<PAGE> 1
As filed with the Securities and Exchange Commission on July 6, 1998
Registration No. 333-56463
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
PRE-EFFECTIVE AMENDMENT NO.1
TO FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------
OAK HILL FINANCIAL, INC.
(Exact name of Registrant as specified in its charter)
Ohio 6712 31-1010517
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
---------------------------
14621 State Route 93
Jackson, Ohio 45640
(740) 286-3283
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
---------------------------
John D. Kidd
President and Chief Executive Officer
Oak Hill Financial, Inc.
14621 State Route 93
Jackson, Ohio 45640
(740) 286-3283
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------------
Copies of Correspondence to:
H. Grant Stephenson, Esq. Terri R. Abare, Esq.
Porter, Wright, Morris & Arthur Vorys, Sater, Seymour and Pease LLP
41 South High Street 221 East Fourth Street
Columbus, Ohio 43215 Cincinnati, Ohio 45202
(614) 227-2155 (513)723-4000
---------------------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after the Effective Date of this Registration
Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any 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, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
==========================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount to be Offering Price Aggregate Offering Registration
Securities to be Registered Registered Per Share* Price* Fee*
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock, without par value....... 1,006,250 $22.50 $22,640,625 $6,679
==========================================================================================================
</TABLE>
* Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(c), based on the average high and low prices of the Common Stock as
reported on the Nasdaq National Market on June 5, 1998.
This Registration Statement shall be deemed to cover an indeterminate number of
additional shares of Oak Hill Financial, Inc. Common Stock, without par value,
as may be issuable pursuant to future stock dividends, stock splits or similar
transactions.
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 SECTION 8(a), MAY DETERMINE.
<PAGE> 2
(RED HERRING LANGUAGE APPEARS AT 90 DEGREES AND READS AS FOLLOWS)
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
SUBJECT TO COMPLETION, DATED JULY 6, 1998
PROSPECTUS
875,000 SHARES
[OAK HILL LOGO]
COMMON STOCK
All of the 875,000 shares of common stock, without par value (the
"Common Stock"), of Oak Hill Financial, Inc. (the "Company") offered hereby are
being sold by shareholders of the Company (the "Selling Shareholders"). See
"Selling Shareholders." The Company will not receive any of the proceeds from
the sale of Common Stock by the Selling Shareholders. The Common Stock is traded
on the Nasdaq National Market under the symbol "OAKF." On July __, 1998, the
last sale price of the Common Stock, as reported on the Nasdaq National Market,
was $_____ per share.
----------
SEE "RISK FACTORS" AT PAGE 8 FOR A DISCUSSION OF CERTAIN INFORMATION
THAT SHOULD BE CAREFULLY CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES
OFFERED HEREBY.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC") OR
ANY OTHER GOVERNMENTAL AGENCY.
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.
================================================================================
Proceeds to
Price to Underwriting Selling
Public Discount (1) Shareholders (2)
- --------------------------------------------------------------------------------
Per Share $ $ $
- --------------------------------------------------------------------------------
Total (3) $ $ $
================================================================================
(1) The Selling Shareholders and the Company have agreed to indemnify
McDonald & Company Securities, Inc., and Advest, Inc. (the
"Underwriters") against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $57,000 which will be paid by
the Selling Shareholders.
(3) Two of the Selling Shareholders have granted the Underwriters a 30-day
option to purchase up to an additional 131,250 shares of Common Stock
on the same terms and conditions as set forth above to cover
over-allotments. If such option is exercised in full, the total Price
to Public, Underwriting Discount and total Proceeds to the Selling
Shareholders will be $ , $ and $ , respectively. See "Underwriting."
The shares of Common Stock are offered subject to receipt and
acceptance by the Underwriters, to prior sale and to the Underwriters' right to
reject any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that certificates for the shares of Common Stock
will be available for delivery on or about ___________________, 1998.
MCDONALD & COMPANY ADVEST, INC.
SECURITIES, INC.
The date of this Prospectus is July __, 1998
<PAGE> 3
[Insert Map of Bank Service Area]
----------
THE UNDERWRITERS MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR
OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING THE PURCHASE OF COMMON
STOCK TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." SUCH STABILIZING
TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS AND SELLING GROUP MEMBERS
MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE "UNDERWRITING."
- 2 -
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the Commission's
public reference room located at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and its regional offices located at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and
7 World Trade Center, 15th Floor, New York, New York 10048. Copies of such
material may also be obtained at prescribed rates by writing the Securities and
Exchange Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and its public reference facilities in Chicago, Illinois
and New York, New York. The Commission also maintains a Web site that contains
copies of such materials and the address of the Web site is
(http://www.sec.gov).
The Common Stock is listed on the Nasdaq National Market, and
accordingly such reports and other information concerning the Company also are
available for inspection and copying at the offices of the Nasdaq Stock Market,
1735 K. Street, N.W., Washington D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), for the registration under the Securities Act of
the shares of Common Stock offered hereby. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. Reference is hereby made to the Registration Statement for further
information with respect to the Company and the Common Stock offered hereby.
Statements contained herein concerning the provisions of documents filed as
exhibits to the Registration Statement are necessarily summaries of such
documents, and each such statement is qualified in its entirety by reference to
the copy of the applicable document filed with the Commission.
INFORMATION INCORPORATED BY REFERENCE
There are hereby incorporated by reference into this Prospectus and
made a part hereof the following documents filed by the Company with the
Commission pursuant to the Exchange Act:
(1) the Annual Report on Form 10-KSB for the fiscal year ended December
31, 1997, filed with the Commission on March 30, 1998;
(2) the Definitive Proxy Statement for the 1998 Annual Meeting of
Shareholders, filed with the Commission on March 27, 1998; and
(3) the Quarterly Report on Form 10-QSB for the quarter ended March 31,
1998, filed with the Commission on May 14,1998.
In addition, the description of the Common Stock contained in the
Company's Registration Statement on Form 8-A filed pursuant to Section 12 of the
Exchange Act, including any amendment thereto or report filed under the Exchange
Act for the purpose of updating such description is also incorporated by
reference in this Prospectus and made a part hereof. All documents filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Prospectus shall be deemed to be incorporated by reference into
the Prospectus and to be a part hereof as of their respective dates. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
Any person to whom a copy of this Prospectus is delivered, including a
beneficial owner, may obtain without charge, upon written or oral request, a
copy of any of the documents incorporated by reference herein, except for the
exhibits to such documents, unless such exhibits are specifically incorporated
by reference herein. Requests should be directed to David G. Ratz, Oak Hill
Financial, Inc., 14621 State Route 93, Jackson, Ohio 45640.
- 3 -
<PAGE> 5
Unless otherwise indicated in this Prospectus, (i) all information
assumes no exercise of the Underwriters' over-allotment option, (ii) all share
information has been adjusted for a 700-for-1 stock split effected October 10,
1995 and a 5-for-4 stock split distributed June 1, 1998. In addition, the
historical financial information reflects the acquisition of Unity Savings Bank
on October 2, 1997, a merger transaction which was accounted for as a
pooling-of-interests.
