SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ASB FINANCIAL CORP.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
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was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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ASB FINANCIAL CORP.
503 Chillicothe Street
Portsmouth, Ohio 45662
(740) 354-3177
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of Shareholders (the "Special Meeting") of ASB
Financial Corp., an Ohio corporation ("ASB"), will be held on [April ___,
2005], at _________ __.m., local time, at Shawnee State Park Resort and
Conference Center, 4404B State Route 125, West Portsmouth, Ohio 45663 for
the following purposes, which are more completely set forth in the
accompanying Proxy Statement:
1. To consider and vote upon a proposal to amend ASB's Articles of
Incorporation to effect a 1-for-300 reverse stock split and the
repurchase of all resulting fractional shares, followed
immediately by an amendment to ASB's Articles of Incorporation
to effect a 300-for-1 forward stock split of ASB's common
shares (collectively, the "Stock Splits"). As a result of the
Stock Splits, (a) each shareholder owning fewer than 300 common
shares of ASB immediately before the Stock Splits will receive
$23.00 in cash, without interest, for each ASB common share
owned by such shareholder immediately prior to the Stock Splits
and will no longer be a shareholder of ASB; and (b) each
shareholder owning 300 or more common shares immediately before
the Stock Splits (i) will receive 300 Common Shares after the
Stock Splits in exchange for each lot of 300 Common Shares held
before the Stock Splits and (ii) any additional Common Shares
held other than in a 300 share lot will be cancelled and
exchanged for $23.00 in cash per share. The proposed
amendments to ASB's Articles of Incorporation are attached as
Exhibits B and C to the accompanying Proxy Statement; and
2. To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.
Only ASB shareholders of record as of the close of business on [March
___, 2005], will be entitled to notice of, and to vote at, the Special
Meeting and any adjournment thereof.
To assure that a quorum is present at the Special Meeting, please
date, sign and promptly return the enclosed Proxy whether or not you expect
to attend the Special Meeting. A postage-prepaid envelope is enclosed for
your convenience.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE STOCK SPLITS,
PASSED UPON THE MERITS OR FAIRNESS OF THE STOCK SPLITS, OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
ASB's Board of Directors carefully considered the terms of the
proposed Stock Splits, has determined that the Stock Splits are fair to,
and in the best interests of, ASB and its shareholders, and unanimously
recommends that you vote FOR the approval of the Stock Splits.
By Order of the Board of Directors,
Robert M. Smith
President
Portsmouth, Ohio
[March ___, 2005]
ASB FINANCIAL CORP.
503 Chillicothe Street
Portsmouth, Ohio 45662
(740) 354-3177
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement provides detailed information about a proposal to
amend the Articles of Incorporation, as amended (the "Articles"), of ASB
Financial Corp. ("ASB") to effect a 1-for-300 reverse stock split and the
repurchase of all resulting fractional shares, followed immediately by a
300-for-1 forward stock split (together these are referred to as the "Stock
Splits") of ASB's common shares, no par value per share (the "Common
Shares"). If the Stock Splits are completed:
* Each shareholder owning fewer than 300 Common Shares
immediately before the Stock Splits will receive $23.00 in
cash, without interest, in exchange for each Common Share owned
by such shareholder immediately prior to the Stock Splits and
will no longer be a shareholder of ASB; and
* Each shareholder owning 300 or more Common Shares will receive
300 Common shares for each lot of 300 Common Shares held prior
to the Stock Splits and will receive $23.00 in cash, without
interest, in exchange for any Common Shares not in a 300 share
lot.
The proposed amendments to ASB's Articles to accomplish the Stock
Splits are attached as Exhibits B and C to this Proxy Statement.
We cannot complete the Stock Splits unless the holders of at least
[857,932] Common Shares, which is a majority of the outstanding Common
Shares, approve the Stock Splits. The Board of Directors has scheduled a
Special Meeting of Shareholders of ASB (the "Special Meeting") to vote upon
the Stock Splits proposal. The date, time and place of the Special Meeting
are as follows:
[April ____, 2005]
___:___, __.m. Local Time
Shawnee State Park Resort and Conference Center
4404B State Route 125, West Portsmouth, Ohio 45663
We urge you to read this Proxy Statement carefully and in its entirety,
including the attached Exhibits. This Proxy Statement is first being mailed
to ASB's shareholders on or about [March ___, 2005].
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE STOCK SPLITS,
PASSED UPON THE MERITS OR FAIRNESS OF THE STOCK SPLITS, OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY ASB.
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SUMMARY TERM SHEET
The following is a summary of the material terms of the Stock Splits
upon which ASB's shareholders will vote at the Special Meeting. While this
summary describes what we believe are the most material terms and
conditions of the Stock Splits, this Proxy Statement contains a more
detailed description of such terms and conditions. We urge you to
carefully review, in their entirety, this Proxy Statement, the attached
Exhibits and the documents incorporated by reference before voting.
ASB Background
* ASB is an Ohio corporation and a registered savings and loan
holding company which owns all of the issued and outstanding
shares of its wholly-owned subsidiary, American Savings Bank,
fsb ("American"). ASB's principal offices are located at 503
Chillicothe Street, Portsmouth, Ohio 45662 and ASB's phone
number at that address is (740) 354-3177.
Please see the section of this Proxy Statement entitled "Information
About ASB - Business of ASB and American" for a more detailed discussion.
Stock Splits Proposal
The Stock Splits will consist of the following steps:
* On the date (the "Effective Date") that the Ohio Secretary of
State accepts for filing certificates of amendment to our
Articles, a 1-for-300 reverse stock split of the Common Shares
will occur, as a result of which:
* Each holder of less than 300 Common Shares immediately
before the reverse stock split will receive from ASB cash
in the amount of $23.00, without interest, for each
Common Share held immediately before the reverse stock
split and will no longer be a shareholder of ASB; and
* Each holder of 300 or more Common Shares immediately
prior to the reverse stock split will receive one whole
Common Share for each lot of 300 Common Shares held by
the shareholder immediately before the reverse stock
split and will receive cash from ASB in the amount of
$23.00 for each Common Share held immediately before the
reverse stock split and not converted into one whole
share.
* After completion of the reverse stock split and the repurchase
of all resulting fractional shares, ASB will effect a 300-for-1
forward stock split of the Common Shares remaining outstanding
after the reverse stock split. Each holder of 300 or more
Common Shares immediately before the reverse stock split will
participate in the forward stock split, which will result in
such holder holding a number of Common Shares equal to the
number of whole shares remaining outstanding after the reverse
stock split multiplied by 300.
Please see the sections of this Proxy Statement entitled "Special
Factors - Effects of the Stock Splits" and "Stock Splits Proposal - Summary
and Structure" for a more detailed discussion of the Stock Splits.
3
Purposes of and Reasons for the Stock Splits
* The Stock Splits are intended to reduce the number of record
holders of the Common Shares below 300 and enable ASB to
terminate the registration of, or deregister, the Common Shares
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Deregistration would eliminate ASB's duty to
file periodic reports and proxy statements with the Securities
and Exchange Commission (the "SEC"), and as a result, ASB would
no longer be a public reporting company. However, ASB will
continue to be subject to the general anti-fraud provisions of
federal and applicable state securities laws and federal
banking laws applicable to ASB and American.
* The following are the principal reasons for the Stock Splits:
* anticipated annual cost savings of approximately $165,000
as a result of the deregistration of the Common Shares
and the related elimination of periodic reporting
requirements, including the cost savings resulting from
no longer being subject to the public company provisions
of the Sarbanes-Oxley Act of 2002, as amended (the
"Sarbanes-Oxley Act") and the elimination of costs
associated with being listed on the Nasdaq National
Market ("Nasdaq");
* additional savings of management's and employees' time
that will no longer be spent preparing the periodic
reports required under the Exchange Act and complying
with other provisions of the Exchange Act;
* reduced premiums for ASB's directors' and officers'
insurance policies as a result of ASB no longer being a
public reporting company;
* decreased expenses resulting from no longer being
required to service holders with small positions in the
Common Shares;
* the Stock Splits constitute the most expeditious,
efficient, cost effective and fair method to convert ASB
from a public reporting company to a privately-held, non-
reporting company compared to other alternatives
considered by the Board; and
* the fact that ASB has not realized many of the benefits
normally associated with being a public reporting company
(such as access to capital markets, active trading market
and use of company stock as currency for acquisitions)
due to the relatively limited liquidity of the Common
Shares.
Please see the sections of this Proxy Statement entitled "Special
Factors - Purpose of the Stock Splits," "Special Factors - Effects of the
Stock Splits" and "Special Factors - Reasons for the Stock Splits" for a
more detailed discussion of the principal reasons for the Stock Splits.
Fairness of the Stock Splits
* The Board has set $23.00 per pre-split Common Share (the
"Repurchase Price") as the cash consideration to be paid by ASB
in lieu of issuing fractional Common Shares (i.e., less than
one whole Common Share) in connection with the Stock Splits.
The Board made this determination in good faith and received a
fairness opinion (the "Fairness Opinion") prepared by Keller &
Company, Inc. ("Keller & Company"), an independent financial
advisor. The
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Board also considered other factors the Board deemed relevant,
as described in greater detail in this Proxy Statement.
* The Fairness Opinion was delivered to the Board to assist the
Board in establishing the terms and conditions of the Stock
Splits. The Fairness Opinion states, that based upon and
subject to the factors and assumptions set forth therein as of
February 28, 2005, the Repurchase Price is fair, from a
financial point of view, to ASB's shareholders.
* The full text of the Fairness Opinion, dated February 28, 2005,
is attached to this Proxy Statement as Exhibit A. We urge to
read the Fairness Opinion in its entirety. Keller & Company
provided the Fairness Opinion for the information and
assistance of the Board in connection with its consideration of
the Stock Splits. The Fairness Opinion is not a recommendation
as to how you should vote with respect to the Stock Splits.
* The Board believes that the Stock Splits are in ASB's best
interests and are substantively and procedurally fair to both
the affiliated and unaffiliated holders of the Common Shares,
including both those holders whose Common Shares will be
completely cashed out pursuant to the Stock Splits ("Cashed Out
Holders") and those who will continue to hold Common Shares
after the Stock Splits ("Continuing Holders").
* The Board has reviewed and considered the analyses and
conclusions of Keller & Company contained in the Fairness
Opinion and has unanimously approved the Stock Splits.
Please see the sections of this Proxy Statement entitled "Special
Factors - Fairness of the Stock Splits," "Opinion of Keller & Company,"
"Stock Splits Proposal - Background of the Stock Splits" and "Stock Splits
Proposal - Recommendation of the Board" for a more detailed discussion of
the foregoing.
Voting Information
* Approval of the Stock Splits requires the approval of a
majority of the outstanding Common Shares entitled to vote at
the Special Meeting. As of the close of business on [March
___, 2005] (the "Record Date"), there were [1,715,862] Common
Shares outstanding and entitled to vote at the Special Meeting,
of which [857,932] are required to approve the Stock Splits.
Please see the section of the Proxy Statement entitled "Meeting and
Voting Information" for a more detailed discussion of the foregoing.
Certain Federal Income Tax Consequences
* ASB will not recognize any gain, loss or deduction for federal
income tax purposes as a result of the Stock Splits.
* ASB's shareholders will generally recognize a gain or loss for
federal income tax purposes equal to the difference between the
amount of cash received and the shareholder's tax basis in the
Common Shares that are exchanged for the Repurchase Price in
lieu of issuing fractional shares.
Please see the section of this Proxy Statement entitled "Stock Splits
Proposal - Material Federal Income Tax Consequences" for a more detailed
discussion of the foregoing.
5
Unavailability of Appraisal or Dissenters' Rights
* A holder of Common Shares does not have the right under Ohio
law or ASB's Articles or Code of Regulations (the
"Regulations") to demand the appraised value of such Common
Shares or any other dissenters' rights if the holder votes
against the Stock Splits.
Please see the section of this Proxy Statement entitled "Stock Splits
Proposal - Unavailability of Appraisal or Dissenters' Rights" for a more
detailed discussion of the foregoing.
Escheat Laws
* All unclaimed cash amounts payable to shareholders in lieu of
issuing fractional shares will be subject to applicable state
laws regarding abandoned property.
Please see the section of this Proxy Statement entitled "Stock Splits
Proposal - Escheat Laws" for a more detailed discussion of the foregoing.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
When used in this Proxy Statement the words or phrases "will likely
result," "are expected to," "will continue," "anticipate," "estimate,"
"project" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. Such statements are subject to certain risks and
uncertainties which could cause actual results to differ materially from
results presently anticipated or projected. ASB cautions you not to place
undue reliance on any such forward-looking statements, which speak only as
of the date made. ASB advises readers that ASB's actual results may differ
materially from any opinions or statements expressed with respect to future
periods in any current statements in this Proxy Statement or in our other
filings with the SEC.
ASB does not undertake, and specifically disclaims any obligation, to
publicly release the result of any revisions, which may be made to any
forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
Please see the section of this Proxy Statement entitled "Available
Information"
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TABLE OF CONTENTS
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SUMMARY TERM SHEET 3
Stock Splits Proposal 3
Purposes of and Reasons for the Stock Splits 4
Fairness of the Stock Splits 4
Voting Information 5
Certain Federal Income Tax Consequences 5
Unavailability of Appraisal or Dissenters' Rights 6
Escheat Laws 6
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS 6
SPECIAL FACTORS 9
Purpose of the Stock Splits 9
Reasons for the Stock Splits 9
Effects of the Stock Splits 11
Alternatives to the Stock Splits 15
Fairness of the Stock Splits 16
Advantages of the Stock Splits 17
Disadvantages of the Stock Splits 18
Other Factors 19
Conclusion 20
OPINION OF KELLER & COMPANY 20
Public Comparables Analysis 22
Review of ASB Market Performance 23
Conclusion 23
Engagement of Keller & Company 24
MEETING AND VOTING INFORMATION 24
Time and Place 24
Revoking Your Proxy 24
Record Date 24
Quorum and Required Vote 24
Solicitation and Costs 25
STOCK SPLITS PROPOSAL 25
Summary and Structure 25
Background of the Stock Splits 27
Recommendation of the Board 31
Potential Disadvantages of the Stock Splits to Shareholders 31
Share Certificates 31
Material Federal Income Tax Consequences 31
Unavailability of Appraisal or Dissenters' Rights 34
Reservation of Rights 34
Escheat Laws 34
Regulatory Approvals 35
INFORMATION ABOUT ASB 35
Business Overview 35
Management of ASB 35
Interest of Certain Persons in Matters to be Acted Upon 37
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Market Price and Dividend Information 39
Common Share Repurchase Information 40
FINANCIAL INFORMATION 41
Summary Historical Financial Information 41
Certain Financial Effects of the Stock Splits 42
Pro Forma Financial Information 42
AVAILABLE INFORMATION 48
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 48
PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS 49
EXHIBIT A - FAIRNESS OPINION
EXHIBIT B - FORM OF REVERSE STOCK SPLIT AMENDMENT
EXHIBIT C - FORM OF FORWARD STOCK SPLIT AMENDMENT
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SPECIAL FACTORS
Purpose of the Stock Splits
The primary purpose of the Stock Splits is to terminate ASB's status
as a public reporting company with the SEC. As a result of the Stock
Splits and the repurchase of the resulting fractional shares from holders
of fewer than 300 shares, ASB expects to have approximately 240 holders of
record of the Common Shares, which would enable ASB to terminate the
registration of the Common Shares under the Exchange Act. If the Stock
Splits are completed, ASB intends to file with the SEC to terminate the
registration of the Common Shares. Upon deregistration, the Common Shares
would no longer be quoted on the Nasdaq and trades in the Common Shares
would only be possible through privately negotiated transactions or in the
Pink Sheets(R) (a centralized quotation service that collects and publishes
market maker quotes for securities).
Reasons for the Stock Splits
Reduced Costs and Expenses. We incur both direct and indirect costs
to comply with the filing and reporting requirements imposed on us as a
public reporting company. As described below, these costs include, among
other things, management's time spent preparing and reviewing our public
filings and legal and accounting fees associated with the preparation and
review of such filings. Our compliance costs have increased significantly
with the adoption and implementation of the Sarbanes-Oxley Act and related
SEC and Nasdaq rules, and we expect these costs to increase further in the
future. For smaller publicly traded companies, such as ASB, those costs
represent a larger portion of our revenues than for larger public
companies.
