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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission File Number 0-13270
UNB CORP.
(Exact name of Registrant as specified in its charter)
Ohio 34-1442295
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State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
220 Market Avenue South, Canton, Ohio 44702
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (330) 454-5821
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 Stated Value
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of February 28, 1999: $222,611,867.
The number of shares outstanding of each of the Registrant's common stock, as of
February 28, 1999: 10,993,179 shares of $1.00 per share stated value common
stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1998 UNB Corp. Annual Report to Shareholders (Exhibit 13) are
incorporated into Part I, Item 1(c), 1(e), Item 2, and Part II, Items 5, 6, 7,
7a and 8.
Portions of the Definitive Proxy Statement of UNB Corp.(Form DEF 14-A) dated
February 19, 1999 and Notice of Annual Meeting of Shareholders to be held on
April 20, 1999, are incorporated into Part III, Items 10, 11, 12, and 13.
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UNB CORP.
FORM 10-K
1998
Page
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PART I
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Item 1 Business 3
Item 2 Properties 18
Item 3 Legal Proceedings 19
Item 4 Submission of Matters to a Vote of Security Holders 19
PART II
Item 5 Market for Registrant's Common Equity and Related Shareholder
Matters 20
Item 6 Selected Financial Data 20
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations 20
Item 7A Quantitative and Qualitative Disclosures About Market Risk 20
Item 8 Financial Statements and Supplementary Data 20
Item 9 Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 21
PART III
Item 10 Directors and Executive Officers of the Registrant 21
Item 11 Executive Compensation 21
Item 12 Security Ownership of Certain Beneficial Owners and Management 21
Item 13 Certain Relationships and Related Transactions 21
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K 21
Signatures 25
Exhibit Index 27
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PART I
ITEM 1 - BUSINESS
a. GENERAL DEVELOPMENT OF BUSINESS
UNB Corp. (Registrant) was incorporated under the laws of the State of
Ohio during 1983. Its principal business is to act as a bank holding
company for the United National Bank & Trust Company (Bank). Effective
October 1, 1984, in a transaction accounted for as an internal
reorganization, the Registrant acquired all of the outstanding stock of
the United National Bank & Trust Company. The Corporation exchanged two
shares of common stock for each previously outstanding share of the
United National Bank & Trust Company. The Registrant did not have any
operations prior to the business combination. UNB Corp. is registered
under the Bank Holding Company Act of 1956, as amended. A substantial
portion of UNB Corp.'s revenue is derived from cash dividends paid by
the Bank. At December 31, 1998, UNB Corp. and its affiliates had total
consolidated assets of $868.7 million and total consolidated
shareholders' equity of $71.7 million.
b. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Registrant and its subsidiary bank are engaged in commercial and
retail banking. Reference is hereby made to Item 1(e), "Statistical
Disclosure", and Item 8 of this Form 10-K for financial information
pertaining to the Registrant's banking business.
c. DESCRIPTION OF UNB CORP.'S BUSINESS
UNB Corp.'s main affiliate, the United National Bank & Trust Company, is
a full-service banking organization with 21 banking offices offering a
wide range of commercial and retail and fiduciary banking services
primarily to customers in northern Stark, southern Summit and western
Wayne Counties of Ohio. These services include a broad range of loan,
deposit and trust products and various miscellaneous services. Loan
products include commercial and commercial real estate loans, a variety
of residential mortgage and construction loan products, direct and
indirect consumer installment loans, home equity lines of credit,
aircraft financing, VISA business lines of credit, small business
leases, dealer floor plans and accounts receivable financing. Deposit
products include interest and non-interest bearing checking products,
various savings and money market products, certificates of deposit and
IRAs. The Trust Department provides fiduciary services in the areas of
employee benefit trusts, personal trusts and investment management
services. Miscellaneous services offered include safe deposit boxes,
night depository, United States savings bonds, traveler's checks, money
orders and cashier checks, bank-by-mail, bank-by-phone and electronic
banking services, wire transfer service, selected utility bill payments,
collections and notary services. Services provided for Bank customers
through third party vendors include those of discount brokerage and the
sale of mutual funds, annuities and life insurance. In addition, the
Bank has correspondent relationships with major banks in New York,
Pittsburgh and Detroit pursuant to which the Bank receives and provides
to its customers various financial services.
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The Bank's primary lending area consists of Stark County, Ohio, and its
contiguous counties, with the exception of aircraft financing which
encompasses a national market. Loans (excluding aircraft
financing)outside the primary lending area are considered for
creditworthy applicants. Lending decisions are made in accordance with
written loan policies designed to maintain loan quality.
Retail lending products are comprised of demand deposit lines of credit
(overdraft protection), personal lines of credit and installment loans.
Demand deposit lines of credit are lines attached to interest and
non-interest bearing checking accounts to cover overdrafts and/or allow
customers to write themselves a loan within an approved credit limit.
Credit limits are based on a percentage of gross income and average
deposits.
Personal lines of credit include lines secured by junior mortgages (home
equity) and Private Banking lines which are generally secured by junior
mortgages but may be unsecured or secured by other collateral. The
pricing on these lines is indexed to prime rate. These loans also have a
rate lock feature which allows a borrower to convert a portion of the
outstanding balance (minimum of $5,000) to a fixed rate term loan. A
maximum of three rate locks per home equity line is available with the
term of each determined by the amount being locked in. The maximum term
is 15 years, which is subject to rate adjustment every five years.
Credit limits are determined by comparing three criteria, appraised
value, debt service and gross income. Criteria for determining credit
limits on private banking products also consider the applicant's annual
income, net worth and average deposits.
Installment loans include both direct and indirect loans. Indirect
installment loan terms can range from 12 to 180 months, depending upon
the collateral which includes new and used automobiles, boats and
recreational vehicles as well as unsecured home improvement loans.
Direct installment loan terms can range from three months to 180 months
and includes the same collateral as indirect lending plus junior
mortgages, unsecured personal loans and unsecured demand notes. Retail
lending underwriting guidelines include evaluating the entire credit
using the Five C's of Credit,character, capacity, capital, condition and
collateral. Credit scoring, analysis of credit bureau ratings and debt
to income ratios are used by the lender in the underwriting process.
The Bank offers a wide variety of mortgage loan products and services,
including a variety of fixed and adjustable rate mortgages with
maturities ranging from 120 to 360 months. The Bank also offers some
specialty products such as jumbo mortgages, Mortgage Assistance Programs
for low income individuals, construction and bridge loans. The
underwriting guidelines include those for consumer loans and those
necessary to meet secondary market guidelines. The Bank originates loans
for sale to the secondary market when it deems it profitable and
desirable to do so. Residential real estate decisions focus on loan to
value limits, debt to income ratio, housing to income ratio, credit
history, and in some cases, whether private mortgage insurance is
obtained.
