S-4/A 1 d330984ds4a.htm S-4/A S-4/A
Table of Contents

As filed with the Securities and Exchange Commission on December 19, 2022

Registration No. 333-267944

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Amendment No. 2

to the

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

FIRST COMMONWEALTH FINANCIAL CORPORATION

(Exact name of Registrant as specified in its charter)

 

 

 

Pennsylvania   6021   25-1428528

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification No.)

601 Philadelphia Street

Indiana, PA 15701

724-349-7220

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

James R. Reske

Executive Vice President and Chief Financial Officer

First Commonwealth Financial Corporation

601 Philadelphia Street

Indiana, Pennsylvania 15701

(724) 349-7220

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

James J. Barresi

Michael E. Fisher

Squire Patton Boggs (US) LLP

201 E. Fourth Street, Suite 1900

Cincinnati, OH 45202

(513) 361-1200

 

Matthew C. Tomb, Esq.

Executive Vice President

Chief Risk Officer and General Counsel

First Commonwealth Financial Corporation

601 Philadelphia Street

Indiana, Pennsylvania 15701

Telephone: (724) 349-7220

 

Charles J. Ferry

Sunjeet S. Gill

Stevens & Lee, P.C.

17 North Second Street, 16th Floor

Harrisburg, PA 17101

(717) 234-1090

 

 

(Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement is declared effective and upon completion of the merger described herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a) MAY DETERMINE.

 

 

 


Table of Contents

The information in this proxy statement/prospectus is not complete and may be changed. A registration statement relating to the securities described in this proxy statement/prospectus has been filed with the U.S. Securities and Exchange Commission. These securities may not be issued until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This proxy statement/prospectus does not constitute an offer to sell or the solicitation of offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED DECEMBER 19, 2022

 

 

LOGO   LOGO

PROXY STATEMENT FOR THE SPECIAL MEETING OF

CENTRIC FINANCIAL CORPORATION SHAREHOLDERS

and

PROSPECTUS OF

FIRST COMMONWEALTH FINANCIAL CORPORATION

MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT

 

 

On August 30, 2022, First Commonwealth Financial Corporation (“FCF”) and Centric Financial Corporation (“CFC”) entered into an Agreement and Plan of Merger (as may be amended, modified or supplemented from time to time in accordance with its terms, the “merger agreement”), pursuant to which CFC will merge into FCF, with FCF as the surviving corporation, in a transaction we refer to as the “merger.” Following the completion of the merger, at a time to be determined by the FCF board of directors, Centric Bank, a wholly owned subsidiary of CFC, will merge with and into First Commonwealth Bank, a wholly owned subsidiary of FCF, with First Commonwealth Bank as the surviving bank, in a transaction we refer to as the “bank merger.”

Under the terms of the merger agreement, CFC shareholders will receive 1.09 shares, which we refer to as the “exchange ratio,” of FCF common stock for each share of CFC Class A voting common stock (“CFC common stock”). Each outstanding option and warrant to acquire shares of CFC common stock will be cancelled in exchange for shares of FCF common stock equal to the value of the option or warrant, if any. FCF shareholders will continue to own their existing shares of FCF common stock. Although the number of shares of FCF common stock that each CFC shareholder will receive is fixed, the market value of the merger consideration will fluctuate with the market price of FCF common stock and will not be known at the time CFC shareholders vote on the merger agreement. Based on the 10-day volume weighted average closing price of FCF common stock of $14.86 on August 29, 2022, the last trading day before the public announcement of the merger, the implied per share purchase price is $16.20, with an aggregate transaction value of approximately $144.0 million. As of December 15, 2022, the closing price of FCF common stock was $13.57 per share, and the implied per share purchase price is $14.79. We urge you to obtain current market quotations of FCF common stock (NYSE trading symbol “FCF”) and CFC common stock (OTC Pink trading symbol “CFCX”).

We expect the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Accordingly, CFC shareholders generally will not recognize any gain or loss for federal income tax purposes on the exchange of shares of CFC common stock for FCF common stock in the merger, except with respect to any cash received by holders of CFC common stock in lieu of fractional shares of FCF common stock.