THE COMPANY
Oak Hill Financial, Inc., an Ohio corporation (the "Company"), is a
bank holding company headquartered in Jackson, Ohio. The Company was
incorporated in 1981 for the purpose of becoming the holding company for Oak
Hill Banks (the "Bank"), an Ohio chartered bank that was established in 1902.
The Bank operates 15 full-service offices and a loan production office in nine
counties in southern Ohio. Through the Bank, the Company is engaged in the
business of commercial banking and other permissible activities closely related
to banking. At March 31, 1998, the Company had total assets of $375.4 million,
total deposits of $321.2 million and stockholders' equity of $34.4 million.
Since the mid-1980s, the Company has pursued a growth strategy designed
to build franchise value through internal and external growth to achieve
economies of scale that would enable the Company to compete more effectively in
the rapidly evolving financial services industry. Given the Company's dominant
share in its historical market area, management recognized that the desired
growth levels would have to come from expansion into new markets through de novo
branching and acquisitions of other financial institutions.
The strategy for internal growth was based on providing
customer-oriented, personalized banking services in mid-sized communities
predominantly within a 100-mile radius of Jackson. By providing the Bank's local
managers with control over loan and deposit pricing decisions in the communities
served, the management believes it is more responsive to its customers than many
of its competitors. The Bank has also expanded its residential mortgage loan
product line and added several new offerings to its product and service mix,
including direct deposit checking, 24-hour telephone banking, and automated
clearinghouse origination services. The Bank has also installed several
off-premises ATMs in high-traffic locations to supplement its branch network.
External growth through acquisitions has also been an important part of
the Company's growth strategy. In 1985, the Bank expanded its market area
through the acquisition of a small bank in Warren County. The Bank's recent
acquisition of Unity Savings Bank ("Unity") in October 1997 enabled the Bank to
expand its market area and increase its asset size. The Unity merger, which was
accounted for as a pooling of interests, added $63.1 million in assets and three
full-service offices to the Bank.
The Company's strategic direction has resulted in more than doubling of
asset size since December 31, 1993, including the Unity merger. Management
believes that significant internal and external growth opportunities remain and
that the Company is positioned for future growth based on the following
characteristics:
SUCCESSFUL TRACK RECORD OF GROWTH. Although the Company has actively
pursued acquisition opportunities, approximately $138.6 million of the
Company's asset growth since December 31, 1993, has been generated
through internal growth, including the opening of de novo branches in
Chillicothe, Portsmouth, Circleville, West Portsmouth, and Trenton,
Ohio. Continuing its pattern of de novo branch openings, the Company
filed a regulatory application in June 1998 to open a branch in Athens,
Ohio. The Company will continue to pursue asset growth and market
expansion through acquisitions and mergers as appropriate opportunities
emerge.
CONSISTENT PROFITABILITY. The Company's rate of growth has been
accomplished without sacrifice to earnings as the Company has
maintained consistent levels of profitability over the last several
years. Excluding the Unity merger, net income from December 31, 1992
through September 30, 1997 increased at approximately a 21% compound
annual rate, and the Company's return on average assets and return on
average equity averaged 1.29% and 16.23%, respectively, during the same
period. For the three months ended March 31, 1998, return on average
assets was 1.45% (annualized), and return on average equity was 16.81%
(annualized).
- 4 -
<PAGE> 6
EXCELLENT ASSET QUALITY. The Company has established and adhered to
loan underwriting standards which have contributed to a history of
excellent asset quality. For the five years ended December 31, 1997,
net charge-offs have averaged 0.13% of average loans each year. For the
three months ended March 31, 1998, net charge-offs (annualized) were
0.16% of average loans, and at March 31, 1998, the ratio of
non-performing assets to total assets was only 0.26%. In addition, at
the same date, the Company's allowance for loan losses was 392.1% of
non-performing loans and 1.30% of total loans.
STRONG CAPITALIZATION. Throughout the Company's history, the Company
has been well capitalized, and the Bank has consistently exceeded
regulatory capital requirements. At March 31, 1998, the Company's ratio
of stockholders' equity to total assets was 9.17%.
There can be no assurance, however, that the Company will be able to
maintain its historical levels of growth, profitability, asset quality and
capitalization. See "Risk Factors."
In December 1997, the Company formed a new subsidiary, Action Finance
Company ("Action Finance"), a consumer finance company offering small personal
loans and other specialty consumer financing to borrowers that are outside the
Bank's traditional customer base. Action Finance is a licensed lender with the
Ohio Division of Consumer Finance. It opened with two offices in Jackson and
Wellston, Ohio. The chief executive officer of Action Finance is Robert H.
Huchison, a finance company executive with 24 years of experience.
The Company intends to pursue a niche strategy with respect to Action
Finance, seeking higher-quality loans than are typical for consumer finance
companies and offering highly competitive rates. With strict control of credit
quality coupled with growth and future expansion into new markets, management
believes that Action Finance has the potential to make a positive contribution
to the Company's earnings within the next several years.
The Company's principal executive offices are located at 14621 State
Route 93, Jackson, Ohio 45640. Its telephone number is (740) 286-3283.
CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS
Certain statements contained in this prospectus and in documents
incorporated by reference in this prospectus, contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 that
are subject to numerous assumptions, risks, and uncertainties. Actual results
could differ materially from those contained in or implied by the Company's
statements for a variety of factors including: changes in economic conditions,
movements in interest rates, competitive pressures on product pricing and
services, success and timing of business strategies, the nature and extent of
governmental actions and reforms, and extended disruption of vital
infrastructure. Such forward-looking statements should be viewed as strategic
objectives rather than predictions of future performance.
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<PAGE> 7
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information of the
Company for the five years ended December 31, 1997 has been derived from the
Company's audited consolidated financial statements. The selected consolidated
financial information of the Company for the three months ended March 31, 1997
and 1998 is derived from unaudited consolidated financial statements of the
Company. This data should be read in conjunction with the consolidated financial
statements, related notes, and other financial information of the Company
incorporated by reference to this document. See "Information Incorporated By
Reference."
