SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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[ ] Definitive Proxy Statement
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ASB FINANCIAL CORP.
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PRELIMINARY COPY
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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 June ___,
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 [May
___, 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
[May ___, 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 executive officers and directors of
ASB, who together own approximately 25.28% 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. 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:
[June ____, 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 [May ___, 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.
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.
Information About the Stock Splits
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.
* If you are a record holder who holds less than 300 Common
Shares but do not want to be cashed out in the Stock Splits,
you may remain a shareholder of ASB by purchasing a sufficient
number of Common Shares, to the extent available, in the open
market far enough
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in advance of the Stock Splits so that you hold at least 300
Common Shares on the Effective Date. Conversely, if you are a
record holder and want to be cashed out in the Stock Splits,
you may do so by selling a sufficient number of Common Shares
in the open market far enough in advance of the Stock Splits so
that you hold less than 300 Common Shares on the Effective
Date.
* If you hold shares in "street name" through a nominee (such as
a broker or a bank) the effect of the Stock Splits on your
Common Shares may be different than for record holders. ASB
intends for the Stock Splits to affect "street name"
shareholders the same as those holding shares in a record
account, and nominees will be asked to effect the Stock Splits
for their beneficial owners. However, your nominee may choose
not to effect the Stock Splits on your street name shares, and
your nominee may have different procedures that you must
follow. Shareholders holding shares in street name should
contact their nominee to determine how the Stock Splits will
affect them.
* If your nominee will not effect the Stock Splits on your
street name Common Shares and if you hold less than 300
Common Shares and wish to ensure that you are cashed out
in the Stock Splits, you may transfer your Common Shares
out of street name and into a record account with ASB far
enough in advance of the Stock Splits so that the
transfer is complete by the Effective Date.
* If your nominee will effect the Stock Splits and you hold
less than 300 Common Shares and you wish to ensure that
you are not cashed out in the Stock Splits you may
acquire additional Common Shares in your street name
account, if available, in the open market. You should
contact your nominee to determine how the Stock Splits
will affect you.
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.
Purpose 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 $198,000
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");
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* 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 and Reasons for the Stock Splits" and "Special Factors
- Effects of 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 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. The Fairness
Opinion is also available for inspection and copying at ASB's
principal executive offices located at 503 Chillicothe Street,
Portsmouth, Ohio 45662 during ASB's regular business hours by
any interested shareholder of ASB or representative of such
holder who has been so designated in writing.
* We urge you 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.
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* 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.
Advantages of the Stock Splits
* By completing the Stock Splits, deregistering the Common Shares
and suspending our periodic reporting obligations under the
Exchange Act, we expect to realize recurring annual cost
savings of approximately $198,000. In addition, we expect to
realize non-recurring savings in the 2006 fiscal year of
approximately $145,000 in fees and expenses to comply with the
internal controls audit requirements of Section 404 of the
Sarbanes-Oxley Act. Deregistration will also eliminate the
significant amount of time and effort previously required of
ASB's management to prepare and review the reports required to
be filed under the Exchange Act.
* The Stock Splits provide Cashed Out Holders with an opportunity
to liquidate all of their Common Shares, and for Continuing
Holders to liquidate some Common Shares, at a premium and
without paying brokerage commissions or other transaction fees.
* 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.
* The Stock Splits will have minimum effect on the relative
voting power of ASB's shareholders. Since only an estimated
86,333 out of 1,705,047 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 25.28% of the outstanding Common
Shares, and will beneficially own approximately 26.21% of the
outstanding Common Shares following completion of the Stock
Splits.
Please see the section of the Proxy Statement entitled "Special
Factors - Fairness of the Stock Splits" for a more detailed discussion of
the foregoing.
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Disadvantages of the Stock Splits
* Upon termination of the registration of the Common Shares under
the Exchange Act, ASB's duty to file periodic reports with the
SEC will be suspended. All of the information regarding ASB's
operations and financial results that is currently available to
the general public and investors will not be readily available
after deregistration. Investors seeking information about us
will have to contact ASB directly to receive such information,
and we may elect not to provide investors with requested
information that we are not required by law to provide.
* After the completion of the Stock Splits and deregistration of
the Common Shares, 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
may cause a decrease in the price at which the Common Shares
trade.
* Following the Stock Splits, Cashed Out Holders will have no
further financial interest in ASB and will no longer
participate in the potential appreciation in the value of, or
the payment of dividends on, the Common Shares.
* After completion of the Stock Splits and the subsequent
deregistration of the Common Shares, ASB will no longer be
subject to the liability provisions of the Exchange Act that
apply to public companies and the provisions of the Sarbanes-
Oxley Act, including the requirement that ASB's chief executive
officer and chief financial officer certify the accuracy of the
financial statements contained in ASB's Exchange Act filings.
Please see the section of the Proxy Statement entitles "Special
Factors - Disadvantages of the Stock Splits" 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 [May ___,
2005] (the "Record Date"), there were 1,705,047 Common Shares
outstanding and entitled to vote at the Special Meeting, of
which [852,524] are required to approve the Stock Splits. The
executive officers and directors of ASB, who together own
approximately 25.28% 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.
Please see the section of the Proxy Statement entitled "Meeting and
Voting Information" for a more detailed discussion of the foregoing.
Material 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.
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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.
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 holder's
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.
Termination of Stock Splits
* The Board may, in its discretion, withdraw the Stock Splits
from the agenda of the Special Meeting at any time prior to a
vote thereon if it believes it is in the best interests of ASB
to do so. 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 such that it might not be appropriate or desirable to
effect the Stock Splits.
Please see the section of this Proxy Statement entitled "Stock Splits
Proposal - Termination of Stock Splits" 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.