Not all of our reporting costs will be eliminated, however. We will
continue to comply with all federal reporting requirements applicable to
ASB as a savings and loan holding company and to American as a federal
savings bank. Further, we anticipate that we will continue to provide our
shareholders with annual audited financial statements and proxy statements,
although we are not required to do so. If provided, these documents may
not be as detailed, or contain the same level of disclosure, as those
required of a public reporting company.
The Board believes that by deregistering the Common Shares and
suspending ASB's periodic reporting obligations under the Exchange Act, we
will realize recurring annual cost savings of approximately $165,000 in
fees and expenses that we have historically incurred, including fees and
expenses for compliance with the Sarbanes-Oxley Act and associated
regulations and compliance with requirements imposed on us by the Nasdaq.
These estimated fees and expenses are described in greater detail below.
Estimated Cost Savings:
-----------------------
Legal fees $ 50,000
Printing, mailing and filing costs $ 25,000
Audit fees $ 75,000
Internal personnel fees $ 15,000
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Total $165,000
========
These estimated historical cost savings reflect, among other things:
(i) a reduction in audit and related fees; (ii) a reduction in legal fees
related to securities law compliance and compliance with Nasdaq
requirements; (iii) the elimination of filing costs and expenses associated
with electronically filing
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periodic reports and other documents (such as proxy statements) with the
SEC on its Edgar database; (iv) the lower printing and mailing costs
attributable to the reduction in the number of shareholders and the less
complicated and extensive disclosure required by our private status; (v) a
reduction in management time spent on compliance and disclosure matters
attributable to our Exchange Act filings; (vi) the lower risk of liability
that is associated with non-reporting company status and the expected
decrease in premiums for directors' and officers' liability insurance;
(vii) the cost savings due to ASB not being subject to the public company
provisions of the Sarbanes-Oxley Act; (viii) the savings in fees charged by
Illinois Stock Transfer Company, ASB's transfer agent (the "Transfer
Agent"), that are expected because of the reduction in the number of
shareholder accounts to be handled by the Transfer Agent; and (ix) a
reduction in direct miscellaneous clerical and other expenses.
Further, due to increases in the market value of the Common Shares
over the past couple of years, ASB is no longer a "small business" filer
under the Exchange Act. Under SEC rules, small business filers are subject
to less stringent disclosure requirements. Due to our transition to a
regular filer, our costs to prepare our Exchange Act filings in the future
would likely be greater than our historical costs because of these
increased disclosure requirements.
In addition to the foregoing annual estimated cost savings, the
consummation of the Stock Splits and the subsequent deregistration of the
Common Shares would also result in a significant one-time cost savings of
approximately $144,900 in fees and expenses because we would not be subject
to the new internal control audit requirements imposed by Section 404 of
the Sarbanes-Oxley Act. Preparing to comply with Section 404 of the
Sarbanes-Oxley Act would require significant expenditures, including fees
to third parties for compliance planning, assessment, documentation and
testing. It would also require a significant investment of time by the
management and employees of ASB and American. These estimated costs for
compliance with Section 404 are described in more detail below.
Non-Recurring Sarbanes-Oxley Act Compliance Costs:
--------------------------------------------------
Third party planning, testing and documentation $100,000
Audit fees $ 29,900
Internal personnel expenses $ 15,000
--------
Total $144,900
========
The historical and non-recurring cost savings figures set forth above
are only estimates. The actual savings we realize from going private may
be higher or lower than these estimates. The estimates are based upon the
(i) actual costs to us of the services and disbursements in each of the
categories listed above that were reflected in our recent financial
statements and (ii) allocation to each category of management's estimates
of the portion of the expenses and disbursements believed to be solely or
primarily attributable to our public reporting company status.
In some instances, these cost savings expectations were based on
verifiable assumptions. For example, our auditing fees will be reduced if
we cease to be a public reporting company due to the elimination of fees
for interim services. In addition, the costs associated with retaining
legal counsel to assist us with complying with the Exchange Act reporting
requirements will be eliminated if we no longer file reports with the SEC.
Operational Flexibility. Another reason for the Stock Splits is the
operational flexibility that completion of the Stock Splits and subsequent
deregistration would provide. The Board believes that ceasing to be a
public
10
reporting company would enable management to focus more on ASB's long-term
growth without the distraction of SEC reporting requirements and other
aspects of being a public company, and that ASB will benefit if business
decisions can be made with this added focus on long-term growth.
Benefits Normally Associated with Public Reporting Company Status
Have Not Been Realized. A further reason for the Stock Splits is that ASB
does not realize many of the benefits normally associated with being a
public reporting company. A typical advantage of being a public company
comes from the ability to use company stock, as opposed to cash or other
consideration, to effect acquisitions. ASB has found that the
opportunities for companies our size to acquire other businesses using
stock are limited. We have not previously completed an acquisition using
stock and, given the limited opportunities for such acquisitions, it is not
likely that would be able to do so in the future.
In addition, public companies can obtain financing by issuing
securities in public offerings. ASB has historically had adequate capital
or other means of obtaining necessary capital and has not needed to obtain
financing through public offerings. We have not issued Common Shares or
any other securities in a public offering since our initial public offering
in 1995, and we do not presently foresee any need to do so.
Conclusion. In light of the foregoing, the Board believes the
benefits ASB receives from maintaining its status as a public reporting
company and maintaining its small shareholder accounts are substantially
outweighed by the associated costs. The Board believes that it is in ASB's
best interests to eliminate the administrative burden and costs associated
with maintaining its status as a public reporting company and its small
shareholder accounts.
Reasons for the Forward Stock Split. The forward stock split will
occur immediately after the reverse stock split and the repurchase of
fractional shares resulting from the reverse split. The forward stock
split is intended to prevent the Common Shares from having an unusually
high per share value that would otherwise result from the reverse stock
split, which would tend to further decrease the liquidity of the Common
Shares.
Effects of the Stock Splits
The Stock Splits are expected to significantly reduce the number of
holders of record of the Common Shares from approximately 418 to
approximately 240. Upon the completion of the Stock Splits, we intend to
apply with the SEC to deregister the Common Shares under the Exchange Act
as soon as practicable. After deregistration, the Common Shares will no
longer be quoted on the Nasdaq. The completion of the Stock Splits and the
termination of our reporting obligations under the Exchange Act will cause
the existing limited trading market for the Common Shares to be further
reduced or eliminated.
Effects on the Common Shares. There will be no differences with
respect to dividend, voting, liquidation or other rights associated with
the Common Shares before and after the Stock Splits. The Common Shares
acquired by ASB for cash in lieu of issuing fractional shares will be
retired.
Effects on All ASB Shareholders. All ASB shareholders:
* Will not have the opportunity to liquidate, at a time and for a
price of their choosing, the Common Shares that are exchanged
for cash in lieu of issuing fractional shares;
* Will not receive a fractional Common Share as a result of the
Stock Splits, but will instead receive cash, in a taxable
transaction, equal to $23.00 for each Common Share held
immediately before the Stock Splits that is exchanged for cash
in accordance with the procedures described in this Proxy
Statement;
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* Will not have to pay any brokerage commissions or other
transaction fees in connection with the exchange of Common
Shares for cash in lieu of issuing fractional shares; and
* Will not receive any interest on cash payments owed as a result
of the Stock Splits.
If you hold Common Shares other than in multiples of 300, some of
your Common Shares will be exchanged for cash in lieu of issuing fractional
shares in connection with the Stock Splits. You will receive a letter of
transmittal as soon as practicable after the Stock Splits are completed.
The letter of transmittal will contain instructions on how to surrender
your existing share certificate(s) to the Transfer Agent to receive your
cash payment and, if applicable, a new share certificate evidencing the
number of Common Shares you hold after the Stock Splits. You will not
receive your cash payment or your new share certificate until you surrender
your outstanding share certificate(s) to the Transfer Agent, along with a
completed and executed copy of the letter of transmittal. Do not send your
share certificate(s) in with your Proxy. Please wait until you receive
your letter of transmittal to surrender your share certificate(s) to the
Transfer Agent.
For a discussion of the federal income tax consequences of the Stock
Splits, please see the section of this Proxy Statement entitled "Stock
Splits Proposal - Material Federal Income Tax Consequences."
Effects on Cashed Out Holders. Cashed Out Holders (i.e., holders of
less than 300 Common Shares immediately before the consummation of the
Stock Splits) will have no further ownership interest in ASB and will not
be able to participate in future earnings or growth of ASB.
If you hold less than 300 Common Shares, but you would rather
continue to hold Common Shares after the Stock Splits and not be completely
cashed out, you may do so by taking either of the following actions far
enough in advance so that it is complete by the Effective Date:
* Purchase a sufficient number of additional Common Shares, to
the extent available, on the open market and have them
registered in your name and consolidated with your current
record account, if you are a record holder, or have them
entered in your account with a nominee (such as your broker or
bank) in which you hold your current shares so that you hold at
least 300 Common Shares in your record account immediately
before the Effective Date. Due to the limited market in the
Common Shares, there is no assurance that you will be able to
purchase enough Common Shares to remain a shareholder of ASB;
or
* If applicable, consolidate your accounts so that you hold at
least 300 Common Shares in one record account immediately
before the Effective Date.
Effects on Continuing Holders. If the Stock Splits are consummated,
Continuing Holders (i.e., holders of 300 or more Common Shares immediately
before the Stock Splits):
* Will likely hold fewer Common Shares after the Stock Splits
than they held before the Stock Splits;
* Will likely experience a change in their ownership percentage
of ASB after completion of the Stock Splits;
* Will likely experience a further reduction in liquidity of the
Common Shares; and
* Will have less publicly available information about ASB.
12
Upon the termination of the registration of the Common Shares under
the Exchange Act, the Common Shares will no longer be eligible for trading
or quotation on any securities market or quotation system, except the Pink
Sheets(R). In order for the Common Shares to be quoted on the Pink
Sheets(R), one or more broker-dealers would need to act as market maker and
sponsor the Common Shares on the Pink Sheets(R). There can be no assurance
that any broker-dealer will be willing to act as a market maker in Common
Shares after the Stock Splits. There is also no assurance that you will be
able to sell your Common Shares or purchase additional Common Shares after
the Stock Splits.
If you hold 300 or more Common Shares, but you would rather be
completely cashed out in connection with the Stock Splits and not remain a
shareholder of ASB, you may do so by selling a sufficient number of Common
Shares in the open market so that you hold less than 300 Common Shares as
of the Effective Date. Any such sales should be made far enough in advance
so they are complete by the Effective Date. Due to the limited market in
the Common Shares, there is no assurance that you will be able to sell
enough Common Shares to reduce your holdings to less than 300 Common
Shares.
Effect on Common Shares Held in Street Name. If you hold Common
Shares in "street name," your nominee (such as your broker or bank) may
have required procedures you must follow and you should contact your
nominee to determine how the Stock Splits will affect you.
Effect on ESOP. Upon completion of the Stock Splits and the
subsequent deregistration of the Common Shares, the Common Shares will no
longer be traded or quoted on the Nasdaq or any other established
securities market. As a result of the lack of an established market for
the Common Shares, ASB's Employee Stock Ownership Plan (the "ESOP") will be
required to obtain annual appraisals to value the Common Shares owned by
the ESOP. In addition, under the terms of the ESOP, the participants in
the ESOP will have a "put right." This put right permits a participant to
require ASB to repurchase the participant's Common Shares held in the ESOP
when they are distributed to the participant.
Effects on Option Holders. Upon completion of the Stock Split,
outstanding options to purchase Common Shares under ASB's 1995 Stock Option
and Incentive Plan (the "Option Plan") will have their number and prices
adjusted to reflect the effect of the Stock Splits.
Effects on ASB. If our number of shareholders falls below 300, we
intend to apply to the SEC to deregister the Common Shares as soon as
practicable after completion of the Stock Splits. Upon deregistration of
the Common Shares, our duty to file periodic reports with the SEC will be
suspended and we will no longer be classified as a public reporting
company. In addition, we will be relieved of the obligation to comply with
the requirements of the proxy rules under Section 14 of the Exchange Act.
We will continue to be subject to the general anti-fraud provisions of
federal and applicable state securities laws and we will also continue to
be subject to regulation by the Office of Thrift Supervision of the
Department of the Treasury (the "OTS") and the Federal Deposit Insurance
Corporation (the "FDIC") as applicable to savings and loan holding
companies and federal savings banks.
Although we will no longer be required to file periodic reports with
the SEC, we currently intend to continue to provide annual audited
financial statements and proxy statements to our shareholders. Although we
intend to continue to provide these documents to our shareholders, there is
no SEC requirement that we do so, and there is no requirement that the
level of our disclosure in such financial statements or in the proxy
statement remain at the level required by our current status as a public
reporting company. These documents may not be as detailed or extensive as
the information we currently file with the SEC and deliver to shareholders
and our financial statements may not be accompanied by
13
management's discussion and analysis in the same detail. It will be more
difficult for our shareholders to obtain information about us.
We estimate that we will save approximately $165,000 in annual costs
associated with being a public company as well as additional cost savings
in time spent by management and employees associated with our SEC reporting
activities. We anticipate a one time cost savings of $144,900 in expenses
associated with compliance with the internal controls audit requirements of
Section 404 of the Sarbanes-Oxley Act. These anticipated savings are
discussed under the heading entitled "Reasons for the Stock Splits -
Reduced Costs and Expenses" above.
The termination of our reporting obligations under the Exchange Act
will render the Common Shares ineligible for listing or quotation on any
stock exchange or other automated quotation system, except the Pink
Sheets(R). As a result, the Common Shares will no longer be listed on the
Nasdaq and the existing limited trading market for the Common Shares will
likely be further reduced or eliminated. This reduction or elimination may
result in ASB having less flexibility in attracting and retaining
executives and other employees since equity-based incentives (such as stock
options) tend to be viewed as having less value in a non-publicly traded
company.
We have no current plans to issue Common Shares after the Stock
Splits other than pursuant to the Option Plan, but we reserve the right to
do so at any time and from time to time at such prices and on such terms as
the Board determines to be in ASB's best interests. If in the future the
Board determines that the adoption of a new option plan would be beneficial
to ASB, it may, in its discretion, adopt such a plan. The exercise of
options granted under any newly adopted plan would reduce the ownership
percentage of ASB's shareholders at the time. Nasdaq rules require that
any new stock option or equity compensation be approved by ASB's
shareholders. However, once the Common Shares are no longer listed on
Nasdaq, ASB will not be required to seek shareholder approval of new option
plans or other equity compensation plans. Holders of Common Shares do not
currently have, and will not have, any preemptive or other preferential
rights to purchase any of our equity securities that we may issue in the
future, unless such rights are specifically granted to such holders.
After the Stock Splits have been consummated, ASB may, from time-to-
time, repurchase Common Shares pursuant privately negotiated sales or other
transactions. Whether or not we purchase shares in the future will depend
on a number of factors, including ASB's financial condition, operating
results and available capital at the time.
We expect our business and operations, and the business and
operations of American, to continue as they are presently conducted. The
executive officers and directors of ASB and American will not change due to
the Stock Splits. American's deposits will continue to be insured by the
FDIC and we will continue to be regulated by the same bank regulatory
agencies as before the Stock Splits. ASB expects to realize time and cost
savings as a result of terminating its public company status, and intends
to invest those savings in other areas of its and American's business
operations. Other than as described in this Proxy Statement, neither ASB,
American nor their management has any current plans or proposals to effect
any extraordinary corporate transaction (such as a merger, reorganization
or liquidation); to sell or transfer any material amount of ASB or
American's assets; to change the composition of the Board or management of
ASB or American; to change materially ASB's indebtedness or capitalization;
to change ASB's dividend policy; or otherwise to effect any material change
in ASB's corporate structure or business.
Effects on ASB's Executive Officers, Directors and Affiliates. Our
affiliates, comprised of our executive officers, directors and any
shareholders who own more than ten percent (10%) of the Common Shares, will
be relieved from complying with the stock ownership reporting requirements
and "short
14
swing profit" trading restrictions under Section 16 of the Exchange Act, as
well as many of the provisions of the Sarbanes-Oxley Act. Our affiliates
will lose the ability to dispose of their Common Shares pursuant to Rule
144 under the Securities Act of 1933, as amended (the "Securities Act").
As is more thoroughly set forth under the heading entitled
"Information About ASB - Interests of Certain Persons in Matters to be
Acted Upon," we expect that upon the completion of the Stock Splits, the
Common Shares beneficially owned by our executive officers and directors
will comprise approximately 26.88% of the then outstanding Common Shares,
as compared to approximately 25.79% of the Common Shares outstanding
immediately prior to the Stock Splits.