<TABLE>
<CAPTION>
At or For In Thousands
the Three Months
Ended March 31. At or For the Year Ended December 31,
-------------------- ----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF FINANCIAL CONDITION(1)
Total assets ............................ $375,428 $327,869 $361,917 $311,854 $268,322 $238,806 $226,447
Interest-bearing deposits
and federal funds sold .............. 12,218 4,030 3,773 4,135 10,956 1,514 13,176
Investment securities (2) ............... 52,133 59,761 51,989 51,171 40,987 43,708 41,211
Loans receivable - net (3) .............. 291,736 244,678 285,249 237,669 200,206 178,045 160,171
Deposits ................................ 321,166 275,346 301,965 258,622 230,678 209,805 205,181
Federal Home Loan Bank (FHLB)
advances and other borrowings(4) .... 16,524 19,639 24,705 21,437 8,905 8,161 2,100
Shareholders' equity .................... 34,427 31,030 33,349 30,349 27,502 19,734 18,118
SUMMARY OF OPERATIONS (1)
Interest income ......................... 7,634 6,562 $ 28,254 $ 24,169 $ 21,097 $ 17,529 $ 16,668
Interest expense ........................ 3,654 3,249 13,707 11,619 10,844 7,817 7,692
-------- -------- -------- -------- -------- -------- --------
Net interest income ................. 3,980 3,313 14,547 12,550 10,253 9,712 8,976
Provision for loan losses ............... 277 106 1,150 859 581 363 472
-------- -------- -------- -------- -------- -------- --------
Net interest income after
provision for loan losses ........... 3,703 3,207 13,397 11,691 9,672 9,349 8,504
Gain on sale of loans ................... 144 14 163 85 57 28 219
Gain (loss) on sale of assets ........... 18 -- (60) 25 (77) (67) 88
Other non-interest income ............... 354 338 1,310 1,291 1,119 858 827
Non-interest expense (5) ................ 2,298 1,914 9,050 7,606 6,567 6,504 5,770
-------- -------- -------- -------- -------- -------- --------
Earnings before federal income
taxes and cumulative effect of
change in accounting method ..... 1,921 1,645 5,760 5,486 4,204 3,664 3,868
Federal income taxes .................... 615 548 2,052 1,774 1,425 1,229 1,366
-------- -------- -------- -------- -------- -------- --------
Earnings before cumulative effect
of change in accounting method ....... 1,306 1,097 3,708 3,712 2,779 2,435 2,502
Cumulative effect of change in method
of accounting for income taxes (6)... -- -- -- -- -- -- 446
-------- -------- -------- -------- -------- -------- --------
Net earnings ............................ $ 1,306 $ 1,097 $ 3,708 $ 3,712 $ 2,779 $ 2,435 $ 2,948
======== ======== ======== ======== ======== ======== ========
PER SHARE INFORMATION (1)(7)
Earnings per share (basic) .............. $ .30 $ .25 $ .84 $ .85 $ .72 $ .66 $ .82
Earnings per share (diluted) ............ $ .29 $ .25 $ .83 $ .84 $ .72 $ .65 $ .81
Book value .............................. $ 7.82 $ 7.06 $ 7.58 $ 6.90 $ 6.26 $ 5.36 $ 4.91
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
At or For In Thousands
the Three Months
Ended March 31. At or For the Year Ended December 31,
------------------- ---------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER STATISTICAL AND
OPERATING DATA(1)
Return on average assets(8).............. 1.45% 1.39% 1.09% 1.29% 1.08% 1.05% 1.33%
Return on average equity(8).............. 15.58 14.48 11.70 12.88 11.64 12.84 17.02
Net interest margin...................... 4.57 4.38 4.54 4.56 4.12 4.40 4.32
Interest rate spread during period....... 3.83 3.69 3.95 3.91 3.43 3.88 3.93
Non-interest expense to average assets... 2.55 2.43 2.67 2.64 2.55 2.80 2.61
Total allowance for loan losses
to nonperforming loans................. 392.10 265.80 360.40 292.80 144.80 350.90 216.20
Total allowance for loan losses
to total loans......................... 1.30 1.25 1.30 1.22 1.17 1.21 1.19
Nonperforming loans to total loans....... 0.57 0.47 0.36 0.42 0.81 0.35 0.55
Nonperforming assets to total assets..... 0.45 0.36 0.29 0.32 0.63 0.32 0.41
Net charge-offs to average loans......... 0.04 0.00 0.12 0.14 0.21 0.06 0.11
Equity to assets at period end........... 9.17 9.46 9.22 9.73 10.25 8.25 8.00
Number of full-service offices........... 15 15 15 14 13 12 11
</TABLE>
- ---------------------------------
(1) The Company merged Unity with and into the Bank, on October 2, 1997.
The merger was accounted for as a pooling-of-interests. Accordingly,
the consolidated financial statements for all prior periods have been
restated as if the merger had occurred on January 1, 1993.
(2) Includes investment securities designated as held to maturity and
available for sale. The Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" as of January 1, 1994. See
Notes A-2 and B of Notes to Consolidated Financial Statements for
additional information regarding the composition and classification of
investment securities pursuant to this Statement.
(3) Includes loans held for sale.
(4) FHLB advances and other borrowings at December 31, 1994 and 1993
included $2.1 million of notes payable to principal shareholders.
(5) Non-interest expense for 1997 included $920,000 in pre-tax expenses
incurred pursuant to the merger with Unity.
(6) Reflects the Company's adoption of SFAS No. 109, "Accounting for Income
Taxes" in 1993.
(7) Per share information gives retroactive effect to the 700-for-1 stock
split effected October 11, 1995, the 5-for-4 stock split effected June
1, 1998, and the issuance of shares in the Unity transaction.
(8) Excluding after-tax merger-related expenses of $767,000, the Company's
return on average assets and return on average equity for the year
ended December 31, 1997, would have totaled 1.32% and 14.12%,
respectively.
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<PAGE> 9
RISK FACTORS
Prospective investors should consider the following risk factors, in
addition to other information contained or incorporated by reference herein, in
connection with a decision to purchase the shares offered hereby.
Growth Strategy. The Company has pursued and continues to pursue a
strategy of growth. The success of the Company's growth strategy will depend
largely upon its ability to manage its credit risk and control its costs while
providing competitive products and services. This growth strategy may present
special risks, such as the risk that the Company will not efficiently handle
growth with its present operations, the risk of dilution of book value and
earnings per share as a result of an acquisition, the risk that earnings will be
adversely affected by the start-up costs associated with establishing new
products and services, the risk that the Company will not be able to attract and
retain qualified personnel needed for expanded operations, and the risk that its
internal monitoring and control systems may prove inadequate. In addition, due
to the rapid growth of the Company, many of the Company's loans are unseasoned,
so the potential for additional loans losses has increased even though the
Company continues to adhere to the same underwriting criteria and monitoring
procedures that have resulted in the Company's present loan loss experience.
Potential Impact of Changes In Interest Rates. The Company's results of
operations are dependent to a large degree on net interest income, the
difference between interest income from loans and investments and interest
expense on deposits and borrowings. One common measurement of interest rate
risk, known as the interest rate gap, is the difference between interest-earning
assets and interest-bearing liabilities repricing or maturing within various
time frames, expressed as a percentage of total assets. At December 31, 1997,
the Company had a cumulative interest rate gap of negative 8.19% for one year.
As a result of this negative interest rate gap position, the costs associated
with the Company's deposits could be expected to increase more rapidly than the
Company's income from loans and investments in a period of rising interest
rates. Consequently, a significant increase in market rates of interest could
adversely affect net interest income. Conversely, a significant decrease in
market rates of interest could result in increased net interest income.
