ITEM 1. BUSINESS
Security Banc Corp. (Registrant or Company) was organized in 1985 under the laws of The State of Ohio. The Executive Office of the registrant is located in Springfield, Ohio. It is a Bank Holding Company as defined in the Bank Holding Company Act of 1956, as amended, and is registered as such with the Board of Governors of the Federal Reserve System. Registrant has three subsidiaries, The Security National Bank and Trust Co. (Security), Citizens National Bank (Citizens), and Third Savings and Loan Company, (Third).
The Security National Bank and Trust Co. was organized under the statutes of The United States as the result of an agreement to merge The Guardian Bank of Springfield, Ohio, with and into The New Carlisle National Bank under the title of The Security National Bank. The agreement to merge was finalized and given approval by the Office of The Comptroller of the Currency on October 1, 1969. The Bank was granted the authority to act as a fiduciary as of May 30, 1978, thereby, changing the name of the Association to "The Security National Bank and Trust Co." The Bank's main office is located at 40 South Limestone Street, Springfield, Ohio.
On September 30, 1996, the Company merged with CitNat Bancorp, Inc., a $140 million bank holding company headquartered in Ohio, in a transaction accounted for as a pooling of interest.
On October 21, 1996, the Company acquired all of the outstanding shares of Third Financial Corporation for $41 million. The acquisition was accounted for using the purchase method of accounting.
Security and Citizens are subject to primary supervision, examination, and regulation by The Comptroller of the Currency. Third is subject to primary supervision, examination, and regulation by The Office of Thrift Supervision. Security and Citizens are members of The Federal Reserve System and are subject to the applicable provisions of The Federal Reserve System and are subject to the applicable provisions of the Federal Reserve Act and Regulations. Deposits of the Company are insured by The Federal Deposit Insurance Corporation (FDIC) to the maximum extent permitted by law.
Security is the parent of the Security Community Urban Redevelopment Corporation. The subsidiary is an Ohio Corporation organized in 1975. It was organized solely to own Security's main office building. Presently, Security leases the Main Office building from the subsidiary. No changes are anticipated in the subsidiary's business functions.
All of the Company's banking centers are located in Champaign, Clark, Greene, Madison and Miami Counties in the state of Ohio.
(10K3)
BUSINESS--Continued
As of December 31, 1996, the Company's consolidated total assets rounded to the nearest thousand, were $816,334,000 including total loans of $540,768,000. On that date, total deposits were $667,035,000 and capital accounts totaled $100,794,000.
The Company's subsidiaries provide full service banking to individuals as well as to industry and governmental subdivisions through each of its twenty-three banking centers.
The Company's subsidiaries have made a strong impact on all the counties it serves through a great variety of services, including personal checking accounts and savings programs, certificates of deposit, the Money Market accounts, C/D's and Individual Retirement Accounts.
A broad range of credit programs for all retail customers includes mortgage loans, credit card banking under the VISA designation, installment loans, and secured and unsecured personal loans.
The banking services provided to commercial customers and government include maintenance of demand and time deposit accounts and certificates of deposit. Available are all types of commercial loans, including loans under lines of credit and revolving credit, term loans, real estate mortgage loans and other specialized loans including accounts receivable financing. The Subsidiaries further serve the requirements of large and small industrial and commercial enterprises in the Springfield metropolitan area and elsewhere by providing financial counseling, automated payroll programs, cash management, and other automated services.
The subsidiaries' Commercial Banking Division is organized to serve the needs of the corporate customers by handling business and commercial mortgages, corporate deposits and other corporate financial services.
The Consumer Banking Divisions, which encompasses the Credit Card and Installment Loan Departments, serves individual as well as corporate customers. The Residential Mortgage Loan Departments provides conventional as well as adjustable rate mortgage loans to individuals. Each Subsidiary manages the investment of funds for their institution using U. S. Government and agency securities, municipal (tax exempt) securities, as well as Federal Funds and certificates of deposit of U. S. banks and savings and loans. Each Subsidiary, in consultation with others, sets the rates on their liability products including purchased federal funds.
Complete fiduciary services are available to individuals, charitable institutions, commercial customers and government agencies through Security's Trust Division. The Personal Trust Department serves as investment agent and custodian for securities portfolios of individuals, as trustees for living and testamentary trusts and as executor and administrator of probate estates. The Corporate Trust Department serves as Trustee for corporate and municipal bond issues, and as registrar for securities. The Institutional Services Department provides employee benefit plan fund management for qualified retirement plans and investment management and securities custody services for not-for-profit institutions.
There are over a half dozen commercial banks in Springfield, Clark County and adjoining counties, furnishing general banking services and thus providing strong competition to the Company. The Company competes for deposits not only with commercial banks in its area, but also with building and loan associations and other non-bank competitors, such as brokerage houses. In addition to the competition described above, the Company competes in various areas of service offered to individuals, industry and government with Banks in Southwestern Ohio, many of which possess greater financial resources than the Company.
(10K4)
BUSINESS--Continued
The earnings of the Company are affected by general economic conditions as well as, by the monetary policies of the Federal Reserve Board. Such policies, which have the effect of regulating the national supply of Bank reserves and Bank credit, can have a major affect upon the source and cost of loanable and investable funds and the rates of return earned on loans and investments. Among the means available to the monetary authorities to influence the size and distribution of Bank reserves are open market operations by the Board of Governors of the Federal Reserve System, changes in cash reserve requirements against member bank deposits, and limitations on interest rates which member banks may pay on most time and savings deposits.
Material Changes and Developments - ---------------------------------
There were no material changes or developments during 1996 in the business done by the Company.
Regulation and Supervision - --------------------------
Security and Citizens, as national banks, are subject to regulation by the Comptroller of the Currency, The Board of Governors of the Federal Reserve System and The Federal Deposit Insurance Corporation. Third, as a savings and loan, is subject to regulation by the Office of Thrift Supervision and The Savings Association Insurance Fund. The Company and any subsidiaries which it may hereafter have will be affiliates of the Company within the meaning of the Federal Reserve Act. As affiliates, the Company and any such subsidiaries are subject to certain restrictions on loans by the subsidiaries, on investments by the subsidiaries in their stock or securities or on its taking such stock and securities as collateral for loans to any borrower. The Company and any such subsidiaries, as affiliates of the Company are also subject to certain restrictions with respect to engaging in the underwriting and public sale and distribution of securities. Neither the Company nor any such subsidiaries may, for example, engage in such transactions with respect to securities of the company unless such securities are registered under the Securities Act of 1993 or any exemption from such registration is available. In addition, any such affiliates of the Bank will be subject to examination at the discretion of supervisory authorities.
The Company, as a Bank Holding Company, is subject to the restrictions of the Bank Holding Company Act of 1956 as amended. This Act first provides that the acquisition of control of a bank is subject to the prior approval of the Board of Governors of the Federal Reserve System. In the future, the Company will be required to obtain the prior approval of the Federal Reserve Board before it may acquire, for its individual account all, or substantially all, of the assets of any bank, or acquire ownership or control of any voting securities of any Bank, if after giving effect to such acquisition, the Company would own or control more than 5% of the voting shares of such bank. The Act does not permit the Federal Reserve Board to approve the acquisition by the Company or any subsidiary for their own account, of any voting shares of, or interest in, or all, or substantially all, of the assets, of any bank located in a state other than Ohio, unless such acquisition is specifically authorized by the statutes of the state in which such bank is located.
The Bank Holding Company Act limits the activities which may be engaged in by the Company and its subsidiaries to ownership of banks and those activities which the Federal Reserve Board has deemed or may in the future find, by order of regulations, to be so closely related to the banking or managing or controlling banks as to be a proper incident thereto.
(10K5)
BUSINESS--Continued
Those activities presently authorized by the Federal Reserve Board include the following general activities: (1) the making or acquiring of loans or other extensions of credit: (2) operating as an industrial bank, Morris Plan Bank, or industrial loan company according to state law without the accepting of demand deposits and without the making of commercial loans: (3) the servicing of loans for any person: (4) performing certain trust functions: (5) acting with certain limitations as investment or financial advisor: (6) leasing personal property and equipment: (7) the making of equity and debt investments in projects or corporations designated primarily to promote community welfare: (8) providing bookkeeping and data processing services for the internal operations of the Bank Holding Company and its Subsidiaries: and providing to others, data processing and transmission services and facilities for banking, financial or related economic data: (9) acting as insurance agent or broker under certain circumstances and with respect to certain types of insurance: (10) acting as underwriter for credit life insurance and credit accident and health insurance which is directly related to extensions of credit by the Bank Holding Company System: (11) providing limited courier services for the internal operations of the Holding Company, for checks exchanged among banking institutions, and for audit and accounting media of a banking or financial nature used in processing such media: (12) providing management consulting advice to non-affiliated banks under certain limitations; (13) the retail sale of money orders with a face value of $1,000 or less, of travelers checks and of U. S. Savings Bonds: (14) performing appraisals of real estate: (15) providing securities brokerage services, (restricted to buying and selling securities solely as agent for customers), related securities activities and incidental activities: (16) underwriting and dealing in government obligations and money market instruments: (17) foreign exchange advisory and transactional services: and (18) acting as futures commission merchant. For details and limitations on these activities, reference should be made to Regulation Y of the Federal Reserve Board, as amended. Further, under the 1970 amendment of this Act and the regulations of the Federal Reserve Board, the Company and its subsidiaries will be prohibited from engaging in certain tie-in arrangements in connection with any extension of credit or provisions of any property or service.