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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." 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. 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 2
Information About the Stock Splits 2
Purpose of and Reasons for the Stock Splits 3
Fairness of the Stock Splits 4
Advantages of the Stock Splits 5
Disadvantages of the Stock Splits 6
Voting Information 6
Material Federal Income Tax Consequences 6
Unavailability of Appraisal or Dissenters' Rights 7
Termination of Stock Splits 7
Escheat Laws 7
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS 8
SPECIAL FACTORS 11
Purpose of and Reasons For the Stock Splits 11
Effects of the Stock Splits 13
Alternatives to the Stock Splits 17
Fairness of the Stock Splits 18
Disadvantages of the Stock Splits 22
Conclusion 24
OPINION OF KELLER & COMPANY 24
Public Comparables Analysis 26
Review of ASB Market Performance 27
Conclusion 28
Engagement of Keller & Company 28
MEETING AND VOTING INFORMATION 28
Time and Place 28
Revoking Your Proxy 28
Record Date 28
Quorum and Required Vote 29
Solicitation and Costs 29
STOCK SPLITS PROPOSAL 30
Summary and Structure 30
Background of the Stock Splits 32
Recommendation of the Board 36
Potential Disadvantages of the Stock Splits to Shareholders 36
Share Certificates 36
Material Federal Income Tax Consequences 37
Unavailability of Appraisal or Dissenters' Rights 39
Termination of Stock Splits 39
Escheat Laws 40
Regulatory Approvals 40
INFORMATION ABOUT ASB 40
Business of ASB and American 40
Management of ASB 41
Interest of Certain Persons in Matters to be Acted Upon 42
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Market Price and Dividend Information 44
Common Share Repurchase Information 45
FINANCIAL INFORMATION 46
Summary Historical Financial Information 46
Pro Forma Financial Information 47
AVAILABLE INFORMATION 53
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 53
PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS 54
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 and Reasons For the Stock Splits
The purpose of the reverse stock split is to terminate ASB's status
as a public reporting company with the SEC. As a result of the reverse
stock split 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).
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. Since our initial public offering in 1995, we have
incurred additional costs as a result of being a public company. However,
since the passage of the Sarbanes-Oxley Act in 2002, our public company
expenses have steadily increased and continue to do so.
When the Sarbanes-Oxley Act was adopted, we realized that we would
incur additional expenses as a result. We did not seek to deregister at
that time, however, because much of the act had yet to be implemented and
the extent of the increases was then unknown. Our compliance costs have
increased from approximately $78,000 in 2001 to approximately $150,000 in
2004 due to the implementation of the Sarbanes-Oxley Act and related SEC
and Nasdaq rules, and we expect these costs to increase further in the
future. Of particular concern is the pending internal control audit
requirement imposed by Section 404 of the Sarbanes-Oxley Act. Although it
is not effective for ASB until June 30, 2006, we must begin preparing to
comply with Section 404 in the coming fiscal year and our expenses will
begin at that time. As discussed below, we expect that our preparations to
comply with Section 404 will result in a significant one-time expense, as
well as significant increases in our annual audit expenses going forward.
For smaller publicly traded companies, such as ASB, these costs represent a
larger portion of our revenues than for larger public companies.
In addition, prior to the current fiscal year ASB was a "small
business" filer under the Exchange Act. Under SEC rules, small business
filers are subject to reduced 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 the increased disclosure requirements.
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. We presently intend to send our
shareholders annual proxy statements, together with a letter summarizing
our performance for the completed fiscal year. We plan on making our
annual audited financial statements available to our shareholders in
electronic form, but we will provide printed copies upon shareholder
request. The annual letter sent to shareholders will explain how our
shareholders may obtain a printed copy of our financial statements. If
provided, these documents may not be as detailed, or contain the same level
of disclosure, as those required of a public reporting company.
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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 $198,000 in
fees and expenses that we have historically incurred and expenses we expect
to incur going forward, 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 Annual Cost Savings:
------------------------------
Historical costs:
Legal fees $ 50,000
Printing, mailing and filing costs $ 25,000
Audit fees $ 37,000
Nasdaq listing fees $ 21,000
Internal personnel costs $ 15,000
--------
Total historical costs $148,000
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Additional expected annual costs:
Section 404 audit fees $ 30,000
Internal personnel costs $ 20,000
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Total additional costs $ 50,000
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Total estimated annual cost savings $198,000
========
These estimated 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)
elimination of filing costs and expenses associated with electronically
filing periodic reports and other documents (such as proxy statements) with
the SEC on its Edgar database; (iv) the elimination of annual Nasdaq
listing fees (v) 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; (vi) a reduction in
management time spent on compliance and disclosure matters attributable to
our Exchange Act filings; (vii) lower risk of liability that is associated
with non-reporting company status and the expected decrease in premiums for
directors' and officers' liability insurance; (viii) cost savings due to
ASB not being subject to the public company provisions of the Sarbanes-
Oxley Act; (ix) 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 (x) a reduction in direct miscellaneous
clerical and other expenses. These savings also include estimated annual
audit savings and internal personnel savings from our not having to comply
with Section 404 of the Sarbanes-Oxley Act.
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 $145,000 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.
12
Non-Recurring Sarbanes-Oxley Act Compliance Costs:
--------------------------------------------------
Third party planning, testing and documentation $100,000
Audit fees $ 30,000
Internal personnel expenses $ 15,000
--------
Total $145,000
========
The annual 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 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.
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.
Reason 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 may cause
the existing limited trading market for the Common Shares to be further
reduced or eliminated. After the completion of the Stock Splits and the
deregistration of the Common Shares, ASB will no longer be subject to the
liability provisions of the Exchange Act or the provisions of the Sarbanes-
Oxley Act, including the requirement that ASB's officers certify the
accuracy of ASB's financial statements.
