the U.S.:
(a) Taxable securities............................................................ 4506 228 1.d.2a
(b) Tax-exempt securities......................................................... 4507 1,369 1.d.2b
(3) Other domestic debt securities.................................................... 3657 14,434 1.d.3
(4) Foreign debt securities........................................................... 3658 1 1.d.4
(5) Equity securities (including investments in mutual funds)......................... 3659 1,115 1.d.5
e. Interest income from assets held in trading accounts.................................. 4069 0 1.e
f. Interest income on federal funds sold and securities purchased under agreements to
resell................................................................................ 4020 1,176 1.f
g. Total interest income (sum of items 1.a through 1.f).................................. 4107 115,336 1.g
</TABLE>
- ---------------
(1) Includes interest income on time certificates of deposit not held for
trading.
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RI-2
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
4
Transit Number: 11300106
</TABLE>
Schedule RI -- Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------------
RIAD Year-to-date
----
<S> <C> <C> <C> <C>
2. Interest expense:
a. Interest on deposits:
(1) Transaction accounts (NOW accounts, ATS accounts, and telephone and
preauthorized transfer accounts)......................................... 4508 969 2.a.1
(2) Nontransaction accounts:
(a) Money market deposit accounts (MMDAs).................................... 4509 2,411 2.a.2a
(b) Other savings deposits................................................... 4511 7,813 2.a.2b
(c) Time certificates of deposit of $100,000 or more......................... 4174 18,730 2.a.2c
(d) All other time deposits.................................................. 4512 20,894 2.a.2d
b. Expense of federal funds purchased and securities sold under agreements to
repurchase................................................................... 4180 3,756 2.b
c. Interest on demand notes issued to the U.S. Treasury and on other borrowed
money........................................................................ 4185 11,751 2.c
d. Interest on mortgage indebtedness and obligations under capitalized leases... 4072 27 2.d
e. Interest on subordinated notes and debentures................................ 4200 0 2.e
f. Total interest expense (sum of Items 2.a through 2.e)........................ 4073 66,352 2.f
3. Net interest income (item 1.g minus 2.f).......................................... 4074 49,985 3.
4. Provisions:
a. Provision for loan and lease losses.......................................... 4230 3,150 4.a
b. Provision for allocated transfer risk........................................ 4243 0 4.b
5. Noninterest income:
a. Income from fiduciary activities............................................. 4070 1,570 5.a
b. Service charges on deposit accounts.......................................... 4080 3,847 5.b
c. Trading gains (losses) and fees from foreign exchange transactions........... 4075 0 5.c
d. Other foreign transaction gains (losses)..................................... 4220 (314) 5.d
e. Other gains (losses) and fees from trading assets and liabilities............ 4076 2 5.e
f. Other noninterest income:
(1) Other fee income......................................................... 5407 2,932 5.f.1
(2) All other noninterest income*............................................ 5408 4,956 5.f.2
g. Total noninterest income (sum of items 5.a through 5.f)...................... 4079 13,003 5.g
6. a. Realized gains (losses) on held-to-maturity securities....................... 3521 0 6.a
b. Realized gains (losses) on available-for-sale securities..................... 3196 1,942 6.b
7. Noninterest expense:
a. Salaries and employee benefits............................................... 4135 15,034 7.a
b. Expenses of premises and fixed assets (net of rental income) (excluding
salaries and employee benefits and mortgage interest)........................ 4217 6,171 7.b
c. Other noninterest expense*................................................... 4092 16,000 7.c
d. Total noninterest expense (sum of items 7.a through 7.c)..................... 4093 37,265 7.d
8. Income (loss) before income taxes and extraordinary items and other adjustments
(item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d)..................... 4301 23,515 8.
9. Applicable income taxes (on item 8)............................................... 4302 9,312 9.
10. Income (loss) before extraordinary items and other adjustments (item 8 minus 9)... 4300 15,203 10.
11. Extraordinary items and other adjustments:
a. Extraordinary items and other adjustments, gross of income taxes*............ 4310 0 11.a
b. Applicable income taxes (on item 11.a)*...................................... 4315 0 11.b
c. Extraordinary items and other adjustments, net of income taxes (item 11.a
minus 11.b).................................................................. 4320 0 11.c
12. Net income (loss) (sum of items 10 and 11.c)...................................... 4340 15,203 12.
</TABLE>
- ---------------
Describe on Schedule RI-E -- Explanations.
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RI-3
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
5
Transit Number: 11300106
</TABLE>
Schedule RI -- Continued
<TABLE>
<CAPTION>
I381 {-
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------
Year-to-date
--------------------
RIAD Bil Mil Thou
---- --- --- ----
<S> <C> <C> <C>
Memoranda
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired
after August 7, 1986, that is not deductible for federal income tax purposes........ 4513 84 M.1
2. Income from the sale and servicing of mutual funds and annuities (included in
Schedule RI, item 8)................................................................ 8431 18 M.2
3. Estimated foreign tax credit included in applicable income taxes, items 9 and 11.b
above............................................................................... 4309 0 M.3
Number
------
4. Number of full-time equivalent employees on payroll at end of current period (round
to nearest whole number)............................................................ 4150 912 M.4
5.-6. Not applicable
MM DD YY
---------
7. If the reporting bank has restated its balance sheet as a result of applying push
down accounting this calendar year, report the date of the bank's acquisition....... 9106 00/00/00 M.7
RIAD
---- Year-to-date
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments)
(included in Schedule RI, items 5.c and 5.e):
a. Interest rate exposures.......................................................... 8757 (314) M.8.a
b. Foreign exchange exposures....................................................... 8758 0 M.8.b
c. Equity security and index exposures.............................................. 8759 0 M.8.c
d. Commodity and other exposures.................................................... 8760 0 M.8.d
9. Impact on income of off-balance sheet derivatives held for purposes other than
trading:
a. Net increase (decrease) to interest income....................................... 8761 0 M.9.a
b. Net (increase) decrease to interest expense...................................... 8762 56 M.9.b
b. Other (noninterest) allocations.................................................. 8763 0 M.9.c
10. Credit losses on off-balance sheet derivatives (see instructions).................. 4251 0 M.10.
</TABLE>
Schedule RI-A -- Changes in Equity Capital
Indicate decreases and losses in parentheses.
<TABLE>
<CAPTION>
I383 {-
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------
RIAD
----
<S> <C> <C> <C>
1. Total equity capital originally reported in the December 31, 1994, Reports of
Condition and Income.............................................................. 3215 230,649 1.
2. Equity capital adjustments from amended Reports of Income, net*................... 3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2).............. 3217 230,649 3.
4. Net income (loss) (must equal Schedule RI, item 12)............................... 4340 15,203 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net................ 4346 0 5.
6. Changes incident to business combinations, net.................................... 4356 0 6.
7. LESS: Cash dividends declared on preferred stock.................................. 4470 0 7.
8. LESS: Cash dividends declared on common stock..................................... 4460 15,203 8.
9. Cumulative effect of changes in accounting principles from prior years* (see
instructions for this schedule)................................................... 4411 0 9.
10. Corrections of material accounting errors from prior years* (see instructions
for this schedule)................................................................ 4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale
securities........................................................................ 8433 (2,365) 11.
12. Other transactions with parent holding company* (not included in items 5, 7, or
8 above).......................................................................... 4415 0 12
13. Total equity capital end of current period (sum of items 3 through 12) (must
equal Schedule RC, item 28)....................................................... 3210 228,487 13.
</TABLE>
- ---------------
* Describe on Schedule RI-E -- Explanations.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Onbank & Trust Company Call Date: 06/30/95 ST-BK: 36-7430 FFIEC 032
101 South Salina Street Page RI-4
Syracuse, NY 13221 Vendor ID: D CERT: 07319
6
Transit Number: 11300106
</TABLE>
Schedule RI-B -- Charge-offs and Recoveries and Changes in Allowance for Loan
and Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases
<TABLE>
<CAPTION>
I386 {-
Dollar Amount in Thousands
- ----------------------------------------------------------------------------------------------------------------------
------Calendar year-to-date------
(Column A) (Column B)
Charge-offs Recoveries
-------------- --------------
RIAD RIAD
---- ----
<S> <C> <C> <C> <C> <C>
Part I excludes charge-offs and recoveries through the located transfer
risk reserve.
1. Loans secured by real estate:
a. To U.S. addressees (domicile).................................... 4651 594 4661 345 1.a
b. To non-U.S. addressees (domicile)................................ 4652 0 4662 0 1.b
2. Loans to depository institutions and acceptances of other banks:
a. To U.S. banks and other U.S. depository institutions............. 4653 0 4663 0 2.a
b. To foreign banks................................................. 4654 0 4664 0 2.b
3. Loans to finance agricultural production and other loans to
farmers............................................................. 4655 0 4665 44 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile).................................... 4645 147 4617 172 4.a
b. To non-U.S. addressees (domicile)................................ 4646 0 4618 0 4.b
5. Loans to individuals for household, family, and other personal
expenditures:
a. Credit cards and related plans................................... 4656 357 4666 38 5.a
b. Other (includes single payment, installment, and all student
loans)........................................................... 4657 163 4667 159 5.b
6. Loans to foreign governments and official institutions.............. 4643 0 4627 0 6.
7. All other loans..................................................... 4644 0 4628 0 7.
8. Lease financing receivables:
a. Of U.S. addressees (domicile).................................... 4658 0 4668 0 8.a
b. Of non-U.S. addressees (domicile)................................ 4659 0 4669 0 8.b
9. Total (sum of items 1 through 8).................................... 4635 1,261 4605 758 9.
Memoranda
<CAPTION>
------Calendar year-to-date------
(Column A) (Column B)
Charge-offs Recoveries
-------------- --------------
RIAD RIAD
---- ----
<S> <C> <C> <C> <C> <C>
3. Not applicable.
1. Loans to finance commercial real estate, construction, and land
development activities (not secured by real estate) included in
Schedule RI-B, part I, items 4 and 7, above......................... 5409 0 5410 0 M.4
2. Loans secured by real estate (sum of Memorandum items 5.a through
5.e must equal sum of Schedule RI-B, part I, items 1.a and 1.b,
above):
a. Construction and land development................................ 3582 0 3583 12 M.5.a
b. Secured by farmland.............................................. 3584 0 3585 0 M.5.b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4 family residential
properties and extended under lines of credit................ 5411 126 5412 5 M.5.c1
(2) All other loans secured by 1-4 family residential properties. 5413 74 5414 0 M.5.c2
d. Secured by multifamily (5 or more) residential properties........ 3588 0 3589 0 M.5.d
e. Secured by nonfarm nonresidential properties..................... 3590 394 3591 340 M.5.e
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 6/30/96 ST-BK: 36-7420 FFIEC 032
101 SOUTH SALINA STREET Page RI-5
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
7
Transit Number: 11300106
</TABLE>
Schedule RI-B -- Continued
Part II. Changes in Allowance for Loan and Lease Losses
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
RIAD
----
<S> <C> <C> <C>
Balance originally reported in the December 31, 1994, Reports of Condition and Income........ 3124 21,487 1.