Employees - ---------
As of December 31, 1996, there were no full time employees of the Registrant. Affiliates of the Registrant had full time equivalent employees of 340 of whom 69 were officers.
Statistical Information - -----------------------
Pages 7 through 14 contain statistical information on the Company and its subsidiaries.
(10-K6)
BUSINESS--Continued
Investment Portfolio
The following table sets forth the carrying amount of investment securities at the dates indicated. (000s)
BUSINESS--Continued
Types of Loans
The following table summarizes consolidated loans by major category for the five years ending December 31. (000s)
Non-accrual loans totaled $4,123,000 and $2,772,000 as of December 31, 1996 and 1995 respectively.
BUSINESS--Continued
The following table shows the maturity of loans (excluding those in non accrual status) outstanding as of December 31, 1996. Also provided are the amounts due after one year classified according to the sensitivity to changes in interest rates. (000s)
Risk Elements
Interest on loans is normally accrued at the rate agreed upon at the time each loan was negotiated. It is the Bank's policy to discontinue accrual of interest on commercial and mortgage loans when there is a clear indication that the borrower's cash flow may not be sufficient to meet payments as they become due. The following table presents data concerning loans at risk at the end of each period. (000s)
BUSINESS--Continued
Summary of Loan Loss Experience
This table summarized the Company's loan loss experience for each of the five years ended December 31 (000s)
BUSINESS--Continued
Allowance for Loan Losses - -------------------------
The allowance for loan losses is established through charges to operations by a provision for loan losses. Loans which are determined to be uncollectible are charged against the allowance and subsequent recoveries, if any, are credited to the allowance. The amount charged to operations is based on several factors. These include the following:
1. Analytical reviews of the loan loss experience in relationship to outstanding loans to determine an adequate allowance for loan losses required for loans at risk.
2. A continuing review of problem or at risk loans and the overall portfolio quality.
3. Regular examinations and appraisals of the loan portfolio conducted by the Bank's examination staff and the banking supervisory authorities.
4. Management's judgement with respect to the current and expected economic conditions and their impact on the existing loan portfolio.
The amount provided for loan losses exceeded actual net charge-offs by $206,000 in 1996, $235,000 in 1995 and $737,000 in 1994.
It is management's practice to review the allowance on a quarterly basis to determine whether additional provisions should be made after considering the factors noted above. Based on these procedures, management is of the opinion that the allowance at December 31, 1996 of $6,827,000 is adequate.
BUSINESS--Continued
Deposits
Maturities of time certificates of deposits and other time deposits of $100,000 or more, outstanding at December 31, are summarized as follows: (000s)
Return on Equity and Assets - ---------------------------
The following table shows consolidated operating and capital ratios of the company for each of the last three years:
BUSINESS--Continued
Loan Commitments and Standby Letters of Credit - ----------------------------------------------
Loan commitments are made to accommodate the financial needs of our customers. Letters of credit commit the Company to make payments on behalf of customers when specific future events occur.
Both arrangements have credit risk essentially the same as that involved in extending loans to customers and are subject to the Company's normal credit policies. Collateral (e.g., securities, receivables, inventory, equipment) is obtained based on Management's credit assessment of the customer.
Off-balance sheet items at December 31 (000s)
1996 1995 ---- ---- Unused Commitments
Open end consumer lines $45,221 $35,047 Other unused commitments 70,140 60,784
Letters of Credit $1,452 $2,738
ITEM 2.
ITEM 2. PROPERTIES
The Security Banc Corporation is headquartered in Springfield, Ohio at 40 South Limestone Street. The subsidiaries of the Company have 23 banking offices located in Ohio. The Company owns 21 of the offices and the other two are leased. Additional information is contained in the Notes to Consolidated Financial Statements, Part IV, Item 14.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Registrant and its subsidiaries are not a party to any material legal proceedings.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
1. To elect three directors of Class III to serve until the Annual Meeting of Shareholders in 2000, or in the case of each director until his successor is duly elected and qualified.
2. To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The common stock of the Corporation is traded on the over-the-counter market. Transfer agent and registrar is The Registrar and Transfer Co., 10 Commerce Drive, Cranford, NJ 07016.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by reference to the registrant's 1996 Annual Report to Shareholders attached to this filing as Exhibit "C".
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AN ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The information required by this item is incorporated herein by reference to the registrant's 1996 Annual Report to Shareholders attached to this filing as Exhibit "C".
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference to the registrant's 1996 Annual Report to Shareholders attached to this filing as Exhibit "C".
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item concerning Directors is incorporated herein by reference to the registrant's 1996 Proxy Statement attached to this filing as Exhibit "D".
Executive Officers - ------------------
The name, age, and position of the Executive Officers of the Registrant as of March, 1997 is listed below along with their business experience during the past five years. Officers are appointed annually by the Board of Directors at the meeting of Directors immediately following the Annual Meeting of Stockholders.
Name, Age, Position Business Experience During Past Five Years - ------------------- ------------------------------------------
Executive Officers ------------------ Harry O. Egger, 57 Security National Bank and Trust Co. Chairman, President, CEO President 1981 - 1996 Chairman since 1987 CEO since 1986
J. William Stapleton, 44 Security National Bank and Trust Co. Executive Vice President/CFO Vice President since 9-18-84 Executive Vice President since 1-1-97
William C. Fralick, 42 Security National Bank and Trust Co. Vice President Vice President since 12-31-84 President since 1-1-97
Glenda S. Greenwood, 41 Security National Bank and Trust Co. Vice President Director of Marketing since 12-29-80 Vice President since 1-1-97
Daniel M. O'Keefe, 52 Security National Bank and Trust Co. Vice President Vice President/Trust Officer since 1-80
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to the registrant's 1997 Proxy Statement attached to this filing as Exhibit "D".
PART III
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference to the Registrant's 1997 Proxy Statement attached to the filing as Exhibit "D".
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by reference to the Registrant's 1997 Proxy Statement attached to the filing as Exhibit "D".
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
a) Document filed as part of the report
1. FINANCIAL STATEMENTS
The following consolidated financial statements and report of independent auditors of Security Banc Corporation, included in the 1996 Annual Report to its shareholders for the year ended December 31, 1996 are incorporated by reference in Item 8.
Report of Independent Auditors
Consolidated Statement of Condition, December 31, 1996 and 1995
Consolidated Statement of Income for the Years Ending December 31, 1996, 1995, and 1994
Consolidated Statement of Shareholders' Equity for the Years Ending December 31, 1996, 1995, and 1994
Consolidated Statement of Cash Flows for the Years Ending December 31, 1996, 1995, and 1994
Notes to Consolidated Financial Statements
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (CONT'D)
a) Document filed as part of the report
2. Schedules to the consolidated financial statements required by Article 9 of Regulation S-X are not required under the related instructions or are inapplicable, and therefore have been omitted.
(b) Reports on Form 8-K - None
(c) Exhibits
C - Security Banc Corporation 1996 Annual Report
D - Security Banc Corporation 1997 Proxy Statement
23 - Consent of Independent Auditors
(d) Financial Statement Schedules - None
Security Banc Corp. has the following subsidiaries:
1. Security National Bank and Trust Co. 2. Citizens National Bank 3. Third Savings and Loan Company
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SECURITY BANC CORPORATION - -------------------------------------------------------------------------------- (Registrant)
By /S/ Harry O. Egger ------------------------------------- Harry O. Egger, Chairman of the Board and Director (Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Jane N. Scarff /s/ Thomas J. Veskauf - --------------------------------- --------------------------------- Director Director
/s/ Chester L. Walthall /s/ Larry D. Ewald - --------------------------------- --------------------------------- Director Director
Robert A. Warren /s/ Larry E. Kaffenbarger - --------------------------------- --------------------------------- Director Director
Richard E. Kramer - --------------------------------- /s/ J. William Stapleton Director --------------------------------- Executive Vice President W. Dean Sweet - --------------------------------- Director
/s/ Harry O. Egger - --------------------------------- Chairman of the Board, President and CEO
/s/ Thomas L. Miller - --------------------------------- Controller Security National Bank
Annual Report
The Annual Shareholders' Meeting of Security Banc Corporation will be held April 15, 1997, at 1:00 p.m. at the Clark State Performing Arts Center, Turner Studio Theater, 300 South Fountain Avenue, Springfield, Ohio 45502. A copy of Security Banc Corporation's Annual Report Form 10-K for the period ending December 31, 1996, may be obtained without charge upon written request to Shareholder Relations, Security Banc Corporation, 40 South Limestone Street, Springfield, Ohio 45502.