Business credit products include commercial loans and commercial real
estate loans, Business Manager, VISA cards to business and lease
financing. Commercial loans include lines and letters of credit, fixed
and adjustable rate term loans, demand and time notes. Commercial real
estate loans include
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fixed and adjustable rate mortgages. Loans are generally to owner
occupied businesses. The portfolio also includes loans to churches,
residential rental property, shopping plazas and residential development
loans. Loans to businesses often entail greater risk because the primary
source of repayment is typically dependent upon adequate cash flow. Cash
flow of a business can be subject to adverse conditions in the economy
or a specific industry. Should cash flow fail, the lender looks to the
assets of the business and/or the ability of the comakers to support the
debt. Commercial lenders consider the Five C's of Credit, character,
capacity, capital, condition and collateral in making commercial credit
decisions. Business Manager is a system which the Bank uses to assist
creditworthy businesses with accounts receivable management. It is a
hybrid program combining funding and billing with cash management,
monitoring and reporting functions. The Bank purchases creditworthy
receivables at full recourse with a flexible reserve. The Bank may earn
a discount, interest and/or fees. The Bank has provided both direct and
indirect leasing on a limited basis, both on a pass through fee basis as
well as with the option to purchase and fund. The direct leases are for
specific equipment and may be open-end or closed-end. Indirect leases
are established by granting a lease line to a dealer, while the Bank
holds title and files a UCC lien for an assignment of the lease. Each
vehicle has its own amortization schedule.
During the second quarter of 1998, the Bank acquired the aircraft
financing line of business and $35.4 million in loan balances from Bank
One. The acquisition of this specialized line of business fits with the
Bank's expertise in fulfilling the financial needs of businesses and
high net-worth individuals. It also allows the Corporation to take
advantage of opportunities outside its traditional geographic market.
This division of the lending function known as United Bank Aircraft
Financing Group is headquartered in offices at the Akron/Canton Airport
and includes three regional offices located in Wichita, Kansas;
Sacramento, California; and Orlando, Florida. The sales staff possesses
significant experience in aircraft financing and the target market
consists of high income/net worth individuals for pleasure and business
use and operators using general aviation aircraft for freight and cargo
hauling, flight training, charter and rental services. Loans acquired
were both fixed and fixed rate with floating rate conversion features.
Underwriting guidelines for financing of aircraft for personal use
include the use of credit scoring and analysis of the individual's net
worth. Underwriting criteria for business operators is the same as that
used in commercial and commercial real estate lending.
In addition to the underwriting guidelines followed for specific loan
types, the Bank has underwriting guidelines common to all loan types.
With regard to collateral, the Bank follows supervisory limits set forth
in Regulation H for transactions secured by real estate. Loans in excess
of these guidelines are reported to the Board of Directors on a monthly
basis. Loans not secured by real estate are analyzed on a loan by loan
basis, based on collateral type guidelines set forth in the loan policy.
Appraisal policies follow and comply with provisions outlined under
Title XI of FIRREA. All appraisals are done by outside independent
appraisers approved by the Board of Directors. Senior Loan Committee has
the option of requiring equipment appraisals. Approval procedures
include loan authorities approved by the Board of Directors for
individual lenders and loan committees. Retail and residential loans are
centrally underwritten by their respective departments. Business credits
can be approved by the individual commercial lender or taken to Loan
Committee if
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it exceeds individual approval limits. Senior Loan Committee approves
aggregate loan commitments in excess of the lender's authority up to
$3.0 million. Executive Loan Committee approves aggregate loan
commitments in excess of $3.0 million up to the Bank's legal lending
limit. Loans to Directors and Executive Officers are approved by the
Board of Directors. All loans are reported in the Senior Loan Committee
minutes and the Board Report. Retail and residential real estate loan
transactions are also reported to Senior Loan Committee at certain
dollar limits. Exceptions and/or overrides are tracked and reported to
Loan Quality Review Committee.
The Loan Quality Review Committee meets as a subcommittee of the Senior
Loan Committee on a quarterly basis. The Committee reviews Bank lending
trends, the Past Due Report, the Watch List and various other reports in
order to monitor and maintain credit quality. The Committee also reviews
on a relationship basis, customers on the Bank's Watch List and credits
with aggregate commitments in excess of $1 million. All past due loans
are collected in a centralized collections department which is
independent of the lending functions.
In the first half of 1997, UNB Corp. received permission from the State
of Ohio Department of Commerce, Division of Consumer Finance, for a
license to establish and operate a consumer finance company, regulated
under the Ohio Mortgage Loan Act, as a wholly owned subsidiary of the
Corporation. United Banc Financial Services, Inc. was capitalized with a
$500,000 investment in June, 1997 and began operations on July 1, 1997.
Its products include real estate and non-real estate secured loans, as
well as personal note loans and indirect, retail loans. Underwriting and
pricing standards are determined by credit risk scores, credit bureau
ratings, debt to income ratios and assets of the consumer. Minimum
credit risk scores and maximum debt to income ratios have been
established for all products. Loan to value ratios for real estate
secured loans are determined by amount financed and credit risk scores.
Generally, a higher risk loan will reflect a higher interest rate, lower
loan to value ratio and greater required equity investment on the part
of the borrower. Amortization terms on real estate secured loans may
extend up to 360 months. Personal, unsecured, non-real estate and
indirect, retail loans may amortize up to 60 months. All real estate
secured loans are interest bearing while non-real estate loans have
interest calculated under the Rule of 78s. Total loans outstanding, net
of unearned income, at December 31, 1998 is $3,327,000. Real estate lien
products accounted for 79.4% of outstandings while the remaining 20.6%
is derived from non-real estate loans. In additions to the extension of
credit, United Banc Financial Services also earns fee income through the
brokering of non-conforming consumer paper and FHA/VA Government loans.
The results of operations for United Banc Financial Services for 1998
did not have a material impact on the earnings of UNB Corp. in 1998.
Revenues from loans accounted for 73% of consolidated revenues in 1998,
and 78% in 1997 and 1996. Revenues from interest and dividends on
investment and mortgage-backed securities accounted for 11% of
consolidated revenues in 1998, 1997 and 1996.
During 1998, UNB Corp. took steps to activate its affiliate, the United
Insurance Agency, Inc., which was chartered on August 23, 1990. During
the first quarter of 1999, UNB Corp. is reapplying for an insurance
license with the State of Ohio and is awaiting approval to be licensed
to sell life,
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property and casualty insurance. Approval is expected in the second
quarter of 1999 with operations expected to begin shortly afterwards.
The addition of this affiliate is anticipated to aid UNB Corp. in its
ability to compete with other providers of financial services in
offering its customers a more complete line of financial products to
satisfy their financial needs. The results of operations for United
Insurance Agency, Inc. is not expected to have to have a material impact
on the earnings of UNB Corp. in 1999.
The business of the UNB Corp. is not seasonal to any material degree,
nor is it dependent upon a single or small group of customers whose loss
would result in a material adverse effect on the Registrant or its
subsidiaries.