Alternatives to the Stock Splits
In making the determination to proceed with the Stock Splits, the
Board considered the potential feasibility of the alternative transactions
described below:
Issuer Tender Offer. The Board considered the feasibility of an
issuer tender offer to repurchase Common Shares. The primary disadvantage
of this type of transaction is that, due to its voluntary nature, ASB would
have no assurance that a sufficient number of Common Shares would be
tendered to sufficiently reduce the number of ASB's shareholders. In
addition, the rules governing tender offers require equal treatment of all
shareholders, including pro rata acceptance of offers from shareholders.
These requirements make it difficult to ensure that ASB would be able to
reduce the number of the holders of record of the Common Shares enough to
permit ASB to deregister the Common Shares, and ASB could repurchase
numerous Common Shares at a great expense and still be unable to
deregister. A tender offer would likely take longer to complete than the
Stock Splits. As a result of these disadvantages, the Board determined not
to pursue this alternative.
Odd-Lot Tender Offer. Another option considered by the Board was an
odd-lot tender offer. In an odd-lot tender offer, ASB would offer to
repurchase, at a designated price per share, Common Shares held by any
holder of less than 100 Common Shares. Unlike general tender offers which
require ASB to permit all shareholders to participate equally, as discussed
above, there is an exception for tender offers to holders of less than 100
Common Shares. However, even if all holders of less than 100 Common Shares
participated in the tender, we still could not sufficiently reduce our
number of shareholders to enable us to deregister. As a result, the Board
rejected this alternative.
Traditional Stock Repurchase Program. The Board also considered a
plan whereby ASB would periodically repurchase Common Shares on the open
market at then-current market prices. The Board rejected this type of
transaction since repurchasing enough shares in this manner to enable ASB
to deregister the Common Shares would likely take an extended period of
time, have no assurance of success and be of undeterminable cost.
Cash Out Merger. The alternative available to the Board which was
most similar to the Stock Splits was coordinating a merger with a shell
corporation and reissuing stock to the shareholders of the newly merged
entity. The share exchange would be such that shareholders owning less
than 300 Common Shares prior to the merger would be cashed out, and
shareholders owning more than 300 Common Shares would become shareholders
in the newly merged entity. The Board of Directors concluded that the
Stock Splits were a better alternative since they do not require the
formation of a new entity and allow ASB to avoid the regulatory issues and
approvals associated with the merger of ASB into another corporation.
15
Maintaining the Status Quo. The Board considered maintaining the
status quo. In that case, ASB would continue to incur the expenses of
being a public reporting company without enjoying the benefits
traditionally associated with public company status. The Board believes
that maintaining the status quo is not in the best interests of ASB and its
shareholders and rejected this alternative.
Fairness of the Stock Splits
The Stock Splits are not structured so that approval of at least a
majority of unaffiliated shareholders is required. The Board based its
decision not to seek such approval due to the equal treatment of affiliated
and unaffiliated shareholders in the Stock Splits. In determining not to
seek such approval, the Board was aware that the executive officers and
directors of ASB, who together own approximately 25.79% of the voting power
of the Common Shares outstanding and entitled to vote at the Special
Meeting, have indicated that they will vote in favor of the Stock Splits.
No independent committee of the Board has reviewed the fairness of
the Stock Splits. The Board is comprised primarily of independent
directors and accordingly there was no need to form a special committee.
Although all of the directors own Common Shares, the 1-for-300 reverse
split ratio and the 300-for-1 forward split ratio were determined without
regard to their share ownership. As this was the sole potential conflict
of interest and the directors will be treated identically to all other
shareholders in the Stock Splits, the Board did not feel that the
additional protections that may be afforded by an independent committee
would be significant.
No unaffiliated representative acting solely on behalf of the
shareholders for the purpose of negotiating the terms of the transaction
proposal or preparing a report covering the fairness of the Stock Splits
was retained by ASB or by a majority of directors who are not employees of
ASB. The Board views (i) the Fairness Opinion, (ii) the need to obtain the
affirmative vote of the holders of at least a majority of the Common
Shares, and (iii) the other matters discussed in this Proxy Statement as
affording adequate procedural safeguards to unaffiliated shareholders
without the extraordinary expense of multiple financial or legal advisors.
ASB has not made any provision in connection with the Stock Splits to
grant unaffiliated shareholders access to ASB's corporate files or to
obtain counsel or appraisal services at ASB's expense. With respect to
unaffiliated shareholders' access to ASB's corporate files, the Board
determined that this proxy statement, together with ASB's other filings
with the SEC, provide adequate information for unaffiliated shareholders to
make an informed decision with respect to the Stock Splits. The Board also
considered the fact that under Ohio law, subject to certain conditions,
shareholders have the right to review ASB's relevant books and records.
The Board did not consider the steps discussed above necessary to
ensure the fairness of the Stock Splits. The Board determined that such
steps would be costly and would not provide any meaningful additional
benefits. The Board noted the fact that the financial advisor engaged by
ASB considered and rendered its opinion as to the fairness of the
consideration payable in the Stock Splits, from a financial point of view,
to ASB's shareholders.
The Board believes that the transaction is substantively and
procedurally fair to affiliated and unaffiliated shareholders,
notwithstanding the absence of an unaffiliated shareholder approval
requirement, independent committee or unaffiliated representative. After
consideration of all aspects of the proposed transaction as described
above, all of the directors, including the directors who are not employees
of ASB, approved the Stock Splits. Except for the unanimous vote of the
Board to approve the Stock Splits and its recommendation that ASB's
shareholders approve the Stock Splits, ASB is not
16
aware that any of its executive officers, directors or affiliates has made
a recommendation either in support of or opposed to the Stock Splits.
The Board considered the factors in support of and in opposition to
the Stock Splits discussed below in reaching its conclusion as to the
substantive fairness of the Stock Splits. The Board did not assign
specific weight to the following factors in a formulaic fashion, but did
place special emphasis on the opportunity for unaffiliated holders of
Common Shares who will have fractional shares exchanged for cash to sell
such Common Shares at a premium and without brokerage fees or commissions,
as well as the significant cost and time savings ASB is expected to realize
from deregistration of the Common Shares.
Advantages of the Stock Splits
Opportunity for Shareholders to Sell Repurchased Common Shares at a
Premium and Without Broker Fees or Commissions. The Repurchase Price of
$23.00 per Common Share represents (i) a premium of 12.86% over the average
closing price of the Common Shares over the 30 trading days prior to and
including February 28, 2005 (the date the Board approved the Stock Splits),
which was $20.38 per share, and (ii) a premium of 9.42% over the closing
price for the Common Shares on February 28, 2005 (the date the Board
approved the Stock Splits), which was $21.02 per share. The Board reviewed
the proposal made by ASB's management that $23.00 per share be established
as the Repurchase Price for the Common Shares. The Board, in the exercise
of its business judgment, adopted such recommendation since the Repurchase
Price for the Common Shares represented fair consideration at a premium to
the current and historical market prices of the Common Shares while also
being consistent with the valuation analysis of Keller & Company. The
Board believes that the Repurchase Price is fair to ASB's shareholders.
The Board determined that the Stock Splits are fair in part because they
provide Cashed Out Holders with an opportunity to liquidate all of their
Common Shares, and for Continuing Holders to liquidate some Common Shares,
without paying brokerage commissions or other transaction fees.
While performing its analysis for the Fairness Opinion, Keller &
Company selected the valuation analyses it deemed most relevant based on
its knowledge of ASB and ASB's expressed intent to continue as an operating
entity and not liquidate. Please see the section entitled "Opinion of
Keller & Company" for a discussion of these analyses.
The Board did not deem ASB's liquidation value material or relevant
in the context of the Stock Splits. The Board did not calculate ASB's
liquidation value, on a per share basis or otherwise. Although not
calculated by the Board, the liquidation value of ASB would likely reflect
an arbitrarily low valuation, and thus using liquidation value to help set
the Repurchase Price would have supported a price lower than the price the
Board believed would be appropriate in light of its desire to ensure that
shareholders who receive cash in lieu of fractional shares receive a fair
price for their Common Shares that are exchanged for cash in connection
with the Stock Splits.
The Board believes that ASB's net book value per share does not
properly reflect ASB's earnings stream and cash flow, two factors it
considers critical for a meaningful valuation of the Common Shares. Net
book value is based upon the historical cost of a company's assets and
ignores the value of a company as a going concern. The value of items such
as a positive business reputation, a trained workforce and established
customer accounts are ignored in computing net book value. The Board
believes that the proper valuation of ASB should be based on ASB's
historical and prospective operating performance and Keller & Company's
analysis was based upon this premise. As set forth in greater detail in
the section of this Proxy Statement entitled "Stock Splits Proposal--
Financial Information--Summary Financial Information," ASB's book value per
Common Share as of December 31, 2004 was $10.96. The Board believes that
the valuation of the Common Shares, as determined by Keller & Company, as
well as the
17
market price of the Common Shares on December 31, 2004 ($22.00 per share),
are significantly greater than the book value per Common Share.
Significant Cost and Time Savings for ASB. By deregistering the
Common Shares and suspending our periodic reporting obligations under the
Exchange Act, we expect to realize recurring annual cost savings of
approximately $165,000. In addition, we expect to realize non-recurring
savings of approximately $149,900 in fees and expenses that we would
otherwise expect to incur due to compliance with the internal controls
audit requirements of Section 404 of the Sarbanes-Oxley Act. The
termination of our reporting obligations under the Exchange Act will also
eliminate the significant amount of time and effort previously required of
our management to prepare and review the reports required to be filed under
the Exchange Act. Please see the section entitled "Special Factors -
Reasons for the Stock Splits" for a more detailed discussion of these cost
savings.
Equal Treatment of Affiliated and Unaffiliated Holders of Common
Shares. The Stock Splits will not impact affiliated holders of Common
Shares differently than unaffiliated holders of Common Shares on the basis
of affiliate status. The sole determining factor as to whether a holder of
Common Shares will remain a shareholder of ASB and how many Common Shares
will be repurchased by ASB in lieu of issuing fractional shares as a result
of the Stock Splits is the number of Common Shares held by such holder
immediately prior to the Stock Splits. Please see the section entitled
"Stock Splits Proposal - Summary and Structure" for a more detailed
discussion.
Minimum Effect on Voting Power. The Stock Splits will have minimum
effect on the voting power of ASB's shareholders. The Common Shares are
ASB's only voting shares and will continue to be ASB's only voting shares
after the Stock Splits. The voting and other rights currently held by the
Common Shares will not be affected by the Stock Splits. The only effect of
the Stock Splits on ASB's voting power will be a change in the overall
percentage of ownership of the Continuing Holders.
No Material Change in Percentage Ownership of Executive Officers and
Directors. Since only an estimated 86,333 out of 1,715,862 outstanding
Common Shares will be eliminated as a result of the Stock Splits, the
percentage ownership of the Continuing Holders will be approximately the
same as it was prior to the Stock Splits. For example, the executive
officers and directors of ASB and American currently beneficially own
approximately 25.79% of the outstanding Common Shares, and will
beneficially own approximately 26.88% of the outstanding Common Shares
following completion of the Stock Splits. All of the directors and
executive officers currently have over 300 shares and will remain
shareholders of ASB after completion of the Stock Splits. Please see the
section entitled "Information About ASB - Interest of Certain Persons in
Matters to be Acted Upon."
Potential Ability to Control Decision to Remain a Holder of or
Liquidate Common Shares. Another factor considered by the Board in
determining the fairness of the Stock Splits to the holders of the Common
Shares is that current holders of fewer than 300 Common Shares can seek to
remain shareholders of ASB following the Stock Splits by acquiring
additional shares so that they own at least 300 Common Shares immediately
before the Stock Splits. Conversely, stockholders that own 300 or more
Common Shares who desire to liquidate their shares in connection with the
Stock Splits at the premium price offered can seek to reduce their holdings
to less than 300 Common Shares by selling shares prior to the Stock Splits.
The Board did not place undue emphasis on this factor due to the limited
trading market for the Common Shares. Please see the section entitled
"Special Factors - Effects of the Stock Splits."
18
Disadvantages of the Stock Splits
Substantial or Complete Reduction of the Market for Common Shares.
After the completion of the Stock Splits and deregistration of the Common
Shares, we anticipate that the public market for the Common Shares will be
substantially reduced or altogether eliminated. The Board, however,
considered that potential trades in the Common Shares could be facilitated
by a market maker in the Pink Sheets(R) following deregistration. Please
see the section entitled "Special Factors - Effects of the Stock Splits."
Termination of Publicly Available Information About ASB. Upon
termination of the registration of the Common Shares under the Exchange
Act, our duty to file periodic reports with the SEC will be suspended.
Information regarding our operations and financial results that is
currently available to the general public and our investors will not be
readily available after deregistration, and investors seeking information
about us will have to contact us directly to receive such information. We
may or may not provide investors with requested information that we are not
required by law to provide. The Stock Splits will not affect the right of
Continuing Holders to obtain certain information from ASB under Ohio law.
Under Ohio law, a shareholder has the right to make a written request to
inspect a company's books and records (including, without limitation,
annual financial statements) and receive copies thereof for any purpose
reasonably related to such person's interest as a shareholder.
While the Board realizes and acknowledges that the termination of
publicly available information may be disadvantageous to our shareholders,
the Board believes that the overall benefits to ASB of no longer being a
public reporting company substantially outweigh the disadvantages
associated with a lack of publicly available information about ASB. We
currently intend to continue to provide annual audited financial statements
and proxy statements to our shareholders; however, these documents may not
be as detailed or extensive as the information we currently file with the
SEC. Although we currently intend to continue to provide these documents,
there is no SEC requirement that we do so or that we maintain the present
level of disclosure contained in such documents. Please see the section
entitled "Special Factors - Effects of the Stock Splits."
Possible Decline in Price of the Common Shares. After the completion
of the Stock Splits, the liquidity of the Common Shares will be
significantly reduced or eliminated. In addition, the lack of publicly
available financial and other information about ASB and the diminished
opportunity for ASB's shareholders to monitor the management of ASB due to
the lack of such public information may cause the Continuing Holders to
experience a decrease in the price at which they may sell their Common
Shares. Please see "Special Factors - Disadvantages of the Stock Splits -
Substantial or Complete Reduction of Public Sale Opportunities" and
"Special Factors - Disadvantages of the Stock Splits - Termination of
Publicly Available Information about ASB" above.
Inability to Participate in Future Increases in Value of the Common
Shares or Payments of Dividends. Following the Stock Splits, Cashed Out
Holders will have no further financial interest in ASB and will not have
the opportunity to participate in the potential appreciation in the value
of, or the payment of dividends on, the Common Shares.
Other Factors
The Board concluded the factors set forth below to be either
inapplicable or not material to its assessment of the fairness of the Stock
Splits.
* Firm Offers. We are not aware of any firm offers to purchase
ASB that have been made during the past two calendar years or
during the current calendar year.
* Prior Public Offerings. We have not made any underwritten
public offering of the Common Shares or any other securities
since our initial public offering in 1995.
19
* Merger, Consolidation or Other Extraordinary Transaction. We
have not engaged in a merger or consolidation with another
company or in any other extraordinary transaction, such as the
sale or other transfer of all, or a substantial part, of our
assets, during the past two calendar years or during the
current calendar year.
* Securities Purchases. There have not been any purchases of our
Common Shares that would enable the holder to exercise control
of ASB.
* Liquidation Value. ASB's liquidation value was not deemed
relevant because we plan to continue to operate as a going
concern following the Stock Splits.
Conclusion
The Board believes that all of the factors mentioned above, both
favorable and unfavorable, when viewed together support a conclusion that
the Stock Splits are substantively fair to ASB's shareholders, including
the Cashed Out Holders and Continuing Holders.
OPINION OF KELLER & COMPANY
The Board retained Keller & Company to provide the Fairness Opinion.
On February 28, 2005, Keller & Company delivered the Fairness Opinion to
the Board. The Fairness Opinion states that, based upon and subject to the
factors and assumptions set forth therein, the Repurchase Price to be paid
to Cashed Out Holders pursuant to the Stock Splits is fair from a financial
point of view as of February 28, 2005. Keller & Company also presented to
the Board a summary of the analyses described below.
