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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Citizens Financial Corporation (PK) | USOTC:CIWV | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 19.00 | 18.27 | 19.50 | 19.00 | 18.88 | 18.88 | 200 | 21:40:30 |
a.
T
|
The
filing of solicitation materials or an information statement subject to
Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
|
b.
£
|
The
filing of a registration statement under the Securities Act of
1933.
|
c.
£
|
A
tender offer.
|
d.
£
|
None
of the above.
|
Transaction
Valuation*
|
Amount
of Filing Fee
|
*$651,483.50
|
**$130.30
|
Amount
previously paid: $130.30
|
Filing
Party: Citizens Financial Corp.
|
|
Form
or Registration No.: 065-82993
|
Date
Filed: September 25,
2009
|
ITEM
1.
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1
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ITEM
2.
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4
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ITEM
3.
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6
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ITEM
4.
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7
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ITEM
5.
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11
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ITEM
6.
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11
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ITEM
7.
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12
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ITEM
8.
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12
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ITEM
9.
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14
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ITEM
10.
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14
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ITEM
11.
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15
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ITEM
12.
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16
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ITEM
13.
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16
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ITEM
14.
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16
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ITEM
15.
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16
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ITEM
16.
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17
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17
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17
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ITEM
1.
|
SUMMARY
TERM SHEET.
|
|
·
|
The
Fourth clause of the Company’s Certificate of Incorporation will be
amended to authorize 4,500,000 shares of Class A Common Stock, which will
enjoy rights and privileges separate and distinct from the rights and
privileges of the existing Common Stock and the Class B Common
Stock.
|
|
·
|
The
Fourth clause of the Company’s Certificate of Incorporation will be
amended to authorize 4,500,000 shares of Class B Common Stock, which will
enjoy rights and privileges separate and distinct from the existing Common
Stock and the Class A Common Stock.
|
|
·
|
The
number of authorized Common Stock shares will remain at its current number
of 4,500,000. The existing Common Stock will continue to enjoy
all the rights and privileges it currently enjoys, without
change.
|
|
·
|
Citizens
Financial’s Certificate of Incorporation will be amended to authorize
4,500,000 shares of Class A Common Stock and 4,500,000 shares of Class B
Common Stock; and
|
|
·
|
The
Company’s currently authorized 4,500,000 shares of Common Stock will be
unchanged.
|
|
·
|
VOTING
RIGHTS – The Class A Common Stock will be allowed voting rights only if
the shareholders are being asked to approve a merger, consolidation,
conversion, sale of assets other than in the regular course of business,
voluntary dissolution of the corporation, or as required by
law. The Class A Common Stock will not enjoy general voting
rights, including the right to participate in the annual election of
directors.
|
|
·
|
DIVIDENDS
– If the Company declares dividends, dividends must be paid on the Class A
Common Stock before dividends may be paid on the existing Common
Stock. However, the Company shall be under no obligation to pay
dividends, and dividends are not cumulative. If dividends are
paid, the dividends paid on the Class A Common Stock will enjoy a 5%
premium over and above what is paid on the Common
Stock.
|
|
·
|
CONVERSION
– In the event the Company is party to a merger, share exchange, sale of
assets other than in the regular course of business, voluntary dissolution
of the Company, or other change in control which will result in the
merger, sale, dissolution or effective dissolution of the Company, the
Class A Common Stock will be converted into Common Stock shares and will
be treated equally in all respects with the existing Common
Stock.
|
|
·
|
REDEMPTION
– The Class A Common Stock will have no redemption
rights.
|
|
·
|
RIGHT
OF FIRST REFUSAL – The Class A Common Stock has a right of first refusal
in favor of the Company. Generally, this right of first refusal
requires a Class A Common Stock shareholder to notify the Company in
writing of the terms of any transfer or sale of the Class A Common
Stock. Following receipt of the written notice, the Company has
five (5) business days to either request additional information regarding
the sale or to immediately exercise its right of first refusal and
purchase the shares of Class A Common Stock that are subject to the
proposed transfer or sale upon the same terms as the proposed transfer or
sale. If the transfer is to be made without consideration (i.e.