13
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;
* 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 Common Shares in "street name" through a nominee, the
Stock Splits may not effect you the same as they do record holders. ASB
intends for the Stock Splits to affect shareholders holding Common Shares
through a nominee the same as those holding shares in a record account and
nominees will be asked to effect the Stock Splits for their beneficial
owners. However, your nominee may choose not effect the Stock Splits on
your Common Shares, and your nominee may have different procedures that you
must follow. Shareholders holding shares in street name should contact
their nominee to determine how the Stock Splits will affect them.
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 one 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, if
available, on the open market and have them registered in your
name and consolidated with your current record account, if
14
you are a record holder, so that you hold at least 300 Common
Shares in your record account immediately before the Effective
Date; or
* If your nominee will effect the Stock Splits on your Common
Shares, you may acquire additional Common Shares in your street
name account, if available, in the open market. 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. If your nominee chooses not to effect the
Stock Splits, you may not be required to take any action to
remain a shareholder of ASB if you continue to hold your Common
Shares through your nominee on the Effective Date. You should
contact your nominee to determine how the Stock Splits will
affect you.
* If applicable, consolidate accounts in which you hold an
interest so that you hold at least 300 Common Shares in one
record account immediately before the Stock Splits.
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.
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. 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. If you hold Common
Shares in "street name" through a nominee, you should contact your nominee
to determine if your nominee will effect the Stock Splits for the
beneficial owners for whom it holds shares. If your nominee does not
intend to effect the Stock Splits, you can ensure that you are cashed out
by selling a sufficient number of shares so that you hold less than 300
Common Shares and then transferring those Common Shares into a record
account with ASB.
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
15
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 Splits,
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. We expect
to provide our annual audited financial statements in electronic format,
and will send printed copies to shareholders upon their request. 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 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 $198,000 in annual costs
associated with being a public company, including cost savings in time
spent by management and employees associated with our SEC reporting
activities. We anticipate a one time cost savings of approximately
$145,000 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 "Purpose of
and 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
16
compensation plan 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 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 26.21% of the then outstanding Common Shares,
as compared to approximately 25.28% 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. The Board did not investigate the potential costs of the
transactions listed below because it determined that they either had no
certainty of sufficiently reducing the number of shareholders of ASB or had
other features, such as triggering dissenters' rights, which could possibly
add to the expense and uncertainty of the transaction.
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
17
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 offer, 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.
Reorganization Through a 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, avoid the regulatory issues and
approvals associated with the merger of ASB into another corporation and do
not trigger dissenters' rights as would a cash out merger.
Sale of ASB. The Board recognized that a sale of ASB was an
available option, but the board determined that selling ASB was not in the
best interests of a majority of ASB's shareholders. ASB is attempting to
achieve the limited goal of eliminating its public company expenses. A
sale of ASB would go well beyond achieving this limited purpose. The Board
does not believe that sale of ASB is in the best interests of ASB or its
shareholders, customers, employees or community. ASB's focus on serving it
community and its local customer base has enabled it to grow steadily and
increase shareholder value. The Board does not feel that it is time to
abandon this model and is instead is seeking to reduce costs and burden of
being a public company to enable ASB to further pursue this focus and
remain independent.
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 25.28% 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.
18
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 aware that any of its
executive officers, directors or affiliates has made a recommendation
either in support of or opposed to the Stock Splits.
In determining the substantive fairness of the Stock Splits the Board
considered the factors discussed below. The Board believes that the Stock
Splits are substantively fair to ASB's shareholders in light of these
factors, taken together with the disadvantages also discussed below. 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.
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 3.8% over the average
closing price of the Common Shares over the 270 trading days prior to and
including February 28, 2005 (the date the Board approved the Stock Splits),
which was $22.16 per
19
share, (ii) a premium of 6.8% over the average closing price of the Common
Shares over the 180 trading days prior to and including February 28, 2005,
which was $21.54 per share, and (iii) a premium of 7.9% over the average
closing price of the Common Shares over the 90 trading days prior to and
including February 28, 2005, which was $21.31 per share, (iv) a premium of
8.0% over the average closing price of the Common Shares over the 60
trading days prior to and including February 28, 2005, which was $21.30 per
share, (v) 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,
which was $20.38 per share, and (v) a premium of 9.42% over the closing
price for the Common Shares on February 28, 2005, which was $21.02 per
share.
The Board reviewed the proposal made by Keller & Company that $23.00
per share be established as the Repurchase Price for the Common Shares. In
reviewing this proposal, the Board took into consideration that, at certain
times during 2004, the trading price of the Common Shares had exceeded
$23.00 per share. Historically, the market for the Common Shares has not
been very liquid. Over the past few years, the liquidity of the Common
Shares has steadily decreased, as evidenced by an average trading volume in
2004 of only 490 shares per day, down from 627 shares per day in 2001.
Due to this lack of liquidity, a single trade may sharply increase or
decrease our trading price. If the trading price of the Common Shares
increases suddenly due to a trade, the bid and asked prices may remain high
for several days even if no additional trades occur at that price. The
Common Shares reached their highest ever trading price of $29.24 on April
6, 2004. The Common Shares traded at $25.55 on April 1, 2004, and trades
of only 2,900 shares over three days increased the price almost $4.00. By
April 19, 2004, after only 3,900 total shares had been traded in the
intervening two weeks, the trading price was back down to $24.10. The
trading price has steadily declined since that date and only reached $23.00
twice between September 1, 2004 and February 28, 2005 (the date the Board
approved the Stock Splits). To eliminate the effects of this occasional
volatility, the Board used the trading price averages for the 30, 60, 90,
120, 180 and 270 days periods shown above to help determine the fairness of
the Repurchase Price.
The Board, in the exercise of its business judgment, approved $23.00
as the Repurchase Price for the Common Shares because it represented fair
consideration at a premium to the current and historical market prices of
the Common Shares without being so high as to be unfair to ASB's remaining
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 determined
that the analysis and fairness opinion provided by Keller & Company was
sufficient information to support the Repurchase Price and concluded that
an additional valuation of the Common Shares was not necessary and would
not justify the additional cost necessary to obtain a valuation.