REGULATION AND SUPERVISION
UNB Corp. is a bank holding company under the Bank Holding Company Act
of 1956, as amended, which restricts the activities of the Corporation
and the acquisition by the Corporation of voting stock or assets of any
bank, savings association or other company. The Corporation is also
subject to the reporting requirements of, and examination and regulation
by, the Board of Governors of the Federal Reserve system (Federal
Reserve Board). Subsidiary banks of a bank holding company are subject
to certain restrictions imposed by the Federal Reserve Act on
transactions with affiliates, including any loans or extensions of
credit to the bank holding company or any of its subsidiaries,
investments in the stock or other securities thereof and the taking of
such stock or securities as collateral for loans to any borrower; the
issuance of guarantees, acceptances or letters of credit on behalf of
the bank holding company and its subsidiaries; purchases or sales of
securities or other assets; and the payment of money or furnishing of
services to the bank holding company and other subsidiaries. Banks and
bank holding companies are prohibited from engaging in certain tie-in
arrangements in connection with extensions of credit or provision of
property or services.
Bank holding companies are prohibited from acquiring direct or indirect
control of more than five percent of any class of voting stock or
substantially all of the assets of any bank holding company without the
prior approval of the Federal Reserve. The Federal Reserve is authorized
to approve the ownership of shares by a bank holding company in any
company the activities of which the Federal Reserve has determined to be
so closely related to banking or to managing or controlling banks as to
be a proper incident thereto. The Federal Reserve has by regulation
determined that certain activities are closely related to banking within
the meaning of the Bank Holding Company Act. These activities include
among others, operating a mortgage company or finance company;
performing certain data processing operations; providing investment and
financial advice and acting as an insurance agent for certain types of
credit-related insurance.
UNB Corp. is under the jurisdiction of the Securities and Exchange
Commission for matters relating to its securities and is subject to the
disclosure and regulatory requirements of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, as
administered by the Commission regulation.
As a national bank, United National Bank & Trust Co. is supervised and
regulated by the Comptroller of the Currency (Comptroller). The deposits
of the Bank are insured by the Bank Insurance Fund (BIF) while deposits
purchased
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from savings and loans in 1994 and 1991 are insured by the Savings
Association Insurance Fund (SAIF) of the Federal Deposit Insurance
Corporation (FDIC). The Bank is subject to the applicable provisions of
the Federal Deposit Insurance Act. Various requirements and restrictions
under the laws of the United States and the State of Ohio affect the
operations of the Bank, including requirements to maintain reserves
against deposits, restrictions on the nature and amount of loans which
may be made and the interest which may be charged thereon, restrictions
relating to investments and other activities, limitations on credit
exposure to correspondent banks, limitations on activities based on
capital and surplus, limitations on payment of dividends, and
limitations on branching. Under current laws, the Bank may establish
branch offices throughout the State of Ohio. Pursuant to recent federal
legislation, the Bank may branch across state lines, if permitted by the
law of the other state. In addition, effective June 1997, such
interstate branching by the Bank is authorized, unless the law of the
other state specifically prohibits the interstate branching authority
granted by federal law.
The Federal Reserve Board has adopted risk-based capital guidelines for
bank holding companies. The risk-based capital guidelines include both a
definition of capital and a framework for calculating risk-based assets
by assigning assets and off-balance sheet items to broad risk
categories. The required minimum ratio of capital to risk-weighted
assets (including certain off-balance sheet items, such as standby
letters of credit) was 8.00% at December 31, 1998 as disclosed in Note
14 of UNB Corp.'s 1998 Annual Report (See Exhibit 13). At least half of
the total regulatory capital is to be comprised of common stockholders'
equity, including retained earnings, noncumulative perpetual preferred
stock, a limited amount of cumulative perpetual preferred stock, and
minority interests in equity accounts of consolidated subsidiaries less
goodwill (Tier 1 capital). The remainder (Tier 2 capital) may consist
of, among other things, mandatory convertible debt securities, a limited
amount of subordinated debt, other preferred stock and a limited amount
of allowance for loan and lease losses. The Federal Reserve Board has
also imposed a minimum leverage ratio (Tier 1 capital to total assets)
of 4% for bank holding companies that meet certain specified conditions,
including no operational, financial or supervisory deficiencies, and
including those having the highest regulatory (CAMEL) rating. The
minimum leverage ratio is 1.0-2.0% higher for other holding companies
based on their particular circumstances and risk profiles and those
experiencing or anticipating significant growth. National banks are
subject to similar capital requirements adopted by the Comptroller.
UNB Corp. and its subsidiaries currently satisfy all regulatory capital
requirements. Failure to meet the capital guidelines could subject a
banking institution to a variety of enforcement remedies available to
federal regulatory authorities, including dividend restrictions and the
termination of deposit insurance by the FDIC.
Under an outstanding proposal of the Comptroller and the FDIC, the Bank
may be required to have additional capital if its interest rate risk
exposure exceeds acceptable levels provided for in the regulation. In
addition, those regulators have established regulations governing prompt
corrective action to resolve capital deficient banks. Under these
regulations, banks which become undercapitalized become subject to
mandatory regulatory scrutiny and limitations, which increase as capital
continues to decrease. Such banks are also required to file capital
plans with their primary federal regulator, and
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their holding companies must guarantee the capital shortfall up to 5% of
the assets of the capital deficient bank at the time it becomes
undercapitalized.
The ability of UNB Corp. to obtain funds for the payment of dividends
and for other cash requirements is largely dependent on the amount of
dividends which may be declared by the Bank. However, the Federal
Reserve expects UNB Corp. to serve as a source of strength to its
subsidiaries, which may require it to retain capital for further
investment in the subsidiaries, rather than for dividends for
shareholders of the Corporation. Generally, United National Bank & Trust
Co. must have the approval of its regulatory authority if a dividend in
any year would cause the total dividends for that year to exceed the sum
of current year's net profits and retained net profits for the preceding
two years, less required transfers to surplus. The Bank may not pay
dividends to the Corporation if, after such payment, it would fail to
meet the required minimum levels under the risk-based capital guidelines
and the minimum leverage ratio requirements. Payment of dividends by the
Bank may be restricted at any time at the discretion of the regulatory
authorities, if they deem such dividends to constitute an unsafe and/or
unsound banking practice or if necessary to maintain adequate capital
for the bank. These provisions could have the effect of limiting the
Corporation's ability to pay dividends on its outstanding common shares.
Management is not aware of any recommendations by regulatory authorities
which, if they were to be implemented, would have a material effect on
UNB Corp.
GOVERNMENT MONETARY POLICIES
The earnings and growth of UNB Corp. are affected not only by general
economic conditions, but also by the fiscal and monetary policies of the
federal government and its agencies and regulatory authorities,
particularly the Federal Reserve Board. Its policies influence the
growth and mix of bank loans, investments and deposits and the interest
rates earned and paid thereon, and thus effecting the earnings of the
Corporation.
Due to the changing conditions in the economy and the activities of
monetary and fiscal authorities, no predictions can be made regarding
future changes in interest rates, credit availability or deposit levels.