a gift), the Company shall have the right to purchase the shares for an
amount determined by the Board to be the fair value of the
shares. The Company retains the right to not exercise its right
of first refusal, which will allow the Class A Common Stock shareholder to
sell or transfer the shares in accordance with the terms of the proposed
transfer or offer. Any Class A Common Stock shares transferred
in violation of the right of first refusal is void and of no effect and
will not be recognized by the
Company.
|
|
·
|
LIQUIDATION
PREFERENCE – The Class A Common Stock will have a liquidation preference
over the existing Common Stock and the Class B Common Stock. In
the event of a liquidation, the Class A Common Stock shareholders will be
entitled to receive liquidation assets equal to those assets received by
the Common Stock shareholders or the book value of the corporation’s
Common Stock, whichever is greater.
|
|
·
|
VOTING
RIGHTS – The Class B Common Stock will be allowed voting rights only if
the shareholders are being asked to approve a merger, consolidation,
conversion, sale of assets other than in the regular course of business,
voluntary dissolution of the corporation, or as required by
law. The Class B Common Stock will not enjoy general voting
rights, including the right to participate in the annual election of
directors.
|
|
·
|
DIVIDENDS
– If the Company declares dividends, dividends must be paid on the Class B
Common Stock after dividends are paid on the Class A Common Stock, but
before dividends may be paid on the existing Common
Stock. However, there shall be no obligation to pay dividends
and dividends shall not be cumulative. If dividends are paid,
the dividends paid on the Class B Common Stock will enjoy a 10% premium
over and above what is paid on the Common
Stock.
|
|
·
|
CONVERSION
– In the event the corporation is party to a merger, share exchange, sale
of assets other than in the regular course of business, voluntary
dissolution of the corporation, or other change in control which will
result in the merger, sale, dissolution or effective dissolution of the
corporation, the Class B Common Stock will be converted into Common Stock
shares and will be treated equally in all respects with the existing
Common Stock.
|
|
·
|
REDEMPTION
– The Class B Common Stock will have no redemption
rights.
|
|
·
|
RIGHT
OF FIRST REFUSAL – The Class B Common Stock has a right of first refusal
in favor of the Company. Generally, this right of first refusal
requires a Class B Common Stock shareholder to notify the Company in
writing of the terms of any transfer or sale of the Class B Common
Stock. Following receipt of the written notice, the Company has
five (5) business days to either request additional information regarding
the sale or to immediately exercise its right of first refusal and
purchase the shares of Class B Common Stock that are subject to the
proposed transfer or sale upon the same terms as the proposed transfer or
sale. If the transfer is to be made without consideration (i.e.
a gift), the Company shall have the right to purchase the shares for an
amount determined by the Board to be the fair value of the
shares. The Company retains the right to not exercise its right
of first refusal, which will allow the Class B Common Stock shareholder to
sell or transfer the shares in accordance with the terms of the proposed
transfer or offer. Any Class B Common Stock shares transferred
in violation of the right of first refusal will be void and of no effect
and will not be recognized by the
Company.
|
|
·
|
LIQUIDATION
PREFERENCE – The Class B Common Stock will have a liquidation preference
superior to the existing Common Stock, but after the Class A Common
Stock.
|
|
·
|
All
Citizens Financial Common Stock shares held by any shareholder who holds,
in the aggregate, 825 or more Common Stock shares as of the effective date
of the merger, will remain Common Stock
shares.
|
|
·
|
All
Citizens Financial Common Stock shares held by any Citizens Financial
shareholder who holds, in the aggregate (which includes record shares and
beneficial shares attributable to the record holder), less than 825 Common
Stock shares as of the effective date of the merger will be converted into
the right to receive Class A Common Stock shares on a
one-share-for-one-share exchange
basis.
|
|
·
|
No
shares of the newly authorized Class B Common Stock will be issued as a
result of the merger.
|
|
·
|
The
officers and directors of Citizens Financial at the effective time of the
merger will be the officers and directors of Citizens Financial
immediately after the merger.
|
|
·
|
All
Citizens Financial Common Stock held by any shareholder who, in the
aggregate, holds 825 or more Common Stock shares as of the effective date
of the merger, will remain Common Stock
shares.
|
|
·
|
The
existing Common Stock will retain all of the rights and privileges
currently afforded to the Common
Stock.
|
|
·
|
All
Citizens Financial Common Stock shares held by any shareholder who, in the
aggregate, holds less than 825 Common Stock shares as of the effective
date of the merger will be converted into the right to receive Class A
Common Stock shares on a one-share-for-one-share exchange
basis.