Based on the number of shares of CFC common stock outstanding or reserved for issuance as of December 15, 2022, FCF expects to issue approximately 9.7 million shares of FCF common stock to CFC shareholders in the aggregate in the merger. We estimate that former CFC shareholders will own approximately 9.4% of the common stock of FCF following the completion of the merger and existing FCF shareholders will own approximately 90.6% of the common stock of FCF following the completion of the merger.

CFC will hold a special meeting of its shareholders in connection with the merger. The special meeting of CFC is currently expected to be held completely virtual and conducted via live audio webcast on January 25, 2023 at 10:00 a.m., Eastern Time. At the special meeting, in addition to other business, CFC will ask its shareholders to approve and adopt the merger agreement. Information about the meeting and the merger is contained in this proxy statement/prospectus. We urge you to read this proxy statement/prospectus carefully and in its entirety.

Holders of CFC non-voting common stock and holders of CFC preferred stock are not entitled to and are not requested to vote at the CFC special meeting.

The board of directors of CFC unanimously recommends that holders of CFC common stock vote “FOR” each of the proposals to be considered at the special meeting.

This document, which serves as a proxy statement for the special meeting of CFC shareholders and as a prospectus for the shares of FCF common stock to be issued in the merger to CFC shareholders, describes the special meeting of CFC shareholders, the merger, the documents related to the merger, and other related matters. You are encouraged to read this proxy statement/prospectus carefully. In particular, you should read the “Risk Factors” section beginning on page 21 for a discussion of the risks you should consider in evaluating the proposed merger. You can also obtain information about FCF from documents that have been filed with the Securities and Exchange Commission that are incorporated into this proxy statement/prospectus by reference.

On behalf of the FCF and CFC, thank you for your prompt attention to this important matter.

Sincerely,

 

LOGO   LOGO

 

T. Michael Price

President and Chief Executive Officer

First Commonwealth Financial Corporation

 

 

Patricia A. Husic

President and Chief Executive Officer

Centric Financial Corporation

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The securities to be issued in the merger are not savings or deposit accounts or other obligations of any bank or non-bank subsidiary of either FCF or CFC, and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.

The accompanying proxy statement/prospectus is dated [                ], 2022, and is first being mailed to holders of CFC common stock on or about [                ], 2022.


Table of Contents

ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about FCF from documents filed with the Securities and Exchange Commission, or SEC, that are not included in or delivered with this proxy statement/prospectus. You can obtain any of the documents filed with or furnished to the SEC by FCF at no cost from the SEC’s website at http://www.sec.report. You may also request copies of these documents, including documents incorporated by reference in this proxy statement/prospectus, at no cost by contacting FCF at the contact information set forth below:

First Commonwealth Financial Corporation

601 Philadelphia Street

Indiana, Pennsylvania 15701

Attention: Chief Risk Officer and General Counsel

Telephone: (800) 711-2265

You will not be charged for any of these documents that you request. To obtain timely delivery of these documents, CFC shareholders must request them no later than five business days before the date of the CFC shareholder meeting, or January 18, 2023.

If you are a CFC shareholder and have any questions about the merger agreement, the merger, the CFC special meeting or the proxy statement/prospectus, would like additional copies of the proxy statement/prospectus, need a proxy card or need help voting your shares of CFC common stock, please contact Sandra L. Schultz, Chief Financial Officer of CFC, 1826 Good Hope Road, Enola, Pennsylvania 17025, telephone: (717) 657-7727 or by e-mail to investors@centricbank.com, or CFC’s proxy solicitor, Alliance Advisors LLC, by calling toll-free at (877) 728-5018 or by e-mail at CFCX@allianceadvisors.com.

You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated [                ], 2022, and you should assume that the information in this proxy statement/prospectus is accurate only as of such date. You should assume that the information incorporated by reference into this proxy statement/prospectus from another document is accurate as of the date of such other document or the date referenced in such other document with respect to particular information contained therein. Neither the mailing of this proxy statement/prospectus to the shareholders of CFC nor the issuance by FCF of shares of FCF common stock in connection with the merger will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Except where the context otherwise indicates, information contained in this proxy statement/prospectus regarding CFC has been provided by CFC and information contained in this proxy statement/prospectus regarding FCF has been provided by FCF.