Letter to the Shareholders
Security Banc Corporation's net income for the year 1996 was $13,387,000, an increase of 5% over the $12,707,000 for the previous year. This year's earnings per share increased to $2.22 from $2.11. Shareholders' equity of $100,794,000 grew 12% and resulted in a strong capital to asset ratio of 12%. Return on average assets and return on average equity of 1.92% and 14.18% respectively, continue to rank well when compared to other banks. The cash dividend of $.81 per share is an 11% increase over 1995. Total assets reached $816,334,000 while loans and deposits ended the year at $540,768,000 and $667,035,000 respectively.
1996 was a year of considerable expansion for Security Banc Corporation as we put the strategic planning efforts of the past few years into action. Our careful study and planning placed us in an excellent position to purchase financial institutions in neighboring communities-purchases consistent with our goals for planned growth. In keeping with our past history and vision for the future, the acquisition of Citizens National Bank of Urbana and Third Savings and Loan Company in Piqua, underscore our commitment to local ownership and hometown banking. Both are solid institutions, similar in culture and philosophy to Security Banc. Everyone affected by this change will benefit including shareholders, customers, employees and the people who live in these communities.
This planned growth ensures shareholder value by broadening our market area. Security Banc Corporation now extends into five counties including Clark, Greene, Champaigne, Miami and Madison. Having a broader base expands our diversity of investment thus increasing our opportunities for return and decreasing our dependence on any on particular economic region. This diversity is a sound approach to managing shareholder investment.
Customers in our service areas will continue to benefit from local ownership. Security National Banks have always been hometown banks. Citizens National Bank and Third Savings have also enjoyed local ownership, and still do. Preserving this local ownership guarantees responsiveness to the community. Decisions which affect people in the community are made by people who live there, not by someone several cities or counties away. Local ownership also means that product development and financial services are designed to serve local markets, thus they are better suited to local customers.
Employees benefit by working within a strong, stable, growing institution which is committed to them as individuals. Security Banc Corporation fosters employee development and encourages participation in decision making. We welcome the directors, management teams, and staff of Citizens National and Third Savings to the Security Banc Corporation employee group. We are proud to have them on board.
Finally, the communities we serve benefit because of our commitment to social responsibility, a core value of our corporation. As the communities sustain us, we must in turn help sustain our communities. Preserving local ownership is the key to preserving this commitment. Security Banc Corporation strongly believes in investing in the social and cultural needs of our towns and our people. We also design our products and services to respond to our local customers. And, we know that the return on shareholder investment increases the overall wealth of our communities.
As we look at the 1996 performance of Security Banc Corporation and its subsidiaries, The Security National Bank and Trust Co., The Citizens National Bank and The Third Savings and Loan Company, it is evident that the strategic planning and consequent decisions we are making are on the right course.
Our current challenge is to fine tune our institutions into highly efficient and customer service driven community banks. The human resource, automation and technology tools needed to produce highly efficient operations have and will continue to be committed to each affiliate. Though additional purchases are not necessary for our continued growth, we will seek opportunities which compliment shareholder value and our strategic direction.
We were saddened by the loss of Dwight W. Hollenbeck, a director since 1939. He resigned early in 1996 and passed away July 7, 1996. His friendship, long tenure, guidance and strong interest in this organization will be missed. Robert A. Warren, President of Hauck Bros., Inc. was appointed to fill this vacancy. Mr. Warren's business experience and community involvement have been a good addition to our organization.
We are thankful for our success, and we extend this gratitude to our shareholders for their vision and confidence in us, our management teams for their leadership, and to our employees, especially our new members for Citizens and Third Savings, for their commitment to service and professional growth. Every member of the Security Banc Corporation family plays a vital role in carrying out the mission of the corporation. We look forward to 1997 as another year of providing outstanding service and continuing our record of outstanding performance.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In the following pages, the analysis of the financial condition and results of operations in 1996 compared to prior years is discussed by Management. The data presented in this discussion should be read in conjunction with the 1996 audited financial statements of the report.
Results of Operations Summary
Net income advanced in 1996 to an all time high of $13,387,000. Net income has steadily increased in each of the previous five (5) years. Net income in 1996 was $13,387,000 compared to net income in 1995 of $12,707,000 and in 1994 of $11,776,000. Net income for 1996 increased $680,000 or five percent (5%) over 1995. Income per share was $2.22 in 1996, $2.11 in 1995, and $1.96 in 1994.
Total assets grew twenty-one percent (21%) in 1996 to $816,334,000. Security Banc Corporation continued its record of excellent performance with a 1996 return on average assets of one point ninety-two percent (1.92%) and a return on average shareholder equity of fourteen point eighteen percent (14.18%). The Corporation has continued to increase cash dividends paid to our shareholders. Cash dividends paid in 1996 were $.81 per share, compared to $.73 per share in 1995. Market price per share at December 31, 1996 was $38.00 compared to $28.50 at December 31, 1995. Financial summary (Table l) recaps these measures.
Net Interest Income
A major share of the Corporation's income results from the spread between income on interest earning assets, such as loans and securities, and the interest expense on liabilities used to fund those assets. The difference between interest earned and interest expensed is referred to as net interest income in the Consolidated Statement of Income. Net interest income is affected by changes in both interest rates and the amount of interest earning assets and interest bearing liabilities outstanding. Net interest margin on interest earning assets is the amount earned on assets, on a taxable equivalent basis, divided by the average earning assets outstanding.
Table II, entitled Average Balance Sheets and Analysis of Net Interest Income, compares the changes in revenue and interest earning assets outstanding, and interest cost and liabilities outstanding for the years ended December 31, 1996, 1995, and 1994.
The Corporation's net interest income on a taxable equivalent basis was $33,920,000, $33,280,000 and $31,671,000 in 1996, 1995, and 1994 respectively. Total average earning assets increased to $650,922,000 in 1996, compared to $609,859,000 in 1995, and $598,915,000 in 1994. Earning assets are total loans, total securities, interest bearing deposits with other banks and federal funds sold. Average total loans increased $27,739,000 to $425,244,000. Average securities, interest bearing deposits with other banks, and federal funds sold increased a combined total of $13,324,000.
Total average interest bearing liabilities increased $30,843,000 to $495,080,000 in 1996. Average time deposits increased $21,791,000. Average purchased funds increased $5,191,000. Average NOW, Money Fund and savings increased $2,143,000, $1,351,000 and $367,000, respectively.
Average earning assets of $650,922,000 in 1996 contributed a tax equivalent interest income of $53,231,000 with a yield of eight point eighteen percent (8.18%).
Average interest bearing liabilities of $495,080,000 in 1996 contributed interest expense of $19,311,000.
Table III, entitled Analysis of Net Interest Income Changes, translates the dollar changes in taxable equivalent net interest margin into (1) changes due to volume or (2) changes due to average yields on interest earning assets and average rates for sources of funds on which interest expense is incurred.
Other Operating Income
Other operating income is comprised of trust income, service charges on deposit accounts, security gains, and other items of income not directly resulting from interest earning assets. These items comprise safe deposit box fees, exchange and collection fees, investor service fees, gain (loss) on the sale of loans and miscellaneous other income.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF STATISTICAL INFORMATION
Footnote: 1) Nonaccrual loans are included in average loan balances and loan fees are included in interest income. 2) Interest income on tax-exempt investments and on certain tax-exempt commercial loans has been adjusted to a taxable equivalent basis using a marginal federal income tax rate of thirty-five percent (35%). 3) For Management Discussion and Analysis, home equity loan averages are included in the consumer loan portfolio as opposed to the real estate loan portfolio.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF STATISTICAL INFORMATION
Operating Expense
Total operating expense decreased $58,000 in 1996 to $18,021,000 compared to $18,079,000 for 1995. Salaries and employee benefits were $9,224,000 in 1996, compared to $9,191,000 in 1995. Equipment and occupancy expenses were $2,354,000, up $148,000 from the previous year. Amortization of intangibles decreased to $53,000 as compared to $71,000 for the previous year. Other operating expense decreased three point three percent (3.3%) to $6,390,000.
Loans
Total average commercial loans increased seven point eight percent (7.8%) to $182,300,000 in 1996 yielding an average rate of nine point zero-four percent (9.04%). Average real estate loans increased thirteen point five percent (13.5%) to $146,063,000, yielding an average rate of eight point thirty-three percent (8.33%). Average consumer loans, which include home equity loans, decreased two point eight percent (2.8%) to $96,881,000, yielding an average rate of ten point sixty-six percent (10.66%).
Under-performing assets consist of (1) non-accrual loans on which the ultimate collectibility of the full amount of interest is uncertain but the principal is currently considered fully collectible. (2) loans past due ninety (90) days or more as to principal or interest and (3) other real estate owned. Under-performing assets as of December 31, 1996 were $6,160,000.
The Corporation provides, as expense, an amount which reflects expected loan losses. This provision is based on the growth of the loan portfolio, local economic conditions, and on recent loan loss experience and is called the provision for loan losses in the Consolidated Statement of Income. Actual losses on loans are charged against the reserve built up on the Consolidated Statement of Condition through the allowance for loan losses. The amount of loans actually removed as assets from the Consolidated Statement of Condition is referred to as charge-offs. Netting out recoveries on previously charged-off assets with current year charge-offs provides net charge-offs.