|
|
·
|
The
holders of the Class A Common Stock will enjoy all the rights and
privileges associated with the newly created Class A Common Stock, which
differ from the rights and privileges of the existing Common
Stock
|
|
·
|
It
is expected the Company will have less than 300 shareholders owning its
existing Common Stock and less than 500 shareholders owning its newly
created Class A Common Stock, which will allow the Company to suspend its
SEC reporting obligations in accordance with Rule 12h-3 of the Securities
and Exchange Commission (“SEC”) Rules and
Regulations.
|
|
·
|
The
percentage of ownership of Common Stock of Citizens Financial beneficially
held by the current officers and directors of the Company as a group will
increase from 12.90% to approximately
13.48%.
|
|
·
|
All
shareholders will have the right to dissent from the merger and exercise
their appraisal rights pursuant to Section 262 of Delaware General
Corporation Law.
|
|
·
|
The
aggregate shareholders’ equity of Citizens Financial as of June 30, 2009,
which was approximately $21,543,499, will remain unchanged, except for any
change caused by shareholders who may choose to dissent from the
transaction.
|
ITEM
2.
|
SUBJECT
COMPANY INFORMATION.
|
(a)
|
Citizens
Financial Corp., 211 Third Street, Elkins, West Virginia 26241, telephone
number (304) 636-4095.
|
(b)
|
Citizens
Financial Corp. Common Stock (“Common Stock”) – 1,829,504 shares
outstanding as of August 31,
2009.
|
(c)
|
The
Common Stock is traded on the Over-the-Counter Bulletin
Board. The high and low sales prices for the Common Stock for
each quarter since January 1, 2007 is as
follows:
|
2007
|
LOW
TRADE
PRICE
|
HIGH
TRADE
PRICE
|
||||||
First
Quarter
|
$ | 18.92 | $ | 19.89 | ||||
Second
Quarter
|
17.19 | 19.28 | ||||||
Third
Quarter
|
13.28 | 17.68 | ||||||
Fourth
Quarter
|
11.25 | 14.85 | ||||||
2008
|
||||||||
First
Quarter
|
$ | 10.05 | $ | 10.82 | ||||
Second
Quarter
|
8.93 | 12.71 | ||||||
Third
Quarter
|
7.78 | 9.82 | ||||||
Fourth
Quarter
|
7.00 | 9.30 | ||||||
2009
|
||||||||
First
Quarter
|
$ | 4.15 | $ | 7.00 | ||||
Second
Quarter
|
4.30 | 8.40 | ||||||
Third
Quarter
|
8.00 | 8.50 | ||||||
Fourth
Quarter
|
7.80 | 8.17 |
(d)
|
As
a bank holding company, the Company’s ability to pay dividends will depend
upon the dividends it receives from Citizens Bank of West Virginia
(“Bank”), the holding company’s sole subsidiary. Also, the
ability of the Company to pay dividends depends on the extent of any
Company obligations, such as debt service and whether the company is
current with any debt service obligations and not in default with the
terms of any loan agreement. The Company’s ability to pay
dividends is also restricted by federal banking regulations and, in
particular, the Company’s obligation to act as a source of strength to its
wholly owned subsidiary bank.
|
2007
|
CASH
DIVIDENDS
DECLARED
|
|||
First
Quarter
|
$ | .12 | ||
Second
Quarter
|
.12 | |||
Third
Quarter
|
.12 | |||
Fourth
Quarter
|
.12 | |||
2008
|
||||
First
Quarter
|
$ | .12 | ||
Second
Quarter
|
.12 | |||
Third
Quarter
|
.12 | |||
Fourth
Quarter
|
.04 | |||
2009
|
||||
First
Quarter
|
0 | |||
Second
Quarter
|
$ | .12 | ||
Third
Quarter
|
.12 | |||
Fourth
Quarter
|
.12 |
(e)
|
Not
applicable.
|
(f)
|
Since
January 1, 2007, the Company has not repurchased any shares of the
Company’s outstanding Common Stock.
|
ITEM
3.
|
IDENTITY
AND BACKGROUND OF FILING PERSON
|
(a)-(c)
|
See
response to Item 2(a). The filing person is the subject
company. Citizens Financial Corp. is incorporated in the State
of Delaware. During the last five years, Citizens Financial
Corp. has not been convicted in a criminal proceeding and has not been a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in a judgment, decree or final order
enjoining 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.
|
Name
and Address
|
Current
Principal Occupation or Employment and Material Positions Held During the
Past Five Years
|
Robert
N. Alday – Director
P.O.