The Fairness Opinion was prepared for use by the Board and was
directed only to the fairness from a financial point of view, as of the
date thereof, of the Repurchase Price. Keller & Company was not involved
in structuring the Stock Splits and its opinion does not compare the
relative merits of the Stock Splits with those of any other transaction or
business strategy which were or might have been available to or considered
by ASB or the Board as alternatives to the Stock Splits and does not
address the underlying business decision by the Board to proceed with or
effect the Stock Splits. The Fairness Opinion is solely for the
information of, and directed to, the Board in its evaluation of the Stock
Splits and is not to be relied upon by any shareholder of ASB or any other
person or entity. The Fairness Opinion does not constitute a
recommendation to the Board as to how it should vote on the Stock Splits or
to any shareholder as to how such shareholder should vote at the Special
Meeting. In furnishing the Fairness Opinion, Keller & Company did not
admit that it is an expert within the meaning of the term "expert" as used
in the Securities Act of nor did it admit that its opinion serves as a
report or valuation within the meaning of the Securities Act.
The full text of the Fairness Opinion is attached as Exhibit A to
this Proxy Statement and is incorporated herein by reference. The summary
of the Fairness Opinion set forth in this Proxy Statement is qualified in
its entirety by reference to the full text of the Fairness Opinion.
Shareholders are urged to read the Fairness Opinion carefully and in its
entirety for a discussion of the procedures followed, assumptions made,
other matters considered and limits of the review by Keller & Company in
connection with the Fairness Opinion.
The Board selected Keller & Company as its financial advisor because
it is a recognized financial institutions consulting firm that has
substantial experience in the financial institutions industry and is
knowledgeable and familiar with the operations of ASB and its business. As
part of its business, Keller & Company is regularly engaged in the
valuation of businesses and securities in connection with mergers,
20
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placements and valuation for corporate and other
purposes, particularly those of financial institutions and financial
institution holding companies.
In rendering the Fairness Opinion, Keller & Company reviewed the
terms of the Stock Splits and also reviewed financial and other information
that was publicly available, or furnished to Keller & Company by ASB's
management. Keller & Company also reviewed certain publicly available
operational, financial and stock market data relating to selected public
companies and conducted other financial studies, analyses and
investigations as Keller & Company deemed necessary or appropriate for
purposes of rendering the Fairness Opinion, as more fully set forth
therein. No limitations were imposed by the Board of ASB upon Keller &
Company with respect to the investigations made or procedures followed by
it in rendering its opinion.
Keller & Company assumed and relied upon, without independent
verification, the accuracy and completeness of all financial and other
information that was publicly available, supplied or otherwise communicated
to it by or on behalf of ASB. Keller & Company further relied upon the
assurances of ASB's management that they are unaware of any facts that
would make the information provided to it incomplete or misleading.
Keller & Company was not requested to make, and did not make, an
independent evaluation or appraisal of the assets, properties, facilities
or liabilities (contingent or otherwise) of ASB, and was not furnished with
any such appraisals or evaluations. Keller & Company's opinion is
necessarily based upon financial, economic, market and other conditions and
circumstances existing and disclosed to Keller & Company on the date of the
Fairness Opinion. Subsequent developments may affect the conclusions
reached in the Fairness Opinion and Keller & Company has no obligation to
update, revise or reaffirm the Fairness Opinion.
In preparing the Fairness Opinion, Keller & Company conducted the
following two principal analyses: (i) a comparison of ASB with certain
publicly traded companies deemed comparable to ASB, and (ii) a review of
the historical market performance of the Common Shares on the Nasdaq.
No company used in any analysis as a comparison is identical to ASB,
and they all differ in various ways. As a result, Keller & Company applied
its experience and professional judgment in making such analyses.
Accordingly, an analysis of the results is not mathematical; rather it
involves complex considerations and judgments concerning differences in
financial characteristics, performance characteristics and trading value of
the comparable companies to which ASB is being compared. The preparation
of a fairness opinion is a complex process and is not necessarily
susceptible to partial analyses or summary description. In arriving at the
Fairness Opinion, Keller & Company considered the results of all of its
analyses as a whole and did not attribute any particular weight to any
analysis or factor considered by it. Keller & Company believes that the
summary provided and the analyses described above must be considered as a
whole and that selecting portions of these analyses, without considering
all of them, would create an incomplete view of the process underlying its
analyses and opinion. In addition, Keller & Company may have given various
analyses and factors more or less weight than other analyses and factors
and may have deemed various assumptions more or less probable than other
assumptions, therefore the range of valuations resulting from any
particular analysis described above should not be taken to be Keller &
Company's view of the actual value of ASB.
21
The following is a summary of the material financial analyses
performed by Keller & Company in connection with the preparation of the
Fairness Opinion. These summaries of financial analyses alone do not
constitute a complete description of the financial analyses Keller &
Company employed in reaching its conclusions. The order of analyses
described does not represent relative importance or weight given to those
analyses by Keller & Company. Some of the summaries of the financial
analyses include information presented in tabular format. The tables must
be read together with the full text of each summary and are alone not a
complete description of Keller & Company's financial analyses. Except as
otherwise noted, the following quantitative information, to the extent that
it is based on market data, is based on market data as it existed on or
before February 18, 2005 and is not necessarily indicative of current
market conditions.
Public Comparables Analysis
In rendering its opinion, Keller & Company analyzed the pricing
ratios of certain comparable thrift institutions and thrift holding
companies. The analysis included a comparison of such key financial ratios
as return on average assets, return on average equity and equity to assets
and such key pricing ratios as price relative to book value, latest twelve
months earnings and assets. Keller & Company reviewed and compared
selected financial and stock market information, ratios and multiples of
ASB to corresponding financial and stock market information, ratios and
multiples for a group of nine selected publicly-traded Midwest thrift
institutions or thrift holding companies set forth below:
AMB Financial Corp. City Savings Financial Corp.
CKF Bancorp, Inc. FFW Corporation
Indian Village Bancorp, Inc. Peoples Ohio Financial Corp.
Peoples-Sidney Financial Corp. Perpetual Federal Savings Bank
River Valley Bancorp
The key pricing ratios for the comparable group, all Ohio publicly-
traded thrifts and all publicly-traded Midwest thrifts, are shown in the
following table:
Pricing Ratios(1)
Trading Group Price to Book Price to Earnings Price to Assets
------------- ------------- ----------------- ---------------
Comparable Group 124.37% 16.0X 12.78%
Publicly-Traded Ohio Thrifts 140.87% 21.9X 15.35%
Publicly-Traded Midwest Thrifts 132.15% 20.4X 13.85%
-------------------
The pricing ratios include any pending merger/acquisition
transactions for the listed institution.
The Repurchase Price of $23.00 per share represents a premium of
15.0% above ASB's current trading price and represents a price to book
ratio of 209.85%, a price to earnings multiple of 19.33 and a price to
asset ratio of 22.08%, with all of these ratios well in excess of the
pricing ratios of the comparable group and the price to book ratio and
price to asset ratio in excess of all publicly-traded Ohio thrifts and
22
all publicly-traded Midwest thrifts, while ASB's price to earnings multiple
is moderately below that of publicly-traded Ohio thrifts and publicly-
traded Midwest thrifts.
Keller considered the comparable group comparison and analysis as the
most appropriate basis for evaluating the fairness from a financial point
of view of the Repurchase Price. Keller reviewed each of the pricing
ratios for the comparable group relative to ASB's corresponding ratios
based on the recent price prior to the Stock Splits and then subsequent to
the Stock Splits, based on the Repurchase Price.
Based on the previous pricing ratio comparison analyses and given
that the Repurchase Price to be paid to Cashed Out Holders pursuant to the
Stock Splits indicates a 15.0% premium above the current trading price of
ASB, Keller & Company concluded that the Repurchase Price was fair from a
financial point of view.
Review of ASB Market Performance
Keller reviewed the trading prices of ASB's Common Shares for the
period of January 1, 2004, through February 18, 2005, as quoted by Nasdaq.
The following table sets forth the high and low closing prices for ASB
Common Shares for each quarter of the calendar year ended December 31,
2004.
Quarter Ended High Close Low Close
------------- ---------- ---------
March 31, 2004 $27.75 $23.11
June 30, 2004 $29.24 $22.00
September 30, 2004 $25.30 $21.30
December 31, 2004 $23.05 $21.05
Period Of High Close Low Close
--------- ---------- ---------
January 1, 2005 to
February 18, 2005 $22.49 $20.00
Latest Price Closing Price
------------ -------------
February 18, 2005 $20.00
The pricing for ASB's Common Shares has indicated a decreasing trend
over the four quarters of 2004 and this trend has continued through
February 18, 2005, with ASB indicating a new low of $20.00 per share at
February 18, 2005. The pricing trend for ASB combined with recent pricing
level of ASB at February 18, 2005, further indicates the fairness of the
Repurchase Price of $23.00, which reflects a premium of 15% over the
closing price of the Common Shares on February 18, 2005.
Conclusion
Based upon the foregoing analyses and the assumptions and limitations
set forth in full in the text of the Fairness Opinion, Keller & Company is
of the opinion that, as of the date of the Fairness Opinion, the Repurchase
Price of $23.00 per Common Share to be paid by ASB in lieu of issuing
fractional shares in connection with the Stock Splits is fair to the Cashed
Out Holders and Continuing Holders from a financial point of view.
23
Engagement of Keller & Company
ASB has agreed to pay Keller & Company a fee of $3,000 and to
reimburse Keller & Company for its reasonable out-of-pocket expenses
related to its engagement, whether or not the Stock Splits are consummated.
No compensation received or to be received by Keller & Company is based on
or is contingent on the results of Keller & Company's engagement. There
are no other current arrangements to compensate Keller & Company, its
affiliates or unaffiliated representatives for any services rendered to
ASB, its executive officers, directors or affiliates. Keller & Company has
previously provided financial institution consulting services to ASB and
American. None of Keller & Company's employees who worked on the
engagement has any known financial interest in the assets or equity of ASB
or the outcome of the engagement.
MEETING AND VOTING INFORMATION
Each properly executed Proxy received prior to the Special Meeting and
not revoked will be voted as directed by the shareholder or, in the absence
of specific instructions to the contrary, will be voted FOR the approval of
the Stock Splits.
Time and Place
The Special Meeting will be held on [___________, 2005], at ___:___
__.m., local time, at the Shawnee State Park Resort and Conference Center,
4404B State Route 125, West Portsmouth, Ohio 45663.
Revoking Your Proxy
Without affecting any vote previously taken, you may revoke your Proxy
by either (i) submitting a later dated proxy or a written revocation which is
received by ASB before the Proxy is exercised or (ii) by attending the
Special Meeting and voting in person or giving notice of revocation in open
meeting before the Proxy is exercised. Attending the Special Meeting will
not, by itself, revoke a Proxy.
Record Date
Only ASB shareholders of record at the close of business on [March
____, 2005] (the "Record Date"), are entitled to vote at the Special Meeting.
Each shareholder will be entitled to cast one vote for each share then owned.
According to ASB's records, as of the Record Date, there were [1,715,862]
votes entitled to be cast at the Special Meeting.
Quorum and Required Vote
The presence at the Special Meeting in person or by proxy of the
holders of at least a majority of the issued and outstanding Common Shares
as of the Record Date is necessary to establish a quorum to conduct
business at the Special Meeting.
Each ASB shareholder is entitled to cast one vote for each share
owned on the Record Date. Under Ohio law and ASB's Articles and
Regulations, the affirmative vote of at least a majority of the issued and
outstanding Common Shares as of the Record Date is necessary to approve the
Stock Splits.
Shareholders holding Common Shares in "street name" should review the
information provided to them by their nominee (such as a broker or bank).
This information will describe the procedures to follow to instruct the
nominee how to vote the street name shares and how to revoke previously
given
24
instructions. The proposal to approve the Stock Splits is a "non-
discretionary" item, meaning that nominees cannot vote Common Shares in
their discretion on behalf of a client if the client has not given them
voting instructions. Shares held in street name that are not voted by
brokerage firms or other nominees are referred to as "broker non-votes."
Broker non votes and abstentions are counted toward the establishment
of a quorum for the Special Meeting. However, because the affirmative vote
of a majority of the outstanding Common Shares is necessary to approve the
Stock Splits, broker non-votes and abstentions will have the same effect as
a vote "AGAINST" the proposal to approve the Stock Splits. The Board urges
you to complete, date and sign the enclosed Proxy and to return it promptly
in the enclosed postage prepaid envelope so that a quorum can be assured
for the Special Meeting and your Common Shares can be voted as you wish.
Solicitation and Costs
The enclosed Proxy is solicited on behalf of the Board. Proxies may
be solicited by the directors, officers and other employees of ASB and
American, in person or by telephone, telegraph or mail only for use at the
Special Meeting. ASB will bear the costs of preparing, assembling, printing
and mailing this Proxy Statement and the enclosed Proxy and all other costs
of the Board's solicitation of Proxies for the Special Meeting. Brokerage
houses and other nominees, fiduciaries, and custodians nominally holding
Common Shares as of the Record Date will be requested to forward proxy
soliciting material to the beneficial owners of such Common Shares, and
will be reimbursed by us for their reasonable expenses.
The repurchase of fractional Common Shares in connection with the
Stock Splits is estimated to cost approximately $1,986,000. We intend to
finance the Stock Splits and repurchase of fractional shares by using cash
on hand. The following is an estimate of the total costs expected to be
incurred by ASB in connection with the Stock Splits and the solicitation of
Proxies for the Special Meeting. Final costs may be higher or lower than
the estimates shown below.
Item Approximate Cost
---- ----------------
Repurchase of Fractional Common Shares $1,986,000
Legal fees $ 30,000
Keller & Company fees $ 3,000
Accounting fees $ 5,000
Filing fees $ 2,500
Printing, mailing and other costs $ 34,500
----------
Total $2,061,000
==========
STOCK SPLITS PROPOSAL
Summary and Structure
The Board has authorized and recommends that you approve the Stock
Splits. The Stock Splits consist of two steps. First, ASB will conduct a
1-for-300 reverse stock split of the Common Shares. In the reverse split,
(i) each lot of 300 Common Shares held by a shareholder of ASB prior to the
reverse split will be converted into one whole Common Share after the
reverse split; and (ii) any Common Shares held by a shareholder other than
in a 300 share lot will not be converted into a whole share and will be
cancelled and exchanged for $23.00 in cash per share. After the reverse
split is completed, it will be followed immediately by a 300-for-1 forward
stock split of the Common Shares, which will convert each
25
whole Common Share issued in connection with the reverse split into 300
Common Shares. The Stock Splits are intended to take effect on the
Effective Date (the date the Ohio Secretary of State accepts for filing
Certificates of Amendment to the Articles). The proposed amendments to the
Articles are attached to this Proxy Statement as Exhibits B and C and are
incorporated herein by reference. Generally, the effects of the Stock
Splits can be illustrated by the following examples:
Hypothetical Scenario Result
--------------------- ------
Shareholder A holds 200 Shareholder A's 200 Common Shares will be
Common Shares in a single converted into the right to receive
record account and holds no $4,600 in cash (200 x $23.00). If
other Common Shares. Shareholder A wanted to continue to be a
shareholder after the Stock Splits, he
could purchase an additional 100 Common
Shares far enough in advance of the Stock
Splits so that the purchase is complete
by the Effective Date.
Shareholder B holds 200 ASB intends for the Stock Splits to treat
shares in a brokerage shareholders holding Common Shares
account and holds no other through a nominee the same as those
Common Shares. holding shares in a record account.
Nominees will be instructed to effect the
Stock Splits for their beneficial owners.
If this occurs, Shareholder B will
entitled to receive $4,600 in cash
(200 x $23.00). However, nominees may
have different procedures and
shareholders holding shares in street
name should contact their nominee to
determine how the Stock Splits will
affect them.
Shareholder C holds 450 After the reverse stock split,
Common Shares in a single Shareholder C would have 1.5 Common
record account and holds no Shares (450/300 = 1.5). He will receive
other shares. one whole Common Share and instead of
receiving a fractional share he will be
entitled to receive $3,450
(150 x $23.00). In the forward stock
split his whole Common Share will be
converted into 300 Common Shares
(1 x 300). After completion of the Stock
Splits, Shareholder C will hold 300
Common Shares and will be entitled to
receive $3,450.