Credit Risk; Exposure To Economic Conditions in Southeastern Ohio. A
significant risk facing lenders generally is credit risk, which is the risk of
losing principal and accrued interest if borrowers fail to perform according to
the terms of the loan agreements. Moreover, the Bank's concentration of loans in
Jackson, Gallia, Pickaway, Ross, Scioto, Vinton and Athens Counties, exposes it
to risks resulting from changes in these local economies in southeastern Ohio.
While the Bank's market area includes Butler and Warren Counties, which are
located in southwestern Ohio, its lending operations are concentrated in the
above-mentioned southeastern Ohio counties. In addition, through its Action
Finance subsidiary, the Company is targeting loan products to borrowers in these
southeastern Ohio counties who have typically a higher credit risk profile than
the lending customers of the Bank, a strategy which may increase the Company's
sensitivity to changes in economic conditions in these southeastern Ohio
counties. From time to time, the growth of the local economies of these
southeastern Ohio counties has lagged the rest of Ohio. For example, as of March
1998 (the latest date for which estimates are available), the average
unemployment rate in these southeastern Ohio counties was 9.6% while the
statewide unemployment rate was 4.3% (seasonally adjusted), according to
estimates by the Ohio Bureau of Employment Services.
Control by Management; Anti-Takeover Provisions. Evan E. Davis, John D.
Kidd and D. Bruce Knox (the "Principal Shareholders") own in the aggregate
approximately 54.9% of the outstanding shares of Common Stock of the Company.
After the completion of this offering the Principal Shareholders will own an
aggregate of approximately 36.0% of the outstanding shares. Accordingly, the
Principal Shareholders will retain significant power with respect to the
election of Directors of the Company and with respect to the outcome of other
matters submitted to the Company's shareholders for approval. Assuming that the
Principal Shareholders continue to retain a substantial percentage of the
outstanding voting shares of the Company, such ownership position could be
expected to deter any prospective acquiror from seeking to acquire ownership or
control of the Company, and the Principal Shareholders would be able to defeat
any acquisition proposal that requires approval of two-thirds of the Company's
shareholders, if the Principal Shareholders chose to do so. In addition, the
Principal Shareholders may make a private sale of shares of common stock of the
Company which they own, including to a person seeking to acquire ownership or
control of the Company. In addition to Ohio and federal laws and regulations
governing changes in control of insured depository institutions, the Company's
Articles of Incorporation and Code of Regulations contain certain provisions
which may delay or make more
- 8 -
<PAGE> 10
difficult an acquisition of control of the Company. For example, the Company's
Articles of Incorporation do not exempt the Company from the provisions of
Ohio's "control share acquisition" and "merger moratorium" statutes. The Company
has 3,000,000 shares of authorized but unissued preferred stock, par value $ .01
per share, which may be issued in the future with such rights, privileges and
preferences as are determined by the Board of Directors of the Company. In
December 1997, the Board of Directors of the Company approved and adopted a
shareholder rights plan that contemplates the issuance of rights to purchase
preferred stock of the Company to the Company's common shareholders of record as
of February 17, 1998, as set forth in the Rights Agreement entered into between
the Company and Fifth Third Bank on January 23, 1998.
Limited Trading Market; Shares Eligible for Future Sale; Possible
Volatility of Stock Price. The Common Stock is traded on the Nasdaq National
Market under the symbol "OAKF." During the 12 months ending April 30, 1998, the
average weekly trading volume in the Common Stock has been less than 2,000
shares per week. There can be no assurance given as to the liquidity of the
market for the Common Stock or the price at which any sales may occur, which
price will depend upon, among other things, the number of holders thereof, the
interest of securities dealers in maintaining a market in the Common Stock and
other factors beyond the control of the Company. The market price of the Common
Stock could be adversely affected by the sale of additional shares of Common
Stock owned by the Company's current shareholders. The Principal Shareholders
are permitted to sell certain limited amounts of Common Stock without
registration, pursuant to Rule 144 under the Securities Act. The market price
for the Common Stock could be subject to significant fluctuations in response to
variations in quarterly and yearly operating results, general trends in the
banking industry and other factors. In addition, the stock market can experience
price and volume fluctuations that may be unrelated or disproportionate to the
operating performance of affected companies. These broad fluctuations may
adversely affect the market price of the Common Stock.
Dependence on Management. The Company's success depends to a great
extent on its senior management, including its Chairman, Evan E. Davis;
President, John D. Kidd; Executive Vice President, Richard P. LeGrand;
Secretary/Treasurer, H. Tim Bichsel; and Vice President, David G. Ratz. The loss
of their individual services could have a material adverse impact on the
Company's financial stability and its operations. In addition, the Company's
future performance depends on its ability to attract and retain key personnel
and skilled employees, particularly at the senior management level. The
Company's financial stability and its operations could be adversely affected if,
for any reason, one or more key executive officers ceased to be active in the
Company's management. The Company does not own or currently plan to acquire "key
man" life insurance on the lives of any of its key employees.
Competition. Banking institutions operate in a highly competitive
environment. The Company competes with other commercial banks, credit unions,
savings institutions, finance companies, mortgage companies, broker-dealers,
mutual funds, and other financial institutions, many of which have substantially
greater financial resources than the Company. Certain of these competitors offer
products and services that are not offered by the Company and certain
competitors are not subject to the same extensive laws and regulations as the
Company. Additionally, consolidation of the financial services industry in Ohio
and in the Midwest in recent years has increased the level of competition.
Recent and proposed regulatory changes may further intensify competition in the
Company's market area.
Holding Company Structure; Government Regulations and Policies. The
Company is a single-bank holding company, the profitability of which is entirely
dependent on the profitability of the Bank and the upstream payment of dividends
from the Bank to the Company. Under state and federal banking law, the payment
of dividends by the Company and the Bank is subject to capital adequacy
requirements. The inability of the Bank to generate profits and pay such
dividends to the Company, or regulatory restrictions on the payment of such
dividends to the Company even if earned, would have an adverse effect on the
financial condition and results of operations of the Company and the Company's
ability to pay dividends to the shareholders.
As a bank holding company, the Company is subject to regulation,
examination and supervision by the Board of Governors of the Federal Reserve
System. The Bank is an Ohio-chartered, federally-insured bank subject to both
state and federal regulations, including comprehensive regulation, examination
and supervision by the Ohio Division of Banks (the "Ohio Division") and the
FDIC. These regulations are primarily intended to protect depositors and may
impose limitations on the Company which may not be in the best interest of its
stockholders. Regulations now affecting the Company and the Bank may be changed
at any time, and the interpretation of those regulations by examining
- 9 -
<PAGE> 11
authorities also is subject to change. Legislative proposals are made from time
to time which, if enacted, could adversely affect banking corporations
generally, including the Company. It is not possible to predict whether any such
initiatives will be successful, or what would be the precise effect of such
initiatives on the Company if enacted. There can be no assurance that future
changes in the regulations or in the interpretation thereof will not adversely
affect the business of the Company or the Bank. Changes in the government's
monetary, fiscal, housing finance or tax policies may also adversely affect the
business of the Company or the Bank.