Box 846
Elkins,
West Virginia 26241
|
President
- Phil Williams Coal Company
|
Maxie
Lyndell Armentrout – Director
P.O.
Box 1514
Elkins,
West Virginia 26241
|
President
and Chairman of the Board - Laurel Lands Corp.
Chairman
of the Board - Citizens Financial Corp.
|
William
J. Brown – Director
102
Westridge Drive
Elkins,
West Virginia 26241
|
Managing
Partner – Brown Rental Group
Co-Owner
– Schoolhouse, LLC
Hess
Oil Company, Inc. - Retired
|
Edward
L. Campbell – Director
Edmonton
Avenue
Beverly,
West Virginia 26253
|
Retired
– Campbell’s Market
|
Thomas
K. Derbyshire – Executive Officer
|
Executive
Vice President – Citizens Bank of West Virginia
Senior
Vice President and Chief Financial Officer – Citizens National Bank of
Elkins
|
William
T. Johnson, Jr. – Director
|
President
and CEO – Citizens Bank of West Virginia
Vice
President – Citizens Financial Corp.
Executive
Vice President – Citizens National Bank of Elkins
|
Cyrus
K. Kump – Director
P.O.
Box 2973
Elkins,
West Virginia 26241
|
President
- Kump Enterprises
President
- Kerr Real Estate
Vice
Chairman of the Board - Citizens Financial Corp.
|
Robert
J. Schoonover – Director
|
President
and CEO – Citizens Financial Corp.
President
and CEO – Citizens National Bank of Elkins
|
Lowell
T. Williams – Director
106
Ellis Avenue
Elkins,
WV 26241
|
Retired
Consultant
– Elkins Builders Supply
|
John
A. Yeager – Director
P.O.
Box 1334
Elkins,
WV 26241
|
Controller
– Newlons International Sales, LLC
|
ITEM
4.
|
TERMS
OF THE TRANSACTION.
|
(a)
(i)
|
The
Company’s Board of Directors has adopted an Amendment to the Company’s
Certificate of Incorporation and an Agreement of Merger which, if approved
by the Company shareholders, will have the combined effect of amending the
Company’s Certificate of Incorporation to authorize Class A Common Stock
shares and converting a number of the corporation’s current outstanding
Common Stock into the right to receive the newly created Class A Common
Stock shares on a one-share-for-one-share exchange
basis. According to the terms of the Agreement of Merger, those
Company shareholders holding, in the aggregate (which includes shares held
of record and shares held in street name combined), less than 825 Company
Common Stock shares at the effective time of the merger will have their
Company Common Stock shares converted into the right to receive the
Company’s Class A Common Stock shares on a one-share-for-one-share
exchange basis. Those shareholders holding, in the aggregate,
825 or more Company Common Stock shares at the effective time of the
transaction will retain their existing Common Stock
shares.
|
(a)(ii)
|
For
those shareholders owning, in the aggregate, less than 825 Company Common
Stock shares, the consideration offered will be the newly created Class A
Common Stock shares. A description of the rights and privileges
of the Class A Common Stock is contained in Item 1. Those
shareholders holding, in the aggregate, 825 or more Common Stock shares at
the effective time will retain their Common Stock without change, unless
such shareholders dissent from the Agreement of
Merger.
|
(a)(iii)
|
The
Company has chosen to amend its Certificate of Incorporation and effect
the Agreement of Merger to allow the Company to suspend its SEC reporting
requirements imposed by Section 15(d) of the Exchange Act. The
Company estimates this suspension will save approximately $200,000
annually. See also the response to Item
8.
|
(a)(iv)
|
Both
the Amendment to the Certificate of Incorporation and the Agreement of
Merger must be approved by at least a majority of the shares entitled to
vote at the Special Meeting of Shareholders for the transaction to be
effective.
|
(a)(v)
|
See
response to Item 1.
|
(a)(vi)
|
Not
applicable. The accounting treatment of the transaction is not
considered to be material.