COMPETITION
UNB Corp. and its affiliates compete with other state, regional and
national banks which do business within Stark, Summit and Wayne Counties
of Ohio. UNB Corp. and its affiliates also compete with a large number
of other financial institutions, such as savings and loan associations,
savings banks, insurance companies, consumer finance companies, credit
unions, mortgage banking companies, and commercial finance and leasing
companies, for deposits, loans and financial services business. Mergers
between financial institutions have added to the competitive pressure.
In addition, money market mutual funds, brokerage houses, and similar
organizations provide many of the financial services offered by UNB
Corp.'s affiliates. Many competitors have substantially greater
resources than UNB Corp. In the opinion of management, the principal
methods by which UNB Corp. and its affiliates compete with other
financial services providers are through the rates of interest charged
for loans, the rates of interest paid for deposits and borrowings, the
competitive
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prices charged for and the availability and quality of products and
services provided and the convenience of its branch locations.
EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL REGULATIONS
Compliance with Federal, State and local provisions regulating the
discharge of materials into the environment, or otherwise relating to
the protection of the environment has not had a material effect upon the
capital expenditures, earnings or competitive position of the UNB Corp.
or its subsidiaries. UNB Corp. anticipates, based on the nature of its
business, that it will have no material capital expenditures for the
purpose of protecting the environment in the foreseeable future. From
time to time the Bank may be required to make capital expenditures for
environmental control facilities related to properties acquired through
foreclosure proceedings.
The Bank has continued involvement in legal proceedings concerning a
seven and one half acre parcel of property acquired through foreclosure
and located in the northwest quadrant of Stark County. A large national
petroleum company, owner of the facility at the date it was taken out of
service, is the party responsible for the contamination cleanup
according to the State of Ohio's Bureau of Underground Storage Tanks
(BUSTER) regulations. After review of several environmental assessments
by the Bank and the petroleum company which were filed with BUSTER, the
agency agreed with the petroleum company's findings which indicated that
the levels of contaminants were such that immediate remediation was not
required. BUSTER determined that the findings indicated the
contamination will remediate itself over time and issued a one year
extension on any formal remediation plan. That extension expired in the
third quarter of 1998. After the extension expired, the petroleum
company had another 90 days to file its remediation plan. In November,
1998, the Bank executed a purchase agreement for the sale of the
property. The contract outlined a due diligence clause on behalf of the
buyers to investigate the EPA, wetland and flood plane analysis. The
results of these studies would be made available to the Bank and based
on their outcome, the developer would have the opportunity to negate the
purchase contract. The analyses have been delayed by the petroleum
company, with no further progress by the end of 1998. Should the
contract expire before the analyses are reviewed, the Bank will work to
execute an extension of the agreement. Estimated cleanup costs, should
they become the responsibility of the Bank, are not material to the
business or financial condition of the Bank and have been set up as an
allowance against the property's value on the Corporation's consolidated
balance sheet.
EMPLOYEES
As of December 31, 1998, UNB Corp. and its subsidiaries had 298
full-time employees and 50 part-time employees. UNB Corp. and its
subsidiaries are not a party to any collective bargaining agreement and
management considers its relationship with its employees to be good.
d. FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES
UNB Corp. and its subsidiaries do not have any offices located in
foreign countries and they have no foreign assets, liabilities, or
related income and expense for the years presented.
e. STATISTICAL DISCLOSURE
The following section contains certain financial disclosures related to
the
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Registrant as required under the Securities and Exchange Commission's
Industry Guide 3, "Statistical Disclosures by Bank Holding Companies",
or a specific reference as to the location of the required disclosures
in the Registrant's 1998 Annual Report to Shareholders, portions of
which are incorporated in this Form 10-K by reference.
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UNB CORP.'S STATISTICAL INFORMATION
I. DISTRIBUTION OF ASSETS, LIABILITIES, AND SHAREHOLDERS' EQUITY; INTEREST
RATES AND INTEREST DIFFERENTIAL
A. The average balance sheet information and the related analysis of net
& interest earnings for the years ending December 31, 1998, 1997 and 1996
B. are included in Table 4 - "Average Balance Sheet and Related Yields",
within Management's Discussion and Analysis of Financial Condition and
Results of Operations found on page 40 of the Registrant's 1998 Annual
Report to Shareholders and is incorporated into this Item I by
reference.
All interest is reported on a fully taxable equivalent basis using a
marginal tax rate of 35%. Nonaccruing loans, for the purpose of the
computations, are included in the daily average loan amounts
outstanding. Loan fees in the amount of $3,025,000, $3,108,000 and
$3,478,000 are included in interest on loans for the years ended
December 31, 1998, 1997, and 1996.
C. Tables setting forth the effect of volume and rate changes on interest
income and expense for the years ended December 31, 1998 and 1997 are
included in Table 2 - "Changes in Net Interest Differential -
Rate/Volume Analysis", within Management's Discussion and Analysis of
Financial Condition and Results of Operations found on Page 38 of UNB
Corp.'s 1998 Annual Report to Shareholders and is incorporated into this
Item I by reference. For purposes of these tables, changes in interest
due to volume and rate were determined as follows:
Volume Variance - change in volume multiplied by the previous year's
rate.
Rate Variance - change in rate multiplied by the previous year's
volume.
Rate/Volume Variance - change in volume multiplied by the change in
rate.
The rate/volume variance was allocated to volume variance and rate
variance in proportion to the relationship of the absolute dollar amount
of the change in each.
II. INVESTMENT PORTFOLIO
A. Investment Securities
The carrying value of investment and mortgage-backed securities at the
dates indicated are summarized below:
December 31,
(Dollars in thousands) 1998 1997 1996
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U.S. Treasury securities and securities
of U.S. government agencies and corporations $ 34,309 $ 53,637 $ 75,817
Obligations of states and political subdivisions -- 951 1,051
Mortgage-backed securities 81,504 67,845 42,907
Other securities 18,636 18,405 13,111
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Total investment and mortgage-backed securities $134,449 $140,838 $132,886
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B. The carrying value and weighted average interest yield for each
investment category listed in Part A at December 31, 1998 which are due
(1) in one year or less, (2) after one year through five years, (3)
after five years through ten years, and (4) after ten years are
presented in Note 3 - Securities, found on page 25 in the Notes to
Consolidated Financial Statements in UNB Corp.'s 1998 Annual Report to
Shareholders and is incorporated herein by reference. The weighted
average yields have been computed by dividing the total interest income
adjusted for amortization of premiums or accretion of discount over the
life of the security by the par value of the securities outstanding. The
weighted average yields of tax exempt obligations are presented on a
non- taxable basis, prior to adjustment to a fully taxable equivalent
basis or consideration of related non-deductible interest expense.
C. Excluding those holdings of the investment portfolio in U.S. Treasury
securities and other agencies and corporations of the U.S. government,
there were no investments in securities of any one issuer which exceeded
10% of the consolidated shareholder's equity of the Registrant at
December 31, 1998.