Please see “Where You Can Find More Information” for more details.


Table of Contents

LOGO

Centric Financial Corporation

1826 Good Hope Road

Enola, Pennsylvania 17025

NOTICE OF SPECIAL MEETING OF CFC SHAREHOLDERS

To CFC Shareholders:

On August 30, 2022, First Commonwealth Financial Corporation (“FCF”) and Centric Financial Corporation (“CFC”) entered into an Agreement and Plan of Merger (as may be amended, modified or supplemented from time to time in accordance with its terms, the “merger agreement”). A copy of the merger agreement is attached as Annex A to the accompanying proxy statement/prospectus.

NOTICE IS HEREBY GIVEN that a special meeting (the “CFC special meeting”) of holders of CFC Class A voting common stock (“CFC common stock”) will be held on January 25, 2023 at 10:00 a.m., Eastern Time. We are pleased to notify you of and invite you to the CFC special meeting, which will be held completely virtual and conducted via live audio webcast.

At the CFC special meeting, holders of CFC common stock will be asked to vote on the following matters:

 

   

A proposal to approve and adopt the merger agreement (the “CFC merger proposal”); and

 

   

A proposal to adjourn the CFC special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the CFC merger proposal or to ensure that any supplement or amendment to the accompanying proxy statement/prospectus is timely provided to holders of CFC common stock (the “CFC adjournment proposal”).

The CFC special meeting will be completely virtual and conducted via live audio webcast because of the public health impact of the COVID-19 pandemic to enable our shareholders to participate from any location around the world that is convenient to them. You will be able to attend the CFC special meeting by first registering at http://viewproxy.com/Centric/2023SM/htype.asp. You will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date. Holders of CFC common stock will be able to listen, vote and submit questions during the virtual meeting.

The board of directors of CFC has fixed the close of business on October 27, 2022 as the record date for the CFC special meeting. Only holders of record of CFC common stock as of the close of business on the record date for the CFC special meeting are entitled to notice of the CFC special meeting or any adjournment or postponement thereof. Only holders of record of CFC common stock will be entitled to vote at the CFC special meeting or any adjournment or postponement thereof.

Holders of record of CFC common stock have the right to dissent from the merger agreement and the merger and obtain payment in cash of the appraised fair value of their shares of CFC common stock under applicable provisions of the Pennsylvania Business Corporation Law, or the PBCL. In order for a holder of CFC common stock to perfect his, her or its right to dissent, such holder must carefully follow the procedure set forth in the PBCL. A copy of the applicable statutory provisions of the PBCL is included as Annex B to the accompanying proxy statement/prospectus and a summary of these provisions can be found under the caption “The Merger  Dissenters’ Rights,” beginning on page 64 of the proxy statement/prospectus. The merger may not be completed if the holders of more than 5% of the outstanding shares of CFC common stock exercise dissenters’ rights.

The CFC board of directors unanimously recommends that holders of CFC common stock vote “FOR” the CFC merger proposal and “FOR” the CFC adjournment proposal.

Your vote is important. We cannot complete the transactions contemplated by the merger agreement unless holders of CFC common stock approve the CFC merger proposal. The affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of CFC common stock is required to approve the CFC merger proposal. Whether or not you plan to attend the CFC special meeting, we urge you to please promptly complete, sign, date and return the accompanying proxy card in the enclosed postage-paid envelope or authorize the individuals named on the accompanying proxy card to vote your shares by calling the toll-free telephone number or by using the Internet as described in the instructions included with the accompanying proxy card. If your shares are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by such bank, broker or other nominee.