|
(a)(vii)
|
It
is not expected the transaction will be a taxable event for those
shareholders retaining their existing common stock shares or those
shareholders exchanging their common stock shares for newly created Class
A Common Stock. It is expected any shareholders who may choose
to dissent from the transaction and receive in cash the fair value for
their shares will have a taxable
event.
|
(c)
|
Those
shareholders holding, in the aggregate, less than 825 shares will be
treated differently than those shareholders holding, in the aggregate, 825
or more Company Common Stock shares at the effective time of the
transaction. According to the terms of the Agreement of Merger,
those Company shareholders holding, in the aggregate, less than 825
Company Common Stock shares at the effective time of the merger will have
their Company Common Stock shares converted into the right to receive the
Company’s Class A Common Stock shares on a one-share-for-one-share
exchange basis. Those shareholders holding, in the aggregate,
825 or more Company Common Stock shares at the effective time of the
transaction will retain their existing Common Stock shares without
change.
|
(d)
|
In
accordance with Delaware law, the Company shareholders are entitled to
dissent from the Agreement of Merger. The following is a
summary of the shareholders dissenter’s rights. The summary is
not intended to be a complete recitation of the shareholders appraisal
rights and is qualified by reference to Section 262 of Delaware General
Corporation Law. Shareholders must follow specific requirements
to perfect their dissent, and the failure to do so may result in the
shareholder’s loss of the right to
dissent.
|
(e)
|
Unaffiliated
security holders are being treated the same in all respects as affiliated
security holders in this transaction. Affiliated security
holders will have access to the Company’s corporate files only as allowed
by applicable Delaware law. Further, unaffiliated shareholders
shall not have the right to obtain counsel or appraisal services at the
Company’s expense, except as may be allowed in accordance with applicable
Delaware law.
|
(f)
|
The
Company’s Common Stock is currently quoted on the Over-the-Counter
Bulletin Board. The Company has taken reasonable steps to
ensure the Company’s Common Stock will continue to be quoted on the
Over-the-Counter Bulletin Board throughout and following this
transaction. Specifically, the Company has mailed to each
market maker quoting the security and to the Over-the-Counter Bulletin
Board requests that the security be quoted throughout and following the
transaction under the symbol CIWV, the same symbol under which the
security is currently traded.
|
ITEM
5.
|
PAST
CONTACTS, TRANSACTIONS, NEGOTIATIONS AND
AGREEMENTS.
|
(a)
|
The
information set forth under “Item 13. Relationships and Related
Transactions and Director Independence” set forth on page 61 of the
Company’s 2008 Annual Report filed on form 10-K with the Securities and
Exchange Commission on March 19, 2009 is hereby incorporated by
reference.
|
|
·
|
Robert
N. Alday - Director Alday is President of Phil Williams Coal
Company. The company currently has an approximately $270,00.00
line of credit with the bank.
|
|
·
|
Max
L. Armentrout –Director Armentrout has an individual $100,000.00 line of
credit with Bank.. Approximately $99,800.00 of the line of
credit is outstanding.
|
|
·
|
William
J. Brown –Director Brown has an outstanding note with the Company of
approximately $560,000.00. Mr. Brown is also a principal in
Schoolhouse, LLC, which has outstanding loans with the Company of
approximately $1,860,000.00
|
|
·
|
William
T. Johnson, Jr. – Director Johnson currently has a $40,000.00 line of
credit with the Company, of which $34,000.00 is drawn and a $50,000.00
line of credit of which $39,000.00 is drawn. Director Johnson
also has a loan with the Company of approximately
$93,000.00.
|
(b)
|
Effective
June 29, 2009, the Company’s sole subsidiary converted from a national
banking organization to a state-chartered Federal Reserve non-member
bank. Prior to June 29, 2009, the Company’s sole subsidiary did
business as Citizens National Bank of Elkins, which was a
nationally-chartered commercial
bank.
|
(c)
|
Not
applicable.
|
(e)
|
Not
applicable.
|
ITEM
6.
|
PURPOSES
OF THE TRANSACTION AND PLANS FOR
PROPOSALS.
|
(b)
|
The
Company Common Stock received in exchange for the Class A Common Stock
will be cancelled and will serve as authorized but unissued
shares.