- 10 -
<PAGE> 12
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Price Range of Common Stock. The high and low sales prices for the
Company Common Stock as reported on the Nasdaq National Market during each
quarter of 1996, 1997, and 1998 are as follows. High and low sale prices have
been restated to give effect to the Company's June 1, 1998 5-for-4 stock split
distributed in the form a stock dividend.
Quarter Ended High Low
------------- ---- ---
March 31, 1996......................... $ 8.00 $ 7.60
June 30, 1996.......................... 9.80 7.60
September 30, 1996..................... 9.80 8.80
December 31, 1996...................... 10.40 9.20
March 31, 1997......................... 11.40 9.80
June 30, 1997.......................... 16.80 10.80
September 30, 1997..................... 16.80 15.40
December 31, 1997...................... 18.80 15.40
March 31, 1998......................... 23.70 17.60
June 30, 1998.......................... 24.00 20.00
At June 30, 1998, the Company had approximately 1,400 shareholders
(approximately 360 shareholders of record) and 4,402,165 shares of Common Stock
outstanding.
Dividends. The ability of the Company to pay cash dividends to
shareholders is limited by its ability to receive dividends from its
subsidiaries. The State of Ohio places certain limitations on the payment of
dividends by Ohio state-chartered banks.
The Company declared the following quarterly cash dividends in 1996,
1997, and 1998 (restated to give effect to the Company's June 1, 1998 stock
split):
Quarter Ended Dividend Declared
------------- -----------------
March 31, 1996......................... $0.04
June 30, 1996.......................... 0.04
September 30, 1996..................... 0.04
December 31, 1996...................... 0.05
March 31, 1997......................... 0.05
June 30, 1997.......................... 0.05
September 30, 1997..................... 0.05
December 31, 1997...................... 0.06
March 31, 1998......................... 0.06
June 30, 1998.......................... 0.07
Future cash and stock dividends will be subject to determination and
declaration by the Board of Directors and will consider, among other factors,
the Company's financial condition and results of operations, investment
opportunities, capital requirements, and regulatory limitations.
RECENT DEVELOPMENTS
On July 7, 1998, the Company reported earnings for the second quarter
of 1998. Net earnings for the three-month period ended June 30, 1998 were
$1,550,000, or $.34 per share on a fully-diluted basis. The second quarter
earnings represent an increase of 46.2% over the $1,060,000, or $.24 per share
on a fully-diluted basis, in net earnings recorded for the second quarter of
1997.
Year-to-date, the company's earnings of $2,856,000 ($.63 per share,
fully diluted) increased 32.4% from $2,157,000 ($.49 per share, fully diluted)
in earnings for the first six months of 1997.
The Company's total assets increased 7.1% from December 31, 1997 to
June 30, 1998 to end the quarter at $387.6 million. This represents an increase
of 15.6% over the $335.4 million in assets recorded at June 30, 1997.
- 11 -
<PAGE> 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Basis of Presentation
- ---------------------
On October 1, 1997, the Company merged Unity with and into the Bank in
a transaction that was accounted for as a pooling-of-interests. Accordingly, the
Company's consolidated financial statements for periods prior to the merger have
been restated to reflect the effects of the business combination as of the
beginning of such periods.
Discussion of Financial Condition Changes from December 31, 1997 to March 31,
- -----------------------------------------------------------------------------
1998
- ----
At March 31, 1998, the Company had total assets of $375.4 million, an
increase of approximately $13.5 million, or 3.7%, over December 31, 1997 levels.
The increase in total assets was funded primarily by growth in the deposit
portfolio of $19.2 million and undistributed net earnings of $1.0 million, which
were partially offset by a decrease in Federal Home Loan Bank advances of $8.2
million.
Cash, federal funds sold and investment securities totaled $72.5
million at March 31, 1998, an increase of $6.9 million, or 10.5%, over December
31, 1997 levels. During the three months ended March 31, 1998, management
purchased $6.4 million of investment securities, while $6.3 million of
securities matured. Securities purchased consisted primarily of U.S. Treasury
notes and U.S. Government agency securities. The increase in cash, federal funds
sold and investment securities reflects management's efforts to maintain
adequate levels of liquidity while maximizing yield on short-term investments.
Loans receivable and loans held for sale totaled $291.7 million at
March 31, 1998, an increase of $6.5 million, or 2.3%, over the total at December
31, 1997. Loan disbursements totaled approximately $54.2 million during the 1998
three month period, while principal repayments and sales amounted to $38.4
million and $9.0 million, respectively. Loan disbursements increased by $12.1
million, or 28.6%, during the 1998 period, as compared to the same period in
1997. Loans originated in 1998 were primarily comprised of commercial loans and
1-4 family residential loans.
The Company's allowance for loan losses amounted to $3.8 million at
March 31, 1998, an increase of $97,000 or 2.6% over the total at December 31,
1997. The allowance for loan losses represented 1.30% of the total loan
portfolio at March 31, 1998 and December 31, 1997. The Company's allowance
represented 392.1% and 360.4% of non-performing loans, which totaled $980,000
and $1.0 million at March 31, 1998 and December 31, 1997, respectively.
The deposit portfolio totaled $321.2 million at March 31, 1998, an
increase of $19.2 million, or 6.4%, over December 31, 1997 levels. Proceeds from
deposit growth were utilized to fund loan origination and to repay advances from
the Federal Home Loan Bank. The increase resulted primarily from management's
marketing efforts and continued growth at newer branch facilities.
The Company and the Bank are required to maintain minimum regulatory
capital pursuant to federal regulations. At March 31, 1998, the Company's and
the Bank's regulatory capital substantially exceeded all regulatory capital
requirements and the Company and the Bank were classified as well capitalized
for regulatory purposes.
Comparison of Results of Operations for the Three-Month Periods Ended March 31,
- -------------------------------------------------------------------------------
1998 and 1997
- -------------
General
- -------
Net earnings for the three months ended March 31, 1998 totaled $1.3
million, an increase of $209,000, or 19.1%, over the $1.1 million in net
earnings reported in the comparable 1997 period. The increase in earnings in the
1998 period was primarily attributable to a $496,000 increase in net interest
income after provision for losses on loans and a $164,000 increase in other
income, which were partially offset by a $384,000 increase in general,
administrative and other expenses and an increase in the federal income tax
provision of $67,000.
- 12 -
<PAGE> 14
Net Interest Income
- -------------------
Total interest income for the three months ended March 31, 1998
increased by $1.1 million, or 16.3%, generally reflecting the effects of growth
in average interest-earning assets from $306.9 million to $353.0 million for the
three month periods ending March 31, 1997 and 1998, respectively, coupled with
an increase in the weighted-average yield year-to-year from 8.67% to 8.77%.