Shareholder D holds 500 After the reverse stock split,
shares in each of two Shareholder D will hold three whole
separate record accounts for Common Shares (1,000/300 = 3.33) and will
a total of 1,000 Common be entitled to receive $2,300 in cash in
Shares. Shareholder D holds lieu of being issued a fractional share
no other Common Shares. (100 x $23.00). In the forward split his
shares will be converted into 900 Common
Shares (3 x 300). After the completion
of the Stock Splits, Shareholder D will
hold 900 Common Shares and will be
entitled to receive $2,300.
Shareholder E holds 800 ASB intends for shareholders holding
Common Shares in a shares through nominees to be treated the
brokerage account. He holds same as record holders and expects that
no other Common Shares. Shareholder E would hold two whole Common
Shares after the reverse split
(800/300 = 2.66) and would be entitled to
receive $4,600 in cash (200 x $23.00).
Shareholder E's two whole Common Shares
would be converted into 600 Common Shares
in the forward split. After the
completion of the Stock Splits,
Shareholder E would hold 600 Common
Shares and would be entitled to receive
$4,600.
26
Husband and Wife each hold Shares held in joint accounts will not be
200 Common Shares in added to shares held individually in
separate record accounts and determining whether a shareholder will
hold 200 shares jointly in receive whole shares after the reverse
another record account. split. In this situation, Husband and
They own no other Common Wife will each be entitled to receive
Shares. $4,600 each for the shares held in their
individual record accounts
(200 x $23.00). Further, they will be
entitled to receive $4,600 for the Common
Shares held in their joint account.
Husband and Wife will hold no Common
Shares after the Stock Splits. If
Husband and Wife wished to continue to be
shareholders after the Stock Splits, they
could transfer a sufficient number of
shares from one account into another so
that at least 300 Common Shares (or a
multiple thereof) are held in one
account.
The Board has set the Repurchase Price at $23.00 per pre-split Common
Share. The Board made this determination in good faith, based upon the
Fairness Opinion and other factors the Board deemed relevant. Please see
the sections entitled "Special Factors - Reasons for the Stock Splits,"
"Opinion of Keller & Company" and "Stock Splits Proposal - Background of
the Stock Splits." ASB currently estimates that shareholders will receive
payment for their Common Shares that are exchanged for cash in lieu of
issuing fractional shares within approximately four weeks after the
Effective Date.
At least a majority of the Common Shares outstanding and entitled to
vote at the Special Meeting must approve the Stock Splits before they can
be completed. The executive officers and directors of ASB and American,
who together own approximately 25.79% of the Common Shares outstanding and
entitled to vote at the Special Meeting, have indicated that they will vote
in favor of the Stock Splits proposal.
The Stock Splits are considered a "going-private" transaction as
defined in Rule 13e-3 promulgated under the Exchange Act because they are
intended to terminate the registration of the Common Shares and suspend
ASB's filing and reporting obligations under the Exchange Act. In
connection with the Stock Splits, we have filed, as required by the
Exchange Act, a Rule 13e-3 Transaction Statement on Schedule 13E-3 (the
"Schedule 13E-3") with the SEC. Please see the section entitled "Available
Information."
The Board has retained for itself the absolute authority to not
implement the Stock Splits, even after they are approved, if it
subsequently determines that the Stock Splits for any reason are not then
in the best interests of ASB. Please see the section entitled "Stock
Splits Proposal - Reservation of Rights."
Background of the Stock Splits
In 1995, American converted from a mutual institution to the stock
form of ownership. In connection with this conversion, all of the issued
and outstanding stock of American was acquired by ASB, which was organized
at that time to become a public holding company for American. ASB held an
initial public offering of the Common Shares and registered them under the
Exchange Act.
During the past several months, the Board has debated the advantages
and disadvantages of remaining a SEC reporting company or converting to a
privately held institution. The Board has considered many factors which
are discussed throughout this Proxy Statement. Ultimately, the Board
concluded that the advantages of remaining a SEC reporting company no
longer outweigh the costs ASB incurs as a publicly traded corporation,
particularly in light of the requirements that the Sarbanes-Oxley Act
imposed upon public companies. As a result, the Board approved the Stock
Splits and recommends that the shareholders approve the Stock Splits at the
Special Meeting.
27
Costs Associated with SEC Regulations. Because we are a SEC
reporting company, we are obligated to prepare and file periodic reports
with the SEC, including annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and proxy statements and related
materials. In addition, we assist our officers and directors in complying
with reports required under the Exchange Act's transaction and short swing
profit reporting requirements for affiliates of ASB.
The costs associated with these reports and other filing obligations
are a significant corporate overhead expense. We realize that the costs
associated with SEC reporting have been increasing in recent years and we
believe that the costs will continue to increase significantly. The
principal reason behind these increases in compliance costs is the
enactment of the Sarbanes-Oxley Act and related rules and regulations
adopted by the SEC. In addition to compliance costs and expenses,
compliance with existing and new SEC reporting requirements, internal
control audit requirements and other SEC regulatory requirements diverts
the time and resources of ASB and American's management from other
business.
We estimate that we currently pay approximately $165,000 per year as
a result of being a public company which we would not incur as a private
company. These costs do not include the time and resources that management
of ASB and American spend in preparation of periodic reports and compliance
with reporting obligations. Further, we anticipate that in order to
complete the documentation and testing of internal controls required by
Section 404 of the Sarbanes-Oxley Act, we would incur an additional
estimated $149,900 for fiscal year 2005 alone. In addition, legal expenses
associated with SEC compliance and disclosure rules and regulations have
increased and we believe will continue to increase. The time demanded of
ASB and American's management with respect to these SEC compliance
requirements takes away time which could be focused on business matters
that bear a more direct relationship to our operations and profitability.
Please see the section entitled "Special Factors - Reasons for the Stock
Split" above.
Advantages of a Public Corporation. Considering the significant
increase in SEC compliance costs that ASB has incurred and will incur in
the future, the Board analyzed the advantages of ASB remaining a SEC
reporting company to determine if the advantages outweighed the costs. One
advantage to being a public company is that it may facilitate a more active
trading market. However, trading reports on our Common Shares reflect that
our Common Shares have a limited trading volume. As a result, our limited
trading market has not allowed our shareholders to recognize the primary
benefit which should be available to shareholders of a publicly traded
company, which is the ability to buy and sell stock in a liquid market.
Another potential advantage of being a publicly traded institution is
the ability to access public markets to raise additional capital. Since
becoming a public company in 1995, we have not needed to access public
markets to raise capital and, accordingly, we have not made any additional
public offerings of Common Shares or any other securities. In addition, we
have not used our Common Shares to acquire other companies because we have
found that our opportunities for acquisitions using stock are limited. We
do not anticipate the need for a large amount of capital for acquisitions
or expansions in the future and we estimate that any anticipated expansion
can be accomplished through controlled growth or by using otherwise
available capital. As a result, we do not foresee the need to access
public markets.
Shareholders of public corporations also have greater access to
information about the entity. As discussed above, the SEC requires that
reporting companies comply with increasing stringent reporting and auditing
requirements. There are several benefits to this type of SEC oversight and
mandated disclosure; however, it is accompanied by substantial expense.
Not only does SEC compliance divert the time and resources of our
management and financial staff from other business, it also results in
increased legal, auditing and accounting costs which we anticipate will
continue to rise in the future.
28
Smaller publicly traded institutions, such as ASB, have more
difficulty absorbing these costs and resource allocations than larger
publicly traded institutions since they represent a larger portion of our
revenues. Because of our status as a savings and loan holding company,
after deregistration we will continue to be extensively regulated under
other federal laws and American will continue to be subject to periodic
reporting requirements of, and inspections by, bank regulatory agencies
such as the OTS and the FDIC.
Background of the Board's Recommendation. The idea of reducing ASB's
number of shareholders and deregistering as an Exchange Act reporting
company was initially discussed in October, 2004. At that time, the Board
and management held informal discussions with ASB's independent auditor
regarding the expected costs and procedures involved in compliance with the
internal auditing requirements of Section 404 of the Sarbanes-Oxley Act.
Our outside auditor then estimated that ASB would incur approximately
$145,000 in additional accounting and auditing expenses in order to comply
with Section 404 of the Sarbanes-Oxley Act. Our auditor informed us that
in order to comply with Section 404, procedures and controls would need to
be implemented at the beginning of the 2005 fiscal year, and our additional
expenses would begin to accrue at that time.
After these meetings, the Board and management began discussions with
our legal counsel regarding the possibility of ASB deregistering as an
Exchange Act reporting company and some of the advantages and disadvantages
of engaging in a "going private" transaction. The Board and management
discussed whether ASB was truly reaping the benefits typically available to
a publicly traded company and discussed whether reducing the number of
shareholders and deregistering as an Exchange Act reporting company might
be a good use of its excess capital. At the Board's request, management
began to analyze potential compliance costs and out of pocket expenses
associated with remaining a SEC reporting company.
After these meetings, management continued to investigate potential
alternatives to avoid these increased costs, including deregistering as an
Exchange Act reporting company, and kept the Board apprised of their
findings.
On November 22, 2004, at its regular monthly Board meeting, the Board
of Directors discussed the anticipated costs associated with ASB's
continued compliance with the Exchange Act's rules and regulations, as
supplemented by the Sarbanes-Oxley Act, during the current and future
fiscal years. The Board also analyzed the current composition of its
shareholders and number of shares issued and outstanding. The Board
discussed the option of going private and the advantages and disadvantages
associated with deregistering the Common Shares. The Board further
discussed options available to reduce the number of ASB's shareholders
below 300 so that we may qualify to deregister as a SEC reporting company.
At this meeting, the Board began to analyze the possible costs associated
with a going private transaction involving a reverse stock split and
considered the funds available to ASB to engage in such a transaction.
The Board next held a special meeting on December 20, 2004, with
ASB's legal counsel to further discuss and consider going private
alternatives. At that meeting, the Board once again carefully considered
the advantages and disadvantages of going private, as well as the
alternatives available to accomplish the deregistration of our Common
Shares. At that meeting, the Board considered, among other issues, the
potential impact of the reverse stock split and the deregistration of the
Common Shares on ASB's shareholders.
On December 27, 2004, the Board of Directors met again. At that
meeting, after further consideration and deliberation by the Board, the
Board unanimously decided to further investigate mechanics and expenses of
proceeding with a going private transaction and, specifically, a reverse
stock
29
split. The Board also discussed with management the price to be paid to
the shareholders in lieu of issuing fractional shares in connection with
the reverse stock split and the desirability of a forward split immediately
following a reverse split to avoid an unusually high per share value for
the Common Shares after the reverse split. The Board determined that a
subsequent forward split was desirable. Also at this meeting the Board
authorized management to contact Keller & Company regarding the possibility
of obtaining a fairness opinion regarding the price to be paid to the
shareholders who would receive cash in lieu of fractional shares.
On January 24, 2005, the Board met to address the question as to
whether the Stock Splits are a fair transaction to affiliated and
unaffiliated shareholders. A separate discussion was conducted with
respect to those shareholders who would receive whole Common Shares in the
reverse split and participate in the subsequent forward split and those
shareholders who would receive only cash and no longer continue to be
shareholders of ASB. After weighing the advantages and disadvantages of
the Stock Splits to unaffiliated shareholders, the Board also considered
whether other procedures should be implemented to assure fairness to
unaffiliated shareholders.
The Board determined that the fairness to unaffiliated shareholders
depended in part on the per share price to be paid in lieu of issuing
fractional shares. At this point, Keller & Company discussed its valuation
analysis with respect to the Common Shares. It presented the Board with
information regarding (i) trading history, including volume and prices, of
the Common Shares, and (ii) a review of the market performance and trading
history of companies comparable to ASB. At the end of its presentation,
Keller & Company presented that a per share purchase price of $23.00 per
Common Share in lieu of issuing fractional shares would be fair to ASB's
shareholders. The information presented to the Board by Keller & Company
regarding its financial analysis is described more fully under the heading
"Opinion of Keller & Company."
Finally, the Board reviewed analyses prepared by management regarding
the anticipated financial impact of the Stock Splits and actively engaged
in further discussions and asked questions to Keller & Company and
management. Specifically, the Board considered the total number of Common
Shares which would be exchanged for cash in the Stock Splits and considered
its resulting impact on the financial condition of ASB.
The Board reviewed the fairness opinion and considered whether a
premium should be paid for shares that will be exchanged for cash in lieu
of issuing fractional shares. After considering other factors described in
this Proxy Statement, the Board concluded that ASB's shareholders should
receive $23.00 for each Common Share held immediately prior to the Stock
Splits that is not converted into a whole Common Share in the reverse
split. In determining the price to be paid in lieu of issuing fractional
shares, the Board particularly focused on the fact that the Stock Splits is
not a voluntary transaction for shareholders, and a higher premium was
justified when considering that factor along with the other analyses. The
Board concluded that this price is a fair price to all unaffiliated
shareholders. The matters considered at the January 24, 2005 Board meeting
are more fully discussed in this Proxy Statement at "Special Factors -
Fairness of this Stock Splits" and "Opinion of Keller & Company."
On February 28, 2005, the Board held a regular meeting attended by
all of the directors. At this meeting, the Board reviewed the per share
price of $23.00 to be paid to the shareholders in lieu of issuing
fractional shares and once again considered the advantages and
disadvantages of the Stock Splits. At this meeting, the Board unanimously
voted to approve the Stock Splits and the price per share to be paid in
lieu of issuing fractional shares and to recommend the approval of the
Stock Splits by ASB's shareholders.
30
Recommendation of the Board
The Board has unanimously determined that the Stock Splits are in the
best interest of ASB and are fair to ASB's shareholders. The Board
unanimously recommends that the shareholders vote "FOR" the approval of the
Stock Splits.
Potential Disadvantages of the Stock Splits to Shareholders
As is more thoroughly described in the section entitled "Special
Factors - Disadvantages of the Stock Splits" above, potential disadvantages
to ASB and Continuing Holders include decreased availability of information
about ASB and decreased liquidity of the Common Shares. If the Stock
Splits are completed, we intend to terminate the registration of the Common
Shares under the Exchange Act. As a result, we will no longer be subject
to the filing and reporting requirements of the Exchange Act. In addition,
the liquidity of the Common Shares will be adversely affected by the lack
of publicly available information about ASB following deregistration of the
Common Shares. Decreased liquidity may have an adverse effect on the
market value of the Common Shares.
Share Certificates
We have appointed the Transfer Agent to act as exchange agent to
carry out the exchange of existing share certificates for cash payments in
lieu of issuing fractional shares and, if applicable, new share
certificates. On the Effective Date, all share certificates evidencing
ownership of Common Shares held by shareholders who will have fractional
shares repurchased will be deemed cancelled without further action by the
shareholders or ASB. Thereafter, such certificates will represent only the
right to receive cash in the amount of $23.00 per pre-split Common Share
for repurchased fractional shares and, if applicable, the right to receive
a new certificate for Common Shares issued in the forward stock split. The
Common Shares acquired by ASB in connection with of the Stock Splits will
be retired.
The Transfer Agent will furnish ASB's shareholders with the necessary
materials and instructions to surrender their Common Share certificate(s)
promptly following the Effective Date. The letter of transmittal will
explain how the certificates are to be surrendered. Shareholders must
complete and sign the letter of transmittal and return it with their
certificate(s) to the Transfer Agent as instructed before they can receive
any cash payments and/or new share certificates to which they are entitled.
Do not send your certificates to us, and do not send them to the Transfer
Agent until you have received a transmittal letter and followed the
instructions therein.
No service charges will be payable by ASB's shareholders in
connection with the exchange of certificates or the payment of cash in lieu
of issuing fractional shares. ASB will pay all expenses of the Stock
Splits.
Material Federal Income Tax Consequences
We have summarized below the material federal income tax consequences
to ASB and to holders of Common Shares resulting from the Stock Splits.
This summary is based on the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), the Treasury Department Regulations (the
"Treasury Regulations") issued pursuant thereto, and published rulings and
court decisions in effect as of the date hereof, all of which are subject
to change. This summary does not take into account possible changes in
such laws or interpretations, including amendments to the Code, applicable
statutes, Treasury Regulations and proposed Treasury Regulations or changes
in judicial or administrative rulings. Some of those changes may have
retroactive effect. No assurance can be given that any such changes will
not adversely affect this summary. This summary is not binding on the
Internal Revenue Service.
31
This summary does not address all aspects of the possible federal
income tax consequences of the Stock Splits and is not intended as tax
advice to any person or entity. In particular, this summary does not
consider the individual investment circumstances of holders of Common
Shares, nor does it consider the particular rules applicable to special
categories of holders (such as tax exempt entities, life insurance
companies, regulated investment companies and foreign taxpayers) or holders
who hold, have held, or will hold, Common Shares as part of a straddle,
hedging or conversion transaction. In addition, this summary does not
address any consequences of the Stock Splits under any state, local or
foreign tax laws.