III. LOAN PORTFOLIO
A. Types of Loans - Total loans on the balance sheet are comprised of the
following classifications at December 31,
(Dollars in thousands) 1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Commercial $ 80,618 $ 84,737 $ 78,563 $ 64,811 $ 61,094
Commercial real estate 83,036 70,896 65,875 60,478 53,252
Aircraft 65,530 - - - -
Residential real estate 234,696 260,190 242,652 172,283 115,354
Consumer loans 207,553 214,595 230,512 221,158 182,822
--------- --------- --------- --------- ---------
Total loans $671,433 $630,418 $617,602 $518,730 $412,522
======== ======== ======== ======== ========
B. Maturities and Sensitivities of Loans to Changes in Interest Rates - The
following is a schedule of contractual maturities and repayments
excluding residential real estate mortgage, aircraft loans to
individuals and consumer loans, as of December 31, 1998:
(Dollars in thousands)
Commercial, Commercial Real
Estate and Commercial Aircraft
------------------------------
Due in one year or less $ 54,316
Due after one year, but within five years 26,559
Due after five years 137,674
---------
Total $218,549
========
The following is a schedule of fixed and variable rate commercial,
commercial real estate and commercial related aircraft loans due after
one year (variable rate loans are those loans with floating or
adjustable interest rates):
13
14
(Dollars in thousands)
Fixed Variable
----- --------
Interest Rates Interest Rates
-------- ----- --------------
Total commercial, commercial real estate and
commercial aircraft loans due after one year $49,601 $114,632
C. Risk Elements
1. Nonaccrual, Past Due and Restructured Loans - The following
schedule summarizes nonaccrual, past due, and restructured loans:
(Dollars in thousands) 1998 1997 1996 1995 1994
----- ---- ---- ---- ----
Nonaccrual loans $1,300 $ 854 $ 708 $1,066 $1,039
Accrual loans past due 90 days 187 91 130 254 19
Restructured loans 203 424 237 212 375
------ ------ ------ ------ ------
Total 1,690 1,369 1,075 1,532 1,433
Potential problem loans 2,147 1,722 1,699 1,075 5,386
------ ------ ------ ------ ------
Total $3,837 $3,091 $2,774 $2,607 $6,819
====== ====== ====== ====== ======
For the year ended December 31, 1998, $23,000 of interest income
would have been earned under the original terms of those loans
classified as nonaccrual. The policy for placing loans on
nonaccrual status is to cease accruing interest on loans when
management believes that the collection of interest is doubtful,
or when loans are past due as to principal or interest 90 days or
more. Consumer installment loans not secured by real estate are
kept on accrual status until they become 120 days past due at
which time they are charged off. The loans must be brought current
and kept current for six consecutive months before being removed
from nonaccrual status. When loans are charged-off, any accrued
interest recorded in the current fiscal year is charged against
interest income. The remaining balance is treated as a loan
charge-off.
At December 31, 1998, loans totaling $660 thousand were classified
as impaired. All loans classified as impaired at December 31, 1998
were also classified as nonaccrual loans, and therefore the
adoption of SFAS No. 114 and SFAS NO. 118 had no effect on the
comparability of non-performing assets at December 31, 1998 to
prior periods.
2. Potential Problem Loans - As shown in the table above, at
December 31, 1998, there are approximately $2.1 million of loans
not otherwise identified which are included on management's
watch list. Management's watch list includes both loans which
management has some doubt as to the borrowers' ability to comply
with the present repayment terms and loans which management is
actively monitoring due to changes in the borrowers financial
condition. These loans and their potential loss exposure have
been considered in management's analysis of the adequacy of the
allowance for loan losses.
3. Foreign Outstandings - There were no foreign outstandings at
December 31, 1998, 1997, or 1996.
4. Loan Concentrations - As of December 31, 1998, indirect
installment loans comprise 21.1% of total loans outstanding. The
dealer network from which indirect consumer paper was purchased in
1998 included 131 dealers, the
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largest of which was responsible for 9.6% of paper bought in 1998.
There are no additional concentrations of loans greater than 10%
of total loans which are not otherwise disclosed as a category of
loans pursuant to Item III. A. above. Also refer to the Note 1,
Concentrations of Credit Risk, found on Page 23 of the 1998 Annual
Report incorporated herein by reference.
5. No material amount of loans that have been classified by
regulatory examiners as loss, substandard, doubtful, or special
mention have been excluded from the amounts disclosed as
nonaccrual, past due 90 days or more, restructured, or potential
problem loans.
D. Other Interest Bearing Assets - As of December 31, 1998, there are no
other interest bearing assets that would be required to be disclosed
under Item III C.1 or 2 if such assets were loans. UNB Corp. had Other
Real Estate Owned at December 31, 1998, in the amount of $449,000.
IV. SUMMARY OF LOAN LOSS EXPERIENCE
A. The following schedule presents an analysis of the allowance for loan
losses, average loan data, and related ratios for the years ended
December 31,
(Dollars in thousands) 1997 1996 1996 1995 1994
---- ---- ---- ---- ----
Average loans outstanding during the
period (net of unearned income) $651,320 $629,514 $582,418 $464,314 $385,618
======== ======== ======== ======== ========
Allowance for loan losses
at beginning of year $ 9,650 $ 8,335 $ 7,242 $ 6,348 $ 6,056
Loans charged off:
Commercial 125 258 106 26 13
Commercial real estate -- -- -- 20 52
Aviation -- -- -- -- --
Residential real estate 135 15 156 71 3
Consumer loans 2,137 2,638 2,900 1,441 1,095
-------- -------- -------- -------- --------
Total charge-offs 2,397 2,911 3,162 1,558 1,163
Recoveries:
Commercial 46 190 5 29 52
Commercial real estate -- 8 39 26 7
Aviation -- -- -- -- --
Residential real estate 135 86 71 71 11
Consumer loans 990 1,013 1,000 576 365
-------- -------- -------- -------- --------
Total recoveries 1,171 1,297 1,115 702 435
-------- -------- -------- -------- --------
Net charge-offs 1,226 1,614 2,047 856 728
Provision for loan loss
charged to operations 2,748 2,929 3,140 1,750 1,020
-------- -------- -------- -------- --------
Allowance for loan losses at end of year $ 11,172 $ 9,650 $ 8,335 $ 7,242 $ 6,348
======== ======== ======== ======== ========
Ratio of net charge-offs to average
loans, net of unearned income 0.19% 0.26% 0.35% 0.18% 0.19%
======== ======== ======== ======== ========
The allowance for loan losses balance and the provision charged to
expense are judgmentally determined by Management based upon the
periodic review of the loan portfolio, an analysis of impaired loans,
past loan loss experience, economic conditions, anticipated loan
portfolio growth, and various other circumstances which are subject to
change over time. In making this judgment, Management reviews selected
large loans as well as delinquent loans, nonaccrual
15
16
loans, problem loans, and loans to industries experiencing economic
difficulties. The collectibility of these loans is evaluated after
considering the current financial position of the borrower, the
estimated market value of the collateral, guarantees, and the Company's
collateral position versus other creditors. Judgments, which are
necessarily subjective, as to the probability of loss and the amount of
such loss, are formed on these loans, as well as other loans in the
aggregate. The reduction in provision from 1997 to 1998 was a result of
slower, more selective loan growth in 1998 coupled with the decrease in
net charge-offs.