Net charge-offs in 1996 increased to $1,669,000 from $715,000 in 1995. The provision for loan losses was $1,875,000 in 1996 and $950,000 in 1995. The allowance for loan losses at December 31, 1996 was equivalent to one point twenty-six percent (1.26%) of loans outstanding. The following table presents loan loss data for the most recent five (5) year period.
Liquidity and Interest Rate Sensitivity
The Corporation's Asset/Liability Management Committee is charged with the responsibility of maintaining an adequate level of liquidity and of managing the risks associated with interest rate changes while sustaining a stable growth in net interest income. The maintenance of an adequate level of liquidity is necessary to ensure that sufficient funds are available to meet customer loan demand and deposit withdrawals. The asset liquidity sources consist of short term marketable securities, federal funds sold, maturing loans and certificates of deposit. Interest rate management seeks to maintain a balance between steady net interest growth and the risks associated with interest rate fluctuations. The strategy is to minimize interest rate risk through the matching of the repricing period of interest earning assets and interest bearing liabilities.
The Corporation has a net asset position of $111,614,000 at the one (1) year interval or a cumulative gap ratio of one point forty-five (1.45). This ratio indicates that in a declining interest rate environment, those assets that are due to reprice would be replaced at a decreased interest yield at a faster pace than maturing liabilities, having a negative impact on the net interest margin. In an increasing rate environment, those assets that are due to reprice would be replaced at a higher interest yield, improving the net interest margin.
Market Information
Security Banc Corporation stock is traded in the over-the-counter market. The following table sets forth the sales prices for the common stock during the periods indicated.
1996 1995
Quarter Ended High Bid Low Bid High Bid Low Bid
As of December 31, 1996, the Corporation had 1,582 shareholders of record. Cash dividends paid per share were $.81.
Report of Independent Auditors
Board of Directors Security Banc Corporation
We have audited the accompanying consolidated statement of condition of Security Banc Corporation and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of Security Banc Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits. The consolidated financial statements give retroactive effect to the merger of Security Banc Corporation and Citnat Bancorp (Citnat), which has been accounted for using the pooling of interests accounting method as described in Note 2 to the consolidated financial statements. We did not audit the 1995 and 1994 financial statements of Citnat, which statements reflect total assets constituting 26% for 1995 and net income constituting 15% for 1995 and 14% for 1994 of the related consolidated financial statement totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Citnat, is based solely on the report of other auditors.
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 based on our audits and for 1995 and 1994 the reports of other auditors the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Security Banc Corporation and subsidiaries at December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles.
Columbus, Ohio January 23, 1997
CONSOLIDATED STATEMENT OF CONDITION
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994 (000's)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 1. Organization
Security Banc Corporation ("Security" or "the Company") is a bank holding company headquartered in Springfield, Ohio. The Company's principal subsidiaries, Security National Bank and Trust Co., Citizens National Bank, and Third Savings and Loan Company are located in Central Ohio and are engaged in general commercial banking and trust business.
Summary of Significant Account
Policies The accounting and reporting policies of Security conform with generally accepted accounting principles and prevailing industry practices. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. A description of the significant accounting policies is presented below:
Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intercompany transactions and balances have been eliminated. The consolidated financial statements have been prepared to give retroactive effect to the September 30, 1996 merger with CitNat (Citizens National Bank), which was accounted for as a pooling-of-interests. Certain prior year amounts have been reclassified to conform with the current year presentation.
Investment Securities
Securities held to maturity and available for sale: Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Debt securities are classified as held-to-maturity when Security Banc Corporation has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost.
Debt securities not classified as held-to-maturity or trading and marketable equity securities not classified as trading are classified as available-for-sale. Available-for-sale securities are stated at fair value, with the unrealized gains and losses, net of tax, reported in a separate component of shareholders' equity.
The amortized cost of debt securities classified as held-to-maturity or available-for-sale is adjusted for amortization of premiums and accretion of discounts to maturity, or in the case of mortgage-backed securities, over the estimated life of the security. Such amortization is included in interest income from investments. Interest and dividends are included in interest income from investments. Realized gains and losses, and declines in value judged to be other-than-temporary are included in net securities gains (losses). The cost of securities sold is based on the specific identification method.
Loans
Loans are stated at the principal amount outstanding, net of unearned income. Interest income on other loans is primarily accrued using the simple interest method based on the principal amounts outstanding. Loan fees received in excess of direct costs involved in origination of a loan are amortized over the estimated loan term. Accrual of interest is discontinued when circumstances indicate that collection of loan principal is questionable.
The company has adopted Financial Accounting Standards Board Statement No. 114, "Accounting by Creditors for Impairment of a Loan", effective January 1, 1995. As a result of applying the new rules, certain impaired loans are reported at the present value of expected future cash flows using the loan's effective interest rate, or as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. The adoption of this statement did not have a material impact on Security Banc Corporation's financial statements.
Allowance for Possible Loan Losses
The allowance for possible loan losses is available for loan charge-offs. The adequacy of the allowance is based on Management's continuous evaluation of key factors in the loan portfolio with consideration given to current economic conditions and past charge-off experience.
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of premises and equipment is determined using the straight-line method over the estimated lives of the respective assets. Maintenance and repairs are charged to expense as incurred while renewals and betterments are capitalized.
Income Taxes
Certain income and expense items are accounted for in different time periods for financial reporting purposes than for income tax purposes. Appropriate provisions are made in the financial statements for deferred taxes in recognition of these temporary differences.
Net Income Per Share
Income per share is computed on the basis of weighted average shares outstanding.
Cash Flows
For purposes of reporting cash flows, cash and cash requirements include cash on hand, amounts due from banks and federal funds sold. Federal funds are purchased for one-day periods.
Interest paid by Security in 1996, 1995, and 1994 was $19,035,000, $18,584,000 and $13,430,000, respectively.
Fair Values of Financial Instruments
The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:
Cash and cash equivalent and interest bearing deposits with other banks: The carrying amounts reported in the balance sheet for cash and short term instruments approximate those assets' fair values.
Investment Securities: Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. Loans receivable: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values for mortgage loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. The fair values for other loans (e.g., commercial, agricultural and consumer) are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. The carrying amount of accrued interest approximates its fair value.
Off balance sheet instruments: The carrying amounts reported for Security Banc Corporation's off balance sheet (letters of credit and lending commitments) approximate those assets' fair value.
Deposit liabilities: The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). The carrying amounts for variable-rate, fixed term money market accounts approximate their fair values at the reporting date. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.
Short term borrowings: The carrying amounts of federal funds purchased and securities sold under agreement to repurchase approximate their fair values.
2. Acquisitions Third Financial Corporation
On October 21, 1996, the company acquired all of the outstanding shares of Third Financial Corporation for $41 million. The acquisition was funded with existing cash. The results of Third Financial Corporation's operations have been combined with those of the Company since the date of acquisition.
The acquisition was accounted for using the purchase method of accounting. Accordingly, a portion of the purchase price was allocated to the net assets acquired based on their estimated fair values. The fair value of tangible assets acquired and liabilities/equity assumed was $162 million and $150 million respectively. The balance of the purchase price, $12 million, was recorded as excess of cost over net assets acquired (goodwill) and other identified intangibles and is being amortized over approximately twenty-five years on a straight line basis.
The following table reflects unaudited pro forma combined results of operations of the Company and Third Financial Corporation on the basis that the acquisition had taken place and was recorded at the beginning of the fiscal year for each of the periods presented:
In management's opinion, the unaudited pro forma combined results of operations are not indicative of the actual results that would have occurred had the acquisition been consummated at the beginning of 1995 or at the beginning of 1996 or future operations of the combined companies under the ownership and management of the Company.
CitNat Bancorp, Inc.
On September 30, 1996, the Company merged with CitNat Bancorp, Inc., a $140 million bank holding company headquartered in Ohio, in a transaction accounted for as a pooling of interest. Security Banc Corporation issued 907,893 shares of common stock to the shareholders of CitNat Bancorp, Inc. based upon an exchange ratio of 2.1842437 shares of Security Banc Corporation common stock for each outstanding share of CitNat common stock.
3. Accounting Changes
The Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-lived Assets and For Long-lived Assets to be Disposed Of" requires that long-lived assets and certain identifiable intangibles be reviewed for impairments. The Statement prescribes when assets should be reviewed, how to determine impairment, and what financial disclosures are necessary.
Additionally, Statement of Financial Accounting Standards No. 122 "Accounting for Mortgage Servicing Rights" requires the recognition of rights to service loans for others as separate assets, however those servicing rights are acquired.
Both of the Statements were effective for 1996 and neither of these pronouncements had a material impact on the financial statements.
4. Reserve Balance Requirements
The Company's subsidiaries are required to maintain certain daily cash and due from bank reserve balances in accordance with regulatory requirements. The balances maintained under such requirements were $10,331,000 at December 31, 1996 and $10,086,000 at December 31, 1995.
5. Investment Securities
The following table lists the book value and market value of debt securities and other investments as of December 31.