Recoveries (must equal part I, item 9, column 8 above)....................................... 4605 759 2.
LESS: Charge-offs (must equal part I, item 9, column A above)................................ 4635 1,261 3.
Provision for loan and lease losses (must equal Schedule RI, item 4.a)....................... 4230 3,180 4.
Adjustments * (see instructions for this schedule)........................................... 4815 0 5.
Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, item
4.b)....................................................................................... 3123 24,134 6.
</TABLE>
- --------------
Describe on Schedule RI-E -- Explanations.
Schedule RI-C -- Applicable Income Taxes by Taxing Authority
<TABLE>
<CAPTION>
I389 {-
Schedule RI-C is to be reported with the December Report of Income. Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
RIAD
----
<S> <C> <C> <C>
Federal...................................................................................... 4780 N/A 1.
State and local.............................................................................. 4790 N/A 2.
Foreign...................................................................................... 4795 N/A 3.
Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b)........... 4770 N/A 4.
Deferred portion of item 4................................................................... 4772 N/A 5.
</TABLE>
Schedule RI-E -- Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and
other adjustments in Schedule RI, and all significant items of other noninterest
income and other noninterest expense in Schedule RI. (See instructions for
details.)
<TABLE>
<CAPTION>
I395 {-
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
All other noninterest income (from Schedule RI, item 5.f.(2))
RIAD Year-to-date
----
<S> <C> <C> <C>
1. Report amounts that exceed 10% of Schedule RI, item 5.f.(2):
a. Net gains on other real estate owned............................................ 5415 0 1.a
b. Net gains on sales of loans..................................................... 5416 0 1.b
c. Net gains on sales of premises and fixed assets................................. 5417 1,673 1.c
Itemize and describe the three largest other amounts that exceed 10% of Schedule
RI, item 5.f.(2):
d. 4461: INTERCOMPANY MANAGEMENT FEES ........................................... 4461 2,958 1.d
e. 4462: ........................................................................ 4462 1.e
f. 4463: ........................................................................ 4463 1.f
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 6/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RI-6
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
8
Transit Number: 11300106
</TABLE>
Schedule RI-E -- Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------
RIAD Year-to-date
-----
<S> <C> <C> <C>
2. Other noninterest expense (from Schedule R1, item 7.c):
a. Amortization expense of intangible assets..................................... 4531 2,054 2.a
Report amounts that exceed 10% of Schedule RI, item 7.c:
b. Net losses on other real estate owned......................................... 5418 0 2.b
c. Net losses on sales of loans.................................................. 5419 0 2.c
d. Net losses on sales of premises and fixed assets.............................. 5420 0 2.d
Itemize and describe the three largest other amounts that exceed 10% of Schedule
RI, item 7.c:
TEXT RIAD
---- ----
e. 4464: DATA PROCESSING 4464 4,888 2.e
f. 4467: ........................................................................ 4467 2.f
g. 4468: ........................................................................ 4468 2.g
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and
applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe
all extraordinary items and other adjustments):
TEXT RIAD
---- ----
a. (1) 4469: ............................................ 4469 3.a.1
(2) Applicable income tax effect...................... 4486 0 3.a.2
b. (1) 4487: ............................................ 4487 3.b.1
(2) Applicable income tax effect...................... 4488 0 3.b.2
c. (1) 4489: ............................................ 4489 3.c.1
(2) Applicable income tax effect...................... 4491 0 3.c.2
4. Equity capital adjustments from amended Reports of Income (from Schedule
RI-A, item 2) (itemize and describe all adjustments):
TEXT RIAD
---- ----
a. 4492: ....................................................................... 4492 4.a
b. 4493: ....................................................................... 4493 4.b
5. Cumulative effect of changes in accounting principles from prior years (from
Schedule RI-A, item 9) (itemize and describe all changes in accounting principles):
TEXT RIAD
---- ----
a. 4494: ....................................................................... 4494 5.a
b. 4495: ....................................................................... 4495 5.b
6. Corrections of material accounting errors from prior years (from Schedule RI-A,
item 10) (itemize and describe all corrections):
TEXT RIAD
---- ----
a. 4496: ....................................................................... 4496 6.a
b. 4497: ....................................................................... 4497 6.b
7. Other transactions with parent holding company (from Schedule RI-A, item 12)
(itemize and describe all such transactions):
TEXT RIAD
---- ----
a. 4498: ....................................................................... 4498 7.a
b. 4499: ....................................................................... 4499 7.b
8. Adjustments to all allowance for loan and lease losses (from Schedule RI-B, part
II, item 5) (itemize and describe all adjustments):
TEXT RIAD
---- ----
a. 4521: Bank Acquisitions...................................................... 4521 8.a
b. 4522: ....................................................................... 4522 8.b
I398 I399 {-
</TABLE>
9. Other explanations (the space below is provided for the bank to briefly
describe, at its option, any other significant items affecting the Report of
Income):
No comment: X (RIAD 4769)
Other explanations (please type or print clearly):
(TEXT 4769)
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-1
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
9
Transit Number: 11300106
</TABLE>
Consolidated Report of Condition for Insured
Commercial and State-Chartered Savings Banks for June 30, 1996
Schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
<TABLE>
<CAPTION>
C300 {-
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1)................................. 0081 98,813 1.a
b. Interest bearing balnaces(2).......................................................... 0071 20,893 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)............................ 1754 1,332,280 2.a
b. Available-for-sale securities (from Schedule RC-B, column D).......................... 1773 469,632 2.b
3. Federal funds sold and securiites purchased under agreements to resell:
a. Federal funds sold.................................................................... 0276 0 3.a
b. Securities purchased under agreements to resell....................................... 0277 0 3.b
RCON
-----
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)... 2122 1,371,171 4.a
b. LESS: Allowance for loan and lease losses....................... 3123 24,134 4.b
c. LESS: Allocated transfer risk reserve........................... 3128 0 4.c
d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b
and 4.c).............................................................................. 2125 1,347,027 4.d
5. Trading assets (from Schedule RC-D)........................................................ 3545 0 5.
6. Premises and fixed assets (including capitalized leases)................................... 2145 44,852 6.
7. Other real estate owned (from Schedule RC-M)............................................... 2150 1,134 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule
RC-M)...................................................................................... 2130 2,006 8.
9. Customers' liability to this bank on acceptances outstanding............................... 2155 0 9.
10. Intangible assets (from Schedule RC-M)..................................................... 2143 18,897 10.
11. Other assets (from Schedule RC-F).......................................................... 2160 90,220 11.
12. Total assets (sum of items 1 through 11)................................................... 2170 3,425,834 12.
</TABLE>
- ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-2
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
10
Transit Number: 11300106
</TABLE>
Schedule RC -- Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
LIABILITIES
Deposits:
13. a. In domestic offices (sum of totals of columns A and C from Schedule RC-E..... 2200 2,515,487 13.a
(1) Noninterest-bearing(1).................................................... 6631 301,499 13.a.1
(2) Interest-bearing.......................................................... 6636 2,213,988 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs................
(1) Noninterest-bearing.......................................................
(2) Interest-bearing..........................................................
14. Federal funds purchased and securities sold under agreements to repurchase:
a. Federal funds purchased...................................................... 0278 500 14.a
b. Securities sold under agreements to repurchase............................... 0279 113,744 14.b
15. a. Demand notes issued to the U.S. Treasury..................................... 2840 0 15.a
b. Trading liabilities (from Schedule RC-D)..................................... 3548 0 15.b
16. Other borrowed money:
a. With original maturity of one year or less................................... 2332 259,245 16.a
b. With original maturity of more than one year................................. 2333 230,164 16.b
17. Mortgage indebtedness and obligations under capitalized leases................. 2910 529 17.
18. Bank's liability on acceptances executed and outstanding....................... 2920 0 18.
19. Subordinated notes and debentures.............................................. 3200 0 19.
20. Other liabilities (from Schedule RC-G)......................................... 2930 57,698 20.
21. Total liabilities (sum of items 13 through 20)................................. 2948 3,197,367 21.
22. Limited-life preferred stock and related surplus............................... 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................................. 3838 0 23.
24. Common stock................................................................... 3230 5,445 24.
25. Surplus (exclude all surplus related to preferred stock)....................... 3839 218,996 25.
26. a. Undivided profits and capital reserves...................................... 3632 28,776 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities...... 8434 (22,620) 26.b
27. Cumulative foreign currency translation adjustments............................
28. Total equity capital (sum of items 23 through 27).............................. 3210 228,4O7 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of
items 21, 22 and 28)........................................................... 3300 3,425,854 29.
MEMORANDUM
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank
by independent external auditors as of any date during 1994.................... 6724 N/A M.1
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which submits a report on the consolidated holding company (but
not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a
certified public accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering
authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
</TABLE>
- ---------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-3
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
11
Transit Number: 11300106
</TABLE>
Schedule RC-A -- Cash and Balances Due from Depository Institutions
Exclude assets held for trading.
<TABLE>
<CAPTION>
C305 {-
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and coin:
a. Cash items in process of collection and unposted debits.............................. 0020 25,910 1.a
b. Currency and coin.................................................................... 0080 25,691 1.b
2. Balances due from depository institutions in the U.S.:
a. U.S. branches and agencies of foreign banks.......................................... 0083 297 2.a
b. Other commercial banks in the U.S. and other depository institutions in the U.S...... 0085 33,412 2.b
3. Balances due from banks in foreign countries and foreign central banks:
a. Foreign branches of other U.S. banks................................................. 0073 0 3.a
b. Other banks in foreign countries and foreign central banks........................... 0074 0 3.b
4. Balances due from Federal Reserve Banks................................................. 0090 34,486 4.
5. Total (sum of items 1 through 4) (must equal Schedule RC, sum of items 1.a and 1.b)..... 0010 119,796 5.
</TABLE>
Memorandum
<TABLE>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in items
2.a and 2.b above)...................................................................... 0050 12,727 M.1
</TABLE>
Schedule RC-B -- Securities
Exclude assets held for trading.
<TABLE>
<CAPTION>
C310 {-
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
(Column C) (Column D)
(Column A) (Column B) Amortized Fair
Amortized Cost Fair Value Cost Value(1)
---------------- ---------------- ------------ ------------
RCON RCON RCON RCON
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. U.S. Treasury securities.......... 0211 24,719 0213 24,703 1286 0 1287 0 1.