Similarly, total interest expense increased for the three months ended March 31,
1998 by $405,000, or 12.5%, reflecting the growth in average interest-bearing
liabilities from $264.7 million to $306.9 million; however, the weighted-average
cost of funds decreased from from 4.98% to 4.94%, during the respective three
month periods.
As a result of the foregoing changes in interest income and interest
expense, net interest income increased by $667,000, or 20.1%, for the three
months ended March 31, 1998, as compared to the same period in 1997. The
interest rate spread amounted to 3.83% and 3.69% for the three months ended
March 31, 1998 and 1997, while the net interest margin was 4.57% and 4.38% for
the three months ended March 31, 1998 and 1997, respectively.
Provision for Losses on Loans
- -----------------------------
The provision for losses on loans totaled $277,000 for the three months
ended March 31, 1998, an increase of $171,000 over the comparable 1997 period.
The increase in the provision in the current period was primarily attributable
to growth in the portfolio year to year.
Although management believes that it uses the best information
available in providing for possible loan losses and believes that the allowance
was adequate at March 31, 1998, future adjustments to the allowance could be
necessary and net earnings could be affected if circumstances and/or economic
conditions differ substantially from the assumptions used in making the initial
determinations.
Other Income
- ------------
Other income for the three months ended March 31, 1998, totaled
$516,000, an increase of $164,000, or 46.6%, over the $352,000 reported in the
comparable 1997 period. The increase resulted from a $20,000, or 5.9% increase
in service fees, charges and other operating income, an increase of $130,000, or
928.6%, in gain on sale of loans, and a $14,000 gain on sale of investments. The
increase in gain on sale of loans was primarily attributable to an increase in
the number of residential mortgage loans originated and sold from the comparable
1997 period.
General, Administrative and Other Expense
- -----------------------------------------
General, administrative and other expense increased for the three
months ended March 31, 1998 by $384,000, or 20.1%. The increase was due
primarily to a $279,000, or 27.7%, increase in employee compensation and
benefits, and an increase in franchise taxes of $13,000, which were partially
offset by a $31,000, or 9.1%, decrease in occupancy and equipment expense, and a
$2,000, or 11.8%, decrease in federal deposit insurance premiums. Other
operating expenses also increased year-to-year by $125,000, or 28.8%.
The increase in employee compensation and benefits was due primarily to
additional staffing levels, primarily related to the start-up of the Action
subsidiary, coupled with normal merit increases, which were partially offset by
an increase in deferred costs related to greater lending volume year-to-year.
The increase in franchise taxes resulted from greater levels of stockholders'
equity in 1998. The decrease in occupancy and equipment expense resulted
primarily from expenses related to the addition of new branch facilities during
the first quarter of 1997. The increase in other operating expenses was
primarily attributable to costs incurred in connection with the inception of the
Action subsidiary, coupled with the Company's overall growth year to year.
- 13 -
<PAGE> 15
Federal Income Taxes
- --------------------
The provision for federal income taxes increased by $67,000, or 12.2%,
during the three months ended March 31, 1998, as compared to the same period in
1997 due principally to the higher level of pre-tax income. The effective tax
rates for the three month periods ended March 31, 1998 and 1997 were 32.0% and
33.3%, respectively.
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock by each Selling Shareholder on May 1,
1998 and as adjusted to reflect the sale of shares offered hereby. The persons
named in this table have sole voting and investment power with respect to all
shares of Common Stock shown as beneficially owned by them, except as otherwise
indicated.
<TABLE>
<CAPTION>
Before the Offering After the Offering
-------------------------- Shares ----------------------------
Number of Percentage Being Number of Percentage
Shares (1) of Class (2) Offered (3) Shares (1) of Class (2)
---------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Evan E. Davis ....... 1,409,964 32.0% 560,000 849,964 19.3%
John D. Kidd ........ 685,602 15.6% 270,600 415,002 9.4%
Richard P. LeGrand .. 54,000 1.2% 25,200 28,800 0.7%
Donna J. Lloyd ...... 42,720 1.0% 19,200 23,520 0.5%
--------- ---- ------- --------- ----
TOTALS ......... 2,192,286 49.8% 875,000 1,317,286 29.9%
========= ==== ======= ========= ====
</TABLE>
- -------------------
(1) For purposes of the above table, a person is considered to
"beneficially own" any shares with respect to which he/she exercises
sole or shared voting or investment power or of which he/she has the
right to acquire the beneficial ownership within 60 days of May 1,
1998. Unless otherwise indicated, voting power and investment power are
exercised solely by the person named above or shared with members of
his household.
(2) "Percentage of Class" is calculated by dividing the number of shares
beneficially owned by the total number of outstanding shares of the
Company on March 31, 1998 plus the number of shares such person has the
right to acquire within 60 days of May 1, 1998.
(3) This table assumes no exercise of the Underwriters' over-allotment
option granted by Mr. Kidd and Mr. Davis. If the over-allotment option
is exercised in full: (i) the number of shares being offered by Mr.
Davis would be 646,625 shares and the number of shares owned by Mr.
Davis and percentage of class after the offering would be 763,339
shares, and 17.3%, respectively; (ii) the number of shares being
offered by Mr. Kidd would be 315,225 shares and the number of shares
owned by Mr. Kidd and percentage of class after the offering would be
370,377 shares and 8.4%, respectively; and (iii) the totals would be
1,006,250 shares offered, and 1,186,036 shares, or 26.9%, owned after
the offering.
Evan E. Davis, age 64. Mr. Davis has been Chairman of the Company since
its formation in 1981. He served as President of the Company from 1981 to June
1995. Mr. Davis' family founded the Bank in 1902. Mr. Davis has been a director
of the Bank since 1957.
John D. Kidd, age 58. Mr. Kidd has been President of the Company since
1995 and Chief Executive Officer since 1981. He has served as President of the
Bank since October of 1991 and served as Chief Executive Officer and Executive
Vice President since joining the Bank in 1970.
Richard P. LeGrand, age 58. Mr. LeGrand has been Executive Vice
President of the Company since October 1991. He has served as a Director of the
Company since January 1987 and as a Director of the Bank since July 1993. Mr.
LeGrand served as Senior Vice President of the Bank from February 1986 to
October 1991, as Executive Vice President from October 1991 to September 1997,
and as President since October 1997.
Donna J. Lloyd, age 52. Ms. Lloyd joined the Bank in 1963. She has
served as Vice President of the Bank since February 1984 and served as Assistant
Vice President from February 1983 to February 1984.
- 14 -
<PAGE> 16
UNDERWRITING
Pursuant to the Underwriting Agreement, and subject to the terms and
conditions thereof, the Underwriters named below have agreed to purchase from
the Selling Shareholders the Common Stock offered hereby. In the Underwriting
Agreement, the Underwriters have agreed, subject to the terms and conditions
contained therein, to purchase all shares of Common Stock offered hereby if any
such shares are purchased.