Net Book Value. 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
20
greater detail in the section of this Proxy Statement entitled "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 market price of the Common Shares on December 31, 2004 ($22.00 per
share), are significantly greater than the book value per Common Share.
Liquidation Value. In determining the fairness of the Repurchase
Price, the Board did not view ASB's liquidation value as representative of
the value of the Common Shares. Most of ASB's (and American's) assets are
financial assets, and their liquidation value roughly approximates their
book value. If ASB's assets were sold in an orderly liquidation, some of
ASB's loans and deposits may be sold at a slight premium over book value,
but other assets may be sold at a discount. Also, as a result of the
liquidation process, ASB would incur greater legal fees, costs of sale and
other expenses of the liquidation process. As a result, the Board believes
that ASB's liquidation value would be substantially less than the current
trading price of the Common Shares.
Going Concern Value. The Board also reviewed and considered the
valuation of ASB's shares as a going concern. As discussed under "Net Book
Value" above, the value of ASB as a going concern takes into consideration,
among other things, ASB's business reputation, established customer base
and trained and experienced management and employees. The Board believes
that an indicator of ASB's value as a going concern is the value of
companies comparable to ASB and, as part of its review, the Board
considered Keller & Company's analysis regarding ASB's peer groups and the
comparison of ASB's key pricing ratios compared to those of the peer
groups. This analysis is discussed later in this Proxy Statement under the
heading "Opinion of Keller & Company - Public Comparables Analysis." The
Board reviewed and adopted Keller & Company's analysis which reflects that
ASB's pricing ratios are consistent with the pricing ratios of the selected
peer groups, with ASB's price-to-book ratio consistently higher than the
peer groups. On February 18, 2005 (the date the Board approved the Stock
Splits), ASB's trading price of $20.00 per share represented a price-to-
book ratio of 182.48%, compared to a price-to-book ratios of 124.37% the
comparable group, of 132.15% for publicly-traded Midwest thrifts and
140.87% for publicly-traded Ohio thrifts. Based on that analysis, and
giving consideration to ASB's earnings performance, its resultant price to
earnings multiple of 16.81 times earnings and ASB's ongoing operations, the
Board determined that ASB's trading price of $20.00 per share on February
18, 2005, generally reflected the value of the Common Shares on a going
concern basis, and the Repurchase represented a premium over this price.
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 1,705,047 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
21
was prior to the Stock Splits. For example, the executive officers and
directors of ASB and American currently beneficially own approximately
25.28% of the outstanding Common Shares, and will beneficially own
approximately 26.21% 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."
Other Factors. Although potentially relevant to a determination of
fairness of the Stock Splits, the factors listed below are, for the reasons
given, not applicable to ASB, and were not considered by the Board for this
reason.
* Firm Offers. No firm offers to purchase ASB have been made
during the past two calendar years or during the current
calendar year. ASB has not received any firm offers to
purchase ASB and the Board did not seek out any such offers.
The Board believes that a sale of ASB is not in the best
interests of ASB or its shareholders, customers, employees and
community at this time.
* 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.
* 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.
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
22
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 send our shareholders annual proxy
statements, along with a letter summarizing our performance for the year.
We plan to make our annual audited financial statements available to our
shareholders in electronic form, but will provide printed copies upon
shareholder request. The annual letter sent to shareholders will explain
how our shareholders may obtain a printed copy of our financial statements.
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 and these documents may not be as
detailed or extensive as the information we currently file with the SEC.
Please see the section entitled "Special Factors - Effects of the Stock
Splits."
Sarbanes-Oxley Act and Other Reporting and Disclosure Provisions Will
No Longer Apply to ASB. After the completion of the Stock Splits and the
deregistration of the Common Shares, ASB will no longer be subject to the
provisions of the Sarbanes-Oxley Act or the liability provisions of the
Exchange Act which apply to public companies. In addition, the Sarbanes-
Oxley Act requires the chief executive officer and the chief financial
officer of ASB to certify the accuracy of ASB's financial statements in its
Exchange Act filings. After deregistration, ASB will no longer make
filings under the Exchange Act and, as a result, its officers will not be
required to certify the accuracy of ASB's financial statements.
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 the Market for Common Shares" and
"Special Factors - Disadvantages of the Stock Splits - Termination of
Publicly Available Information About ASB" above.
ASB Will No Longer Have the Potential Benefits Normally Associated
with Public Reporting Company Status. Another potential disadvantage of
the Stock Splits is that ASB will no longer potentially have the benefits
normally associated with being a public reporting company, such as better
access to the capital markets for issuances of securities. ASB would still
have access to capital markets, but if it were to conduct an offering of
Common Shares or other securities it would have to again become a reporting
company, and the expenses that ASB is seeking to eliminate would then be
reinstated. ASB believes that the cost savings of deregistration outweigh
the drawbacks of losing more ready access to the capital markets. ASB has
historically had excess 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.
Another typical advantage of being a public company is using company
stock, as opposed to cash or other consideration, to effect acquisitions.
However, ASB has found that the opportunities for companies our size to
acquire other businesses using stock are limited. Further, the lack of
liquidity of
23
the Common Shares does not make it an attractive form of consideration to a
potential target. 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.
Cashed Out Shareholders Will Not 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.
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 in lieu of issuing fractional shares in 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 Fairness
Opinion is also available for inspection and copying at ASB's principal
executive offices located at 503 Chillicothe Street, Portsmouth, Ohio 45662
during ASB's regular business hours by any interested shareholder of ASB or
representative of such holder who has been so designated in writing. 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. As part of
its business, Keller & Company is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted
24
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 and ASB's earnings for the quarter ended
December 31, 2004, that at the time had not yet been publicly released.
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.
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 of ASB or collateral
securing those 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.