2. U.S. Government agency and
corporation obligations (exclude
mortgage-backed securities):
RCON RCON RCON RCON
---- ---- ---- ----
a. Issued by U.S. Government
agencies(2).................... 1289 0 1290 0 1291 0 1293 0 2.a
b. Issued by U.S. Government-
sponsored agencies(3).......... 1294 135,540 1295 133,829 1297 44,994 1298 43,285 2.b
</TABLE>
- ---------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool Certificates,"
U.S. Maritime Administration obligations, and Export-Import Bank
participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association, the
Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: O6/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-4
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
12
Transit Number: 11300106
</TABLE>
Schedule RC-B - Continued
Exclude assets held for trading.
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value(1)
---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3. Securities issued by states and political
subdivisions in the U.S.:
RCON RCON RCON RCON
---- ---- ---- ----
a. General obligations............................... 1676 63,009 1677 63,864 1678 0 1679 0 3.a
b. Revenue obligations............................... 1681 0 1686 0 1690 0 1691 0 3.b
c. Industrial development and similar obligations.... 1694 0 1695 0 1696 0 1697 0 3.c
4. Mortgage-backed securities (MBS):
a. Pass-through securities:
(1) Guaranteed by GNMA............................ 1698 4,408 1699 4,233 1701 100,527 1702 99,838 4a1
(2) Issued by FNMA and FHLMC...................... 1703 42,823 1705 41,067 1706 259,638 1707 259,970 4a2
(3) Other pass-through securities................. 1709 0 1710 0 1711 0 1713 0 4a3
b. Other mortgage-backed securities (include CMOs,
REMICs, and stripped MBS):
(1) Issued or guaranteed by FNMA, GNMA............ 1714 630,798 1715 635,517 1716 18,509 1717 18,441 4b1
RCON RCON RCON RCON
---- ---- ---- ----
(2) Collateralized by MBS issued or guaranteed by
FNMA, FHLMC, or GNMA.......................... 1718 12,800 1719 12,874 1731 0 1732 0 4b2
(3) All other mortgage-backed securities.......... 1733 418,152 1734 419,982 1735 13,032 1736 12,880 4b3
5. Other debt securities:
RCON RCON RCON RCON
---- ---- ---- ----
a. Other domestic debt securities.................... 1737 0 1738 0 1739 0 1741 0 5.a
b. Foreign debt securities........................... 1742 30 1743 31 1744 0 1746 0 5.b
6. Equity securities:
RCON RCON RCON RCON
---- ---- ---- ----
a. Investments in mutual funds....................... 1747 0 1748 0 6.a
b. Other equity securities with readily determinable
fair values....................................... 1749 0 1751 0 6.b
c. All other equity securities(1).................... 1752 35,158 1753 35,158 6.c
RCON RCON RCON RCON
---- ---- ---- ----
7. Total (sum of items 1 through 6)(total of column A
must equal Schedule RC, item 2.a) (total of column D
must equal Schedule RC, item 2.b).................... 1754 1,322,280 1771 1,336,100 1772 471,856 1773 469,632 7.
</TABLE>
- -----------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
<PAGE>
<TABLE>
<S> <C> <C> <C>
OnBank & Trust Company Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 South Salina Street Page RC-5
Syracuse, NY 13221 Vendor ID: D CERT: 07319
13
Transit Number: 11300106
</TABLE>
Schedule RC-B -- Continued
Memoranda
<TABLE>
<CAPTION>
C312 {-
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
1. Pledged securities (2).......................................................... 0416 695,213 M.1
2. Maturity and repricing data for debt securities (2,3,4)(excluding those in
nonaccrual status):
a. Fixed rate debt securities with a remaining maturity of:
(1) Three months or less................................................... 0343 9,465 M.2.a1
(2) Over three months through 12 months.................................... 0344 75,038 M.2.a2
(3) Over one year through five years....................................... 0345 114,710 M.2.a3
(4) Over five years........................................................ 0346 1,005,380 M.2.a4
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1)
through 2.a(4))............................................................ 0347 1,204,533 M.2.a5
b. Floating rate debt securities with a repricing frequency of:
(1) Quarterly or more frequently........................................... 4544 117,452 M.2.b1
(2) Annually or more frequently, but less frequently than quarterly........ 4545 427,708 M.2.b2
(3) Every five years or more frequently, but less frequently than
annually................................................................... 4551 17,001 M.2.b3
(4) Less frequently than every five years.................................. 4552 0 M.2.b4
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1)
through 2.b.(4))........................................................... 4553 562,161 M.2.b5
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must
equal total debt securities from Schedule RC-B, sum of items 1 through 5,
columns A and D, minus nonaccrual debt securities included in Schedule
RC-N, item 9, column C).................................................... 0393 1,766,754 M.2.c
3. Not applicable..................................................................
4. Held-to-maturity debt securities restructured and in compliance with modified
terms (included in Schedule RC-B, items 3 through 5, column A, above)........... 5365 0 M.4
5. Not applicable..................................................................
6. Floating rate debt securities with a remaining maturity of one year or less(2)
(included in Memorandum item 2.b.(5) above)..................................... 5519 0 M.6
7. Amortized cost of held-to-maturity securities sold or transferred to
available-for-sale or trading securities during the calendar year-to-date
(report the amortized cost at date of sale or transfer)......................... 1778 0 M.7
8. High-risk mortgage securities (included in the held-to-maturity and
available-for-sale accounts in Schedule RC-B, item 4.b):
a. Amortized cost............................................................. 8780 84,156 M.8.a
b. Fair value................................................................. 8781 86,297 M.8.b
9. Structured notes (included in the held-to-maturity and available-for-sale
accounts in Schedule RC-B, items 2, 3, and 5):
a. Amortized cost............................................................. 8782 100,150 M.9.a
b. Fair value................................................................. 8783 98,577 M.9.b
</TABLE>
- ---------------
(2) Includes held-to-maturity securities at amortized cost and
available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(4) Memorandum item 2 is not applicable to savings banks that must complete
supplemental Schedule RC-J.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Onbank & Trust Company Call Date: 06/30/95 ST-BK: 36-7430 FFIEC 032
101 South Salina Street Page RC-6
Syracuse, NY 13221 Vendor ID: D CERT: 07319
14
Transit Number: 11300106
</TABLE>
Schedule RC-C -- Loans and Lease Financing Receivables
Part I. Loans and Leases
Do not deduct the allowance for loan and lease losses from amounts reported in
this schedule. Report total loans and leases, net of unearned income. Exclude
assets held for trading.
<TABLE>
<CAPTION>
C315 {-
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
1. Loans secured by real estate:
a. Construction and land development............................................... 1415 31,371 1.a
b. Secured by farmland (including farm residential and other improvements)......... 1420 826 1.b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4 family residential properties and
extended under lines of credit.............................................. 1797 91,618 1.c.1
(2) All other loans secured by 1-4 family residential properties:
(a) Secured by first liens.................................................. 5367 553,281 1.c.2a
(b) Secured by junior liens................................................. 5368 688 1.c.2b
d. Secured by multifamily (5 or more) residential properties....................... 1460 6,160 1.d
e. Secured by nonfarm nonresidential properties.................................... 1480 201,037 1.e
2. Loans to depository institutions:
a. To commercial banks in the U.S.:
(1) To U.S. branches and agencies of foreign banks.............................. 1506 0 2.a.1
(2) To other commercial banks in the U.S........................................ 1507 0 2.a.2
b. To other depository institutions in the U.S..................................... 1517 0 2.b
c. To banks in foreign countries:
(1) To foreign branches of other U.S. banks..................................... 1513 0 2.c.1
(2) To other banks in foreign countries......................................... 1516 0 2.c.2
3. Loans to finance agricultural production and other loans to farmers................ 1590 3,677 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile)................................................... 1763 297,905 4.a
b. To non-U.S. addressees (domicile)............................................... 1764 0 4.b
5. Acceptances of other banks:
a. Of U.S. banks................................................................... 1756 0 5.a
b. Of foreign banks................................................................ 1757 0 5.b
6. Loans to individuals for household, family, and other personal expenditures (i.e.,
consumer loans) (includes purchased paper):
a. Credit cards and related plans (includes check credit and other revolving credit
plans).......................................................................... 2008 25,838 6.1
b. Other (includes single payment, installment, and all student loans)............. 2011 149,638 6.b
7. Loans to foreign governments and official institutions (including foreign central
banks)............................................................................. 2081 0 7.
8. Obligations (other than securities and leases) of states and political subdivisions
in the U.S. (includes nonrated industrial development obligations)................. 2107 7,110 8.
9. Other loans:
a. Loans for purchasing or carrying securities (secured and unsecured)............. 1545 0 9.a
b. All other loans (exclude consumer loans)........................................ 1564 1,074 9.b
10. Lease financing receivables (net of unearned income):
a. Of U.S. addressees (domicile)................................................... 2182 5,481 10.a
b. Of non-U.S. addressees (domicile)............................................... 2183 0 10.b
11. LESS: Any unearned income on loans reflected in items 1-9 above.................... 2123 4,453 11.
12. Total loans and leases, net of unearned income (sum of items 1 through 10 minus
item 11) (must equal Schedule RC, item 4.a)........................................ 2122 1,371,171 12.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-7
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
15
Transit Number: 11300106
</TABLE>
Schedule RC-C - Continued
Part I. Continued
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above............................... 1496 0 M.1
2. Loans and leases restructured and in compliance with modified terms (included in
Schedule RC-C, part I, above):
a. Loans secured by real estate:
(1) To U.S. addressees (domicile)................................................... 1687 0 M.2.a1
(2) To non-U.S. addressees (domicile)............................................... 1689 0 M.2.a2
b. All other loans and all lease financing receivables (exclude loans to individuals
for household, family, and other personal expenditures).............................. 8691 0 M.2.b
c. Commercial and industrial loans to and lease financing receivables of non-U.S.
addressees (domicile) included in Memorandum item 2.b above.......................... 8692 0 M.2.c
3. Maturity and repricing data for loans and leases (1)(excluding those in nonaccrual
status):
a. Fixed rate loans and leases with a remaining maturity of:
(1) Three months or less............................................................ 0348 20,608 M.3.a1
(2) Over three months through 12 months............................................. 0349 57,584 M.3.a2
(3) Over one year through five years................................................ 0356 129,734 M.3.a3
(4) Over five years................................................................. 0357 394,369 M.3.a4
(5) Total fixed rate loans and leases (sum of Memorandum items 3.a.(1) through
3.a.(4))........................................................................ 0358 602,295 M.3.a5
b. Floating rate loans with a repricing frequency of:
(1) Quarterly or more frequently.................................................... 4554 445,148 M.3.b1
(2) Annually or more frequently, but less frequently than quarterly................. 4555 199,534 M.3.b2
(3) Every five years or more frequently, but less frequently than annually.......... 4561 101,564 M.3.b3
(4) Less frequently than every five years........................................... 4564 16,252 M.3.b4
(5) Total floating rate loans (sum of Memorandum items 3.b.1 through 3.b.(4))....... 4567 762,498 M.3.b5
c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) (Must equal
the sum of total loans and leases, net, from Schedule RC-C, part I, item 12, plus
unearned income from Schedule RC-C, part I, item 11, minus total nonaccrual loans
and leases from Schedule RC-N, sum of items 1 through 8, column C)................... 1479 1,364,793 M.3.c
d. Floating rate loans with a remaining maturity of one year or less (included in
Memorandum items 3.b.(1) through 3.b.(4) above)...................................... A246 108,181 M.3.d.