McDonald & Company Securities, Inc...............
-------
Advest, Inc......................................
-------
Total............................................ 875,000
=======
The Selling Shareholders have been advised that the Underwriters
propose initially to offer the Common Stock to the public at the public offering
price set forth on the cover page of this Prospectus and to certain dealers at
such price less a concession not in excess of $_____ per share. The Underwriters
may allow and such dealers may reallow a concession not in excess of $_____ per
share to certain other dealers. After the shares are released for sale to the
public, the offering price and such concessions may be changed.
The offering of the shares of Common Stock is made for delivery when,
as and if, accepted by the Underwriters and subject to prior sale and to
withdrawal, cancellation or modification of the offer without notice. The
Underwriters reserve the right to reject any order for the purchase of the
shares.
Two of the Selling Shareholders have granted to the Underwriters an
option, exercisable not later than 30 days from the date of this Prospectus, to
purchase up to an additional 131,250 shares of Common Stock to cover
over-allotments. To the extent that the Underwriters exercise this option, the
Underwriters will have a firm commitment to purchase such shares and the Selling
Shareholders will be obligated, pursuant to the option, to sell such shares to
the Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of shares of Common Stock
offered hereby. If purchased, the Underwriters will sell such additional shares
on the same terms as those on which the shares are being offered.
The Underwriting Agreement provides that the Selling Shareholders and
the Company will indemnify the Underwriters and controlling persons, if any,
against certain liabilities, including liabilities under the Securities Act, or
to contribute to payments which the Underwriters or any such controlling persons
may be required to make in respect thereof.
The Underwriters are permitted to engage in certain transactions that
stabilize the price of the Common Stock. If the Underwriters create a short
position in the Common Stock in connection with the offering, i.e., if they sell
more shares of Common Stock than are set forth on the cover page of this
Prospectus, the Underwriters may reduce that short position by purchasing Common
Stock in the open market. The Underwriters may also elect to reduce any short
position by exercising all or part of the over-allotment option described above.
In general, purchases of Common Stock for the purpose of stabilization
or to reduce a short position could cause the price of the Common Stock to be
higher than it might be in the absence of such purchases. Neither the Company
nor the Underwriters makes any representation or predictions as to the direction
or magnitude of any effect that the transactions described above may have on the
price of the Common Stock. In addition, neither the Company nor the Underwriters
makes any representation that the Underwriters will engage in such transactions
or that such transactions, once commenced, will not be discontinued without
notice.
LEGAL MATTERS
The validity of the Common Stock offered hereby is being passed upon
for the Selling Shareholders by Porter, Wright, Morris & Arthur, Columbus, Ohio.
Certain legal matters will be passed upon for the Underwriters by Vorys, Sater,
Seymour and Pease LLP, Cincinnati, Ohio.
- 15 -
<PAGE> 17
EXPERTS
The consolidated financial statements as of December 31, 1997, and for
each of the three years in the period ended December 31, 1997 incorporated by
reference in this Prospectus have been audited by Grant Thornton LLP,
independent certified public accountants, and have been so included in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
- 16 -
<PAGE> 18
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES, OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT
BE LEGALLY MADE. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
TABLE OF CONTENTS
Page
----
Available Information............................ 3
Information Incorporated by Reference............ 3
The Company...................................... 4
Cautionary Statement Concerning Forward
Looking Statements............................. 5
Selected Consolidated Financial Data............. 6
Risk Factors..................................... 8
Price Range of Common Stock and Dividends........ 11
Subsequent Developments.......................... 12
Management Discussion and Analysis of
Financial Condition and Results of Operations.. 12
Selling Shareholders............................. 15
Underwriting..................................... 16
Legal Matters.................................... 16
Experts.......................................... 17
================================================================================
================================================================================
875,000 SHARES
COMMON STOCK
------------
PROSPECTUS
------------
MCDONALD & COMPANY
SECURITIES, INC.
ADVEST, INC.
July __, 1998
================================================================================
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with
the sale and distribution of the securities being registered hereby, other than
underwriting discounts and commissions, if any. All amounts shown are estimates,
except the SEC registration fee:
SEC registration fee..................................... $ 6,679
Printing and engraving fee............................... 15,000
Legal fees and expenses.................................. 20,000
Accounting fees and expenses............................. 5,000
Blue Sky fees and expenses............................... 5,000
Transfer agent and registrar fees and expenses........... 4,000
Miscellaneous fees and expenses.......................... 1,321
Total........................................... $57,000
======
All the costs identified above will be paid by the Selling Shareholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Article VI of the Company's Regulations provides that the Company
shall indemnify any person who was or is a party or is threatened to be made a
party to any action (other than an action by or in the right of the Company) by
reason of the fact that the person was or is a director of the Company; or while
a director of the Company such person was or is serving at the request of the
Company as a director, officer, or in some other agency capacity for another
entity. The Company may indemnify any person who was or is a party or is
threatened to be made a party to any action (other than an action by or in the
right of the Company) by reason of the fact that the person was or is an
officer, employee or agent of the Company, or while an officer, employee or
agent of the Company was or is serving at the request of the Company as a
director, officer or in some other agency capacity for another entity.
Indemnification covers expenses (including attorney's fees), judgments, fines
and amounts paid in settlements if such an aforementioned person acted in good
faith and in a manner in which they reasonably believed to be in or not opposed
to the best interests of the Company; and, with respect to a criminal
proceeding, the person had no reasonable cause to believe that the conduct was
unlawful. The termination of an action by judgment, order, settlement or
conviction, or upon a plea of nolo contendere, shall not, by itself, create a
presumption about a person's state of mind.
The Company may indemnify any person who was or is a party or is
threatened to be made a party in an action by or in the right of the Company to
procure a judgment in its favor by reason of the fact that the person is a
director, officer, employee or agent, or is serving at the request of the
Company as a director, officer or in some other agency capacity for another
entity. In actions by the Company, indemnification covers expenses (including
attorney's fees) incurred by a person in connection with defense or settlement
of such action if they acted in good faith and in a manner reasonably believed
to be in or not opposed to the best interests of the Company. No indemnification
shall be made in respect of (1) any action as to which such person is adjudged
to be liable for negligence or misconduct in the performance of their duties,
unless and only to the extent the court in which such action was brought
determines upon application that such person is reasonably entitled to indemnity
for such expenses as the court shall deem proper; or (2) any action in which the
only liability asserted against a director is pursuant to Section 1701.95 of the
Ohio Revised Code dealing with liability for unlawful loans, dividends or
distributions.