B. The following schedule is a breakdown of the allowance for loan losses
allocated by type of loan and related ratios:
Allocation of the Allowance for Loan Losses
-------------------------------------------
Percentage Percentage
of Loans of Loans
in Each in Each
Allowance Category to Allowance Category to
Amount Total Loans Amount Total Loans
------- ----------- --------- ------------
(Dollars in thousands)
December 31, 1998 December 31, 1997
-------------------- ----------------------
Commercial $ 4,899 12.0% $ 3,344 13.5%
Commercial real estate 1,921 12.4 781 11.2
Aviation 611 9.8 -- --
Residential real estate 235 34.9 261 41.3
Consumer 2,082 30.9 2,316 34.0
Unallocated 1,424 -- 2,948 --
------- ------- ------- -------
Total $11,172 100.0% $ 9,650 100.0%
======= ======= ======= =======
December 31, 1996 December 31, 1995
---------------------- ----------------------
Commercial $ 2,064 12.7% $ 2,160 12.5%
Commercial real estate 663 10.7 782 11.7
Aviation -- -- -- --
Residential real estate 244 39.3 129 33.2
Consumer 4,420 37.3 2,174 42.6
Unallocated 944 -- 1,997 --
------- ------- ------- -------
Total $ 8,335 100.0% $ 7,242 100.0%
======= ======= ======= =======
December 31, 1994
-----------------
Commercial $ 1,660 14.9%
Commercial real estate 840 13.0
Aviation -- --
Residential real estate 1,257 28.2
Consumer 2,129 43.9
Unallocated 462 --
------- -------
Total $ 6,348 100.0%
======= =======
16
17
A comparison of allocations of the allowance for loan losses between
the five years presented shows a significant shift in the dollars
allocated to each of the four loan categories. During the third quarter
of 1995, a change in the methodology used to determine the allocation
of the allowance for loan losses among the various loan categories was
approved by the Executive Committee of the Board of Directors and
instituted by management. Management will continue to use the same
three methodologies it has historically used to determine the
allocation of the allowance, however, it will select the single
methodology that results in the highest aggregate calculation for
allocation of the allowance among the various loan categories, and not
the highest specific allocation for each loan category from among the
three methodologies. Management believes this change reflects a more
reliable analysis of the Bank's risk of loan loss.
At December 31, 1998 and 1997 there was no specific allocation to any
loan category in connection with the adoption of SFAS No. 114 due to
the adequacy of the collateral values relative to the balance of
impaired loans outstanding at year-end 1998 and 1997. At December 31,
1996, $135,000 was specifically allocated to commercial loans in
connection with the adoption of SFAS No. 114.
While management's periodic analysis of the adequacy of the allowance
for loan loss may allocate portions of the allowance for specific
problem loan situations, the entire allowance is available for any loan
charge-offs that occur.
V. DEPOSITS
The following is a schedule of average deposit amounts and average
rates paid on each category for the periods included:
(Dollars in thousands) Years Ended December 31,
----------------------------------------------------
1998 1997 1996
---- ---- ----
Amount Rate Amount Rate Amount Rate
------ ---- ------ ---- ------ ----
Noninterest bearing
demand deposits $ 89,305 - $ 76,523 - $ 71,263 -
Interest bearing
demand deposits 79,669 1.58% 72,770 1.68% 71,078 1.98%
Savings 197,971 3.42 174,789 3.14 157,662 2.85
Certificates and other
time deposits 295,555 5.67 290,854 5.76 271,351 5.73
-------- -------- --------
$662,500 $614,936 $571,354
======== ======== ========
The following table summarizes time deposits issued in amounts of
$100,000 or more as of December 31, 1998 by time remaining until
maturity:
(Dollars in thousands)
Maturing in:
Under 3 months $ 15,461
Over 3 to 6 months 13,719
Over 6 to 12 months 12,940
Over 12 months 7,804
--------
$ 49,924
========
17
18
VI. RETURN ON EQUITY AND ASSETS
Information required by this section is incorporated by reference to
the information appearing in the table under the caption "Five-Year
Summary of Selected Data" located on Page 51 of UNB Corp's 1998 Annual
Report to Shareholders.
VII. SHORT-TERM BORROWING
Information required by this section is found in Note 7 - "Short-term
Borrowings" on Page 27 of UNB Corp.'s 1998 Annual Report to
Shareholders, incorporated herein by reference.
ITEM 2 - PROPERTIES
UNB CORP.
UNB Corp.'s executive offices are located on the second floor of the
United Bank Plaza, at 220 Market Avenue, South, Canton, Ohio which is
leased from 220 Market Avenue Tenancy (Market Avenue, LLC).
UNITED NATIONAL BANK & TRUST CO.
The executive offices, various administrative offices and the main
branch of United National Bank & Trust Co. are located in 21,800 square
feet of the United Bank Building at 220 Market Avenue, S., Canton,
Ohio. This property is leased from 220 Market Avenue Tenancy (Market
Avenue, LLC) through 2003 with five three-year options extending
through the year 2018. The properties occupied by eleven of the Bank's
branches are owned by the Bank, while properties occupied by its
remaining nine branches are leased with various expiration dates
running through the year 2021 with renewal options. The Bank owned
location of the Uniontown branch which closed in October, 1998, is
currently unoccupied and available for sale. In addition to the leased
branch locations, the Bank also leases the office space occupied by the
Mortgage Loan Department at 4895 Portage Street, N.W. in North Canton,
Ohio. The term of this lease runs through March, 2007.
United Bank Center, at 624 Market Avenue, N., Canton, Ohio, is owned by
the Bank and houses various administrative and operational departments
of the Bank. The second floor of this building which was previously
leased, is now vacant and will be renovated in the second quarter of
1999 to become the location of several administrative departments of
the Bank now located in the United Bank Building at 153 Lincoln Way,
Massillon, Ohio. This building, previously owned by the Bank, was
donated to the City of Massillon in 1998 with a lease back arrangement
for the branch facility located there. There is no mortgage debt owing
on any of the above property owned by the Bank.
The Aircraft Finance Group has four office locations, all of which are
leased with various expiration dates in 1999 and 2000. This group is
headquartered in offices at the Akron/Canton Airport and includes three
regional offices located in Wichita, Kansas; Sacramento, California;
and Orlando, Florida.
UNITED BANC FINANCIAL SERVICES, INC.