4. Loans to finance commercial real estate, construction, and land development
activities (not secured by real estate) included in Schedule RC-C, part I, items 4
and 9.b, page RC-6(2)................................................................... 2746 0 M.4
5. Loans and leases held for sale (included in Schedule RC-C, part I, above)............... 5369 7,243 M.5
6. Adjustable rate closed-end loans secured by first liens on 1-4 family residential
properties (included in Schedule RC-C, part I, item 1.c.(2)(a), page RC-6).............. 5370 176,612 M.6
</TABLE>
- ---------------
(1) Memorandum item 3 is not applicable to savings banks that must complete
Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C,
part I, items 1.a through 1.e.
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-7a
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
15a
</TABLE>
Schedule RC-C - Continued
Part II. Loans to Small Businesses and Small Farms
Schedule RC-C, Part II is to be reported only with the June Report of Condition.
Report the number and amount currently outstanding as of June 30 of business
loans with "original amounts" of $1,000,000 or less and farm loans with
"original amounts" of $500,000 or less. The following guidelines should be used
to determine the "original amount" of a loan; (1) For loans drawn down under
lines of credit or loan commitments, the "original amount" of the loan
extended, or renewed prior to the report date. However, if the amount currently
outstanding as of the report date exceeds this size, the "original amount" is
the amount currently outstanding on the report date. (2) For loan
participations and syndications, the "original amount" of the loan
participation or syndication is the entire amount of the credit originated by
the lead lender. (3) For all other loans, the "original amount" is the total
amount of the loan at origination or the amount currently outstanding as of the
report date, whichever is larger.
Loans to Small Businesses
<TABLE>
<S> <C> <C> <C> <C>
1. Indicate in the appropriate box at the right whether all or substantially
all of the dollar volume of your bank's "Loans secured by nonfarm
nonresidential properties" reported in Schedule RC-C, part I, item 1.e,
and all or substantially all of the dollar volume of your bank's
"Commercial and industrial loans to U.S. addresses" reported in
Schedule RC-C, part I, item 4.a, have original amounts of $100,000 or
less (If your bank has no loans outstanding in both of these two loan C318 {-
categories, place an "X" in the box marked "NO" and go to item 5; RCON YES NO
otherwise, see instructions for further information.) ...................... 6999 X 1.
</TABLE>
If YES, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5.
If NO and your bank has loans outstanding in either loan category, skip
items 2.a and 2.b, complete items 3 and 4 below, and go to item 5.
<TABLE>
<CAPTION>
Number of Loans
-------------------
<S> <C> <C> <C>
2. Report the total number of loans currently outstanding
for each of the following Schedule RC-C, part I, loan
categories: RCON
a. "Loans secured by nonfarm nonresidential
properties" reported in Schedule RC-C, part I,
item 1.e .......................................... 5562 N/A 2.a
b. "Commercial and industrial loans to U.S. addresses"
reported in Schedule RC-C, part I, item 4.a ....... 5563 N/A 2.b
</TABLE>
<TABLE>
<CAPTION>
(Column A) (Column B)
Amount
Currently
Number of Loans Outstanding
------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Dollar Amounts in Thousands RCON RCON
- ----------------------------------------------------------------- ----------------------------
3. Number and amount currently outstanding of "Loans
secured by nonfarm nonresidential properties"
reported in Schedule RC-C, part I, item 1.e (sum
of items 3.a through 3.c must be less than or
equal to Schedule RC-C, part I, item 1.3):
a. With original amounts of $100,000 or less .......... 5564 172 5565 6,922 3.a
b. With original amounts of more than $100,000
through $250,000 ................................... 5566 181 5567 22,181 3.b
c. With original amounts of more than $250,000
through $1,000,000 ................................. 5568 177 5569 68,743 3.c
4. Number and amount currently outstanding of "Commercial
and industrial loans to U.S. addressees" reported in
Schedule RC-C, Part I, item 4.a (sum of items 4.a
through 4.c must be less than or equal to Schedule
RC-C, part I, item 4.a):
a. With original amounts of $100,000 or less .......... 5570 993 5571 29,682 4.a
b. With original amounts of more than $100,000
through $250,000 ................................... 5572 245 5573 28,569 4.b
c. With original amounts of more than $250,000
through $1,000,000 ................................. 5574 223 5575 64,446 4.c
</TABLE>
15a
<PAGE>
<TABLE>
<S> <C> <C> <C>
Onbank & Trust Company Call Date: 06/30/95 ST-BK: 36-7430 FFIEC 032
101 South Salina Street Page RC-7b
Syracuse, NY 13221 Vendor ID: D CERT: 07319
15b
</TABLE>
Schedule RC-C -- Continued
Part II. Continued
Agricultural Loans to Small Farms
<TABLE>
<S> <C> <C> <C> <C>
5. Indicate in the appropriate box at the right whether all or substantially
all of the dollar volume of your bank's "Loans secured by farmland
(including farm residential and other improvements)" reported in
Schedule RC-C, part I, item 1.b, and all or substantially all of the
dollar volume of your bank's "Loans to finance agricultural production
and other loans to farmers" reported in Schedule RC-C, part I, item 3,
have original amounts of $100,000 or less (If your bank has no loans YES NO
outstanding in both of these two loan categories, place an "X" in the --- ---
box marked "NO" and do not complete items 7 and 8; otherwise, see instructions
for further information.)................................................................ 6960 x 5.
</TABLE>
If YES, complete items 6.a and 6.b below and do not complete items 7 and 8.
If NO and your bank has loans outstanding in either loan category, skip items
6.a and 6.b and complete items 7 and 8 below.
<TABLE>
<S> <C> <C> <C> <C>
Number of Loans
6. Report the total number of loans currently outstanding for each of the ---------------------
following Schedule RC-C, part I, loan categories: RCON
a. "Loans secured by farmland (including farm residential and other ----
improvements)" reported in Schedule RC-C, part I, item 1.b........................... 5576 N/A 6.a
b. "Loans to finance agricultural production and other loans to farmers" reported in
Schedule RC-C, part I, item 3........................................................ 5577 N/A 6.b
</TABLE>
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
Amount
Currently
Number of Loans Outstanding
---------------- ----------------
RCON RCON
---- ----
<S> <C> <C> <C> <C> <C>
7. Number and amount currently outstanding of "Loans secured by farmland
(including farm residential and other improvements)" reported in
Schedule RC-C, part I, item 1.b (sum of items 7.a through 7.c must be
less than or equal to Schedule RC-C, part I, item 1.b):
a. With original amounts of $100,000 or less.......................... 5578 2 5579 53 7.a
b. With original amounts of more than $100,000 through $250,000....... 5580 0 5581 0 7.b
c. With original amounts of more than $250,000 through $500,000....... 5582 0 5583 0 7.c
8. Number and amount currently outstanding of "Loans to finance
agricultural production and other loans to farmers" reported in Schedule
RC-C, part I, item 3 (sum of items 8.a through 8.c must be less than or
equal to Schedule RC-C, part I, item 3):
a. With original amounts of $100,000 or less.......................... 5584 20 5585 490 8.a
b. With original amounts of more than $100,000 through $250,000....... 5586 8 5587 1,082 8.b
c. With original amounts of more than $250,000 through $500,000....... 5588 3 5589 982 8.c
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Onbank & Trust Company Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 South Salina Street Page RC-8
Syracuse, NY 13221 Vendor ID: D CERT: 07319
16
Transit Number: 11300106
</TABLE>
Schedule RC-D -- Trading Assets and Liabilities
Schedule RC-D is to be completed only by banks with $1 billion or more in total
assets or with $2 billion or more in par/notional amount of off-balance sheet
derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e,
columns A through D).
<TABLE>
<CAPTION>
C320 {-
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------
ASSETS RCON
----
<S> <C> <C> <C>
1. U.S. Treasury securities................................................................ 3531 0 1.
2. U.S. Government agency and corporation obligations (exclude mortgage-backed
securities)............................................................................. 3532 0 2.
3. Securities issued by states and political subdivisions in the U.S....................... 3533 0 3.
4. Mortgage-backed securities (MBS):
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA................. 3534 0 4.a
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA (include
CMOs, REMICs, and stripped MBS)...................................................... 3535 0 4.b
c. All other mortgage-backed securities................................................. 3536 0 4.c
5. Other debt securities................................................................... 3537 0 5.
6. Certificates of deposit................................................................. 3538 0 6.
7. Commercial paper........................................................................ 3539 0 7.
8. Bankers acceptances..................................................................... 3540 0 8.
9. Other trading assets.................................................................... 3541 0 9.
10. Not applicable..........................................................................
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and
equity contracts........................................................................ 4549 0 11.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5)....... 3545 0 12.
LIABILITIES
13. Liability for short positions........................................................... 3546 0 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and
equity contracts........................................................................ 3547 0 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item
15.b)................................................................................... 3548 0 15.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Onbank & Trust Company Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 South Salina Street Page RC-9
Syracuse, NY 13221 Vendor ID: D CERT: 07319
17
Transit Number: 11300106
</TABLE>
Schedule RC-E -- Deposit Liabilities
<TABLE>
<CAPTION>
C325 {-
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------
-Nontransaction-
--------Transaction Accounts-------- Accounts
(Column A) (Column C)
Total (Column B) Total
transaction Memo: Total nontransaction
accounts demand deposits accounts
(including total (included in (including
demand deposits) column A) MMDAs)
---------------- ---------------- ----------------
RCON RCON RCON
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Deposits of:
1. Individuals, partnerships and corporations... 2201 285,561 2240 260,667 2346 1,904,372 1.
2. U.S. Government.............................. 2202 99 2280 99 2520 0 2.
3. States and political subdivisions in the
U.S.......................................... 2203 31,112 2290 22,888 2530 276,498 3.