II-1
<PAGE> 20
Any indemnification shall be made by the Company only as authorized in
the specific case upon a determination that the indemnification was proper
because the person met the applicable standard of conduct set forth above. Such
determination shall be made (1) by the Board of Directors by a majority vote of
a quorum of disinterested directors; (2) in a written opinion by independent
counsel; (3) by the shareholders; or (4) by the court where the action was
brought. Any determination made by the disinterested directors or independent
counsel shall be properly communicated to the person who threatened or brought
the action by or in the right of the Company. Such person shall have the right,
within ten days after notification, to petition the court to review the
reasonableness of such determination. To the extent that a director or other
person in an agency capacity has been successful on the merits or in defense of
an action referred to above, that person shall be indemnified against expenses
(including attorney's fees) reasonably incurred in connection with the action;
this type of indemnification does not require an authorized determination by the
Company.
Expenses (including attorney's fees) incurred by a director in
defending an action referred to above, except where the liability asserted
against a director is pursuant to Section 1701.95 of the Ohio Revised Code,
shall be paid by the Company as they are incurred in advance of the final
disposition of the action, if the director agrees to repay such amount if it is
proved that the director's action or failure to act was undertaken with
deliberate intent to cause injury to the Company or with reckless disregard for
the best interests of the Company. Expenses (including attorney's fees) incurred
by a director or other person in an agency capacity in defending an action
referred to above, including an action brought against a director pursuant to
Section 1701.95 of the Ohio Revised Code, may be paid by the Company as incurred
before final disposition of the action as authorized by the directors if such
person agrees to repay the Company if it is ultimately determined that the
person is not entitled to be indemnified.
The indemnification authorized by Article VI is not exclusive of, and
is in addition to, any other rights granted to those seeking indemnification
under the Company's regulations, common law and corporation law of the State of
Ohio, or vote of shareholders or disinterested directors. Indemnification rights
shall continue in the person who has ceased to be affiliated with the Company
and shall inure to such person's heirs, executors and administrators.
The Company may purchase insurance on behalf of any person who was or
is a director, officer, employee or agent of the Company, or was or is serving
at the request of the Company as director, officer or in some other agency
capacity for another entity, against liability that is asserted or incurred by
such person in any such capacity, whether or not the Company has the power to
indemnify such person against liability under the provisions of Article VI.
Under Section 1701.13 of the Ohio General Corporation Law, a corporation may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the corporation, or who, while serving
in such capacity, is or was at the request of the corporation, a director,
officer, employee or agent of another corporation or legal entity or of an
employee benefit plan, against liability asserted against or incurred by such
person in any such capacity whether or not the corporation would have the power
to provide indemnity under Section 1701.13 of the Ohio General Corporation Law.
The above discussion of the Company's Regulations and of Section
1701.13 of the Ohio General Corporation Law is not intended to be exhaustive and
is respectively qualified in its entirety by such Regulations and statute.
ITEM 16. EXHIBITS.
EXHIBIT EXHIBIT
NUMBER DESCRIPTION
------ -----------
**1 Underwriting Agreement among the Selling Shareholders,
McDonald & Company Securities, Inc., and Advest, Inc.
*2(a) Agreement and Plan of Merger, dated April 28, 1997, between
Oak Hill Banks and Unity Savings Bank (reference is made to
Exhibit 2(a) of the Registrant's 8-K, filed on October 14,
1997, and incorporated herein by reference).
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<PAGE> 21
*2(b) Supplemental Agreement, dated April 28, 1997, among Oak Hill
Financial, Inc., Oak Hill Banks, and Unity Savings Bank
(reference is made to Exhibit 2(b) of the Registrant's 8-K
filed on October 14, 1997, and incorporated herein by
reference).
*3(a) Second Amended and Restated Articles of Incorporation
(reference is made to Form SB-2, Exhibit 3(i), File No.
33-096216 and incorporated herein by reference).
*3(b) Restated Code of Regulations (reference is made to Form SB-2,
Exhibit 3(ii), File No. 33-96216 and incorporated herein by
reference).
*4(a) Reference is made to Articles FOURTH, FIFTH, SEVENTH, EIGHTH,
TENTH AND ELEVENTH of the Registrant's Restated Articles of
Incorporation (contained in the Registrant's Restated Articles
of Incorporation filed as Exhibit 3(a) hereto) and Articles
II, III, IV, VI and VIII of the Registrant's Amended and
Restated Code of Regulations (contained in the Registrant's
Amended and Restated Code of Regulations filed as Exhibit 3(b)
hereto).
*4(b) Rights Plan, dated January 23, 1998, between Oak Hill
Financial, Inc., and Fifth Third Bank, (reference is made to
Exhibit 4.1 to the Form 8-A, filed with the Securities and
Exchange Commission on January 23, 1998 and incorporated
herein by reference).
5 Opinion of Porter, Wright, Morris & Arthur regarding legality.
(Previously filed)
*23(a) Consent of Porter, Wright, Morris & Arthur (included in
Exhibit 5)
23(b) Consent of Grant Thornton LLP. (Previously filed)
24 Powers of Attorney. (Previously filed)
- -----------------------------------
*Incorporated by reference as indicated
** To be filed by Amendment
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes: (1) to file during any
period in which offers or sales are being made, a post effective amendment to
this registration statement: (i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933; (ii) 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. Notwithstanding the foregoing, any increase or
decrease in volume or securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
(iii) 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; (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; (3)
to remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any 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 (and, where applicable, each filing of an
employee benefit plan's annual report
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<PAGE> 22
pursuant to 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the 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 question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement on Form S-3 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Jackson, State of Ohio, on July 6, 1998.
OAK HILL FINANCIAL, INC.
By: /s/ John D. Kidd
-----------------------
John D. Kidd, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John D. Kidd President, Chief )
- ---------------------------------- Executive Officer, Director ) July 6, 1998
John D. Kidd (Principal Executive Officer) )
)
*Evan E. Davis Chairman of the Board ) July 6, 1998
- ---------------------------------- )
Evan E. Davis )
)
*Richard P. LeGrand Executive Vice President and ) July 6, 1998
- ---------------------------------- Director )
Richard P. LeGrand )
)
*H. Tim Bichsel Secretary and Treasurer ) July 6, 1998
- ---------------------------------- (Principal Financial and Accounting )
H. Tim Bichsel Officer) )
)
*Barry M. Dorsey Director ) July 6, 1998
- ---------------------------------- )
Barry M. Dorsey )
)
*Rick A. McNelly Director ) July 6, 1998
- ---------------------------------- )
Rick A. McNelly )
)
*Donald R. Seigneur Director ) July 6, 1998
- ---------------------------------- )
Donald R. Seigneur )
)
/s/ H. Grant Stephenson Director ) July 6, 1998
- ---------------------------------- )
H. Grant Stephenson )
)
*C. Clayton Johnson Director ) July 6, 1998
- ---------------------------------- )
C. Clayton Johnson )
)
*D. Bruce Knox Director ) July 6, 1998
- ---------------------------------- )
D. Bruce Knox )
*By /s/ H. Grant Stephenson July 6, 1998
-------------------------------------
H. Grant Stephenson, Attorney-in-fact
for each of the persons indicated
</TABLE>
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