The market value of the available for sale investments ($147,732,000) plus the cost of the held to maturity investments ($36,129,000) is the total investments carrying value of $183,861,000.
The following table summarizes the cost and market value of debt securities at December 31, 1996 and 1995 by contractual maturity. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations.
Proceeds from sales of investments available for sale in 1996 were $120,682,000. Proceeds from sales of investments held to maturity in 1996 were $1,399,000. Gross gains on investments available for sale in 1996 were $372,000. Gross losses recognized on investments available for sale in 1996 were $0. Gross gains on investments held to maturity were $6,000 in 1996. Gross losses recognized on investments held to maturity in 1996 were $16,000. Proceeds from sales of investments available for sale in 1995 were $190,648,000. Proceeds from sales of investments held to maturity in 1995 were $0. Gross gains on investments available for sale in 1995 were $254,000. Gross losses recognized on investments available for sale in 1995 were $244,000. Proceeds from sales of investments available for sale were $31,402,000 in 1994. Gross gains on investments available for sale were $326,000 in 1994. Gross losses recognized on investments available for sale in 1994 were $10,000. Proceeds from investments held to maturity in 1994 were $0.
Securities with a carrying value of $109,031,000 at December 31, 1996, and $88,279,000 at December 31, 1995, were pledged to secure deposits and repurchase agreements.
6. Loans
Nonperforming loans totaled $6,124,000 and $4,504,000 at December 31, 1996 and 1995, respectively. Nonaccrual loans included in these amounts totaled $4,123,000 and $2,772,000 at December 31, 1996 and 1995, respectively. Interest income not recorded on these loans was $436,000 in 1996 and $251,000 in 1995.
The following table presents the aggregate amount of loans outstanding to directors and executive officers (including their related interests) as of December 31, 1996 and December 31, 1995, and an analysis of activity in such loans during 1996. All such loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other persons. These loans do not involve more than normal risk of collectibility or any other unfavorable features.
7. Allowance for Loan Losses
8. Premises and Equipment
9. Federal Funds Purchased and Securities Sold Under Agreement to Repurchase
Securities sold under repurchase agreements represent borrowings with overnight maturities. The following table is a summary of securities pledged against the securities sold under agreement to repurchase contracts as of December 31:
10. Advances from FHLB
The Company had advances from the Federal Home Loan Bank ("FHLB") of $5,000,000 due in 1997 at variable interest rates on December 31, 1996. The Company also had advances from the FHLB on December 31, 1996 of $6,574,000 due on various dates through 2008, at adjustable and fixed rates ranging from 6.55% to 7.40%.
Real estate loans of $17,390,000 at December 31, 1996, collateralize FHLB advances.
11. Commitments and Contingent Liabilities
Security Banc Corporation has various commitments and contingent liabilities outstanding, such as letters of credit and loan commitments, that are not reflected in the consolidated financial statements. Letters of credit commit the Corporation to make payments on behalf of customers when certain specified future events occur. Loan commitments are made to accommodate the financial needs of Security Banc Corporation's customers. These arrangements have credit risk essentially the same as that involved in extending loans to customers and are subject to Security Banc Corporation's normal credit policies. Collateral is obtained based on Management's credit assessment of the customer.
Unfunded loan commitments and unused lines of credit as of December 31, 1996 were $115,361,000. The aggregate amount of outstanding letters of credit was $1,452,000 at December 31, 1996. No significant losses are anticipated as a result of these commitments.
12. Income Tax
Income taxes paid were $5,285,000, $4,778,000 and $3,730,000 in 1996, 1995, and 1994, respectively. Income tax expense associated with security gains was $123,000 in 1996, $3,500 in 1995, and $107,000 in 1994.
Significant components of the Corporation's deferred tax assets and liabilities at December 1996 and 1995 are as follows:
13. Stock Options
Security sponsors non-qualified and incentive stock option plans covering key employees. Approximately 240,000 shares have been authorized under the plans, 5,520 shares of which were available at December 31, 1996 for future grants. All options granted have a maximum term of 10 years. Options granted vest ratably over five years.
Security has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related interpretations in accounting for its employee stock options because the alternative fair value accounting provided for under FASB Statement No. 123, "Accounting for Stock-Based Compensation", requires use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of Security employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.
Security stock option activity and related information for the periods ended December 31, 1996, and December 31, 1995, is summarized in the following table:
Exercise prices for options outstanding as of December 31, 1996, ranged from $8.12 to $33.00. The weighted average remaining contractual life of these options is seven (7) years.
The fair value of the options presented above was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for 1996 and 1995, respectively; risk free interest rates of 5.25%; dividend yields of 2.67%; volatility factors of the expected market price of Security common stock of .037 and a weighted average expected option life of seven (7) years. Because the effect of applying Statement 123's fair value method to stock options results in net income and earnings per share that are not materially different from amounts reported in the consolidated statements of income, pro forma information has not been provided.
14. Retirement Plans
Security Banc Corporation has a non-contributory defined benefit pension plan that covers all employees who have reached the age of twenty-one (21) and have one thousand (1,000) hours of service during their anniversary year. The amount of the benefit is determined pursuant to a formula contained in the retirement plan which, among other things, takes into account the employee's average earnings in the highest sixty (60) consecutive calendar months. Accrued benefits are fully vested after five (5) years of service. For eligibility and vesting purposes, employees will be given credit for service at the former CitNat Bancorp, Inc. and Third Financial Corporation. Security Banc Corporation's funding policy is to make annual contributions to the plan which at least equals the minimum required contributions.
Disclosure of net periodic Pension cost for 1996, 1995, and 1994 is as follows:
The following table sets forth the plan's funded status and amount recognized in Security Banc Corporation's consolidated statement of condition as of December 31, 1996 and 1995.
(The Accumulated Benefit Obligation including the vested benefit obligation is $4,769,373.)
15. Profit Sharing Plan
During the year, the company had three profit sharing plans. The plan covering employees of the former CitNat Bancorp, Inc. and Third Financial Corporation will be merged into the Security National Bank plan effective January 1, 1997, employees of the subsidiaries will be eligible to participate in the Security National Bank Plan upon meeting plan eligibility requirements. For eligibility and vesting purposes, employees will be given service credit for service at the former CitNat Bancorp, Inc. and Third Financial Corporation.
All employees of Security National Bank become eligible participants in the plan when they have completed one (1) year of eligibility service; have worked at least five hundred (500) hours and are at least age twenty-one (21). Eligible participants may make contributions to the plan by deferring up to fifteen percent (15%) of their annual earnings.
The Board of Directors of Security National Bank annually determine the bank's matching contribution to the plan. For the plan year ended December 31, 1996 and December 31, 1995, the matching contribution was fifty percent (50%) of the employee's contribution up to the first six percent (6%) of annual earnings contributed by the participant.
Employee contributions are one hundred percent (100%) vested immediately. The bank's matching contributions are vested at twenty percent (20%) for each year of eligibility service, based on five (5) year vesting schedule.
The contribution by the Companies for all three plans for 1996, 1995, and 1994 was $208,000, $209,000, and $205,000, respectively.
16. Parent Company and Regulatory Restrictions
Dividends paid by the Company's subsidiaries are subject to various legal and regulatory restrictions. In 1996, the subsidiaries paid $27 million in dividends to the parent company.
The subsidiaries can initiate dividend payments in 1997 of $6 million, plus an additional amount equal to their net profits, as defined by statute, up to the date of any such dividend declared.
Separate parent company financial statements for operating activities and cash flows are not presented. The financial statements of the Banks have essentially mirrored the Companies' activities in each of the three years presented.
17. Capital Ratios
The Corporation's Tier 1, total risk-based capital and leverage ratios are well above both the required minimum levels of 4.00%, 8.00%, and 4.00%, respectively, and the well-capitalized levels of 6.00%, 10.00%, and 5.00%, respectively.
At December 31, 1996, all of the Corporation's subsidiary financial institutions met the well-capitalized levels under the capital definitions prescribed in the FDIC Improvement Act of 1991.
18. Fair Values of Financial Instruments
FASB Statement No. 107, "Disclosures about Fair Value of Financial Instruments," requires disclosure of fair value information about financial instruments, whether or not recognized in the statement of condition, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. Statement 107 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the bank.