4. Commercial banks in the U.S.................. 2206 0 2310 0 0 4.
a. U.S. branches and agencies of foreign
banks........................................ 2347 0 4a
b. Other commercial banks in the U.S......... 2348 1,032 4b
5. Other depository institutions in the U.S..... 2207 2,153 2312 2,153 2349 0 5.
6. Banks in foreign countries................... 2213 0 2320 0 6.
a. Foreign branches of other U.S. banks...... 2367 0 6a
b. Other banks in foreign countries.......... 2373 0 6b
7. Foreign governments and official institutions
(including foreign central banks)............ 2216 0 2300 0 2377 0 7.
8. Certified and official checks................ 2330 15,692 2330 15,692 8.
9. Total (sum of items 1 through 8) (sum of
columns A and C must equal Schedule RC, item
13.a)........................................ 2215 334,617 2210 301,499 2385 2,180,870 9.
</TABLE>
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C):
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts............. 6835 181,637 M.1.a
b. Total brokered deposits......................................................... 2365 203,665 M.1.b
c. Fully insured brokered deposits (included in Memorandum item 1.b above):
(1) Issued in denominations of less than $100,000............................... 2343 0 M.1.c1
(2) Issued either in denominations of $100,000 or in denominations greater than
$100,000 and participated out by the broker in shares of $100,000 or less... 2344 203,665 M.1.c2
d. Total deposits denominated in foreign currencies................................ 3776 0 M.1.d
e. Preferred deposits (uninsured deposits of states and political subdivisions in
the U.S. reported in item 3 above which are secured or collateralized as
required under state law)....................................................... 5590 280,505 M.1.e
2. Components of total nontransaction accounts (sum of Memoranda items 2.a through 2.d
must equal item 9, Column C, above):
a. Savings deposits:
(1) Money market deposit accounts (MMDAs)....................................... 6810 154,833 M.2.a1
(2) Other savings deposits (excludes MMDAs)..................................... 0352 686,971 M.2.a2
b. Total time deposits of less than $100,000....................................... 6648 760,249 M.2.b
c. Time certificates of deposit of $100,000 or more................................ 6645 578,817 M.2.c
d. Open-account time deposits of $100,000 or more.................................. 6646 0 M.2.d
3. All NOW accounts (included in column A above)...................................... 2398 33,118 M.3
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-10
SYRACUSE, NY 13221 Vendor ID: D CERT: 24344
18
Transit Number: 11300106
</TABLE>
SCHEDULE RC-E -- Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
Maturity and repricing data for time deposits of less than $100,000 (sum of
Memorandum items 5.a.(1) through 5.b.(3) must equal Memorandum item 2.b above):(1)
a. Fixed rate time deposits of less than $100,000 with a remaining maturity of:
(1) Three months or less......................................................... A225 162,285 M.5.a.(1)
(2) Over three months through 12 months.......................................... A226 354,999 M.5.a.(2)
(3) Over one year ............................................................... A227 184,919 M.5.a.(3)
b. Floating rate time deposits of less than $100,000 with a repricing frequency of:
(1) Quarterly or more frequently................................................. A228 58,046 M.5.b.(1)
(2) Annually or more frequently, but less frequently than quarterly.............. A229 0 M.5.b.(2)
(3) Less frequently than annually ............................................... A230 0 M.5.b.(3)
c. Floating rate time deposits of less than $100,000 with a remaining maturity of
one year or less (included in Memorandum items 5.b.(1) through 5.b.(3) above..... A231 28,576 M.5.c.
Maturity and repricing data for time deposits of $100,000 or more (i.e., time
certificates of deposit of $100,000 or more and open-account time deposits of
$100,000 or more)
(sum of Memorandum items 6.a.(1) thorugh 6.b.(4) must equal the sum of Memorandum
items 2.c. and 2.d. above):(1)
a. Fixed rate time deposits of $100,000 or more with a remaining maturity of:
(1) Three months or less ........................................................ A232 280,477 M.6.a.(1)
(2) Over three months through 12 months ......................................... A233 196,610 M.6.a.(2)
(3) Over one year through five years ............................................ A234 93,651 M.6.a.(3)
(4) Over five years ............................................................. A235 4,991 M.6.a.(4)
b. Floating rate time deposits of $100,000 or more with a repricing frequency of:
(1) Quarterly or more frequently ................................................ A236 3,088 M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly.............. A237 0 M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually....... A238 0 M.6.b.(3)
(4) Less frequently than every five years ....................................... A239 0 M.6.b.(4)
c. Floating rate time deposits of $100,000 or more with a remaining maturity of
one year or less (included in Memorandum items 6.b.(1) through 6.b.(4) above).... A240 1,810 M.6.c.
</TABLE>
- ---------------
Memorandum items 5 and 6 are not applicable to savings banks that must complete
supplemental Schedule RC-J.
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-11
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
19
Transit Number: 11300106
</TABLE>
Schedule RC-F -- Other Assets
<TABLE>
<CAPTION>
C330 {-
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C> <C> <C>
1. Income earned, not collected on loans................................................... 2164 8,914 1.
2. Net deferred tax assets(1).............................................................. 2148 26,295 2.
3. Excess residential mortgage servicing fees receivable................................... 5371 2,076 3.
4. Other (itemize and describe amounts that exceed 25% of this item)....................... 2168 52,935 4.
TEXT RCON
---- ----
a. 3549: INTERCOMPANY A/C.........................3549 19,272 4.a
b. 3550: IENC-SECURs..............................3550 14,116 4.b
c. 3551:..........................................3551 4.c
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11)...................... 2160 90,220 5.
</TABLE>
Memorandum
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
1. Deferred tax assets disallowed for regulatory capital purposes.......................... 5610 0 M.1
</TABLE>
Schedule RC-G -- Other Liabilities
<TABLE>
<CAPTION>
C335 {-
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C> <C> <C>
1. a. Interest accrued and unpaid on deposits(2)........................................... 3645 5,348 1.a
b. Other expenses accrued and unpaid (includes accrued income taxes payable)............ 3646 8,065 1.b
2. Net deferred tax liabilities(1)......................................................... 3049 0 2.
3. Minority interest in consolidated subsidiaries.......................................... 3000 0 3.
4. Other (itemize and describe amounts that exceed 25% of this item)....................... 2938 44,285 4.
TEXT RCON
---- ----
a. 3552: Deferred Fee-Unfunded Commitments..... 3552 42,444 4.a
b. 3553:....................................... 3553 4.b
c. 3554:....................................... 3554 4.c
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20)...................... 2930 57,698 5.
</TABLE>
- ---------------
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, includes "dividends" accrued and unpaid on deposits.
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-12
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
20
Transit Number: 11300106
</TABLE>
Schedule RC-K -- Quarterly Averages(1)
<TABLE>
<CAPTION>
C355 {-
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
ASSETS
1. Interest-bearing balances due from depository institutions............................ 3381 8,205 1.
2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2).... 3382 1,274,251 2.
3. Securities issued by states and political subdivisions in the U.S.(2)................. 3383 67,370 3.
4. a. Other debt securities(2)......................................................... 3647 423,623 4.a
b. Equity securities (3) (includes investments in mutual funds and Federal Reserve
stock)........................................................................... 3648 35,158 4.b
5. Federal funds sold and securities purchased under agreements to resell................ 3365 29,907 5.
6. Loans:
a. Total Loans...................................................................... 3360 1,346,190 6.a
b. Loans secured by real estate..................................................... 3385 894,022 6.b
c. Loans to finance agricultural production and other loans to farmers.............. 3386 3,677 6.c
d. Commercial and industrial loans.................................................. 3387 274,376 6.d
e. Loans to individuals for household, family, and other personal expenditures...... 3388 174,115 6.e
7. Trading assets........................................................................ 3401 0 7.
8. Lease financing receivables (net of unearned income).................................. 3484 3,797 8.
9. Total assets(4)....................................................................... 3368 3,366,858 9.
LIABILITIES
10. Interest-bearing transaction accounts (NOW accounts, ATS accounts, and telephone and
preauthorized transfer accounts) (exclude demand deposits)............................ 3485 28,766 10.
11. Nontransaction accounts:
a. Money market deposit accounts (MMDAs)............................................ 3486 154,325 11.a
b. Other savings deposits........................................................... 3487 704,836 11.b
c. Time certificates of deposit of $100,000 or more................................. 3345 634,159 11.c
d. All other time deposits.......................................................... 3469 786,301 11.d
12. Federal funds purchased and securities sold under agreements to repurchase............ 3353 117,216 12.
13. Other borrowed money.................................................................. 3555 412,792 13.
</TABLE>
- ---------------
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter or (2) an average of weekly figures (i.e., the
Wednesday of each week of the quarter).
(2) Quarter averages for all debt securities should be based on amortized cost.
(3) Quarterly averages for all equity securities should be based on historical
cost.
(4) The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-13
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
21
Transit Number: 11300106
</TABLE>
Schedule RC-L -- Off-Balance Sheet Items
Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported in Schedule RC-L are regarded as volume indicators
and not necessarily as measures of risk.
<TABLE>
<CAPTION>
C360 {-
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
RCON
-----
<S> <C> <C> <C> <C> <C>
1. Unused commitments:
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g.,
home equity lines................................................................ 3814 44,718 1.a
b. Credit card lines................................................................ 3815 0 1.b
c. Commercial real estate, construction, and land development:
(1) Commitments to fund loans secured by real estate............................. 3816 29,796 1.c.1
(2) Commitments to fund loans not secured by real estate......................... 6550 0 1.c.2
d. Securities underwriting.......................................................... 3817 0 1.d
e. Other unused commitments......................................................... 3818 162,005 1.e
2. Financial standby letters of credit................................................. 3819 255 2.
RCON
----
a. Amount of financial standby letters of credit conveyed to others. 3820 0 2.a
RCON
----
3. Performance standby letters of credit.............................. 3821 0 3.
a. Amount of performance standby letters of credit conveyed to others............... 3822 37,743 3.a
4. Commercial and similar letters of credit............................................ 3411 0 4.
5. Participations in acceptances (as described in the instructions) conveyed to others
by the reporting bank............................................................... 3428 0 5.
6. Participations in acceptances (as described in the instructions) acquired by the
reporting (nonaccepting) bank....................................................... 3429 0 6.
7. Securities borrowed................................................................. 3432 0 7.
8. Securities lent (including customers' securities lent where the customer is
indemnified against loss by the reporting bank)..................................... 3433 0 8.