Keller & Company discussed ASB's current financial position and
recent earnings performance with ASB's management and discussed and
reviewed local economic conditions and growth trends. Keller & Company
gave consideration to historical pricing quotations for ASB and trading
activity in the Common Shares and identified a comparable group of publicly
traded thrift institutions based on asset size, geographic location and
financial characteristics that were similar to ASB. Keller & Company
assumed and relied upon the accuracy and completeness of all the financial
information, analyses and other information that was publicly-available
regarding the comparable institutions and did not verify the accuracy of
completeness of this information.
ASB's Board did not give Keller & Company any specific instructions
or impose any specific parameters on Keller & Company's determination of
the Repurchase Price and the fairness thereof. The Board asked Keller &
Company to advise them on a price to be paid to shareholders in lieu of
issuing fractional Common Shares in the Stock Splits that was fair to both
those shareholders who will have fractional shares repurchased and also the
remaining shareholders of ASB. 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.
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
25
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.
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. - Indiana City Savings Financial Corp. - Indiana
CKF Bancorp, Inc. - Kentucky FFW Corporation - Indiana
Indian Village Bancorp, Inc. - Ohio Peoples Ohio Financial Corp. - Ohio
Peoples-Sidney Financial Corp. - Ohio Perpetual Federal Savings Bank - Ohio
River Valley Bancorp - Indiana
26
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 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 & Company 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 & Company 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
27
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 recommended by Keller & Company 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.
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 June ___, 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 May ____,
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 1,705,047 votes
entitled to be cast at the Special Meeting.
28
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. The executive officers and directors of ASB, who together
own approximately 25.28% 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.
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 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.
29
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 $ 69,500
----------
Total $2,096,000
==========
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 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 $4,600
record account and holds no in cash (200 x $23.00). If Shareholder A
other Common Shares. 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 through
account and holds no other a nominee the same as those holding shares
Common Shares. in a record account. Nominees will be
asked 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 choose not to effect the Stock
Splits and they may also have different
procedures that must be followed.
Shareholders holding shares in street name
should contact their nominee to determine
how the Stock Splits will affect them.
30
Shareholder C holds 450 After the reverse stock split, Shareholder
Common Shares in a single C would have 1.5 Common Shares (450/300 =
record account and holds no 1.5). He will receive one whole Common
other shares. 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, Shareholder
shares in each of two D will hold three whole Common Shares
separate record accounts for (1,000/300 = 3.33) and will be entitled to
a total of 1,000 Common receive $2,300 in cash in lieu of being
Shares. Shareholder D holds issued a fractional share (100 x $23.00).
no other Common Shares. 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 shares
Common Shares in a through nominees to be treated the same as
brokerage account. He holds record holders, although nominees may
no other Common Shares. choose not to effect the Stock Splits. If
Shareholder E's nominee effects the Stock
Splits, 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.
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 - Purpose of and Reasons For the
Stock Splits," "Special Factors - Fairness of 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 25.28% 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.
31
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 may, in its discretion, withdraw the Stock Splits from the
agenda of the Special meeting prior to a vote being taken if it determines
that the Stock Splits, for any reason, are not then in the best interests
of ASB. Reasons the Board may withdraw the Stock Splits proposal 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 record
holders of the Common Shares to below 300 as a result of the Stock Splits
or that would enable ASB to deregister without effecting the Stock Splits;
any change in the number of shares that will be exchanged for cash in
connection with the Stock Splits that would substantially increase the cost
of the Stock Splits from what is currently anticipated; and any adverse
change in the financial condition of ASB. Please see the section entitled
"Stock Splits Proposal - Termination of Stock Splits"
Background of the Stock Splits
ASB became an SEC reporting company in 1995 in connection with the
mutual to stock conversion of American. The conversion was governed by OTS
regulations. One of the most significant features of the OTS conversion
regulations was the process to determine how much stock would be offered in
the conversion. ASB, like many companies which converted in the mid-
1990's, was required to raise more capital than would have been desirable
had the board been able to choose the amount of capital to raise. Other
aspects of the OTS regulations which affected ASB's early existence as a
public company included the requirement that converted companies remain
Exchange Act reporting companies for at least three years after conversion
and the OTS limitations on stock repurchases during the first three years
following conversion. As a result of these regulations, ASB had excess
capital, it could not fully utilize stock repurchases as a mechanism for
managing its excess capital, and it had to remain a public company until at
least 1998.
The 1999 fiscal year was the first year in which deregistering was an
option for ASB. Up to that time, the costs of being a public company had
been relatively stable from year to year and ASB was hopeful that it would
have the opportunity to grow through acquisitions and that it would be
beneficial to have a publicly traded stock as acquisition currency. Over
the next few years, however, several patterns began to emerge. Despite
pursuing various opportunities, ASB has never been the successful bidder in
an acquisition in which it could use stock as currency. That reality left
ASB with stock repurchases and capital distributions as the principal means
of deploying its excess capital. ASB paid special dividends per share of
$5.00 in 1996, $2.00 in 1998, $1.00 in 1999 and $1.00 in 2003. ASB has
continually pursued stock repurchases, but the declining trading volume has
reduced the efficacy of repurchases as a capital management tool. ASB's
excess capital also meant that the easier access to the capital markets
available to public companies was not a meaningful advantage to ASB. It
was becoming more apparent to the Board that ASB was not realizing the
benefits of being a public company, while it continued to incur the
expense. Management and the Board began to informally discuss the benefits
and disadvantages of remaining a publicly traded company.
The passage of the Sarbanes-Oxley Act in 2002 ushered in a wave of
corporate reforms that have increased ASB's expense as a public company
without enhancing, from an operations perspective, the benefits of being a
public company. As the regulations implementing the Sarbanes-Oxley Act
were put into place in 2003 and 2004 and the associated compliance costs
began to come into focus, ASB's legal
32
and professional fees increased 50% in the 2003 and 2004 fiscal years, with
the expense of complying with the internal control audit requirements of
Section 404 yet to be a factor. The issue of remaining a public company
began to take on greater significance for ASB.