By Order of the Board of Directors

 

 

LOGO

Patricia A. Husic

President and Chief Executive Officer

Centric Financial Corporation

[                ], 2022


Table of Contents

TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS

     1  

SUMMARY

     10  

Information about the Companies

     10  

The Merger and the Merger Agreement

     10  

Merger Consideration

     11  

Treatment of CFC Equity Awards

     11  

Material U.S. Federal Income Tax Consequences of the Merger

     12  

CFC’s Reasons for the Merger; Recommendation of CFC’s Board of Directors

     12  

Opinion of CFC’s Financial Advisor

     13  

Interests of Certain CFC Directors and Executive Officers in the Merger

     13  

Governance of FCF after the Merger

     14  

Name and Headquarters

     14  

Regulatory Approvals

     14  

Expected Timing of the Merger

     15  

Conditions to Complete the Merger

     15  

Termination of the Merger Agreement

     16  

Termination Fee

     17  

Accounting Treatment

     17  

The Rights of CFC Shareholders Will Change as a Result of the Merger

     17  

Listing of FCF Common Stock

     17  

The CFC Special Meeting

     17  

Voting Agreements

     18  

Appraisal or Dissenters’ Rights in the Merger

     18  

Trading Markets and Dividends

     18  

Risk Factors

     18  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     19  

RISK FACTORS

     21  

Risks Relating to the Consummation of the Merger

     21  

Risks Relating to the Combined Company’s Business Following the Merger

     25  

THE CFC SPECIAL MEETING

     29  

Date, Time and Place of the Meeting

     29  

Recommendation of CFC’s Board of Directors

     29  

Record Date and Quorum

     29  

Broker Non-Votes

     30  

Vote Required; Treatment of Abstentions and Failure to Vote

     30  

Attending the Special Meeting

     30  

Proxies

     31  

Shares Held in Street Name

     32  

Revocability of Proxies

     32  

Shares Subject to Voting Agreement; Shares Held by Directors and Executive Officers

     33  

Delivery of Proxy Materials

     33  

Dissenter’s Rights

     33  

Solicitation of Proxies

     33  

Other Matters to Come Before the CFC Special Meeting

     34  

Assistance

     34  

CFC PROPOSALS

     35  

PROPOSAL 1: CFC MERGER PROPOSAL

     35  

PROPOSAL 2: CFC ADJOURNMENT PROPOSAL

     35  

 

i


Table of Contents

INFORMATION ABOUT THE COMPANIES

     36  

FCF

     36  

CFC

     36  

SECURITY OWNERSHIP OF CERTAIN CFC BENEFICAL OWNERS AND MANAGEMENT

     37  

THE MERGER

     39  

Terms of the Merger

     39  

Background of the Merger

     39  

FCF’s Reasons for the Merger

     42  

CFC’s Reasons for the Merger; Recommendation of CFC’s Board of Directors

     43  

Opinion of CFC’s Financial Advisor

     46  

Certain Unaudited Prospective Financial Information

     56  

Interests of Certain CFC Directors and Executive Officers in the Merger

     58  

Governance of FCF after the Merger

     61  

Name and Headquarters

     61  

Accounting Treatment

     61  

Regulatory Approvals

     61  

Stock Exchange Listings

     63  

Appraisal or Dissenters’ Rights in the Merger

     64  

THE MERGER AGREEMENT

     67  

Explanatory Note Regarding the Merger Agreement

     67  

Structure of the Merger

     67  

Merger Consideration

     68  

Fractional Shares

     68  

Governing Documents

     68  

Treatment of CFC Equity Awards

     68  

Closing and Effective Time of the Merger

     69  

Exchange of Shares

     69  

Representations and Warranties

     70  

Covenants and Agreements

     72  

Combined Company Governance

     78  

Meeting; Recommendation of CFC’s Board of Directors

     79  

Agreement Not to Solicit Other Offers

     79  

Conditions to Complete the Merger

     80  

Termination of the Merger Agreement

     81  

Effect of Termination

     82  

Termination Fee

     83  

Expenses and Fees

     83  

Amendment, Waiver and Extension of the Merger Agreement

     83  

Governing Law

     84  

Specific Performance

     84  

VOTING AGREEMENTS

     85  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     86  

Tax Consequences of the Merger Generally

     87  

Cash Instead of a Fractional Share

     87  

Backup Withholding

     88  

COMPARISON OF THE RIGHTS OF HOLDERS OF FCF COMMON STOCK AND HOLDERS OF CFC COMMON STOCK

     89  

LEGAL MATTERS

     94  

EXPERTS

     94  

DEADLINES FOR SUBMITTING SHAREHOLDER OR STOCKHOLDER PROPOSALS

     95  

FCF

     95  

WHERE YOU CAN FIND MORE INFORMATION

     96  

 