9. Mortgages transferred (i.e., sold or swapped) with recourse that have been treated
as sold for Call Report purposes:
a. FNMA and FHLMC residential mortgage loan pools:
(1) Outstanding principal balance of mortgages transferred as of the report
date............................................................................. 3650 0 9.a.1
(2) Amount of recourse exposure on these mortgages as of the report date......... 3651 0 9.a.2
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools:
(1) Outstanding principal balance of mortgages tarnsferred as of the report
date............................................................................. 3652 0 9.b.1
(2) Amount of recourse exposure on these mortgages as of the report date......... 3653 0 9.b.2
c. Farmer Mac agricultural mortgage loan pools:
(1) Outstanding principal balance of mortgages transferred as of the report
date............................................................................. 3654 0 9.c.1
(2) Amount of recourse exposure on these mortgages as of the report date......... 3655 0 9.c.2
d. Small business obligations transferred with recourse under Section 208 of the
Riegle Community Development and Regulatory Improvement Act of 1994:
(1) Outstanding principal balance of small business obligations transferred
as of the report date........................................................ A249 0
(2) Amount of retained recourse on these obligations as of the report date....... A250 0
10. When-issued securities:
a. Gross commitments to purchase.................................................... 3434 0 10.a
b. Gross commitments to sell........................................................ 3435 0 10.b
11. Spot foreign exchange contracts..................................................... 8765 0 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives)
(itemize and describe each component of this item over 25% of Schedule RC,
item 28, "Total equity capital").................................................... 3430 0 12.
TEXT RCON
---- ----
a. 3555: ........................................................ 3555 N/A 12.a
b. 3556: ........................................................ 3556 N/A 12.b
c. 3557: ........................................................ 3557 N/A 12.c
d. 3558: ........................................................ 3558 N/A 12.d
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-14
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
22
Transit Number: 11300106
</TABLE>
Schedule RC-L -- Continued
<TABLE>
<CAPTION>
C361 {-
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
13. All other off-balance sheet assets (exclude off-balance sheet derivates) (itemize
and describe each component of this item over 25% of Schedule RC, item 28, "Total
equity capital").................................................................... 5591 0 13.
TEXT RCON
---- ----
a. 5592: ........................................................ 5592 N/A 13.a
b. 5593: ........................................................ 5593 N/A 13.b
c. 5594: ........................................................ 5594 N/A 13.c
d. 5595: ........................................................ 5595 N/A 13.d
C361 {-
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Interest Foreign Equity Commodity
Off-Balance Sheet Derivatives Rate Exchange Derivative And Other
Position Indicators Contracts Contracts Contracts Contracts
- -------------------------------------------------------- ---------- ---------- ---------- ----------
14. Gross amounts (e.g., notional amounts)(for each
column, sum of items 14.a through 14.e must equal
sum of items 15, 16.a, and 16.b):
a. Futures contracts............................. 0 0 0 0 14.a
RCON 8693 RCON 8694 RCON 8695 RCON 8696
b. Forward contracts............................. 0 0 0 14.b
RCON 8697 RCON 8698 RCON 8699 RCON 8700
c. Exchange-traded option contracts:
(1) Written options........................... 0 0 0 0 14.c1
RCON 8701 RCON 8702 RCON 8703 RCON 8704
(2) Purchased options......................... 0 0 0 0 14.c2
RCON 8705 RCON 8706 RCON 8707 RCON 8708
d. Over-the-counter option contracts:
(1) Written options........................... 51,000 0 0 0 14.d1
RCON 8709 RCON 8710 RCON 8711 RCON 8712
(2) Purchased options......................... 0 0 0 0 14.d2
RCON 8713 RCON 8714 RCON 8715 RCON 8716
e. Swaps......................................... 50,000 0 0 0 14.e
RCON 3450 RCON 3826 RCON 8719 RCON 8720
15. Total gross notional amount of derivative contracts
held for trading................................... 51,000 0 0 0 15.
RCON 7186 RCON 7187 RCON 8723 RCON 8724
16. Total gross notional amount of derivative contracts
held for purposes other than trading:
a. Contracts marked to market.................... 0 0 0 16.a
RCON 8725 RCON 8726 RCON 8727 RCON 8728
b. Contracts not marked to market................ 50,000 0 0 0 16.b
RCON 8729 RCON 8730 RCON 8731 RCON 8732
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/95 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-15
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
23
Transit Number: 11300106
</TABLE>
SCHEDULE RC-L -- Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Off-balance Sheet Interest Foreign Equity Commodity
Derivatives Position Rate Exchange Derivatives And Other
Indicators Contracts Contracts Contracts Contracts
- ----------------------------------------------------------------------------------------------------------------------
RCON RCON RCON RCON
---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17. Gross fair values:
a. Contracts held for trading:
(1) Gross positive fair
value........................... 8733 0 8734 0 8735 0 8736 0 17.a1
(2) Gross negative fair
value........................... 8737 0 8738 0 8739 0 8740 0 17.a2
b. Contracts held for purposes
other than trading that are
marked to market:
(1) Gross positive fair
value........................... 8741 0 8742 703 8743 0 8744 0 17.b1
(2) Gross negative fair
value........................... 8745 0 8746 509 8747 0 8748 0 17.b2
c. Contracts held for purposes
other than trading that are
not marked to market:
(1) Gross positive fair
value........................... 8749 279 8750 0 8751 0 8752 0 17.c1
(2) Gross negative fair
value........................... 8753 0 8754 0 8755 0 8756 0 17.c2
</TABLE>
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C> <C> <C>
Memoranda
1-2. Not applicable.................................................................
Unused commitments with an original maturity exceeding one year that are
reported in Schedule RC-L, items 1.a through 1.e, above (report only the unused
portions of commitments that are fee paid or otherwise legally binding)........ 3833 153,631 M.3
RCON
----
a. Participations in commitments with an original........... 3834 54.322 0 M.3.a
3. To be completed only by banks with $1 billion or more in total assets:
4. Standby letters of credit (both financial and performance) issued to non-U.S.
addressees (domicile) included in Schedule RC-L, items 2 and 3, above.......... 3377 831 M.4
5. Installment loans to individuals for household, family and other personal
expenditures that have been securitized and sold without recourse (with
servicing retained), amounts outstanding by type of loan:
a. Loans to purchase private passenger automobiles............................. 2741 N/A M.5.a
b. Credit cards and related plans.............................................. 2742 N/A M.5.b
c. All other consumer installment credit (including mobile home loans)......... 2743 N/A M.5.c
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Onbank & Trust Company Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 South Salina Street Page RC-16
Syracuse, NY 13221 Vendor ID: D CERT: 07319
24
Transit Number: 11300106
</TABLE>
Schedule RC-M -- Memoranda
<TABLE>
<CAPTION>
C365 {-
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors,
principal shareholders, and their related interests as of the report date:
a. Aggregate amount of all extensions of credit to all executive officers, directors,
principal shareholders and their related interests................................... 6164 21,572 1.a
RCON Number
---- ------
b. Number of executive officers, directors, and principal shareholders
to whom the amount of all extensions of credit by the reporting
bank (including extensions of credit to related interests) equals
or exceeds the lesser of $500,000 or 5 percent of total capital as
defined for this purpose in agency regulations..................... 6165 7 1.b
2. Federal funds sold and securities purchased under agreements to resell with U.S.
branches and agencies of foreign banks (1) (included in Schedule RC, items 3.a and
3.b).................................................................................... 3405 0 2.
3. Not applicable.
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for
others (include both retained servicing and purchased servicing):
a. Mortgages serviced under a GNMA contract............................................. 5500 0 4.a
b. Mortgages serviced under a FHLMC contract:
(1) Serviced with recourse to servicer............................................... 5501 0 4.b.1
(2) Serviced without recourse to servicer............................................ 5502 116,998 4.b.2
c. Mortgages serviced under a FNMA contract:
(1) Serviced under a regular option contract......................................... 5503 0 4.c.1
(2) Serviced under a special option contract......................................... 5504 130,312 4.c.2
d. Mortgages serviced under other servicing contracts................................... 5505 9,291 4.d
5. To be completed only by banks with $1 billion or more in total assets:
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b
must equal Schedule RC, item 9):
a. U.S. addressees (domicile)........................................................... 2103 0 5.a
b. Non-U.S. addressees (domicile)....................................................... 2104 0 5.b
6. Intangible assets:
a. Mortgage servicing rights............................................................ 3164 0 6.a
b. Other identifiable intangible assets:
(1) Purchased credit card relationships.............................................. 5506 0 6.b.1
(2) All other identifiable intangible assets......................................... 5507 1,419 6.b.2
c. Goodwill............................................................................. 3163 17,478 6.c
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10)............... 2143 18,897 6.d
e. Intangible assets that have been grandfathered for regulatory capital purposes....... 6442 0 6.e
7. Mandatory convertible debt, net of common or perpetual preferred stock
dedicated to redeem the debt............................................................ 3295 0 7.
</TABLE>
- ---------------
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Onbank & Trust Company Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 South Salina Street Page RC-17
Syracuse, NY 13221 Vendor ID: D CERT: 07319
25
Transit Number: 11300106
</TABLE>
Schedule RC-M -- Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
8. a. Other real estate owned:
(1) Direct and indirect investments in real estate ventures....................... 5372 0 8.a.1
(2) All other real estate owned:
(a) Construction and land development........................................ 5508 24 8.a.2a
(b) Farmland................................................................. 5509 0 8.a.2b
(c) 1-4 family residential properties........................................ 5510 893 8.a.2c
(d) Multifamily (5 or more) residential properties........................... 5511 0 8.a.2d
(e) Nonfarm nonresidential properties........................................ 5512 217 8.a.2e
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7)..... 2150 1,134 8.a.3
b. Investments in unconsolidated subsidiaries and associated companies:
(1) Direct and indirect investments in real estate ventures....................... 5374 2,006 8.b.1
(2) All other investments in unconsolidated subsidiaries and associated 5375 0 8.b.2
companies.....................................................................
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8)..... 2130 2,006 8.b.3
c. Total assets of unconsolidated subsidiaries and associated companies............... 5376 2,006 8.c
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC,
item 23, "Perpetual preferred stock and related surplus"................................ 3778 0 9.
10. Mutual fund and annuity sales during the quarter (include proprietary, private label,
and third party products):
a. Money market funds................................................................. 6441 0 10.a
b. Equity securities funds............................................................ 8427 156 10.b
c. Debt securities funds.............................................................. 8428 1 10.c
d. Other mutual funds................................................................. 8429 5 10.d
e. Annuities.......................................................................... 8430 308 10.e
f. Sales of proprietary mutual funds and annuities (included in items 10.a through 8784 0 10.f
10.e above)........................................................................
</TABLE>
Memorandum
<TABLE>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interbank holdings of capital instruments (to be completed for the December report
only):
a. Reciprocal holdings of banking organizations' capital instruments.................. 3836 N/A M.1.a
b. Nonreciprocal holdings of banking organizations' capital instruments............... 3837 N/A M.1.b
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-18
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
26
Transit Number: 11300106
</TABLE>
Schedule RC-N -- Past Due and Nonaccrual Loans, Leases, and Other Assets
The FFIEC regards the information reported in all of Memorandum item 1, in items
1 through 10, column A, and in Memorandum items 2 through 4, column A, as
confidential.