|
(c)
|
The
Company plans to suspend its obligation to file reports under Section
15(d) of the Exchange Act following the transaction. The
Company does not plan to undertake other material changes to its
operations in connection with or as a result of this
transaction. However, the preceding does not restrict the
Company from engaging in material changes to its operations in the
future.
|
ITEM
7.
|
PURPOSE(S),
ALTERNATIVES, REASONS AND EFFECTS.
|
(a)
|
The
Company is undergoing the 13E-3 transaction to reduce the number of
stockholders owning the Company’s stock to below 300 and restrict the
number of stockholders owning the Company’s Class A Common Stock to below
500, which will allow the Company to suspend its SEC reporting obligations
in accordance with SEC Rule 12h-3.
|
(b)
|
The
Company considered effecting the 13E-3 transaction by manner of a tender
offer for the Company’s shares. The Company’s Board of
Directors did not pursue the 13E-3 transaction through a tender offer
because the number of shareholders who may have chosen to tender their
shares in exchange for cash could not be
ascertained. Accordingly, it was not certain the Company would
achieve its objectives of reducing the number of Common Stock shareholders
to below 300. Further, the Company’s Board of Directors felt it
was prudent to preserve the Company’s existing
capital.
|
(c)
|
The
Company’s Board of Directors determined to structure the 13E-3 transaction
as a merger type transaction which will result in certain company
shareholders exchanging their common stock shares for newly created Class
A Common Stock shares to allow each of the Company’s shareholders the
ability to retain an ongoing equity interest in the Company and to
preserve the Company’s existing capital. The Board of Directors
also chose to pursue this transaction structure based on the Board’s
belief that the transaction is fair to each of the Company’s shareholders,
including affiliated and unaffiliated
shareholders.
|
(d)
|
The
transaction will result in the Company having less than 300 shareholders
owning the Company’s existing Common Stock and less than 500 shareholders
owning the Company’s newly created Class A Common Stock, which will allow
the Company to suspend its SEC reporting obligations imposed by Section
15(d) of the Exchange Act. The effect on the Company’s
shareholders, including both affiliated and unaffiliated shareholders,
will depend on whether the shareholder owns, at the effective time of the
Agreement of Merger, in the aggregate, 825 or more Common Stock
shares. See the response to Item 1 for more
information.
|
ITEM
8.
|
FAIRNESS
OF THE TRANSACTION.
|
(a)
|
The
Company and the Company’s Board of Directors reasonably believes the
transaction is fair to all Company shareholders, including affiliated and
unaffiliated shareholders.
|
l
|
BURDEN
OF SEC REPORTING REQUIREMENTS – The Board considered the time and expense
involved in preparing and filing the documents the Company is required to
file with the SEC pursuant to Section 15(d) of the Exchange
Act. In considering this burden, the Board considered both the
actual money expended on the preparation and filing of the documents, as
well as the time Company officers and directors spent in preparing the
required documentation.
|
l
|
LACK
OF PERCEIVED BENEFIT FROM REPORTING COMPANY STATUS – The Board considered
the benefits afforded to the Company by reason of its reporting Company
status. The directors considered both the information that was
made publicly available through the SEC filings, as well as what
information would be available to shareholders following the suspension of
the SEC reporting requirements. Based on this review, the Board
felt the cost and time associated with preparing the SEC filings was not
justified, based on the Company information that would still be publicly
available following the suspension of the reporting
requirements.
|
l
|
RIGHTS
AND PRIVILEGES OF NEWLY CREATED CLASS A COMMON STOCK – The Board
considered the rights and privileges of the newly created Class A Common
Stock. The Board considered the voting rights, dividend
preferences, conversion rights, redemption rights, right of first refusal
in favor of the Company, and the liquidation preference of the newly
created Class A Common Stock and the Class B Common
Stock. After reviewing the rights and privileges of the newly
created classes, the Board felt the rights and privileges of the Class A
Common Stock and Class B Common Stock were commensurate with the rights
and privileges of the existing Common
Stock.
|
l
|
FAIRNESS
TO ALL SHAREHOLDERS – The Board considered the overall fairness of the
transaction to both those shareholders retaining their existing Common
Stock and those shareholders who will have their Common Stock converted
into the right to receive Class A Common Stock on a
one-share-for-one-share exchange basis. The Board also
considered the fairness of the transaction
procedure.