ii


Table of Contents


Table of Contents

QUESTIONS AND ANSWERS

The following are some questions that you may have about the merger and the CFC special meeting, and brief answers to those questions. We urge you to carefully read the remainder of this proxy statement/prospectus because the information in this section does not provide all of the information that might be important to you with respect to the merger or the CFC special meeting. Additional important information is also contained in the documents incorporated by reference into this proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 96.

In this proxy statement/prospectus, unless the context otherwise requires:

 

   

“CFC” refers to Centric Financial Corporation, a Pennsylvania corporation;

 

   

“Centric Bank” refers to Centric Bank, a Pennsylvania state-chartered bank and a wholly owned subsidiary of CFC;

 

   

“CFC articles of incorporation” refers to the amended and restated articles of incorporation of Centric Financial Corporation, as amended;

 

   

“CFC bylaws” refers to the amended and restated bylaws of Centric Financial Corporation;

 

   

“CFC common stock” refers to the Class A voting common stock of CFC, par value $1.00 per share;

 

   

“CFC non-voting common stock” refers to the Class B non-voting common stock of CFC, par value $1.00 per share;

 

   

“CFC preferred stock” refers to the preferred stock of CFC, par value $1.00 share;

 

   

“FCF” refers to First Commonwealth Financial Corporation, a Pennsylvania corporation;

 

   

“FCF Bank” refers to First Commonwealth Bank, a Pennsylvania state chartered bank and a wholly owned subsidiary of FCF;

 

   

“FCF articles of incorporation” refers to the amended and restated articles of incorporation of FCF, as amended;

 

   

“FCF by-laws” refers to the amended and restated by-laws of FCF, as amended;

 

   

“FCF common stock” refers to the common shares of FCF, $1.00 par value per share;

 

Q:

What is the merger?

 

A:

FCF and CFC entered into an Agreement and Plan of Merger (as may be amended, modified or supplemented from time to time in accordance with its terms, the “merger agreement”), pursuant to which CFC will merge with and into FCF (the “merger”) with FCF as the surviving entity. It is anticipated that following the merger, CFC Bank will merge into FCF Bank (the “bank merger,” and together with the merger, the “mergers”), with FCF Bank as the surviving bank. A copy of the merger agreement is attached as Annex A to this proxy statement/prospectus and is incorporated by reference herein. In this proxy statement/prospectus, we refer to the closing of the transactions contemplated by the merger agreement as the “closing” and the date on which the closing occurs as the “closing date.”

Each share of CFC common stock issued and outstanding immediately prior to the effective time, except for shares of CFC common stock owned by CFC as treasury stock or owned by CFC or FCF (in each case other than in a fiduciary or agency capacity or as a result of debts previously contracted) and except for shares for which appraisal rights have been exercised, will be converted into the right to receive 1.09 shares (the “exchange ratio”) of FCF common stock (the “merger consideration”).

After completion of the merger, CFC will cease to exist. Holders of FCF common stock will continue to own their existing shares of FCF common stock. See the information provided in the section entitled “The Merger Agreement—Structure of the Merger” beginning on page 67 and the merger agreement for more information about the merger.

 

1


Table of Contents

In order to complete the merger, among other things, CFC shareholders must approve and adopt the merger agreement (the “CFC merger proposal”).

 

Q:

Why am I receiving this proxy statement/prospectus?

 

A:

You are receiving this document because it is a proxy statement being used by the CFC board of directors to solicit proxies of CFC shareholders in connection with approval of the merger and related matters.

In order to approve the merger agreement and related matters, CFC has called a special meeting of its shareholders (the “CFC special meeting”). This document serves as the proxy statement for the CFC special meeting and describes the proposals to be presented at the CFC special meeting.