<TABLE>
<CAPTION>
C370 {-
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------
--(Column A)-- --(Column B)-- ---(Column C)---
Past due 30 Past due 90
through 89 days days or more
and still and still
accruing accruing Nonaccrual
--------------- --------------- ---------------
RCON RCON RCON
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1. Loans secured by real estate:
a. To U.S. addressees (domicile)................... 1245 2,760 1246 337 1247 7,382 1.a
b. To non-U.S. addressees (domicile)............... 1248 0 1249 0 1250 0 1.b
2. Loans to depository institutions and acceptances of
other banks:
a. To U.S. banks and other U.S. depositary
institutions.................................... 5377 0 5378 0 5379 0 2.a
b. To foreign banks................................ 5380 0 5381 0 5382 0 2.b
3. Loans to finance agricultural production and other
loans to farmers..................................... 1594 0 1597 0 1583 0 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile)................... 1251 6,318 1252 62 1253 3,387 4.a
b. To non-U.S. addressees (domicile)............... 1254 0 1255 0 1256 0 4.b
5. Loans to individuals for household, family, and other
personal expenditures:
a. Credit cards and related plans.................. 5383 157 5384 43 5385 0 5.a
b. Other (includes single payment, installment, and
all student loans).............................. 5386 1,732 5387 277 5388 62 5.b
6. Loans to foreign governments and official 5389 0 5390 0 5391 0
institutions......................................... 6.
7. All other loans...................................... 5459 0 5460 0 5461 0 7.
8. Lease financing receivables:
a. Of U.S. addressees (domicile)................... 1257 0 1258 0 1259 0 8.a
b. Of non-U.S. addressees (domicile)............... 1271 0 1272 0 1791 0 8.b
9. Debt securities and other assets (exclude other real
estate owned and other repossessed assets)........... 3505 0 3506 0 3507 0 9.
==========================================================================================================================
</TABLE>
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed
portions of past due and nonaccrual loans and leases. Report in item 10 below
certain guaranteed loans and leases that have already been included in the
amounts reported in items 1 through 8.
<TABLE>
<CAPTION>
RCON RCON RCON
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
10. Loans and leases reported in items 1 through 8 above
which are wholly or partially guaranteed by the U.S.
Government........................................... 5612 455 5613 213 5614 13 10.
a. Guaranteed portion of loans and leases included
in item 10 above................................ 5615 422 5616 212 5617 12 10.a
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-19
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
27
Transit Number: 11300106
</TABLE>
Schedule RC-N - Continued
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts In Thousands
- -------------------------------------------------------------------------------------------------------------------
--(Column A)-- --(Column B)-- -------(Column C)-------
Past due 30 Past due 90
through 89 days or more
days and still and still
accruing accruing Nonaccrual
-------------- -------------- ------------------------
RCON RCON RCON
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1. Restructured loans and leases included in
Schedule RC-N, items 1 through 8, above........... 1658 0 1659 0 1661 0 M.1
2. Loans to finance commercial real estate,
construction, and land development activities
(not secured by real estate) included in Schedule
RC-N, items 4 and 7, above........................ 6558 0 6559 0 6560 0 M.2
3. Loans secured by real estate (sum of Memorandum
items 3.a through 3.e must equal sum of Schedule
RC-N, items 1.a and 1.b, above):
a. Construction and land development.............. 2759 15 2769 0 3492 1,363 M.3a
b. Secured by farmland............................ 3493 0 3494 0 3495 0 M.3b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4
family residential properties and extended
under lines of credit...................... 5398 295 5399 165 5400 489 M.3c1
(2) All other loans secured by 1-4 family
residential properties..................... 5401 759 5402 172 5403 1,955 M.3c2
d. Secured by multifamily (5 or more) residential
properties..................................... 3499 0 3500 0 3501 29 M.3d
e. Secured by nonfarm nonresidential properties... 3502 1,691 3503 0 3504 3,546 M.3e
</TABLE>
<TABLE>
<CAPTION>
--(Column A)-- --(Column B)--
Past due 30
through 89 Past due 90
days days or more
-------------- --------------
RCON RCON
---- ----
<S> <C> <C> <C> <C> <C>
4. Interest rate, foreign exchange rate, and other
commodity and equity contracts:
a. Book value of amounts carried as assets........ 3522 0 3528 0 M.4.a
b. Replacement cost of contracts with a positive
replacement cost............................... 3529 0 3530 0 M.4.b
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-20
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
28
Transit Number: 11300106
</TABLE>
Schedule RC-O -- Other Data for deposit Insurance Assessments
<TABLE>
<CAPTION>
C375 {-
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
1. Unposted debits (see instructions):
a. Actual amount of all unposted debits............................................... 0030 0 1.a
OR
b. Separate amount of unposted debits:
(1) Actual amount of unposted debits to demand deposits............................ 0031 N/A 1.b.1
(2) Actual amount of unposted debits to time and savings deposits(1)............... 0032 N/A 1.b.2
2. Unposted credits (see instructions):
a. Actual amount of all unposted credits.............................................. 3510 0 2.a
OR
b. Separate amount of unposted credits:
(1) Actual amount of unposted credits to demand deposits........................... 3512 N/A 2.b.1
(2) Actual amount of unposted credits to time and savings deposits(1).............. 3514 N/A 2.b.2
3. Uninvested trust funds (cash) held in bank's own trust department (not included
in total deposits).................................................................... 3520 0 3.
4. Deposits of consolidated subsidiaries (not included in total deposits):
a. Demand deposits of consolidated subsidiaries....................................... 2211 0 4.a
b. Time and savings deposits (1) of consolidated subsidiaries......................... 2351 0 4.b
c. Interest accrued and unpaid on deposits of consolidated subsidiaries............... 5514 0 4.c
5. Not applicable.
Item 6 is not applicable to state nonmember banks that have not been authorized by the
Federal Reserve to act as pass-through correspondents.
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank
on behalf of its respondent depository institutions that are also reflected as deposit
liabilities of the reporting bank:
a. Amount reflected in demand deposits (included in Schedule RC-E, Memorandum item
4.a)............................................................................... 2314 0 6.a
b. Amount reflected in time and savings deposits (1) (included in Schedule RC-E,
Memorandum item 4.b)............................................................... 2315 0 6.b
7. Unamortized premiums and discounts on time and savings deposits:(1)
a. Unamortized premiums............................................................... 5516 0 7.a
b. Unamortized discounts.............................................................. 5517 0 7.b
8. To be completed by banks with "Oakar deposits."
Total "Adjusted Attributable Deposits" of all institutions acquired under Section
5(d)(3) of the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction
Worksheet(s))......................................................................... 5518 215,642 8.
9. Deposits in lifeline accounts......................................................... 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total
deposits)............................................................................. 8432 0 10.
</TABLE>
- ---------------
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists
of nontransaction accounts and all transaction accounts other than demand
deposits.
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-21
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
29
Transit Number: 11300106
</TABLE>
Schedule RC-O -- Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
11. Adjustments to demand deposits reported in Schedule RC-E for certain reciprocal demand balances:
a. Amount by which demand deposits would be reduced if reciprocal demand balances between the
reporting bank and savings associations were reported on a net basis rather than a gross basis
in Schedule RC-E.............................................................................. 8785 0 11.a
b. Amount by which demand deposits would be increased if reciprocal demand balances between the
reporting bank and U.S. branches and agencies of foreign banks were reported on a gross basis
rather than a net basis in Schedule RC-E...................................................... 8786 0 11.b
c. Amount by which demand deposits would be reduced if cash items in process of collection were
included in the calculation of net reciprocal demand balances between the reporting bank and
the domestic offices of U.S. banks and savings associations in Schedule RC-E.................. 8787 0 11.c
</TABLE>
Memoranda
(To be completed each quarter except as noted)
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C> <C> <C>
1. Total deposits of the bank:
(sum of Memorandum items 1.a.(1) and 1.b.(1) must equal Schedule RC, item 13.a):
a. Deposit accounts of $100,000 or less:
(1) Amount of deposit accounts of $100,000 or less.............................. 2702 1,849,307 M.1.A.1
RCON NUMBER
---- ------
(2) Number of deposit accounts of $100,000 or less (to be completed for the June
report only).......................................... 3779 257,326 M.1.a2
b. Deposit accounts of more than $100,000:
(1) Amount of deposit accounts of more than $100,000........................... 2710 666,180 M.1.b1
RCON NUMBER
---- ------
(2) Number of deposit accounts of more than $100,000..... 2722 2,004 M.1.b2
2. Estimated amount of uninsured deposits of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying
the number of deposit accounts of more than $100,000 reported in Memorandum item
1.b(2) above by $100,000 and subtracting the result from the amount of deposit
accounts of more than $100,000 reported in Memorandum item 1.b.(1) above.
RCON YES NO
---- --- ---
Indicate in the appropriate box at right whether your bank has a method or
procedure for determining a better estimate of uninsured deposits than the
estimate described above........................................................ 6861 X M.2.a
b. If the box marked YES has been checked, report the estimate of uninsured deposits
determined by using your bank's method or procedure............................. 5597 N/A M.2.b
- -------------------------------------------------------------------------------------------------------------------------
C377 {-
Person to whom questions about the Reports of Condition and Income should be directed:
WILLIAM G. SCHMIDT, AVP (315) 442-1866
- -------------------------------------------------------------------------- ------------------------------------------------
Name and Title (TEXT 8901) Area code/phone number/extension (TEXT 8902)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-22
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
30
Transit Number: 11300106
</TABLE>
Schedule RC-R -- Regulatory Capital
This schedule must be completed by all banks as follows: Banks that reported
total assets of $1 billion or more in Schedule RC, item 12, for June 30, 1994,
must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets
of less than $1 billion must complete items 1 and 2 below or Schedule RC-R in
its entirety, depending on their response to item 1 below.
<TABLE>
<CAPTION>
C380 {-
RCON YES NO
---- --- ---
<S> <C> <C> <C> <C>
1. Test for determining the extent to which Schedule RC-R must be completed. To be completed
only by banks with total assets of less than $1 billion. Indicate in the appropriate box
at the right whether the bank has total capital greater than or equal to eight percent of
adjusted total assets.................................................................... 6056 N/A 1.
</TABLE>
For purposes of this test, adjusted total assets equals total assets
less cash, U.S. Treasuries, U.S. Government agency obligations, and 80
percent of U.S. Government-sponsored agency obligations plus the allowance
for loan and lease losses and selected off-balance sheet items as reported
on Schedule RC-L (see instructions)
If the box marked YES has been checked, then the bank only has to
complete item 2 below. If the box marked NO has been checked, the bank must
complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's
actual risk-based capital ratio is less than eight percent or that the bank
is not in compliance with the risk-based capital guidelines.