Under the original SEC regulations implementing Section 404 of the
Sarbanes-Oxley Act, ASB would have been required to comply in 2005. In
anticipation of that effective date, the Board and management began the
education process that addressing Section 404 would require. In December
2003, Michael Gampp, ASB's Chief Financial Officer, and Gerald Jenkins, the
Chair of ASB's Audit Committee and former CEO of ASB, attended a seminar on
Section 404. They reported back to the Board at its next meeting their
initial assessment of what ASB would need to do from a regulatory,
operations, personnel and expense stand-point to implement Section 404.
During the following months, the board and management continued to
explore the implications of Section 404 and began to develop policies and
procedures for compliance. In September 2004, Robert Smith, the President
of ASB, Mr. Gampp and Jack Stephenson, a Vice President of ASB, attended
another seminar to help ASB prepare to comply with Section 404.
Information presented included estimates of the costs of implementing
Section 404 compliant internal control structures. That program also
included presentations regarding going private as an alternative to
implementing a Section 404 compliance program. After this conference,
management further discussed the merits of remaining a public company.
On October 27, 2004, at a meeting with all directors in attendance,
the Board met with ASB's auditors to discuss various audit and accounting
issues, including Section 404 compliance. ASB's auditors estimated that
adding Section 404 attestation procedures to the annual audit process would
likely cause ASB's annual audit costs to increase approximately $30,000 per
year. Our auditor also estimated that we would incur additional expense in
excess of $100,000 to engage another public accounting firm to assist ASB
in designing Section 404 procedures and controls which would need to be
implemented beginning in the 2005 fiscal year.
In light of these expense estimates, the Board and management
revisited the question of whether ASB was realizing the benefits generally
associated with being a public company and decided to fully investigate
taking ASB private. Since the stock conversion in 1995, the Board had
achieved meaningful success in growing ASB and increasing shareholder
value, despite some of the limitations it encountered. Because the Board
believes that future growth and further enhancement of shareholder value
remain viable prospects for ASB, it appeared that it remained in the best
interests of a majority of ASB's shareholders for ASB to remain
independent, but not as a public company. The Board instructed management
to provide the Board with a detailed analysis of the potential compliance
costs and out of pocket expenses associated with remaining a SEC reporting
company.
At a meeting on November 22, 2004, which was attended by all
directors, the Board discussed the anticipated costs associated with ASB's
ongoing compliance with the Exchange Act rules and regulations,
particularly the increased compliance requirements of Sarbanes-Oxley.
Management estimated the costs for 2005 would be $145,000 and thereafter
would be at least $50,000 per year, in addition to ASB's historical
expenses associated with being a public company. The Board also discussed
the advantages and disadvantages of being a private company. Management
recommended that ASB go private based on management's assessment of the
costs to remain a public company versus the likely benefits of remaining a
public company. The Board again discussed various methods for going
private, including the effects on shareholders who would be eliminated in
the transaction. The Board also reviewed the current composition of ASB's
shareholders and number of shares issued and outstanding, and began to
analyze the possible costs associated with a going private transaction.
The Board instructed Mr. Smith to contact counsel for ASB to advise the
board on the legal aspects of the going-private process and instructed
34
management to continue to refine its financial analysis of the cost of
remaining public compared to going private.
Management contacted a public accounting firm with Section 404
expertise to request a proposal regarding the costs of implementing an
internal control structure to comply with Section 404. In December 2004,
Mr. Gampp and Mr. Smith met with representatives from the firm to discuss
the Section 404 compliance process and the cost. The estimate for outside
professional fees to document and implement a compliant internal control
structure was $100,000, contingent upon performance of a substantial amount
of the work by Mr. Gampp.
On December 20, 2004, the Board held a special meeting to discuss
going private. All of the directors, Mr. Gampp and ASB's legal counsel
were present. ASB's counsel presented the various methods available to ASB
to reduce the number of shareholders to a number that would enable ASB to
deregister its shares. The methods discussed included a reverse stock
split, a cash out merger and forms of tender offers. The Board once again
carefully considered the consequences of going private to ASB, its
continuing shareholders and the shareholders who would be cashed out, as
well as the advantages and disadvantages of the various methods of going
private. Management presented its preliminary analysis of ASB's
shareholder list and the size of a split necessary to sufficiently reduce
the number of ASB's shareholders to allow ASB to deregister.
At a regular Board meeting on December 27, 2004, with all Board
directors in attendance, the Board continued its discussion of going
private. After further consideration and deliberation, the Board
unanimously decided to proceed with a going private transaction through a
reverse stock split, which appeared to be the most effective method
available to ASB to reduce the number of shareholders below 300. The Board
asked Mr. Gampp and Mr. Smith to analyze ASB's shareholder list to
determine the effects of various split ratios and to make a recommendation
to the Board of a split ratio that would balance the Board's goals of
reducing the number of shareholders to a level comfortably below the 300
shareholder threshold at which reporting obligations would be reinstated,
while minimizing the number of shareholders who would be cashed out.
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. Mr. Gampp reported that the Common Shares were then
trading at $21.59 per share. The Board determined that a premium over the
current trading prices would be appropriate and discussed various
scenarios. Management presented its analysis of a per share price of $23,
which represented a premium of approximately 6.5% over the current trading
price. The Board also discussed the desirability of a forward split
immediately following the reverse split to avoid an unusually high per
share value for the Common Shares after the completion of 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 analysis of the price to be paid to the shareholders who
would receive cash in lieu of fractional share and a fairness opinion
regarding the financial terms of the proposed transaction.
After the December 27, 2004, Board meeting, Mr. Gampp and Mr. Smith
further reviewed ASB's shareholder list. After performing a detailed
analysis, Mr. Gampp and Mr. Smith determined that a reverse split of 1 for
300 would reduce the number of ASB's record holders to approximately 240.