United Banc Financial Services, Inc. has two office locations, one in
the Portage and Frank area of North Canton, Ohio and the other on
Whipple Avenue in the Belden Village area of Canton, Ohio. Both
locations are leased, with expiration dates of 2002 and 2003,
respectively. In addition, a third office
18
19
will be opening in the first quarter of 1999 in the City of Green in
southern Summit County.
A listing of all corporate locations is found under the caption
"Locations" found on page 14 of UNB Corp.'s 1998 Annual Report to
Shareholders, and is incorporated herein by reference. The facilities
owned or leased by UNB Corp. and its subsidiaries are considered by
management to be satisfactory for its current operations.
ITEM 3 - LEGAL PROCEEDINGS
The nature of UNB Corp.'s business results in a certain amount of
litigation. Accordingly, the Corporation and its subsidiaries are
subject to various pending and threatened lawsuits in which claims for
monetary damages are asserted in the ordinary course of business. While
any litigation involves an element of uncertainty, in the opinion of
Management, liabilities, if any, arising from such litigation or threat
thereof will not have a material effect on the Corporation.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the year ended December 31, 1998, one
matter was submitted to a vote of security holders at a Special Meeting
of Shareholders held on October 1, 1998 for the purpose of amending the
Articles of Incorporation to increase the number of no par value Common
Shares that the Corporation is authorized to issue from 15,000,000 to
50,000,000. The purposes for increasing the number of authorized Common
Shares were to have additional shares available for issuance in the
future for stock splits, stock dividends, acquisitions, shareholders'
rights plans, and other corporate purposes. The additional shares may
be issued on authorization of the Board of Directors without further
approval of Shareholders, except as may be required by law. The Board
of Directors had no present agreements, commitments, or understandings
for the issuance of any such shares, with the exception of shares which
may be issued pursuant to the 1987 Stock Option and Performance Unit
Plan, the UNB Corp. 1997 Stock Option Plan, or the 1989 Dividend
Reinvestment Plan. The adoption of the proposed amendment required the
affirmative vote of the holders of 66-2/3% of the outstanding shares of
the Corporation. Shareholders of record at the close of business July
30, 1998, were entitled to notice of and to vote at the meeting. Total
outstanding shares as of close of business July 30, 1998 were
5,732,435. Affirmative shares required for passage were 3,821,623.
Shareholders approved the amendment. The results of the voting were as
follows:
For Against Abstain Total
--- ------- ------- -----
5,024,843 99,739 10,920 5,135,502
(87.66%) (1.74%) (0.19%) (89.59%)
Percentages indicate the shares voted as a percentage of shares
outstanding. Based on the results of the vote, a Certificate of
Amendment to the Corporation's Articles of Incorporation was filed with
the Secretary of the State of Ohio.
19
20
PART II
ITEM 5 - MARKET PRICE OF AND DIVIDENDS ON THE COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
Shares of the Common Stock of UNB Corp. are traded on the
over-the-counter market primarily with brokers in the Corporation's
service area. The information required under this item is incorporated
by reference to the information appearing under the caption "Market
Price Ranges for Common Shares" located on Page 15 of the UNB Corp.
1998 Annual Report to Shareholders. In addition, attention is directed
to the caption "Capital Resources" within Management's Discussion and
Analysis located on page 46 of UNB Corp.'s 1998 Annual Report to
Shareholders and to Note 14 - "Dividend and Regulatory Capital
Requirements" located on page 31 therein. Such information is
incorporated herein by reference.
ITEM 6 - SELECTED FINANCIAL DATA
The information required under this item is incorporated by reference
to the information appearing under the caption "Five Year Summary of
Selected Data" located on page 51 of the 1998 Annual Report to
Shareholders. See the Consolidated Statement of Changes in
Shareholders' Equity on page 20 of the 1998 Annual Report to
Shareholders for the reporting requirements of adoption of SFAS No.
130, "Reporting of Comprehensive Income." See Note 9 - Retirement
Plans, found on page 27 of the 1998 Annual Report to Shareholders for
the revised disclosures included in the financial statements required
under the adoption of SFAS No. 132 "Employers' Disclosures about
Pensions and Other Postretirement Benefits," which was issued in
February, 1998. These items are incorporated by reference to Exhibit
13.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" appears on pages 36 through 50 of UNB Corp.'s
1998 Annual Report to Shareholders and is incorporated herein by
reference.
ITEM 7A.- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Disclosures About Market Risk specified by
Item 305 of Regulations S-K are incorporated herein by reference to UNB
Corp.'s 1998 Annual Report to Shareholders (Exhibit 13, pages 47
through 49.)
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA
UNB Corp.'s Report of Independent Auditors and Consolidated Financial
Statements and accompanying notes are listed below and are incorporated
herein by reference to UNB Corp.'s 1998 Annual Report to Shareholders
(Exhibit 13, pages 17 through 35). The supplementary financial
information specified by Item 302 of Regulation S-K, selected quarterly
financial data, is included in Note 19 - "Quarterly Financial Data
(Unaudited)" to the consolidated financial statements found on page 35.
20
21
Report of Independent Auditors
Consolidated Balance Sheets
December 31, 1998 and 1997
Consolidated Statements of Income
For the three years ended December 31, 1998
Consolidated Statements of Changes in
Shareholders' Equity For the three
years ended December 31, 1998
Consolidated Statements of Cash Flows
For the three years ended December 31, 1998
Notes to Consolidated Financial Statements
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Crowe, Chizek and Company LLP, served as independent auditors for the
purpose of auditing the Corporation's Annual Consolidated Financial
Statements and for the preparation of consolidated tax returns for the
fiscal years ending December 31, 1998, 1997, and 1996. The appointment
of independent auditors is approved annually by the Board of Directors.
For the year 1999, the Board of Directors has again authorized the
engagement of Crowe, Chizek and Company LLP, as independent auditors.
PART III
Information relating to the following items is included in UNB Corp.'s Proxy
statement and Notice of Annual Meeting of Shareholders to be held Tuesday, April
20, 1999, ("1998 Proxy Statement") dated February 19,1999, filed with the
Commission on Form DEF 14-A, pursuant to Section 14(A) of the Securities
Exchange Act of 1934 and is incorporated by reference into this Form 10-K Annual
Report (Exhibit 22).
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11 - EXECUTIVE COMPENSATION
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
a. FINANCIAL STATEMENT SCHEDULES
1. FINANCIAL STATEMENTS
The following consolidated financial statements of the Registrant
appear in
21
22
the 1998 Annual Report to Shareholders (Exhibit 13) on the pages
referenced and are specifically incorporated by reference under
Item 8 of this Form 10-K:
Annual Report
Page Numbers
------------
Report of Independent Auditors 17
Report of Management 17
Consolidated Balance Sheets, December 31, 1998 and 1997 18
Consolidated Statements of Income,
For the three years ended December 31, 1998 19
Consolidated Statements of Changes in Shareholders' Equity,
For the three years ended December 31, 1998 20
Consolidated Statements of Cash Flows,
For the three years ended December 31, 1998 21
Notes to Consolidated Financial Statements 22-35
2. FINANCIAL STATEMENT SCHEDULES
Financial statement schedules are omitted as they are not
required or are not applicable, or the required information is
included in the financial statements found in UNB Corp.'s 1998
Annual Report to Shareholders.