|
l
|
OPINION
OF FINANCIAL ADVISOR. The Board considered the opinion of Howe
Barnes Hoefer & Arnett rendered to the Board on September 15, 2009 to
the effect of, as of the date of such opinion and based upon and subject
to certain matters stated therein, the terms of the Agreement of Merger
providing for certain Company shareholders to retain their Common Stock
shares and certain Company Common Stock to be converted into the right to
receive newly created Class A Common Stock shares on a
one-share-for-one-share exchange basis, was fair, from a financial point
of view, to Citizens Financial’s shareholders, including affiliated and
unaffiliated shareholders.
|
(c)
|
The
transaction is not structured so that approval of at least a majority of
unaffiliated security holders is
required.
|
(d)
|
A
majority of the directors who are not employees of the company have not
retained an unaffiliated representative to act solely on behalf of
unaffiliated shareholders for purposes of negotiating the terms of the
Agreement of Merger and/or preparing a report concerning the fairness of
the transaction.
|
(e)
|
The
transaction was unanimously approved by the Company’s Board of
Directors. Accordingly, the transaction was approved by a
majority of the Directors of the Company who are not employees of the
Company.
|
(f)
|
Not
applicable.
|
ITEM
9.
|
REPORTS,
OPINIONS, APPRAISALS AND
NEGOTATIONS.
|
(a)
|
The
Company has received from Howe Barnes Hoefer & Arnett (“Howe Barnes”)
an opinion as to the fairness of the transaction, from a financial point
of view, to the Company’s shareholders, including affiliated and
unaffiliated shareholders.
|
(b)
|
The
Company engaged Howe Barnes to act as its financial advisor in connection
with the merger. Howe Barnes is a full-service brokerage firm
that specializes in preparing and issuing fairness reports. The
company engaged Howe Barnes following a review of multiple appraisals for
the engagement based on their reputation and prior experience in
evaluating similar transactions. Howe Barnes fee for preparing
and issuing the opinion was approximately $14,000. See Item
16(c) for a copy of the Fairness
Opinion.
|
(c)
|
The
report will be available to the Company’s shareholders and any shareholder
representative who has been so designated in writing for inspection and
copying at the Company’s principal executive offices during its regular
business hours up to the time of the Company’s special meeting of
shareholders.
|
ITEM
10.
|
SOURCE
AND AMOUNT OF FUNDS OR OTHER
CONSIDERATION.
|
(a)
|
No
cash funds will be used in connection with this transaction, except as may
be required to pay shareholders who may dissent from the
transaction. Instead, the consideration to be used will be the
Company’s Class A Common Stock.
|
(b)
|
Not
applicable. The Company has no set financing or alternative
financing arrangements at this
time.
|
(c)
|
The
transaction expenses are estimated as
follows:
|
Description
|
Amount
|
|||
Advisory
fees and expenses
|
$ | 14,000.00 | ||
Legal
fees and expenses
|
$ | 85,000.00 | ||
SEC
filing fee
|
$ | 130.00 | ||
Printing,
solicitation and mailing costs
|
$ | 5,000.00 | ||
Miscellaneous
expenses
|
$ | 6,000.00 | ||
Total
|
$ | 110,130.00 |
(d)
|
Not
applicable.
|
ITEM
11.
|
INTEREST
IN SECURITIES OF THE SUBJECT
COMPANY.
|
(a)
|
Based
upon information received by Citizens Financial upon request from the
persons concerned, each person known by Citizens Financial to be the
beneficial owner of more than five percent of Citizens Financial’s Common
Stock, each director, named executive officer and all directors and
executive officers of Citizens Financial as a group, owned beneficially as
of September 8, 2009, the number and percentage of outstanding shares
indicated in the following table:
|
Name
and Position
|
No.
of Shares (1)
|
Percentage
of Class (2)
|
Percentage
of Class (Pro Forma) (2)
|
|||||||||
Robert
Alday – Company Director
|
62,100 | 3.39 | % | 3.55 | % | |||||||
Max
L. Armentrout – Company Director
|
101,175 | 5.53 | % | 5.78 | % | |||||||
William
J. Brown – Company Director
|
5,500 | .30 | % | .31 | % | |||||||
Edward
L. Campbell – Company Director
|
1,950 | .11 | % | .11 | % | |||||||
Cyrus
K. Kump – Company Director
|
14,000 | .77 | % | .80 | % | |||||||
William
T. Johnson, Jr. – Company Director
|
11,905 | .65 | % | .68 | % | |||||||
Robert
J. Schoonover – Company Director
|
1,800 | .10 | % | .10 | % | |||||||
L.T.