SECURITY BANC CORPORATION
DIRECTORS
Harry O. Egger Chairman of the Board President, and Chief Executive Office Larry D. Ewald President, Process Equipment Company Larry E. Kaffenbarger President, Kaffenbarger Truck Equipment Co. Richard E. Kramer President and Chief Executive Officer, Fulmer Supermarkets, Inc. Kenneth F. Rupp, Jr. President and Chief Executive Officer Third Savings Jane N. Scarff Vice President, Scarff Nursery, Inc. W. Dean Sweet Chief Executive Officer, Sweet Manufacturing Company Thomas J. Veskauf Partner: Gorman, Veskauf, Henson & Wineberg, Attorneys-at-Law Chester L. Walthall President, Heat-Treating, Inc Robert A. Warren President, Hauck Bros., Inc. James R. Wilson President and Chief Executive Officer, Citizens National Bank
Directors Emeritus: Robert B. Gordon Roger W. Kadel Fred R. Leventhal Paul L. Robe
OFFICERS Harry O. Egger Chairman of the Board, President, and Chief Executive William C. Fralick Vice President Glenda S. Greenwood Vice President Daniel M. O'Keefe Vice President J. William Stapleton Vice President
CITIZENS NATIONAL BANK
DIRECTORS Leroy Blazer Consultant Dr. Walter Bumgarner Doctor of Veterinary Medicine Grover C. Foulk Farmer Henry W. Houston Attorney-at-Law John G. Kagamas Chairman of the Board, Citizens National Bank Robert B. McConnell President, Desmond-Stephan Mfg., Co. Charles R. Saxbe Attorney-at-Law Charles E. Stadler Farmer Ronald L. Welch Farmer James R. Wilson President and Chief Executive Officer, Citizens National Bank John Wing Farmer
OFFICERS
James R. Wilson President and Chief Executive Officer Richard M. Anderson Senior Vice President Tim Bunnell Vice President and CFO Steven Glock Vice President Judith A. Markin Vice President Max Coates Vice President Stephen Mast Assistant Vice President Mary Andrews Mitchell Assistant Vice President Rick McCain Auditor Mary L. Beatty Customer Service Administrator
SECURITY NATIONAL BANK
DIRECTORS Harry O.Egger Chairman of the Board, President, and Chief Executive Officer Larry D. Ewald President, Process Equipment Company Larry E. Kaffenbarger President, Kaffenbarger Truck Equipment Co Richard E. Kramer President and Chief Executive Officer, Fulmer Supermarkets, Inc. Jane N. Scarff Vice President, Scarff Nursery, Inc. W. Dean Sweet Chief Executive Officer, Sweet Manufacturing Company Thomas J. Veskauf Partner: Gorman, Veskauf, Henson & Wineberg, Attorneys-at-Law Chester L. Walthall President, Heat-Treating, Inc. Robert A. Warren President, Hauck Bros., Inc.
OFFICERS Harry O. Egger Chairman of the Board, President, and Chief Executive Officer Loans William C. Fralick Vice President Business Jeffrey A. Darding Vice President Norman D. Filburn Vice President James E. Leathley Vice President Gary L. Linn Vice President Janet L. Sandifer Vice President Michael B. Warnecke Vice President Merrill E. Wells Vice President Thomas A. Goodfellow Assistant Vice President Peter W. Foreman Business Loan Officer Real Estate Gary J. Seitz Mortgage Banking Officer Personal Steve D. Hopkins, Jr. Vice President Ernest R. Picklesimer Assistant Vice President H. Lew Eblin Credit Adjustment Manager Management Services Allan W. Macbeth Vice President Charles E. Imel Director of Operations
Financial Services J. William Stapleton Vice President Thomas L. Miller Controller Sharon K. Boysel Accounting Officer Human Resources Thomas L. Locke Director of Human Resources Trust Daniel M. O'Keefe Vice President James A. Kreckman Vice President Richard O. Matthies Vice President Clarence Espen, Jr. Assistant Vice President Mary L. Goddard Trust Officer Margaret E. Thornton Trust Officer Terri L. Wyatt Trust Operations Officer Audit Margaret A. Chapman Auditor Compliance Margaret L. Foley Compliance Officer Marketing/Retail Glenda S. Greenwood Director of Retail Services/Marketing William A. Creed Vice President C. Alan Bobo Assistant Vice President -Manager Karen S. Gibson Assistant Vice President -Manager Gregg E. Hebrank Assistant Vice President-Manager Barbara S. Hennigan Assistant Vice President-Manager John W. Cole Branch Manager Martha E. Graham Branch Manager Janet R. Heck Branch Manager Judith A. Hopkins Branch Manager Joanna S. Jaques Branch Manager Larry A. Motter Branch Manager Joyce E. Sheridan Branch Manager Linda R. Swank Branch Manager
THIRD SAVINGS
DIRECTORS Richard N. Adams, PhD. Miami County Commissioner Robert M. Baird President, Baird Funeral Home Scott A. Gabriel Executive Vice President, Third Savings Samuel H. Heitzman Chairman of the Board, Third Savings Dr. Douglas D. Hulme Veterinarian Robert L. Roberts General Manager Pioneer Rural Electric W. Samuel Robinson CPA: Murray, Wells, Wendeln & Nolan Kenneth F. Rupp, Jr. President and Chief Executive Officer
OFFICERS Kenneth F. Rupp, Jr. President and Chief Executive Officer Scott A. Gabriel Executive Vice President and Treasurer Craig C. Bundschuh Senior Vice President and Secretary Gary L. Enz Senior Vice President Ronald A. MacDonald Vice President Stephen W. Vallo Vice President Dean F. Brewe Assistant Vice President Helen E. Brown Assistant Vice President Teresa A. Mayo Assistant Vice President Thomas G. Rhoades Assistant Vice President Judith V. Wallace Assistant Vice President Edward E. Duncan Assistant Vice President Regulator Compliance Annette M. Ryan Assistant Vice President -Loan Processing Manager Vivian J. Bausman Collection Manager
SECURITY BANC CORPORATION SPRINGFIELD, OHIO SECURITY BANC CORPORATION 40 South Limestone Street, Springfield, Ohio 45502
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Security Banc Corporation will be held at the Clark State Performing Arts Center, Turner Studio Theater, 300 South Fountain Avenue, Springfield, Ohio 45502, on Tuesday, April 15, 1997 at 1:00 p.m. for the purpose of considering and voting upon the following matters.
1. To elect three directors of Class III to serve until the Annual Meeting of Shareholders in 2000 or in the case of each director until his successor is duly elected and qualified.
2. To transact such other business as may properly come before the Annual Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on February 28, 1997 as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting. All shareholders are cordially invited to attend the meeting in person. However, if you do not expect to attend the meeting in person, please fill in, date, sign, and return the enclosed Proxy Card.
By Order of the Board of Directors
J. William Stapleton Executive Vice President/Secretary
Springfield, Ohio March 14, 1997
SECURITY BANC CORPORATION
PROXY STATEMENT
40 South Limestone Street, Springfield, Ohio 45502 March 14, 1997 (Mailing Date)
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed form of proxy is being solicited on behalf of the Board of Directors of Security Banc Corporation for use at the Annual Meeting of Shareholders and any adjournment thereof. The Annual Meeting will be held on Tuesday, April 15, 1997, at the time and place for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. Shares represented by properly executed proxies, if such proxies are received in time and not revoked, will be voted at such meeting in accordance with any specifications thereon. Any proxy may be revoked at any time before it is exercised by receipt of later proxy, by receipt by the secretary of a revocation or by ballot at the meeting.
The persons named as proxies were selected by the Board of Directors of the Corporation. No officer or employee of the Corporation was named as proxy.
The cost of the solicitation of proxies will be borne by the Corporation. In addition to using the mail, proxies may be solicited by personal interview, telephone and wire. Officers and regular employees of the Corporation and its subsidiaries will not receive any compensation for the solicitation of proxies.
VOTING SECURITIES
The Board of Directors has fixed the close of business on Friday, February 28, 1997 as the record date for the determination of Shareholders entitled to notice of and to vote at the Annual Meeting. On the record date, the outstanding capital stock of the Corporation consisted of 6,057,913 shares, par value three dollars and an eighth ($3.125) per share, each of which is entitled to one (1) vote at the meeting. Each such share is entitled to one (1) vote on all matters properly coming before the Annual Meeting.
PRINCIPAL SHAREHOLDERS
As of January 21, 1997, Security National Bank and Trust Co., as Trustee held in trust 902,343 shares, amounting to fourteen point nine percent (14.9%) of the common shares of the Corporation. The shares are held by them in their fiduciary capacity under various agreements as Trustee. The Trustee has advised the Corporation that it has sole voting power for 783,956 shares and shared voting power for 106,135 shares.
Cede & Co., Box 20, Bowling Green Station, New York, NY, 10004 holds 427,744 shares (7%) interest on behalf of Dwight W. Hollenbeck Trust. Mr. Richard L. Kuss and his wife, Barbara, 1130 Vester Avenue, Suite A, Springfield, Ohio, 45503 are the owners of 212,714 shares (3.5%)and 121,572 shares (2%), respectively. They have combined beneficial ownership of 334,286 shares (5.5%). The Board of Directors has no knowledge of any other person who owned of record or beneficially more than five percent (5.0%) of the outstanding common shares of the Corporation.
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors of Security Banc Corporation is divided into three (3) classes, with the terms of office of each class ending in successive years. The terms of Directors of Class III expire with this Annual Meeting. The directors of Class I and Class II will continue in office. The Shareholders are being asked to vote on the re-election of the three (3) Directors in Class III. Nominees are to be elected to serve until the 2000 Annual Meeting of Shareholders and until their respective successors are fully elected and have qualified. It is intended that shares represented by the proxies will, unless contrary instructions are given, be voted for the three (3) nominees as listed below. Although Management does not expect that any nominee will be unavailable for election, in the event that vacancies occur unexpectedly, the shares will be voted for substitute nominees, if any.