3. EXHIBITS
Management Contracts or Arrangements (for remaining Exhibits,
reference is made to the Exhibit Index which is found on Page 27
of this Form 10-K).
Contract or Arrangement Reference Location
----------------------- ------------------
Change of Control Agreement of Form 10-K for fiscal year ended
of Leo E. Doyle, dated December 31, 1997, Exhibit 10.a
November 16, 1995
Change of Control Agreement of Form 10-K for fiscal year ended
James J. Pennetti, dated December 31, 1997, Exhibit 10.c
November 16, 1995
Change of Control Agreement of Form 10-K for fiscal year ended
Robert M. Sweeney, dated December 31, 1997, Exhibit 10.d
November 16, 1995
UNB Corp. 1997 Stock Option Plan Form DEF 14-A, dated April 15, 1997,
Appendix A
Amendment to the Change of Control Form 10-K for fiscal year ended
Agreement of Leo E. Doyle, December 31, 1997, Exhibit 10.f
dated January 16, 1997
Amendment to the Change of Form 10-K for fiscal year ended
Control Agreement of December 31, 1997, Exhibit 10.h
James J. Pennetti,
dated January 16, 1997
22
23
Contract or Arrangement Reference Location
----------------------- ------------------
Amendment to the Change of Form 10-K for fiscal year ended
Control Agreement of December 31, 1997, Exhibit 10.i
Robert M. Sweeney,
dated January 16, 1997
Employment Contract by and Form 10-K for fiscal year ended
between Roger L. Mann and December 31, 1997, Exhibit 10.k
UNB Corp. and United National
Bank and Trust Co., dated
April 17, 1997
Change of Control Agreement of Form 10-K for fiscal year ended
Charles J. Berry, dated December 31, 1997, Exhibit 10.l
May 15, 1997
Change of Control Agreement of Form 10-K for fiscal year ended
Roger L. Mann, dated December 31, 1997, Exhibit 10.m
June 1, 1997
Amendment to the Change of Form 10-K for fiscal year ended
Control Agreement of Roger L. December 31, 1997, Exhibit 10.n
Mann, dated December 10, 1997
Amendment to the Change of Form 10-K for fiscal year ended
Control Agreement of Leo E. December 31, 1997, Exhibit 10.o
Doyle, dated December 10, 1997
Amendment to the Change of Form 10-K for fiscal year ended
Control Agreement of James J. December 31, 1997, Exhibit 10.p
Pennetti, dated December 10, 1997
Amendment to the Change of Form 10-K for fiscal year ended
Control Agreement of Robert December 31, 1997, Exhibit 10.q
M. Sweeney, dated
December 10, 1997
b. REPORTS ON FORM 8-K
One report on Form 8-K was filed during the last quarter of the year
ending December 31, 1998. The report, filed October 15, 1998, reported
the declaration by the Board of Directors of UNB Corp. of a dividend
of one common share purchase right for each outstanding common share,
no par value. The dividend was payable on October 26, 1998 to
shareholders of record on that date. Each Right entitles the
registered holder to purchase from the Corporation one common share,
without par value, of the Corporation at a price of $60.00, subject to
adjustment. The description and terms of the Rights are set forth in a
Rights Agreement dated as of October 15, 1998, between the Corporation
and United National Bank & Trust Company, as Rights Agent. The Rights
Agreement sets forth the circumstances under which the Rights
certificates will be distributed. A copy of the Rights Agreement was
filed with the Form 8-K as Exhibit 99.1.
23
24
c) Exhibits
See the Exhibit Index which appears following the Signatures section
of this report.
d) Financial Statements
See subparagraph (a)(1) above.
24
25
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.
UNB Corp.
By /s/ Roger L. Mann
---------------------------------------
Roger L. Mann, President and Chief
Executive Officer
Date 3/11/99
-----------------------------------
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.
Signature Title Date
--------- ----- ----
/s/ Roger L. Mann President, Chief 3/11/99
- -------------------------- Executive Officer -----------------------
Roger L. Mann (Principal Executive
Officer) and Director
/s/ James J. Pennetti Vice President 3/11/99
- -------------------------- and Treasurer -----------------------
James J. Pennetti (Principal Financial
and Accounting Officer)
/s/ Donald W. Schneider Chairman of 3/11/99
- -------------------------- the Board and -----------------------
Donald W. Schneider Director
absent Director
- --------------------------- -----------------------
Louis V. Bockius III
/s/ E. Lang D'Atri Director 3/11/99
- --------------------------- -----------------------
E. Lang D'Atri
/s/ Robert J. Gasser Director 3/11/99
- --------------------------- -----------------------
Robert J. Gasser
23
26
SIGNATURES(continued)
/s/ Nan Johnston Director 3/11/99
- --------------------------- -----------------------
Nan Johnston
/s/ Edgar W. Jones, Jr Director 3/11/99
- --------------------------- -----------------------
Edgar W. Jones, Jr.
absent Director
- --------------------------- -----------------------
Harold M. Kolenbrander, Ph.D.
/s/ Russell W. Maier Director 3/11/99
- --------------------------- -----------------------
Russell W. Maier
/s/ Robert L. Mang Director 3/11/99
- --------------------------- -----------------------
Robert L. Mang
absent Director
- --------------------------- -----------------------
James A. O'Donnell
absent Director
- --------------------------- -----------------------
E. Scott Robertson
/s/ Marc L. Schneider Director 3/11/99
- --------------------------- -----------------------
Marc L. Schneider
/s/ Abner A. Yoder Director 3/11/99
- --------------------------- -----------------------
Abner A. Yoder
26
27
EXHIBIT INDEX
-------------
Regulation S-K
Exhibit Number Exhibit Description
- -------------- -----------------------------------
11 Statement regarding Computation of Per Share
Earnings (included in Note 1 to the Consolidated
Financial Statements, 1998 Annual Report to
Shareholders under the caption "Earnings and
Dividends Declared Per Share").
13 UNB Corp. Annual Report to Shareholders for the
Fiscal Year Ended December 31, 1998.
21 Subsidiaries of the Registrant (exhibit is filed
herewith).
22.a Proxy Statement of UNB Corp. and Notice
for the Annual Meeting of Shareholders on
April 20, 1999, dated February 19, 1999.
(Incorporated by reference to Form DEF
14.A filed by UNB Corp., dated February
19, 1999).
22.b Proxy Statement of UNB Corp. and Notice
of Special Meeting of Shareholders on
October 1, 1998 dated August 17, 1998.
(Incorporated by reference to Form DEF
14.A filed by UNB Corp., dated August
17, 1998).
27 Financial Data Schedule for 1998(submitted as part
of electronic filing only)
27