This summary assumes that you are one of the following: (i) a citizen
or resident of the United States, (ii) a domestic corporation, (iii) an
estate, the income of which is subject to United States federal income tax
regardless of its source, or (iv) a trust, if a United States court can
exercise primary supervision over the trust's administration and one or
more United States persons are authorized to control all substantial
decisions of the trust. This summary also assumes that you have held and
will continue to hold your Common Shares as capital assets for federal
income tax purposes.
We believe that the Stock Splits will be treated as a tax-free
"recapitalization" for federal income tax purposes. This treatment will
result in no material federal income tax consequences to ASB. However, you
may not qualify for tax free "recapitalization" treatment for federal
income tax purposes, depending on whether you are receiving cash, stock or
both cash and stock pursuant to the Stock Splits.
You should consult your tax advisor as to the particular federal,
state, local, foreign, and other tax consequences applicable to your
specific circumstances.
Federal Income Tax Consequences to Continuing Holders Not Receiving
Cash. If you (i) continue to hold Common Shares directly immediately after
the Stock Splits and (ii) you receive no cash as a result of the Stock
Splits, you will not recognize any gain or loss in the Stock Splits, and
you will have the same adjusted tax basis and holding period in your Common
Shares as you had in such Common Shares immediately prior to the Stock
Splits.
Federal Income Tax Consequences to Holders Receiving Cash. If you
receive cash in exchange for Common Shares as a result of the Stock Splits,
your tax consequence will depend on whether, in addition to receiving cash,
you retain a portion of your Common Shares or a person or entity related to
you (as determined by the Code) continues to hold Common Shares immediately
after the Stock Splits.
If you receive cash, do not continue to hold directly any Common
Shares and are not related to any person or entity who or which continues
to hold Common Shares, you will recognize capital gain or loss. The amount
of this capital gain or loss will equal the difference between the cash you
receive for your Common Shares and your aggregate adjusted tax basis in
such Common Shares.
If you receive cash and either (a) retain a portion of your Common
Shares or (b) do not continue to hold directly any Common Shares but are
related to a person or entity who or which continues to hold Common Shares
(in which case you may be treated as owning constructively the Common
Shares owned by such related person or entity), your receipt of cash may be
treated (i) first, as ordinary taxable dividend income to the extent of
your ratable share of ASB's undistributed earnings and profits, (ii)
second, as a tax-free return of capital to the extent of your aggregate
adjusted tax basis in your Common Shares, and (iii) then, the remainder as
capital gain.
32
If you fall into the category described in the immediately preceding
paragraph, your tax treatment will depend upon whether your receipt of cash
either (i) is "not essentially equivalent to a dividend" or (ii)
constitutes a "substantially disproportionate redemption of stock," as
described below. If your receipt of cash meets either of these two tests,
your receipt of cash will result solely in capital gain or loss. If your
receipt of cash cannot meet either of these two tests, your tax
consequences will be those described in the immediately preceding
paragraph.
"Not Essentially Equivalent to a Dividend." You will satisfy the
"not essentially equivalent to a dividend" test if the reduction in your
proportionate interest in ASB resulting from the Stock Splits (taking into
account for this purpose the Common Shares owned by persons or entities
related to you) is considered a "meaningful reduction" given your
particular facts and circumstances. The Internal Revenue Service has ruled
that a small reduction by a minority stockholder whose relative stock
interest is minimal and who exercises no control over the affairs of the
corporation will satisfy this test.
"Substantially Disproportionate Redemption of Stock." Your receipt
of cash in the Stock Splits will be a "substantially disproportionate
redemption of stock" for you if the percentage of Common Shares owned by
you (and by persons or entities related to you) immediately after the
Stock Splits is (i) less than 50% of all Common Shares and (b) less than
80% of the percentage of Common Shares owned by you (and by persons or
entities related to you) immediately before the Stock Splits.
If you or a person or entity related to you will continue to hold
Common Shares after the Stock Splits, you should consult with your own tax
advisor to determine your particular tax consequences.
Capital Gain and Loss. For individuals, net capital gain (defined
generally as your total capital gains in excess of capital losses for the
year) recognized upon the sale of capital assets that have been held for
more than 12 months generally will be subject to tax at a rate not to
exceed 15%. Net capital gain recognized from the sale of capital assets
that have been held for 12 months or less will continue to be subject to
tax at ordinary income tax rates. Capital gain recognized by a corporate
taxpayer will continue to be subject to tax at the ordinary income tax
rates applicable to corporations. There are limitations on the
deductibility of capital losses.
Special Rate for Certain Dividends. In general, dividends are taxed
at ordinary income rates. However, you may qualify for a 15% rate of tax
on any cash received in the Stock Splits that is treated as a dividend as
described above, if (i) you are an individual or other non-corporate
stockholder; (ii) you have held the Common Shares of ASB with respect to
which the dividend was received for more than 60 days during the 120-day
period beginning 60 days before the ex-dividend date, as determined under
the Code; and (iii) you were not obligated during such period (pursuant to
a short sale or otherwise) to make related payments with respect to
positions in substantially similar or related property. You should consult
with your tax advisor regarding your eligibility for such lower tax rates
on dividend income.
Backup Withholding. Holders of Common Shares will be required to
provide their social security or other taxpayer identification numbers (or,
in some instances, additional information) to the Transfer Agent in
connection with the Stock Splits to avoid backup withholding requirements
that might otherwise apply. The letter of transmittal will require each
holder of Common Shares to deliver such information when the Common Share
certificates are surrendered following the Effective Date of the Stock
Splits. Failure to provide such information may result in backup
withholding.
33
As explained above, the amounts paid to you as a result of the Stock
Splits may result in dividend income, capital gain income, or some
combination of dividend and capital gain income to you depending on your
individual circumstances.
Unavailability of Appraisal or Dissenters' Rights
No appraisal or dissenters' rights are available under Ohio law or
under ASB's Articles or Regulations to holders of Common Shares who vote
against the Stock Splits. Other rights or actions may exist under Ohio law
or federal and state securities laws for shareholders who can demonstrate
that they have been damaged by the Stock Splits.
Reservation of Rights
Although we are requesting your approval of the Stock Splits, the
Board reserves the right, in its discretion, to withdraw the Stock Splits
from the agenda of the Special Meeting prior to any vote thereon or to
abandon the Stock Splits before the Effective Date even if the shareholders
have approved the proposal. Although the Board presently believes that the
Stock Splits are in ASB's best interests and has recommended a vote for the
Stock Splits, the Board nonetheless believes that it is prudent to
recognize that factual circumstances could possibly change prior to the
Effective Date such that it might not be appropriate or desirable to effect
the Stock Splits at that time. Such reasons include any change in the
nature of the shareholdings of ASB prior to the Effective Date which would
result in ASB being unable to reduce the number of holders of record of
Common Shares to below 300 as a result of the Stock Splits. If the Board
decides to withdraw the Stock Splits from the agenda of the Special
Meeting, the Board will promptly notify ASB's shareholders of the decision
by mail and by announcement at the Special Meeting. If the Board decides
to abandon the Stock Splits after the Special Meeting and before the
Effective Date, the Board will promptly notify ASB's shareholders of the
decision by mail or by press release and any other appropriate public
disclosure.
Escheat Laws
The unclaimed property and escheat laws of each state provide that
under circumstances defined in that state's statutes, holders of unclaimed
or abandoned property must surrender that property to the state.
Shareholders who are entitled to receive cash in lieu of fractional shares
in connection with the Stock Splits whose addresses are unknown to ASB or
who do not surrender their share certificates and request payment of the
Repurchase Price generally will have a period of years from the Effective
Date in which to claim the cash payment to which they are entitled. For
example, with respect to shareholders whose last known addresses, as shown
by the records of ASB, are in Ohio the period is five years. Following the
expiration of that five-year period, the relevant provisions of the Ohio
Revised Code would likely cause the cash payments to escheat to the State
of Ohio. For shareholders who reside in other states or whose last known
addresses, as shown by the records of ASB, are in states other than Ohio,
such states may have abandoned property laws which call for such state to
obtain either (i) custodial possession of property that has been unclaimed
until the owner reclaims it or (ii) escheat of such property to the state.
Under the laws of such other jurisdictions, the "holding period" or the
time period which must elapse before the property is deemed to be abandoned
may be shorter or longer than five years. If ASB does not have an address
for a shareholder, then the unclaimed cash payment would be turned over to
ASB's state of incorporation, the State of Ohio, in accordance with its
escheat laws.
34
Regulatory Approvals
ASB is not aware of any material governmental or regulatory approval
required for completion of the Stock Splits, other than compliance with the
relevant federal and state securities laws and Ohio corporate laws.
INFORMATION ABOUT ASB
Business Overview
ASB is a savings and loan holding company which owns all of the
common stock issued by American upon its conversion from a mutual savings
association to a stock savings association in May of1995. ASB's activities
have been limited primarily to holding the common stock of American since
the conversion.
American engages principally in the business of originating real
estate loans secured by first mortgages on one- to four-family residential
real estate located in American's primary market area, which consists of
the Cities of Portsmouth and Waverly, Ohio and contiguous areas of Scioto
County and Pike County, Ohio. American also makes loans secured by
multifamily real estate (over four units) and nonresidential real estate
and secured and unsecured consumer loans. In addition, American purchases
interests in multifamily real estate and nonresidential real estate loans
originated and serviced by other lenders. American also invests in
mortgage-backed securities, U.S. Government agency obligations, obligations
of state and political subdivisions, and other investments permitted by
applicable law. Funds for lending and other investment activities are
obtained primarily from savings deposits, which are insured up to
applicable limits by the FDIC, and loan principal and mortgage-backed
security repayments.
American conducts business from its main office in Portsmouth, Ohio
and a branch office in Waverly, Ohio. American's primary market area for
lending consists of Scioto County and Pike County, Ohio, and for deposits
consists of Scioto County and Pike County and adjacent communities in North
Central Kentucky.
ASB is subject to regulation, supervision and examination by the OTS
and the SEC. American is subject to regulation, supervision and
examination by the OTS and the FDIC.
ASB's principal offices are located at 503 Chillicothe Street,
Portsmouth, Ohio 45662, and ASB's phone number at that address is (740)
354-3177.
Management of ASB
Board of Directors. There are six members of ASB's Board of
Directors. Information regarding ASB's current directors is set forth
below.
* William J. Burke, age 63, has been a director of ASB since
1995. Mr. Burke is a director, the Chief Executive Officer and
the marketing manager of OSCO Industries, Inc., a manufacturing
company which has its principal place of business in
Portsmouth, Ohio. He has been employed by OSCO Industries,
Inc., since 1967.
35
* Gerald R. Jenkins, age 69, has been a director of ASB since
1995. Mr. Jenkins retired in 1998 as the President and Chief
Executive Officer of ASB and American. Prior to becoming
President of American in 1983, he held various positions at
American including Secretary and Vice President.
* Christopher H. Lute, age 55, has been a director of ASB since
2003. Mr. Lute is the President and Chief Executive Officer of
Lute Plumbing Supply, Inc., a wholesale distributor of
plumbing, heating, cooling, kitchen and bath products with
facilities in Ohio, Kentucky, Indiana and West Virginia. He
has held this position since 1979. Mr. Lute is also immediate
past Chairman of the Southern Ohio Growth Partnership and is
President of WIT & Co., a national buying group. Mr. Lute also
serves on the board of the Southern Ohio Museum and Cultural
Center.
* Larry F. Meredith, age 63, has been a director of ASB since
2003. Mr. Meredith is a consultant to the Pike County Board of
Mental Retardation and Developmental Disabilities and is a
part-time instructor at Shawnee State University. Mr. Meredith
served as a director of The Waverly Building and Loan Company
from 1997 until its acquisition by American in 2002. He has
previously served as Superintendent of Pike County Schools,
Supervisor of Scioto County Schools and a member of the Eastern
Board of Education.
* Louis M. Schoettle, age 78, has been a director of ASB since
1995. Dr. Schoettle is a physician. He retired from active
practice in 1994 after over 35 years of practicing medicine in
Portsmouth. Dr. Schoettle also owns and operates a 1,100 acre
farm.
* Robert M. Smith, age 58, has been a director of ASB since 1995.
Mr. Smith has been employed by American since 1966 and has
served as the President and Chief Executive Officer of American
and ASB since 1998. Prior positions held by Mr. Smith with
American include Secretary, Treasurer and Executive Vice
President. Mr. Smith is also a director of Intrieve,
Incorporated and serves on the board of the Ohio Bankers
League.
The Board has determined that, except for Mr. Smith, each director is
an "independent director" under applicable Nasdaq rules.
Executive Officers. In addition to Mr. Smith, who is the President of
ASB and American, the following persons are executive officers of ASB and
American:
* Carlisa R. Baker, age 42, has served as the Treasurer of ASB
since 1995. She has served as Treasurer of American since 1993
and has been employed by American since 1979.
* Mary Kathryn Fish, age 53, is the Secretary of ASB and
American, and has been employed by American since 1984. She
has served as Secretary of American since 1993 and of ASB since
1995.
* Michael L. Gampp, age 35, has served as the Vice President and
Chief Financial Officer of ASB and American since 2000. From
1997 until joining ASB and American, Mr. Gampp was a principal
with Reynolds & Co., Certified Public Accountants, and from
1995 to 1997 he served as Chief Financial Officer of Buckeye
Rural Electric.
* Jack A. Stephenson, age 52, has served as American's Vice
President responsible for lending activities and has served as
Vice President of ASB since 1995.
36
Each director and executive officer may be contacted at ASB's address
at 503 Chillicothe Street, Portsmouth, Ohio 45662, and the phone number at
that address is (740) 354-3177.
To ASB's knowledge, none of ASB's executive officers or directors has
been convicted in a criminal proceeding during the past five years
(excluding traffic violations or similar misdemeanors) or has been a party
to any judicial or administrative proceeding during the past five years
(except for matters that were dismissed without sanction or settlement)
that resulted in a judgment, decree or final order enjoining the person
from future violations of, or prohibiting activities subject to, federal or
state securities laws, or a finding of any violation of federal or state
securities laws.
Each of ASB's executive officers and directors is a citizen of the
United States of America.
Interest of Certain Persons in Matters to be Acted Upon
Information regarding the Common Shares beneficially owned by the
executive officers and directors of ASB and American is set forth in the
table below. The Stock Splits will not impact affiliated holders of Common
Shares differently from unaffiliated holders of Common Shares on the basis
of affiliate status. The executive officers and directors of ASB and
American will receive no extra or special benefit not shared on a pro rata
basis by all other holders of the Common Shares. If the Stock Splits are
implemented, the executive officers and directors of ASB and American will
not benefit by any material increase in their percentage ownership of
Common Shares. Please see the sections entitled "Special Factors -
Fairness of the Stock Splits" and "Special Factors - Advantages of the
Stock Splits."
Share Ownership of Directors and Executive Officers. The following
table provides certain information regarding the number of Common Shares
beneficially owned by ASB's directors and executive officers as of March 1,
2005 and the anticipated ownership percentage of such persons after the Stock
Splits:
Percent of
Percent of Outstanding
Number of Outstanding Common Number of Common
Common Shares Shares Before Common Shares Shares After
Name (1) Before Stock Splits (2) Stock Splits (3) After Stock Splits Stock Splits (4)
-------- ----------------------- ------------------ ------------------ ----------------
William J. Burke 40,699 (5) 2.37 40,500 2.49
Gerald R. Jenkins 129,400 (6) 7.54 128,700 7.90
Christopher H. Lute 4,209 (7) 0.25 3,900 0.24
Larry F. Meredith 1,847 (8) 0.11 1,800 0.11
Louis M. Schoettle 60,000 (9) 3.50 59,400 3.65
Robert M. Smith 118,200 (10) 6.88 117,000 7.18
All directors and executive
officers of ASB as a group
(10 persons) 444,620 (11) 25.79 440,100 26.88
-------------------
Each of the persons listed in this table may be contacted at ASB's
address.
All shares are owned directly with sole voting or investment power
unless otherwise indicated by footnote.
Assumes a total of [1,715,862] Common Shares outstanding before the
Stock Splits, plus the number of vested stock options held by such
person or group.