This level would provide ASB with greater flexibility in the event of an
increase in the number of record holders due to share transfers and would
the permit ASB to better manage the number of its record holders without
once again moving above 300 record holders.
On January 24, 2005, the Board met once again to address the question
as to whether the Stock Splits are a fair transaction to ASB's
shareholders, both affiliated and unaffiliated. Michael Keller of
34
Keller & Company and Mr. Gampp also participated in the meeting. The Board
considered whether certain procedures should be implemented to help assure
fairness to unaffiliated shareholders, such as granting unaffiliated
shareholders access to ASB's corporate files or permitting unaffiliated
shareholders to obtain counsel or appraisal services at ASB's expense.
Because the number of Common Shares held was the only factor determining
what a shareholder would receive in the Stock Splits, all shareholders of
ASB, both affiliated and unaffiliated, will be treated the same in the
Stock Splits. The Board determined that these procedures would provide
little or no added benefit to ASB's unaffiliated shareholders and did not
justify their substantial additional expense. After weighing the
advantages and disadvantages of the Stock Splits, the Board finally
determined that the fairness of the Stock Splits to all of ASB's
shareholders depended primarily on the per share price to be paid in lieu
of issuing fractional shares.
The Board also discussed the fairness of the Stock Splits to both
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 be shareholders of
ASB. The Board again determined that fairness to both continuing and
cashed out shareholders depended in large part on the price to be paid in
lieu of issuing fractional shares.
Mr. Keller of Keller & Company discussed with the Board 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. Mr. Keller stated that the current
trading price of the Common Shares as a multiple of earnings and as a
percent of book value per share was at or above the level of ASB's peers as
well as above the average premiums paid in recent acquisitions. Mr. Keller
performed an analysis of the financial impact of the transaction to ASB at
prices ranging from $21 to $25 per cashed-out share. The Board discussed
the pros and cons of paying a premium above the current trading price.
After presenting the relevant financial information, Keller & Company
advised the Board that, in its opinion, 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 held 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 then
discussed the fairness of the price to be paid in lieu of issuing
fractional shares in light of, among other factors, the historical trading
price of the Common Shares, ASB's going concern value, liquidation value
and net book value and the impact of the Stock Splits on the voting power
of ASB's shareholders. 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 premium to be paid for the fractional shares,
the Board particularly focused on the fact that the Stock Splits is not a
voluntary transaction for ASB's shareholders. The Board concluded that
$23.00 is a fair price to all of ASB's shareholders, both affiliated and
unaffiliated and those that will continue as ASB shareholders and those who
will be completely cashed out. The matters considered at the January 24,
2005, Board meeting are more fully discussed in this Proxy Statement at
"Special Factors - Fairness of the Stock Splits" and "Opinion of Keller &
Company."
At a regular board meeting held on February 28, 2005, the Board
discussed the repurchase of fractional shares and discussed whether
fractional shares should be repurchased from all shareholders or only from
holders of less than one whole share after the reverse stock split. The
Board reviewed the financial impact of purchasing all fractional shares and
considered the fact that shareholders who did not
36
want to receive cash in lieu of fractional shares could purchase additional
shares to prevent an involuntary cash-out. Based on these factors, the
Board decided to repurchase all fractional shares resulting from the
reverse stock split. The Board then discussed the advisability of a
forward split immediately following the reverse split in order to return
the trading price of the Common Shares to approximately the trading price
prior to the reverse stock split. Mr. Gampp provided the board with
hypothetical trading prices based upon various forward split ratios. The
board reviewed the various alternatives and decided that a forward split of
300 for 1 to return the trading price of Common Shares to approximately the
trading price of the Common Share prior to the reverse stock split would be
in the best interests of the continuing shareholders. After further
discussion by the Board, the Board unanimously voted to approve the Stock
Splits and, as recommended by Keller & Company, the $23.00 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.
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.
36
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.
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.
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 ASB. 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.
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.
37
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.
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.
38
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.
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.
Termination of Stock Splits
Although we are requesting your approval of the Stock Splits, the
Board may, in its discretion, withdraw the Stock Splits from the agenda of
the Special Meeting prior to any vote thereon. 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 Special Meeting such that it might not be appropriate
or desirable to effect the Stock Splits at that time. Such reasons
include, among other things:
* Any change in the nature of the shareholdings of ASB which
would result in ASB being unable to reduce the number of record
holders of Common Shares to below 300 as a result of the Stock
Splits;
* Any change in the number of ASB's record holders that would
enable ASB to deregister the Common Shares under the Exchange
Act without effecting the Stock Splits;
* Any change in the number of Common Shares that will be
exchanged for cash in connection with the Stock Splits that
would substantially increase the cost and expense of the Stock
Splits from what is currently anticipated; or
* Any adverse change in the financial condition of ASB that would
render the Stock Splits inadvisable.
39
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.
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.
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 of ASB and American
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 of 1995. 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.
40
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.
* 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 also serves on the board of the Ohio
Bankers League.
41
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 36, 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.
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 May 4,
2005 and the anticipated ownership percentage of such persons after the Stock
Splits:
42
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) 2.39 40,500 2.49
Gerald R. Jenkins 117,400 (6) 6.89 116,700 7.16
Christopher H. Lute 4,412 (7) 0.26 4,200 0.26
Larry F. Meredith 2,100 (8) 0.12 2,100 0.13
Louis M. Schoettle 60,000 (9) 3.52 59,400 3.65
Robert M. Smith 118,200 (10) 6.93 117,000 7.18
All directors and executive
officers of ASB as a
group (10 persons) 433,076 (11) 25.28 429,000 26.21
--------------------
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 1,705,047 Common Shares outstanding before the
Stock Splits, plus the number of vested stock options held by such
person or group.