The Board of Directors of the Corporation has, by resolution of the Board, fixed and determined the number of Directors at eleven (11) persons in accordance with Article III, Section I of the Code of Regulations of the Corporation. All nominees are presently Directors of the Corporation.
Listed are the names of three (3) nominees for election to the Board of Directors along with present Directors of Class I and Class II, their principal occupations and other directorships, their age, the year in which each first became a Director, the number of shares of the Corporation's Common Stock beneficially owned by each, directly or indirectly as of the close of business December 31, 1996, and percent of class.
The following statement pertains to the Nominees and Directors:
When appropriate, each nominee includes in his or her beneficial holdings of the Corporation's stock, shares held by or in trust for the respective nominee's spouse, minor children and/or relatives having the same home as the nominee, shares held by such nominee as fiduciary where the nominee has the right to vote or dispose of such shares and such nominee disclaims any beneficial ownership of such shares.
(1) Includes 1,016 shares held by the wife of Chester L. Walthall.
(2) Includes 30,000 shares owned by the wife of Harry O. Egger.
(3) Includes 522 shares owned by the wife of Thomas J. Veskauf.
(4) Includes 7,626 shares owned by the wife of Larry D. Ewald and includes 4,000 shares held in a trust as to which Larry D. Ewald, as co-trustee, shares investment and voting power.
(5) Includes 1,015 shares owned by the wife of Richard E. Kramer and includes 8,004 shares held in trust.
(6) Includes 12,404 shares owned by wife, minor children, and shares held in Trust.
As of December 31, 1996, the Directors and Executive Officers of the Corporation, as a group, beneficially owned an aggregate of 219,163 shares of the Corporation's Common Stock which constitutes approximately three point six percent (3.6%) of the shares outstanding.
MEETINGS OF THE CORPORATION/BANK BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
During 1996, the Corporation's Board of Directors held eight (8) scheduled meetings. All of the directors attended at least seventy-five percent (75%) of the scheduled meetings.
The Executive Committee rotates on a regularly scheduled basis. Those members of the Committee at December 31, 1996 were Directors Egger, Ewald, Kramer, Veskauf, and Walthall. The Executive Committee is empowered to exercise powers and perform all duties of the Board of Directors when the Board is not in session. The Executive Committee met five (5) times in 1996.
The Executive Compensation Committee of the Corporation/Bank is composed of Directors Ewald, Scarff, and Sweet. The Executive Compensation Committee met six (6) times in 1996. The purpose of the Executive Compensation Committee is to establish and execute compensation policy and programs for executives of the organization.
The Audit Committee of the Corporation is composed of members of the Board of Directors rotating on a regularly scheduled basis, all of whom were present for at least seventy-five percent (75%) of the meetings of this Committee except Director Veskauf. Directors Ewald, Kaffenbarger, Veskauf, and Walthall were members of the Committee as of December 31, 1996. The Audit Committee met four (4) times in 1996. The function of the Audit Committee consists of reviewing, with the Company's internal auditor and the independent auditors, the scope and results of procedures for auditing and the adequacy of the system of internal controls.
The Corporation has no standing Nomination Committee. Nominations for election to the Board of Directors will receive full consideration by the Executive Committee. Shareholders desiring to make valid nominations for election to the Board of Directors need to comply with the statements in the section entitled "Shareholder Proposals".
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
This Committee deals with compensation issues as they pertain to executive officers.
CEO COMPENSATION
Whenever the Committee has a meeting during which Mr. Egger's base salary, annual bonus, or grant of stock options is on the meeting agenda, the Committee sets aside time to discuss these matters without Mr. Egger and other officers of the Corporation being present. During these sessions, the members of the Committee debate the merits of the matters under consideration and, as part of these discussions, generally consider the Corporation's financial performance, Common Stock price performance, and Midwest Peer Group specific comparative compensation data. In the past, the CEO compensation has been below the comparative compensation of the Midwest Peer Group, whereas, the financial performance of the Corporation and common stock price performance has been well above the norm as it relates to the Peer Group. The Committee also considers factors such as Mr. Egger's leadership, experience, knowledge, board communications, Corporation's community involvement and strategic recommendations, as well as the Corporation's positioning for future performance. Although the Committee does not place any particular relative weight on any one of the foregoing factors, the Corporation's financial performance as it relates to increasing shareholder value is generally a key factor. All of these decisions regarding the components of Mr. Egger's compensation and the rationale are reported to the Board without Mr. Egger and other officers present.
Based on the performance of the Corporation and its increased value for the shareholder as well as being rated one of the top performing community banks in the State of Ohio, the Committee believes Mr. Egger's compensation is a fair reflection of the services he performs for the Corporation.
OTHER NAMED EXECUTIVE OFFICERS
In addition, the Committee approved compensation recommendations for all other named executive officers of the Corporation. Executive Officer salary, bonus, and stock option grants are based on performance, and appraisals, along with favorable corporate financial performance as it relates to shareholder value.
The Executive Compensation Committee Members
Larry D. Ewald Jane N. Scarff, (Committee Chairperson) W. Dean Sweet
PERFORMANCE GRAPH
The graph summarizes cumulative return (assuming reinvestment of dividends) experienced by the Corporation's shareholders over the years 1992 through 1996, compared to the S&P 500 Stock Index, and the NASDAQ Bank Index.
Security has elected to use the NASDAQ Bank Index in the current year performance graph as opposed to the Mid-Atlantic Bank Index used in prior years to make the performance graph more comparable to banks on a nationwide basis.
[GRAPHIC OMITTED]
Assumes $100 invested on 12-31-91 in Security Banc Corporation, NASDAQ Bank Index, and S&P 500.
The financial information upon which the S & P 500 and NASDAQ Bank Index, has been compiled from information issued by the companies themselves or other secondary sources. Although these sources are considered to be reliable, management makes no representations or warranties with respect to the accuracy or completeness of this analysis or the underlying data, and specifically disclaims any implied warranties of merchantability or fitness for any particular purpose. This analysis does not purport to be a complete analysis nor does it constitute an offer or recommendation to buy or sell any securities.
EXECUTIVE COMPENSATION
The following table is a summary of certain information concerning the compensation paid to, or earned by, the Corporation/Bank's chief executive officer and each of the Corporation/Bank's most highly compensated executive officers (the "named executives") during each of the last three (3) fiscal years.
COMPENSATION OF DIRECTORS
The Board of Directors of the Corporation are not paid a fee for serving on the Board. However, Corporation Directors serving on an Affiliate Bank Board are receiving a single annual retainer of $1,200 and a fee of $800 per meeting attended ($200 for Committee Meeting). Corporation Directors who are also employees of any of the affiliates of the Corporation receive no additional compensation for service on the Corporate Board.
Pursuant to a Deferred Compensation Plan, directors may annually defer any amount of their compensation as directors until age seventy (70) or until they cease to serve on the Board, whichever occurs last. The deferred funds bear interest until paid under one of the chosen methods as selected by the director:
(a) at an annually adjusted rate equal to one fourth percent (1/4%) greater than the average bond equivalent yield to maturity on one-year United States Treasury Bills in effect for the first five (5) business days in December immediately preceding such calendar year, unless an alternate rate is set by the Committee for that year at least fifteen (15) days before the beginning of the year.
(b) annual positive total return on Security Banc Corporation Stock.
EMPLOYMENT AGREEMENTS
Harry O. Egger: The employment agreement with Harry O. Egger will automatically be extended on January 1, of each year so that it provides for a continuing five (5) year employment contract. In the event the Corporation/Bank ceases to exist as a corporate entity, Harry O. Egger shall be paid in cash, as a lump sum, equal to two-point-nine (2.9) times his annual base compensation determined by averaging the same over the five (5) years immediately prior to the occurrence.
James R. Wilson: James R. Wilson shall be employed as President and CEO of Citizens National Bank. The compensation shall be fixed at no less than $165,000 per annum. In the event the Banc or its subsidiary, the Citizens National Bank, ceases to exist as a corporate entity for any reason then James R. Wilson shall be paid in cash, in full, in a lump sum at the time of occurrence of any of said events, a sum equal to 2.9 times his annual base compensation determined by averaging the same over the five (5) years next prior to the occurrence. This employment contract is for a term of two (2) years commencing on the date of employment and terminating on September 30, 1998.
Other Agreements: James R. Wilson and Citizens National Bank entered into an agreement which by the terms will require the Bank to make payments upon his retirement or disability. Terms of the agreement require upon his normal retirement to receive $50,000 annually for a period of 10 years. The Agreement also addresses other issues as they relate to disability and death benefits.
Kenneth F. Rupp Jr.: Kenneth F. Rupp shall be employed as President and CEO of Third Savings and Loan Company. The compensation shall be no less than his current salary. In the event of a change in control or 12 months thereafter, of which involuntary termination occurs, the Bank shall pay an amount equal to the annual salary as of the date of termination. The Employment Contract terminates July 9, 1997.