Williams – Company Director
|
6,275 | .34 | % | .36 | % | |||||||
John
A. Yeager – Company Director
|
7,500 | .41 | % | .43 | % | |||||||
Dickson
W. Kidwell – Bank Director
|
1,500 | .08 | % | .09 | % | |||||||
Franklin
M. Santmyer – Bank Director
|
3,625 | .20 | % | .21 | % | |||||||
Thomas
A Wamsley – Bank Director
|
1,650 | .09 | % | .09 | % | |||||||
C.
Curtis Woodford – Bank Director
|
15,900 | .87 | % | .91 | % | |||||||
Thomas
K. Derbyshire – Company Executive Officer
|
1,000 | .05 | % | .06 | % | |||||||
Nathanial
S. Bonnell – Bank Executive Officer
|
200 | .01 | % | 0 | % | |||||||
Rudy
F. Torjak, Jr. – Bank Executive Officer
|
0 | 0 | % | 0 | % | |||||||
Directors
and Executive Officers of the Company as a Group (16
persons)
|
236,080 | 12.90 | % | 13.48 | % |
|
(1)
|
Includes
both Company Common Stock shares directly owned and indirectly controlled
by the named affiliated
stockholder.
|
|
(2)
|
As
of September 8, 2009, the Company had 1,829,504 shares
outstanding. It is assumed the transaction will reduce the
number of shares outstanding by 79,386 to 1,750,118 Common Stock
Shares.
|
(b)
|
In
August 2009 Director, William T. Johnson, Jr. purchased 200 Company shares
at $8.50 per share. The shares were purchased through
E*Trade.com in an open market
transaction.
|
ITEM
12.
|
THE
SOLICITATION OR RECOMMENDATION.
|
(d)
|
The
executive officers, directors and affiliates of the issuer intend to vote
in favor of the transaction based on their believe that the transaction is
fair to and in the best interest of the Company and the Company’s
stockholders, including affiliated and unaffiliated
stockholders.
|
(e)
|
Not
applicable.
|
ITEM
13.
|
FINANCIAL
STATEMENTS.
|
(a)(1)
|
The
information set forth on pages 26 through 55 of the Company’s 2008 Annual
Report filed on Form 10K with the Securities and Exchange Commission on
March 19, 2009 is hereby incorporated by
reference.
|
(2)
|
The
information contained under “Item 1. Financial Statements” in
the Company’s Third Quarter, 2009 10-Q filed with the Securities and
Exchange Commission is hereby incorporated by
reference.
|
(3)
|
Not
applicable.
|
(4)
|
As
of September 30, 2009, the Company book value per share based on the
number of shares outstanding was $12.22 per
share.
|
(b)
|
Not
applicable.
|
ITEM
14.
|
PERSONS/ASSETS,
RETAINED, EMPLOYED, COMPENSATED OR
USED.
|
(a)
|
Not
applicable.
|
(b)
|
Not
applicable.
|
ITEM
15.
|
ADDITIONAL
INFORMATION.
|
(b)
|
The
information in the Proxy Statement, including all appendices attached
thereto, is hereby incorporated by
reference.
|
ITEM
16.
|
MATERIAL
TO BE FILED AS EXHIBITS.
|
(a)
|
Proxy
materials.
|
(b)
|
Not
applicable.
|
(c)
|
Howe
Barnes Hoefer & Arnett Fairness Opinion and Fairness
Report.
|
(d)
|
Not
applicable.
|
(f)
|
Proxy
Materials.
|
(g)
|
Proxy
Materials.
|
C
ITI
ZENS FINANCIAL CORP.
|
||
By:
|
/s/
Robert J.
Schoonover
|
|
Name:
|
Robert
J. Schoonover
|
|
Title:
|
President
and Chief Executive Officer
|
Proxy
materials
|
Howe
Barnes Hoefer & Arnett Fairness Opinion and Fairness
Report
|
Certification
of Counsel
|
1 Year Citizens Financial (PK) Chart |
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