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 66,442 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 1,200 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 900 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 7,735 shares which may be acquired upon the exercise of
options, 71,009 shares held in the ESOP, 72,466 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.
43
The directors and executive officers of ASB have engaged in the
following transactions involving the Common Shares in the past 60 days: Ms.
Baker sold 450 Common Shares at a price of $21.77 per share on March 4, 2005;
Mr. Stephenson sold 2,000 Common Shares at a price of $22.00 per share on
March 9, 2005; Mr. Jenkins sold 12,000 Common Shares at a price of $22.00 per
share on March 9, 2005; Mr. Gampp exercised an option to purchase 339 Common
Shares at an exercise price of $8.75 per share on March 16, 2005; Mr.
Meredith acquired 253 phantom shares in the Deferred Compensation Plan at a
price of $22.40 per share on May 2, 2005; and Mr. Lute acquired 203 phantom
shares in the Deferred Compensation Plan at a price per share of $22.40 per
share on May 2, 2005.
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 May 4, 2005 and their anticipated ownership percentage after the Stock
Splits:
Number of Number of
Common Shares Percent of Common 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 226,114 (1) 13.26 225,900 13.86
Services, Inc.
1201 Broadway
Quincy, Illinois 62301
ASB Financial Corp. 153,646 (1) 9.01 153,600 9.43
Employee Stock
Ownership Plan
1201 Broadway
Quincy, Illinois 62301
Robert M. Smith 118,200 (2) 6.93 117,000 7.18
503 Chillicothe St.
Portsmouth, Ohio 45662
Gerald R. Jenkins 117,400 (3) 6.89 116,700 7.16
503 Chillicothe Street
Portsmouth, Ohio 45662
--------------------
Includes 153,646 shares held as Trustee for the ESOP as to which
First Bankers Trust has limited investment power and 72,466 shares
held as Trustee of the Deferred Compensation Plan as to which First
Bankers Trust Company, N.A. has sole investment power. 139,646l
shares held in the ESOP have been allocated to the accounts of
participants and there are 14,000 unallocated shares. The ESOP
Trustee has voting power over unallocated shares and 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 (10) in the preceding table.
See footnote (6) in the preceding table.
44
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.
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
March 31, 2005 $22.87 $20.00 $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.
45
Number Price Range 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
March 31, 2005 None N/A N/A N/A
Through May 1, 2005 11,154 $22.00 $22.00 $22.00
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
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."
46
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
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.
Pro Forma Financial Information
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. We estimate that
the repurchase of these fractional shares will cost approximately
$1,986,000. In addition, we estimate we will incur approximately $110,000
in professional fees, printing costs and other related expenses in the
Stock Splits, for a total cost of approximately $2,096,000. We do not
expect that the
47
Stock Splits, or our use of approximately $2,096,000 to complete the Stock
Splits, will 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.
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.
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.
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 reporting costs and do not include anticipated future
costs. Further, these results exclude $198,000 in estimated cost savings
due to no longer being an Exchange Act reporting company.
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."
48
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 (2,096) 2,326
-------- ------- --------
5,567 (2,096) 3,471
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 ($2,096) $170,865
======== ======= ========
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 (2,096) 8,444
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 (2,096) 16,565
-------- ------- --------
Total liabilities and shareholders' equity $172,961 ($2,096) $170,865
======== ======= ========
--------------------
Retirement of repurchased shares.
49
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 (2,096) 3,211
-------- ------- --------
7,385 (2,096) 5,289
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 ($2,096) $164,275
======== ======= ========
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 (2,096) 8,069
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 (2,096) 15,328
Total liabilities and shareholders' equity $166,371 ($2,096) $164,275
======== ======= ========
--------------------
Retirement of repurchased shares.
50
PRO FORMA CONSOLIDATED INCOME STATEMENT
December 31, 2004
(Unaudited)
(Dollars in thousands, except per share data)
Six Months Ended December 31, 2004 Pro-Forma Pro-Forma
Historical Adjustments Combined
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) 429 110 539
------ ------ ------
Total general administrative and
other expenses 1,896 110 2,006
Earnings before income taxes 1,369 (135) 1,234
Federal Income Taxes
Current 337 (46) 291
Deferred 11 0 11
------ ------ ------
Total federal income taxes 348 (46) 291
------ ------ ------
0
Net Earnings $1,021 ($89) $ 932
====== ====== ======
Earnings Per Share
Basic $ 0.60 $ 0.60
Diluted $ 0.60 ($0.01) $ 0.59
--------------------
Interest forfeited from using $2,096,000 in short-term investments to
fund the transaction.
Transaction costs.
51
PRO FORMA CONSOLIDATED INCOME STATEMENT
June 30, 2004
(Dollars in thousands, except per share data)
Year Ended June 30, 2004 Pro-Forma Pro-Forma
Historical Adjustments Combined
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) 890 110 1,000
------ ----- ------
Total general administrative and
other expenses 3,743 110 3,853
Earnings before income taxes 2,754 (160) 2,594
Federal Income Taxes
Current 694 (54) 690
Deferred 50 0 50
------ ----- ------
Total federal income taxes 744 (54) 690
------ ----- ------
0
Net Earnings $2,010 ($106) $1,904
====== ===== ======
Earnings Per Share
Basic $ 1.22 $0.01 $ 1.23
Diluted $ 1.18 $0.02 $ 1.20
--------------------
Interest forfeited from using $2,096,000 in short-term investments to
fund the transaction.
Transaction costs.
52
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, copies of which are
being delivered to you with this Proxy Statement. 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.
53
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: May __, 2005 By Order of the Board of Directors,
Robert M. Smith
President
54
EXHIBIT A
---------
FAIRNESS OPINION
----------------
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 or 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.
PRELIMINARY COPY
----------------
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ASB FINANCIAL CORP.
ASB FINANCIAL CORP. SPECIAL MEETING OF SHAREHOLDERS
[June ___, 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 [June __, 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.