PROFIT SHARING PLAN
During the year, the company had three profit sharing plans. The plan covering employees of the former CitNat Bancorp, Inc. and Third Financial Corporation will be merged into the Security National Bank plan effective January 1, 1997. Employees of the subsidiaries will be eligible to participate in the Security National Bank Plan upon meeting plan eligibility requirements. For eligibility and vesting purposes, employees will be given service credit for service at the former CitNat Bancorp, Inc. and Third Financial Corporation.
All employees of Security National Bank become eligible participants in the plan when they have completed one (1) year of eligibility service; have worked at least five hundred (500) hours and are at least age twenty-one (21). Eligible participants may make contributions to the plan by deferring up to fifteen percent (15%) of their annual earnings.
The Board of Directors of Security National Bank annually determine the bank's matching contribution to the plan. For the plan year ended December 31, 1996 and December 31, 1995, the matching contribution was fifty percent (50%) of the employee's contribution up to the first six percent (6%) of annual earnings contributed by the participant.
Employee contributions are one hundred percent (100%) vested immediately. The bank's matching contributions are vested at twenty percent (20%) for each year of eligibility service, based on five (5) year vesting schedule.
The contribution by the Companies for all three plans for 1996, 1995, and 1994 was $208,000, $209,000, and $205,000, respectively.
RETIREMENT PLANS
The following table shows estimated annual benefits payable for life to participants upon retirement at age sixty-five (65) in 1996 under the Security National Bank Pension Plan based upon combinations of compensation levels and years of service.
REPORT OF THE STOCK OPTION COMMITTEE
The Stock Option Committee of the Board of Directors determines stock option grants to executive officers and other eligible employees. Stock options are intended to encourage key employees to remain employed by the Corporation/Bank by providing them with a long term interest in the Corporation/Bank's overall performance as reflected by the performance of the market of the Corporation/Bank's Common Stock.
The Security Banc Corporation's 1987 and 1995 Stock Option Plans are administered by the Board of Directors of the Corporation. The aggregate number of common shares of the Corporation which may be issued under the Plans are two hundred thousand (200,000) and forty thousand (40,000) shares, respectively. As of December 31, 1996, the total shares issued from each of the plans were 199,680 and 34,800 respectively.
Under the terms of the Plan, the Corporation may grant stock options to Officers and certain key Executives. The options, which must be granted at fair market value, expire ten (10) years from the date of grant.
All outstanding incentive stock options entitle the holder to purchase shares at prices equal to the fair market value of the shares on the dates the options were granted. The fair market value of a share of the Corporation's Common Stock was $38.00 as of December 31, 1996.
The following table sets forth certain information regarding individual exercises of stock options during 1996 by each of the named executives:
Generally, option grants to executive officers are a reflection of the executive's attainment of Corporation/Bank and personal goals.
Stock Option Committee Members Larry D. Ewald Jane N. Scarff W. Dean Sweet
(a) Represents shares of Security Banc Corporation received as the result on converting 11,340 CitNat options at the conversion price of $36.50 per share of Security Banc Corporation.
(b) Represents 18,492 options of Third Financial Corporation acquired in the cash purchases by Security Banc Corporation at $33.41 per share less the $10.00 per share option cost.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Corporation's banking subsidiary has, and expects in the future to have, transactions with corporations in which Directors and Officers of the Company are active as Directors, Officers, or substantial Shareholders. These transactions are undertaken in the ordinary course of business and on substantially the same terms and conditions as comparable transactions with other corporations. The Bank has made, and expects in the future to make, loans to such Directors, Officers and their associates. These loans are made in the ordinary course of business, on substantially the same terms, including interest rates and collateral as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risk of collectibility or present any other unfavorable terms.
The firm of Gorman, Veskauf, Henson & Wineberg, Attorneys-at-Law of which Thomas J. Veskauf is a partner was paid fees for various legal services performed for the Corporation during the year ended December 31, 1996.
RELATIONSHIP WITH CERTIFIED PUBLIC ACCOUNTANT
The Security Banc Corporation Board of Directors has retained the professional services of Ernst & Young, Certified Public Accountants for 1997. The Corporation's financial statements for the previous fiscal year were examined by Ernst & Young. In connection with the audit function, Ernst & Young also reviewed the 10-K filing with the Securities and Exchange Commission.
SHAREHOLDER PROPOSALS
Shareholders of the Corporation who wish to make a proposal to be included in the Proxy Statement and Proxy of the Corporation's Annual Meeting of Shareholders which, unless changed, will be held on April 21, 1998, must cause such proposal to be received by the Corporation at its principal office no later than November 14, 1997. Each proposal submitted should be accompanied by the name and address of the Shareholder submitting the proposal and number of shares owned. The proxy rules, as implemented by the Securities Exchange Act of 1934, govern the content and form the Shareholder proposals. All proposals must be a proper subject for action at the 1998 Annual Meeting.
OTHER BUSINESS
The Board of Directors does not know of any other matters to be presented at the Annual Meeting. However, if any other matters do come before such meeting or an adjournment thereof, it is intended that the holders of the proxies will vote in accordance with the recommendation of Management.
/s/ Harry O. Egger - --------------------------- Harry O. Egger
Chairman of the Board President and Chief Executive Officer
March 14, 1997
THIS FORM 10-K ANNUAL REPORT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE WITHOUT CHARGE AFTER MARCH 31, 1997. TO OBTAIN A COPY, CALL (937) 324-6874 OR WRITE TO SHAREHOLDER RELATIONS, SECURITY BANC CORPORATION, 40 SOUTH LIMESTONE STREET, SPRINGFIELD, OHIO 45502.
REVOCABLE PROXY SECURITY BANC CORPORATION
PLEASE MARK VOTES AS IN THIS EXAMPLE
PROXY FOR ANNUAL MEETING APRIL 15, 1997
KNOW ALL MEN BY THESE PRESENTS that I, the undersigned shareholder of Security Banc Corporation, Springfield, Ohio do hereby nominate and constitute and appoint John E. Dibert and Roger L. Evans or any one of them with full power to act alone my true and lawful attorney(s) with full power of substitution for me and in my name, place and stead to vote all the Common Stock of said Corporation, standing in my name on its books on Friday, February 28, 1997, at the Annual Meeting of its Shareholders to be held at Clark State Performing Arts Center, Turner Studio Theater, 300 South Fountain Avenue, Springfield, Ohio, on April 15, 1997, at 1:00 p.m. or at any adjournment thereof with all the powers the undersigned would possess if personally present as follows:
1. To elect three directors of Class III:
Larry E. Kaffenbarger, Chester L. Walthall, Robert A. Warren
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
This proxy confers discretionary authority to vote "for" the proposition listed above unless otherwise indicated. If any other business is presented at said meeting, this proxy shall be voted in accordance with the recommendations of the Board of Directors.
The Board of Directors recommends a vote "for" the proposition listed above. This proxy is solicited on behalf of the Corporation's Board of Directors and may be revoked prior to its exercise. Please sign and date this proxy and return it in the enclosed envelope.
Please sign exactly as your name appears on this card. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If shares are held jointly, each holder should sign.
Detach above card, sign, date and mail in postage paid envelope provided.
PLEASE ACT PROMPTLY SIGN, DATE & MAIL YOUR PROXY CARD TODAY
REVOCABLE PROXY SECURITY BANC CORPORATION
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
PROXY FOR ANNUAL MEETING APRIL 15, 1997
KNOW ALL MEN BY THESE PRESENTS that I, the undersigned shareholder of Security Banc Corporation, Springfield, Ohio do hereby nominate and constitute and appoint John E. Dibert and Roger L. Evans or any one of them with full power to act alone my true and lawful attorney(s) with full power of substitution for me and in my name, place and stead to vote all the Common Stock of said Corporation, standing in my name on its books on Friday, February 28, 1997, at the Annual Meeting of its Shareholders to be held at Clark State Performing Arts Center, Turner Studio Theater, 300 South Fountain Avenue, Springfield, Ohio, on April 15, 1997, at 1:00 p.m. or at any adjournment thereof with all the powers the undersigned would possess if personally present as follows:
With- For All For hold Except 1. To elect three directors of Class III: [ ] [ ] [ ]
Larry E. Kaffenbarger, Chester L. Walthall, Robert A. Warren
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
This proxy confers discretionary authority to vote "for" the proposition listed above unless otherwise indicated. If any other business is presented at said meeting, this proxy shall be voted in accordance with the recommendations of the Board of Directors.
The Board of Directors recommends a vote "for" the proposition listed above. This proxy is solicited on behalf of the Corporation's Board of Directors and may be revoked prior to its exercise. Please sign and date this proxy and return it in the enclosed envelope.
Please sign exactly as your name appears on this card. When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If shares are held jointly, each holder should sign.
Please be sure to sign and date Date this Proxy in the box below.
Shareholder sign above --- Co-holder (if any) sign above
- ------------------------------------------------------------------------------- Detach above card, sign, date and mail in postage paid envelope provided.
SECURITY BANC CORPORATION - ------------------------------------------------------------------------------- PLEASE ACT PROMPTLY SIGN, DATE & MAIL YOUR PROXY CARD TODAY - -------------------------------------------------------------------------------