(Footnotes continued on next page)
37
Assumes a total of [1,629,529] Common Shares outstanding after the
Stock Splits, plus the number of vested stock options held by such
person or group.
Includes 27,099 phantom shares held in American's Deferred
Compensation Plan (the "Deferred Compensation Plan") which represent
Common Shares that may be acquired under the plan in the next 60
days.
Includes 78,442 shares as to which Mr. Jenkins has shared voting and
investment power and 18,227 phantom shares held in the Deferred
Compensation Plan which represent Common Shares that may be acquired
under the plan in the next 60 days.
Includes 1,200 shares which may be acquired upon the exercise of
options and 997 phantom shares held in the Deferred Compensation Plan
which represent Common Shares that may be acquired under the plan in
the next 60 days.
Includes 1,200 shares which may be acquired upon the exercise of
options and 647 phantom shares held in the Deferred Compensation Plan
which represent Common Shares that may be acquired under the plan in
the next 60 days.
Includes 21,883 shares as to which Dr. Schoettle has shared voting and
investment power, and 12,745 phantom shares held in the Deferred
Compensation Plan which represent Common Shares that may be acquired
under the plan in the next 60 days.
Includes 26,494 shares held in the ESOP as to which Mr. Smith has
shared investment power, 3,999 shares held by the ASB Management
Recognition Plan (the "MRP") as to which Mr. Smith has shared voting
power as Trustee of the MRP, 65,000 shares as to which Mr. Smith has
shared voting and investment power, and 12,295 phantom shares held in
the Deferred Compensation Plan which represent Common Shares that may
be acquired under the plan in the next 60 days.
Includes 8,074 shares which may be acquired upon the exercise of
options, 71,009 shares held in the ESOP, 72,010 phantom shares held in
the Deferred Compensation Plan which represent Common Shares that may
be acquired under the plan in the next 60 days and 193,427 shares over
which a person has shared voting or investment power.
The directors and executive officers of ASB have engaged in the
following transactions involving the Common Shares in the past 60 days: Mr.
Jenkins exercised an option to purchase 13,942 Common Shares at an exercise
price of $7.64 per share on January 4, 2005 and Mr. Burke gifted 2,400 Common
Shares on January 6, 2005.
39
Owners of 5% or More of the Common Shares. The following table sets
forth certain information regarding the only persons known to ASB to
beneficially own more than five percent of the outstanding Common Shares as
of March 1, 2005 and their anticipated ownership percentage after the Stock
Splits:
Number of Number of
Common Common
Shares Percent of Common Shares Percent of Common
Before Shares Outstanding After Shares Outstanding
Name and Address Stock Splits Before Stock Splits Stock Splits After Stock Splits
---------------- ------------ ------------------- ------------ ------------------
First Bankers Trust Services, Inc. 211,658 (1) 12.34 211,500 12.98
1201 Broadway
Quincy, Illinois 62301
ASB Financial Corp. 139,646 (1) 8.14 139,500 8.56
Employee Stock Ownership Plan
1201 Broadway
Quincy, Illinois 62301
Gerald R. Jenkins 129,400 (2) 7.54 128,700 7.90
503 Chillicothe Street
Portsmouth, Ohio 45662
Robert M. Smith 118,200(3) 6.88 117,000 7.18
503 Chillicothe Street
Portsmouth, Ohio 45662
-------------------
Includes 139,646 shares held as Trustee for the ESOP as to which
First Bankers Trust has limited investment power and 72,012 shares
held as Trustee of the Deferred Compensation Plan as to which First
Bankers Trust Company, N.A. has sole investment power. All shares
held in the ESOP have been allocated to the accounts of participants.
The ESOP Trustee has voting power over shares that have been
allocated to the account of an ESOP participant but as to which no
voting instructions are given by the participant.
See footnote (5) in the preceding table.
See footnote (9) in the preceding table.
Market Price and Dividend Information
Our Common Shares are currently traded on the Nasdaq under the symbol
"ASBP." The following table sets lists the high and low closing prices and
dividend information for the periods indicated. The last sale of Common
Shares reported on the Nasdaq on [___________, 2005]was [$_____.] Prices in
the table do not reflect any retail mark-ups or mark-downs or commissions.
39
Cash Dividends
Quarter Ended High Close Low Close Declared
------------- ---------- --------- --------------
Fiscal 2005
September 30, 2004 $25.30 $21.30 $0.15
December 31, 2004 $23.05 $21.05 $0.15
Fiscal 2004
September 30, 2003 $24.96 $17.27 $0.14
December 31, 2003 $27.50 $22.56 $0.14
March 31, 2004 $27.75 $23.11 $0.14
June 30, 2004 $29.24 $22.00 $0.15
Fiscal 2003
September 30, 2002 $11.59 $10.70 $0.13
December 31, 2002 $14.90 $10.70 $0.13
March 31, 2003 $17.50 $14.25 $0.13
June 30, 2003 $17.25 $14.05 $1.14
Dividends are paid only when declared by the Board, in its sole
discretion, based on ASB's financial condition, results of operation,
market conditions and such other factors as it may deem appropriate. If
the Stock Splits are completed and we deregister the Common Shares, the
Common Shares will no longer be quoted on the Nasdaq or be eligible to be
traded on any exchange or automated quotation service operated by a
national securities association, and trades in the Common Shares will only
be possible through privately negotiated transactions or in the Pink
Sheets(R).
Common Share Repurchase Information
The following table provides information regarding ASB's Common Share
repurchases during the periods indicated.
Price Range
Number ------------- Weighted Average
Quarter Ended Repurchased High Low Price Per Share
------------- ----------- ---- --- ----------------
Fiscal 2005
September 30, 2004 None N/A N/A N/A
December 31, 2004 None N/A N/A N/A
Through [________, 2005] None N/A N/A N/A
Fiscal 2004
September 30, 2003 6,850 $19.47 $19.47 $19.47
December 31, 2003 None N/A N/A N/A
March 31, 2004 None N/A N/A N/A
June 30, 2004 None N/A N/A N/A
Fiscal 2003
September 30, 2002 1,800 $10.90 $10.94 $10.94
December 31, 2002 2,600 $10.94 $10.94 $10.94
March 31, 2003 None N/A N/A N/A
June 30, 2003 1,688 $16.25 $16.25 $16.26
40
FINANCIAL INFORMATION
Summary Historical Financial Information
The following summary consolidated financial information was derived
from ASB's audited consolidated financial statements as of and for each of
the years ended June 30, 2004 and 2003 and from unaudited consolidated
interim financial statements as of and for the six months ended December
31, 2004 and 2003. The statement of operations data for the six months
ended December 31, 2004 is not necessarily indicative of results for a full
year. This financial information is only a summary and should be read in
conjunction with our historical financial statements and the accompanying
footnotes, which are incorporated herein by reference into this Proxy
Statement. Please see the section entitled "Incorporation of Certain
Documents by Reference."
Six Months Ended Year Ended
December 31, June 30,
2004 2003 2004 2003 2002
(Dollars in thousands, except per share data)
Results of Operations
Interest income $ 4,620 $ 4,417 $ 8,954 $ 9,576 $ 9,543
Interest expense 1,649 1,464 3,051 3,888 5,050
-------- -------- -------- -------- --------
Net interest income 2,971 2,953 5,903 5,688 4,493
Provision for loan losses 46 50 111 249 70
-------- -------- -------- -------- --------
Net interest income after
provision for loan losses 2,925 2,903 5,792 5,439 4,423
Noninterest income 340 381 705 745 486
Noninterest expenses 1,896 1,926 3,743 3,277 3,077
-------- -------- -------- -------- --------
Income before taxes & extraordinary item 1,369 1,358 2,754 2,907 1,832
Income tax expense 348 346 744 846 548
-------- -------- -------- -------- --------
Net income before extraordinary item 1,021 1,012 2,010 2,061 1,284
Extraordinary item 0 0 0 0 229
-------- -------- -------- -------- --------
Net income $ 1,021 $ 1,012 $ 2,010 $ 2,061 $ 1,513
======== ======== ======== ======== ========
Financial Condition
Total assets $172,961 $160,151 $166,371 $152,755 $148,272
Total deposits 138,035 132,482 136,761 130,780 132,818
Net loans 137,987 125,235 129,821 114,919 109,015
Shareholders' equity 18,661 17,008 17,424 16,359 15,454
Average assets 169,666 156,453 159,501 151,372 142,629
Average shareholders' equity 18,043 16,684 15,474 16,341 13,179
Key Financial Ratios
Return on average assets 1.20% 1.29% 1.26% 1.36% 1.06%
Return on average equity 11.32% 12.13% 12.99% 12.61% 11.48%
Dividends paid as a percent
of net income 50.54% 45.95% 46.07% 117.95% 49.83%
Per Share Data
Net income, basic 0.60 0.61 1.22 1.32 1.00
Net income, diluted 0.60 0.59 1.18 1.30 0.97
Cash dividends declared 0.15 0.14 0.57 1.53 0.49
Book value 10.96 10.22 10.49 9.84 10.11
41
ASB's book value per share, as set forth above, has been derived from
financial statements prepared by ASB's management relating to the fiscal
periods set forth above. As required by Exchange Act Rule 13a-14(a), ASB's
Chief Executive Officer and Chief Financial Officer have certified that
such financial statements, and the financial information included in the
periodic reports in which such financial statements appear, fairly present
in all material respects the financial condition, results of operation and
cash flows of ASB as of, and for, the periods presented in such periodic
reports.
Certain Financial Effects of the Stock Splits
We do not expect the Stock Splits or our use of approximately
$2,061,000 to complete the Stock Splits (which includes payments to be made
to shareholders who have fractional shares repurchased and professional
fees and other expenses related to the transaction) to have any material
adverse effect on our capitalization, liquidity, results of operations or
cash flow. Please see the section entitled "Meeting and Voting Information
- Solicitation and Costs." We expect to finance the Stock Splits with cash
on hand.
If the Stock Splits are completed, shareholders who receive cash in
lieu of fractional shares will receive cash in the amount of $23.00 per
Common Share held immediately prior to the Stock Splits. The repurchase of
the fractional Common Shares resulting from the Stock Splits is estimated
to cost approximately $1,986,000 and would reduce the number of record
holders of Common Shares from approximately 418 to approximately 240.
We expect that, as a result of the Reverse/Forward Stock Splits and
the cashing out of fractional Common Shares held by shareholder after the
reverse stock split:
* Our aggregate shareholders' equity will change from
approximately $18,661,000 (as of December 31, 2004) to
approximately $16,675,000; and
* Book value per Common Share would change from $10.96 (at
December 31, 2004) to $10.31, assuming the cash out of
fractional Common Shares had occurred on December 31, 2004.
Pro Forma Financial Information
The following pro forma consolidated information has been derived
from ASB's financial statements. The financial statements for the year
ended June 30, 2004, have been audited by independent certified public
accountants. The financial statements for the quarterly periods ended
December 31, 2004 and 2003 are unaudited. In the opinion of ASB's
management, these quarterly financial statements have been prepared on the
same basis as the audited financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for the fair
presentation of the results of these quarters.
The pro forma consolidated financial statements have been prepared
based upon the assumption that the Stock Splits were completed effective
the first day of the period presented for the income statement and as of
the date of the balance sheet, and all fractional Common Shares under one
whole share are repurchased. These pro forma consolidated financial
statements are not necessarily indicative of the results that would have
occurred had the Stock Splits actually taken place at the respective time
periods specified nor do they purport to project the results of operations
for any future date or period. Based on information from various external
sources, ASB believes that approximately 86,333 pre-split Common Shares
will be repurchased at $23.00 per Common Share for a total purchase price
of approximately $1,986,000.
42
The pro forma results are not indicative of future results because
ASB's public reporting costs for the periods presented include only the
historic public costs and do not include anticipated future costs.
Further, these results exclude $165,000 in estimated cost savings due to no
longer being subject to periodic reporting obligations under the Exchange
Act.
The unaudited pro forma financial statements should be read in
conjunction with our historical financial statements and the accompanying
footnotes, which are incorporated herein by reference into this Proxy
Statement. Please see the section entitled "Incorporation of Certain
Documents by Reference."
43
PRO FORMA CONSOLIDATED BALANCE SHEET
Six Months Ended December 31, 2004
(Unaudited)
(Dollars in thousands)
Pro-Forma Pro-Forma
Historical Adjustments Combined
---------- ----------- ---------
ASSETS
Cash and due from banks $ 1,145 $ 0 $ 1,145
Interest bearing deposits(1) 4,422 (2,061) 2,436
-------- -------- --------
5,567 (2,061) 3,581
Certificates of deposits 71 71
Investment securities available for sale-at market 10,935 10,935
Mortgage backed securities available for sale
at market 11,287 11,287
Loans receivable, net 137,987 137,987
Office premises and equipment at
depreciated cost 1,887 1,887
Federal Home Loan Bank stock-at cost 1,128 1,128
Accrued interest receivable on loans 206 206
Accrued interest receivable on mortgage
backed securities 45 45
Accrued interest receivable on investments
and interest bearing deposits 107 107
Prepaid expenses and other assets 3,419 3,419
Prepaid federal income taxes 197 197
Deferred federal income taxes 125 0 125
-------- -------- --------
Total Assets $172,961 $ (2,061) $170,975
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $138,035 $ 0 $138,035
Advances from the Federal Home Loan Bank 14,952 14,952
Advances by borrowers for taxes and insurance 185 185
Accrued interest payable 44 44
Other liabilities 1,084 0 1,084
-------- -------- --------
Total liabilities 154,300 0 154,300
Shareholders' equity
Preferred stock, 1,000,000 shares authorized,
no par value; no shares issued 0 0
Common stock, 4,000,000 shares authorized,
no par value; 1,952,037 shares issued 0 0
Additional paid-in capital(1) 10,540 (2,061) 8,554
Retained earnings, restricted 10,353 10,353
Shares acquired by stock benefit plans (63) (63)
Accumulated comprehensive income,
unrealized gains on securities designated
as available for sale, net of tax effects 671 671
Less 250,117 shares of treasury stock
at cost (2,840) 0 (2,840)
-------- -------- --------
Total shareholders' equity 18,661 (2,061) 16,675
-------- -------- --------
Total liabilities and shareholders' equity $172,961 $ (2,061) $170,975
======== ======== ========
-------------------
Retirement of repurchased shares.
44
PRO FORMA CONSOLIDATED BALANCE SHEET
Year Ended June 30, 2004
(Dollars in thousands)
Pro-Forma Pro-Forma
Historical Adjustments Combined
---------- ----------- ---------
ASSETS
Cash and due from banks $ 2,078 $ 0 $ 2,078
Interest bearing deposits(1) 5,307 (2,061) 3,246
-------- -------- --------
7,385 (2,061) 5,324
======== ======== ========
Certificates of deposits 178 178
Investment securities available for sale-at market 12,487 12,487
Mortgage backed securities available for sale
at market 11,768 11,768
Loans receivable, net 129,821 129,821
Office premises and equipment at
depreciated cost 1,814 1,814
Federal Home Loan Bank stock-at cost 1,104 1,104
Accrued interest receivable on loans 336 336
Accrued interest receivable on mortgage
backed securities 50 50
Accrued interest receivable on investments
and interest bearing deposits 130 130
Prepaid expenses and other assets 830 830
Prepaid federal income taxes 183 183
Deferred federal income taxes 285 0 285
-------- -------- --------
Total Assets $166,371 $ (2,061) $164,310
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $136,761 $ 0 $136,761
Advances from the Federal Home Loan Bank 10,899 10,899
Advances by borrowers for taxes and insurance 180 180
Accrued interest payable 52 52
Other liabilities 1,055 0 1,055
-------- -------- --------
Total liabilities 148,947 0 148,947
Shareholders' equity
Preferred stock, 1,000,000 shares authorized,
no par value; no shares issued 0 0
Common stock, 4,000,000 shares authorized,
no par value; 1,952,037 shares issued 0 0
Additional paid-in capital(1) 10,165 (2,061) 8,104
Retained earnings, restricted 9,848 9,848
Shares acquired by stock benefit plans (126) (126)
Accumulated comprehensive income,
unrealized gains on securities designated
as available for sale, net of tax effects 377 377
Less 250,117 shares of treasury stock
at cost (2,840) 0 (2,840)
-------- -------- --------
Total shareholders' equity 17,424 (2,061) 15,363
Total liabilities and shareholders' equity $166,371 $ (2,061) $164,310
======== ======== ========
-------------------
Retirement of repurchased shares.