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ---------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
Subordinated
Debt(1) and
Intermediate Other Limited-
Term Preferred Life Capital
Stock Instruments
---------------- ----------------
RCON RCON
---- ----
<S> <C> <C> <C> <C> <C>
Item 2 is to be completed by all banks.
2. Subordinated debt(1) and other limited-life capital instruments
(original weighted average maturity of at least five years) with a
remaining maturity of:
a. One year or less................................................... 3780 0 3786 0 2.a
b. Over one year through two years.................................... 3781 0 3787 0 2.b
c. Over two years through three years................................. 3782 0 3788 0 2.c
d. Over three years through four years................................ 3783 0 3789 0 2.d
e. Over four years through five years................................. 3784 0 3790 0 2.e
f. Over five years.................................................... 3785 0 3791 0 2.f
</TABLE>
3. Not applicable
Items 4-9 and Memoranda items 1 and 2 are to be completed by banks that answered
NO to item 1 above and by banks with total assets of $1 billion or more.
<TABLE>
<CAPTION>
(Column A) (Column B)
Credit
Equivalent
Assets Recorded Amount of Off-
on the Balance Balance Sheet
Sheet Items(2)
---------------- ----------------
RCON RCON
---- ----
<S> <C> <C> <C> <C> <C>
4. Assets and credit equivalent amounts of off-balance sheet items assigned
to the Zero percent risk category:
a. Assets recorded on the balance sheet:
(1) Securities issued by, other claims on, and claims
unconditionally guaranteed by, the U.S. Government and its
agencies and other OECD central governments.................... 3794 137,919 4.a.1
(2) All other...................................................... 3795 60,177 4.a.2
b. Credit equivalent amount of off-balance sheet items................. 3796 0 4.b
</TABLE>
- ---------------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported in
column A.
<PAGE>
<TABLE>
<S> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-23
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
31
Transit Number: 11300106
</TABLE>
Schedule RC-R -- Continued
<TABLE>
<CAPTION>
(Column A) (Column B)
Credit Equivalent
Assets Recorded on Amount
the of Off-Balance
Balance Sheet Sheet Items(1)
------------------ -----------------
<S> <C> <C> <C> <C> <C>
1. Assets and credit equivalent amounts of off-balance sheet items
assigned to the 20 percent risk category:
a. Assets recorded on the balance sheet:
RCON RCON
---- ----
(1) Claims conditionally guaranteed by the U.S. Government
and its agencies and other OECD central governments...... 3798 30,832 5.a.1
(2) Claims collateralized by securities issued by the U.S.
Government and its agencies and other OECD central
governments; by securities issued by U.S.
Government-sponsored agencies; and by cash on deposit.... 3799 0 5.a.2
(3) All other................................................ 3800 1,317,717 5.a.3
b. Credit equivalent amount of off-balance sheet items.......... 3801 1,619 5.b
2. Assets and credit equivalent amounts of off-balance sheet items
assigned to the 50 percent risk category:
a. Assets recorded on the balance sheet......................... 3802 961,507 6.a
b. Credit equivalent amount of off-balance sheet items.......... 3803 18,872 6.b
3. Assets and credit equivalent amounts of off-balance sheet items
assigned to the 100 percent risk category:
a. Assets recorded on the balance sheet......................... 3804 964,456 7.a
b. Credit equivalent amount of off-balance sheet items.......... 3805 77,071 7.b
3. On-balance sheet asset values excluded from the calculation of
the risk-based capital ratio(2)................................. 3806 (22,620) 8.
4. Total assets recorded on the balance sheet (sum of items 4.a,
5.a, 6.a, 7.a, and 8, column A) (must equal Schedule RC, item 12
plus items 4.b and 4.c)......................................... 3807 3,449,988 9.
</TABLE>
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
Current credit exposure across all off-balance sheet derivatives contracts by the
risk based capital standards................................................... 8764 1,369 M.1.
</TABLE>
<TABLE>
<CAPTION>
-------------With a remaining maturity of------------
- -------------------------------------------------------------------------------------------------------------------
(Column B) (Column C)
Column A) Over one year
through five Over five
One year or less years years
------------------ ------------- -------------
RCON RCON RCON
---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1. Notional principal amounts of off-balance
sheet derivative contracts:(3)
a. Interest rate contracts.................... 3809 0 8766 50,000 8767 0 M.2a
b. Foreign exchange contracts................. 3812 0 8769 0 8770 0 M.2b
c. gold contracts............................. 8771 0 8772 0 8773 0 M.2c
d. Other precious metals contracts............ 8774 0 8775 0 8776 0 M.2d
e. Other commodity contracts.................. 8777 0 8778 0 8779 0 M.2e
f. Equity derivative contracts................ A000 0 A001 0 A002 0 M.2f
</TABLE>
- ---------------
(1) Do not report in column B the risk-weighted amount of assets reported in
column A.
(2) Include the difference between the fair value and the amortized cost of
available-for-sale securities in item 8 and report the amortized cost of
these securities in items 4 through 7 above. Item 8 also includes on-balance
sheet asset values (or portions thereof) of off-balance sheet interest rate,
foreign exchange rate, and commodity contracts and those contracts (e.g.
future contracts) not subject to risk-based capital. Exclude from item 8
margin accounts and accrued receivables as well as any portion of the
allowance for loan and lease losses in excess of the amount that may be
included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or
less and all futures contracts.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 36-7430 FFIEC 032
101 SOUTH SALINA STREET Page RC-24
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
32
Transit Number: 11300106
Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on March 31, 1995
OnBank & Trust Company Syracuse NY
- --------------------------------------------------------- ------------------------------------------ ----------
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, the truncated statement will appear as the bank's
submit a brief narrative statement on the amounts statement both on agency computerized records and in
reported in the Reports of Condition and Income. This computer-file releases to the public.
optional statement will be made available to the public,
along with the publicly available data in the Reports of All information furnished by the bank in the narrative
Condition and Income, in response to any request for statement must be accurate and not misleading.
individual bank report data. However, the information Appropriate efforts shall be taken by the submitting
reported in column A and in all of Memorandum item 1 of bank to ensure the statement's accuracy. The statement
Schedule RC-N is regarded as confidential and will not must be signed, in the space provided below, by a senior
be released to the public. BANKS CHOOSING TO SUBMIT THE officer of the bank who thereby attests to its accuracy.
NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT
DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF If, subsequent to the original submission, material
INDIVIDUAL BANK CUSTOMERS, REFERENCES TO THE AMOUNTS changes are submitted for the data reported in the
REPORTED IN THE CONFIDENTIAL ITEMS IN SCHEDULE RC-N, OR Reports of Condition and Income, the existing narrative
ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE statement will be deleted from the files, and from
MADE PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF disclosure; the bank, at its option, may replace it with
THEIR CUSTOMERS. Banks choosing not to make a statement a statement, under signature, appropriate to the amended
may check the "No comment" box below and should make no data.
entries of any kind in the space provided for the
narrative statement; i.e., DO NOT enter in this space The optional narrative statement will appear in agency
such phrases as "No statement," "Not applicable," "N/A," records and in release to the public exactly as
"No Comment," and "None." submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the
The optional statement must be entered on this sheet. truncation of statements exceeding the 750-character
The statement should not exceed 100 words. Further, limit described above). THE STATEMENT WILL NOT BE EDITED
regardless of the number of words, the statement must OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
not exceed 750 characters, including punctuation, ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL
indentation, and standard spacing between words and NOT SIGNIFY THAT ANY FEDERAL SUPERVISORY AGENCY HAS
sentences. If any submission should exceed 750 VERIFIED OR CONFIRMED THE ACCURACY OF THE INFORMATION
characters, as defined, it will be truncated at 750 CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL
characters with no notice to the submitting bank and APPEAR ON ANY PUBLIC RELEASE OF THE OPTIONAL STATEMENT
SUBMITTED BY THE MANAGEMENT OF THE REPORTING BANK.
- ---------------------------------------------------------------------------------------------------------------------------
No comment: X (RCON 6979) C371 C372 {-
BANK MANAGEMENT STATEMENT (please type or print clearly) (TEXT 6980):
---------------------------------------- -----------------
Signature of Executive Officer of Bank Date of Signature
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
ONBANK & TRUST COMPANY Call Date: 06/30/96 ST-BK: 48-3778 FFIEC 032
101 SOUTH SALINA STREET Page RC-25
SYRACUSE, NY 13221 Vendor ID: D CERT: 07319
33
Transit Number: 11300106
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
- ---------------------------------------------------------------------------------------------------------------------------
OMB No. For OCC: 1557-0081
OMB No. For FDIC: 3064-0052
OMB No. For Federal Reserve: 7100-0036
Expiration Date: 03/31/95
SPECIAL REPORT
(Dollar Amounts in Thousands)
CLOSE OF BUSINESS DATE: FDIC Certificate Number:
6/30/96 07319 C700 {-
- ---------------------------------------------------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
- ---------------------------------------------------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 1020-242, but does not constitute a part of the Report of
Condition. With each Report of Condition, these Laws require all banks to furnish a report of all loans or other
extensions of credit to its executive officers made since the date of the previous Report of Condition. Data regarding
individual loans or other extensions of credit are not required. If no such loans or other extensions of credit were
made during the period, insert "none" against subitem (a). (Exclude the first $15,000 of indebtedness of each executive
officer under bank credit card plan.) See Sections 215.2 and 215.3 of Title 12 of the Code of Federal Regulations
(Federal Reserve Board Regulation O) for the definitions of "executive officer" and "extension of credit," respectively.
Exclude loans and other extensions of credit to directors and principal shareholders who are not executive officers.
- ---------------------------------------------------------------------------------------------------------------------------
RCON
----
1. Number of loans made to executive officers since the previous
Call Report date. . . . . . . . . . . . . . . . . . . . . . . . . . 3561 NONE a.
2. Total dollar amount of above loans (in thousands of dollars) . . . . 3562 0 b.
3. Range of interest charged on above loans (example:
9 3/4% = 9.75) . . . . . . . . . . . . . . . . . . . . . . . . . . 7701/7702 0.00% to 0.00% c.
- ---------------------------------------------------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT: DATE (Month, Day, Year):
_______________________________________________________________________ ______________________________________________
NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED: (TEXT 8903) AREA CODE/PHONE NUMBER: (TEXT 8904)
WILLIAM G. SCHMIDT, AVP (315) 442-1866
- ---------------------------------------------------------------------------------------------------------------------------
FDIC 8040/53 (9-94)
</TABLE>
<PAGE>