45
PRO FORMA CONSOLIDATED INCOME STATEMENT
December 31, 2004
(Unaudited)
(Dollars in thousands, except per share data)
Pro-Forma Pro-Forma
Historical Adjustments Combined
---------- ----------- ---------
Six Months Ended December 31, 2004
Interest Income
Loans $4,179 $ 0 $4,179
Mortgage-backed securities 208 208
Investment securities(1) 233 (25) 208
Interest-bearing deposits and other 0 0 0
------ ------ ------
Total interest income 4,620 (25) 4,595
Interest Expense
Deposits 1,456 1,456
Borrowings 193 193
------ ------
Total interest expense 1,649 1,649
Net interest income 2,971 (25) 2,946
Provision for losses on loans 46 46
------ ------
Net interest income after provision
for losses on loans 2,925 (25) 2,900
Other income
Gain on sale of office premises 0 0
Gain on sale of investment securities 0 0
Other operating 340 340
------ ------
Total other income 340 340
General, Administrative and Other Expense
Employee compensation and benefits 1,046 1,046
Occupancy and equipment 115 115
Franchise taxes 82 82
Data processing 224 224
Other operating(2) 429 75 504
------ ------ ------
Total general administrative and
other expenses 1,896 75 1,971
Earnings before income taxes 1,369 (100) 1,269
Federal Income Taxes
Current 337 (34) 303
Deferred 11 0 11
------ ------ ------
Total federal income taxes 348 (34) 314
------ ------ ------
0
Net Earnings $1,021 $ (66) $ 955
Earnings Per Share
Basic $ 0.60 $ 0.60
Diluted $ 0.60 $(0.01) $ 0.59
-------------------
Interest forfeited from using $2,061,000 in short-term investments to
fund the transaction.
Transaction costs.
46
PRO FORMA CONSOLIDATED INCOME STATEMENT
June 30, 2004
(Dollars in thousands, except per share data)
Pro-Forma Pro-Forma
Historical Adjustments Combined
---------- ----------- ---------
Year Ended June 30, 2004
Interest Income
Loans $8,102 $ 0 $8,102
Mortgage-backed securities 200 200
Investment securities(1) 641 (50) 591
Interest-bearing deposits and other 11 0 11
------ ------ ------
Total interest income 8,954 (50) 8,904
Interest Expense
Deposits 2,862 2,862
Borrowings 189 189
------ ------
Total interest expense 3,051 3,051
Net interest income 5,903 (50) 5,853
Provision for losses on loans 111 111
Net interest income after provision
for losses on loans 5,792 (50) 5,742
Other income
Gain on sale of office premises 58 58
Gain on sale of investment securities 40 40
Other operating 607 0 607
------ ------ ------
Total other income 705 0 705
General, Administrative and Other Expense
Employee compensation and benefits 2,017 2,017
Occupancy and equipment 235 235
Franchise taxes 169 169
Data processing 432 432
Other operating(2) 890 75 965
------ ------ ------
Total general administrative and
other expenses 3,743 75 3,818
Earnings before income taxes 2,754 (125) 2,629
Federal Income Taxes
Current 694 (43) 651
Deferred 50 0 50
------ ------ ------
Total federal income taxes 744 (43) 701
------ ------ ------
0
Net Earnings $2,010 $ (82) $1,928
Earnings Per Share
Basic $ 1.22 $ 0.01 $ 1.23
Diluted $ 1.18 $ 0.02 $ 1.20
-------------------
Interest forfeited from using $2,061,000 in short-term investments to
fund the transaction.
Transaction costs.
47
AVAILABLE INFORMATION
The Stock Splits will constitute a "going-private" transaction for
purposes of Rule 13e-3 of the Exchange Act. As a result, ASB has filed the
Schedule 13E-3 which contains additional information about ASB. Copies of
the Schedule 13E-3 are available for inspection and copying at ASB's
principal executive offices during regular business hours by any interested
shareholder of ASB, or a representative who has been so designated in
writing, and may be inspected and copied, or obtained by mail, by written
request addressed to ASB Financial Corp., 503 Chillicothe Street,
Portsmouth, Ohio 45662.
ASB is currently subject to the information requirements of the
Exchange Act and files periodic reports, proxy statements and other
information with the SEC relating to its business, financial and other
matters. Copies of such reports, proxy statements and other information,
as well as the Schedule 13E-3, may be copied (at prescribed rates) at the
public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549. For further
information concerning the SEC's public reference rooms, you may call the
SEC at 1-800-SEC-0330. Some of this information may also be accessed on
the World Wide Web through the SEC's internet address at "www.sec.gov."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In our filings with the SEC, information is sometimes incorporated by
reference. This means that we are referring you to information that we
have filed separately with the SEC. The information incorporated by
reference should be considered part of this Proxy Statement, except for any
information superseded by information contained directly in this Proxy
Statement.
This Proxy Statement incorporates by reference the following
documents that we have previously filed with the SEC. They contain
important information about ASB and its financial condition.
* Our Annual Report on Form 10-KSB for the year ended June 30,
2004; and
* Our Quarterly Report on Form 10-Q for the quarter ended
December 31, 2004.
We also incorporate by reference any additional documents that we may
file with the Commission under Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act between the date of this Proxy Statement and the date of the
Special Meeting.
We will provide, without charge, upon the written or oral request of
any person to whom this Proxy Statement is delivered, by first class mail
or other equally prompt means within one business day of receipt of such
request, a copy of any and all information that has been incorporated by
reference, without exhibits unless such exhibits are also incorporated by
reference in this Proxy Statement. You may obtain a copy of these
documents and any amendments thereto by written request addressed to ASB
Financial Corp., 503 Chillicothe Street, Portsmouth, Ohio 45662.
48
PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS
Shareholders of ASB desiring to submit proposals to be considered for
inclusion in ASB's Proxy Statement and form of Proxy (the "Proxy
Materials") for the 2005 Annual Meeting of Shareholders (the "2005 Annual
Meeting") must provide their proposals by certain deadlines. To be
included in the Proxy Materials, a shareholder proposal must be received by
ASB no later than May 27, 2005. If a shareholder intends to present a
proposal at the 2005 Annual Meeting and the proposal was not included in
the Proxy Materials, ASB's management proxies for the 2005 Annual Meeting
will be entitled to vote on such proposal in their discretion, despite the
exclusion of any discussion of the matter in the Proxy Materials, if the
proposal is not received by ASB before August 10, 2005.
The Board is not aware of other matters that are likely to be brought
before the Special Meeting. However, in the event that any other matters
properly come before the Special Meeting, the persons named in the enclosed
Proxy are expected to vote the Common Shares represented thereby on such
matters in accordance with their best judgment.
Dated: [March __, 2005] By Order of the Board of Directors,
Robert M. Smith
President
49
EXHIBIT A
---------
KELLER & COMPANY, INC.
FINANCIAL INSTITUTION CONSULTANTS
INVESTMENT AND FINANCIAL ADVISORS
555 METRO PLACE NORTH
SUITE 524
DUBLIN, OHIO 43017
(614) 766-1426 (614) 766-1459 FAX
keller@ee.net
February 28, 2005
Board of Directors
ASB Financial Corp.
503 Chillicothe
Portsmouth, Ohio 45662
Members of the Board:
You have requested our opinion as to the fairness, from a financial point
of view to the shareholders of ASB Financial Corp. ("ASB"), of the price
per share for ASB stock to be paid to shareholders in connection with the
Reverse Stock Split (defined below) set forth in the proxy material and to
be sent to shareholders of record as established by the company in regard
to the Reverse Stock Split.
As more fully described in the proxy material to be sent to shareholders,
ASB will conduct a Reverse Stock Split, resulting in an exchange of one
share for each 300 shares of ASB. Any shareholder with less than 300
shares of ASB will receive cash based on a price per share of $23.00.
Further, any partial shares resulting, based on the terms of the Reverse
Stock Split, will be redeemed to shareholders in cash based on a price per
share of $23.00.
Keller & Company, Inc. ("Keller'), as part of its bank consulting and
advisory business, is regularly engaged in the valuation of financial
institutions and their securities in connection with the underwritings and
distributions of listed and unlisted securities and with mergers and
acquisitions and other corporate transactions. In connection with this
opinion, we have reviewed, among other things: (i) proxy material; (ii)
Annual Reports for the years ended June 30, 2002, 2003, and 2004; (iii)
Form 10-Q for the quarters ended September 30, 2003 and 2004; (iv) certain
publicly-available financial statements of ASB as of December 31, 2003 and
2004, and other historical financial information provided by ASB that we
deemed relevant; (v) such other information, financial studies, analyses
and investigations and financial, economic and market criteria as we
considered relevant. We reviewed historical returns and the current and
historical market prices and trading volumes of ASB's common stock and the
historical and projected earnings and other operating data of ASB and the
current and future capitalization of ASB. We considered the current market
environment in general and the banking environment in particular.
During the completion of our review, we have assumed and relied upon the
accuracy and completeness of all the financial information, analyses and
other information that was publicly-available or otherwise furnished to,
reviewed by or discussed with us, and we do not assume any
Board of Directors
ASB Financial Corp.
February 28, 2005
Page 2
responsibility or liability for independently verifying the accuracy or
completeness thereof. We did not make an independent evaluation or
appraisal of the specific assets, the collateral securing assets or the
liabilities (contingent or otherwise) of ASB or any of its subsidiaries, or
the collectability of any such assets, nor have we been furnished with any
such evaluations or appraisals. We did not make an independent evaluation
of the adequacy of the allowance for loan losses of ASB nor have we
reviewed any individual credit files relating to ASB and, we have assumed
that the respective allowances for loan losses for ASB is adequate to cover
such losses. We have also assumed that there has been no material change
in ASB's assets, financial condition, results of operations, business since
the date of the most recent financial statements made available to us. Our
opinion is necessarily based upon information available to us, and
financial, stock, market and other conditions and circumstances existing,
as of the date hereof.
The opinion of Keller is directed to the Board of Directors of ASB in
connection with its Reverse Stock Split and does not constitute a
recommendation to any stockholder of ASB as to how a stockholder should
vote at any meeting of stockholders called to consider and vote upon the
Reverse Stock Split. The opinion of Keller is not to be quoted or referred
to, in whole or in part, in any proxy material or in any other document,
nor shall this opinion be used for any other purposes, without Keller's
prior written consent provided; however, that we hereby consent to the
inclusion of this opinion as an annex to ASB's proxy material and to the
references to this opinion therein.
Based upon and subject to the foregoing, it is our opinion, as of the date
hereof, that the price per share for ASB stock used in the Reverse Stock
Split of ASB is fair, from a financial point of view.
Very truly yours,
/s/ Keller & Company, Inc.
KELLER & COMPANY, INC.
EXHIBIT B
---------
FORM OF
REVERSE STOCK SPLIT
AMENDMENT
Article FOURTH of the Articles of Incorporation, as amended, of ASB
Financial Corp. is hereby amended and replaced in its entirety as follows:
FOURTH: (A) The authorized shares of the corporation shall be five
million (5,000,000), four million (4,000,000) of which shall be common
shares, each without par value, and one million (1,000,000) of which shall
be preferred shares, each without par value. The directors of the
corporation may adopt an amendment to the Articles of Incorporation in
respect of any unissued or treasury shares of any class and thereby fix or
change: the division of such shares into series and the designation and
authorized number of each series; the dividend rate; the date of payment of
dividends and the dates from which they are cumulative; the liquidation
price; the redemption rights and price; the sinking fund requirements; the
conversion rights and the restrictions on the issuance of shares of any
class or series.
(B) Effective at the date and time this amendment to the Articles
of Incorporation to amend and replace this Article FOURTH is accepted by
the Secretary of State of the State of Ohio (the "Effective Time"), each
three hundred (300) of the corporation's common shares then issued and
outstanding shall be automatically converted into one fully-paid and non-
assessable common share (the "Reverse Stock Split"). In lieu of the
issuance of any fractional common shares or scrip that would otherwise
result from the Reverse Stock Split, any holder of common shares who would
otherwise be entitled to receive fractional shares shall be entitled to
receive the amount of Twenty-Three and 00/100 Dollars ($23.00) in cash for
each common share held immediately prior to the Effective Time and not
converted into a whole common share in the Reverse Stock Split. This
subsection (B) of this Article FOURTH shall affect only issued and
outstanding shares of the corporation and shall not affect the total
authorized number of shares.
(C) This Article FOURTH shall not change the stated capital or
paid-in surplus referable to the common shares, if any.
EXHIBIT C
---------
FORM OF
FORWARD STOCK SPLIT
AMENDMENT
Article FOURTH of the Articles of Incorporation, as amended, of ASB
Financial Corp. is hereby amended and replaced in its entirety as follows:
FOURTH: (A) The authorized shares of the corporation shall be five
million (5,000,000), four million (4,000,000) of which shall be common
shares, each without par value, and one million (1,000,000) of which shall
be preferred shares, each without par value. The directors of the
corporation may adopt an amendment to the Articles of Incorporation in
respect of any unissued or treasury shares of any class and thereby fix or
change: the division of such shares into series and the designation and
authorized number of each series; the dividend rate; the date of payment of
dividends and the dates from which they are cumulative; the liquidation
price; the redemption rights and price; the sinking fund requirements; the
conversion rights and the restrictions on the issuance of shares of any
class or series.
(B) Effective at the date and time this amendment to the Articles
of Incorporation to amend and replace this Article FOURTH is accepted by
the Secretary of State of the State of Ohio (the "Effective Time"), each
share of the corporation's common shares then issued and outstanding shall
be automatically converted into three hundred (300) fully paid and
non-assessable common shares. This subsection (B) of this Article FOURTH
shall affect only issued and outstanding shares of the corporation and shall
not affect the total authorized number of shares.
(C) This Article FOURTH shall not change the stated capital or
paid-in surplus referable to the common shares, if any.
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ASB FINANCIAL CORP.
ASB FINANCIAL CORP. SPECIAL MEETING OF SHAREHOLDERS
[April ___, 2005]
IMPORTANT
Please complete both sides of the Proxy Card.
Sign, date and return the attached Proxy Card in the postage
paid envelope as soon as possible. Your vote is important,
regardless of the number of shares that you own.
The undersigned shareholder of ASB Financial Corp. ("ASB") hereby
constitutes and appoints the Proxy Committee of ASB as the Proxy or Proxies
of the undersigned with full power of substitution and resubstitution, to
vote at the Special Meeting of Shareholders of ASB to be held at Shawnee
State Park Resort and Conference Center, 4404B State Route 125, West
Portsmouth, Ohio 45663, on [April __, 2005], at ___:___ __.m., local time
(the "Special Meeting"), all of the shares of ASB which the undersigned is
entitled to vote at the Special Meeting, or at any adjournment thereof, on
each of the following proposals, all of which are described in the
accompanying Proxy Statement:
1. A proposal to amend ASB's Articles of Incorporation to effect a 1-
for-300 reverse stock split and the repurchase of all resulting
fractional shares, followed immediately by an amendment to ASB's
Articles of Incorporation to effect a 300-for-1 forward stock split
of ASB's common shares (collectively, the "Stock Splits"). As a
result of the Stock Splits, (a) each shareholder owning fewer than
300 common shares of ASB immediately before the Stock Splits will
receive $23.00 in cash, without interest, for each ASB common share
owned by such shareholder immediately prior to the Stock Splits and
will no longer be a shareholder of ASB; and (b) each shareholder
owning 300 or more common shares immediately before the Stock Splits
(i) will receive 300 Common Shares after the Stock Splits in exchange
for each lot of 300 Common Shares held before the Stock Splits and
(ii) any additional Common Shares held other than in a 300 share lot
will be cancelled and exchanged for $23.00 in cash per share.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, upon such other business as may properly come
before the Special Meeting or any adjournments thereof.
IMPORTANT: Please sign and date this Proxy on the reverse side.
Your Board of Directors recommends a vote "FOR" the approval of the
amendments to ASB's Articles of Incorporation to effect the Stock Splits.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. Unless otherwise
specified, the shares will be voted FOR the approval of the amendments to
ASB's Articles of Incorporation to effect the Stock Splits.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the Special Meeting of Shareholders of ASB and of
the accompanying Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears above. When signing as
attorney, executor, administrator, trustee, guardian or agent, please give
your full title. If share are held jointly, each holder should sign.
____________________________ ______________________________
Signature Signature
Dated: _______________, 2005 Dated: _________________, 2005
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.