This document is also a prospectus that is being delivered to holders of CFC common stock because, pursuant to the merger agreement, FCF is offering shares of FCF common stock to holders of CFC common stock.

This proxy statement/prospectus contains important information about the merger and the other proposals being voted on at the CFC special meeting. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares of common stock voted by proxy without attending your meeting. Your vote is important and we encourage you to submit your proxy as soon as possible.

 

Q:

When and where will the special meeting take place?

 

A:

The CFC special meeting will be completely virtual and conducted via live audio webcast on January 25, 2023 at 10:00 a.m., Eastern Time. You will be able to attend the CFC special meeting by first registering at http://viewproxy.com/Centric/2023SM/htype.asp by 11:59 p.m., Eastern Time, on January 22, 2023. You will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date. Holders of CFC common stock will be able to listen, vote and submit questions during the virtual meeting.

Even if you plan to attend the special meeting virtually, CFC recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the applicable special meeting.

 

Q:

What matters will be considered at the CFC special meeting?

 

A:

At the CFC special meeting, CFC shareholders will be asked to consider and vote on the following proposals:

 

   

CFC Proposal 1: the CFC merger proposal; and

 

   

CFC Proposal 2: a proposal to adjourn the CFC special meeting to solicit additional proxies (i) if there are insufficient votes at the time of the CFC special meeting to approve the CFC merger proposal or (ii) if adjournment is necessary or appropriate to ensure that any supplement or amendment to this proxy statement/prospectus is timely provided to holders of CFC common stock (the “CFC adjournment proposal”).

In order to complete the merger, among other things, CFC shareholders must approve the CFC merger proposal. The CFC adjournment proposal is not a condition to the obligations of FCF or CFC to complete the merger.

 

Q:

What will holders of CFC common stock receive in the merger?

 

A:

In the merger, holders of CFC common stock will receive 1.09 shares of FCF common stock for each share of CFC common stock held immediately prior to the completion of the merger. FCF will not issue any fractional shares of FCF common stock in the merger. Holders of CFC common stock who would otherwise

 

2


Table of Contents
  be entitled to a fractional share of FCF common stock in the merger will instead receive an amount in cash (rounded to the nearest cent) determined by multiplying the volume weighted average closing price (“VWAP”) of FCF common stock reported on NYSE for the consecutive period of ten (10) full trading days ending on the day that is three trading days preceding the closing date (the “FCF Closing Price”) by the fraction of a share (rounded to the nearest thousandth when expressed in decimal form) of FCF common stock that such shareholder would otherwise be entitled to receive.

 

Q:

What will holders of FCF common stock receive in the merger?

 

A:

In the merger, holders of FCF common stock will not receive any consideration, and their shares of FCF common stock will remain outstanding and will constitute shares of FCF following the merger. Following the merger, shares of FCF common stock will continue to be traded on NYSE.

 

Q:

Will the value of the merger consideration change between the date of this proxy statement/prospectus and the time the merger is completed?

 

A:

Yes. Although the number of shares of FCF common stock that CFC shareholders will receive is fixed, the value of the merger consideration will fluctuate between the date of this proxy statement/prospectus and the completion of the merger based upon the market value for FCF common stock. Any fluctuation in the market price of FCF common stock will change the value of the shares of FCF common stock that CFC shareholders will receive.

CFC is permitted to terminate the merger agreement, in certain circumstances, if the market price of FCF common stock falls below certain thresholds. See “The Merger Agreement—Termination of the Merger Agreement” beginning on page 81 for a more detailed discussion of the circumstances under which CFC can terminate the merger agreement.

 

Q:

How will the merger affect CFC equity awards?

 

A:

The merger agreement provides that, at the effective time, each option granted by CFC to purchase shares of CFC common stock under a CFC stock plan, whether vested or unvested, that is outstanding and unexercised immediately prior to the effective time (a “CFC Stock Option”) and each warrant to purchase shares of CFC common stock (a “CFC Warrant”) will without any further action on the part of any holder thereof, be cancelled and converted into the right to receive the “net number” of shares of CFC common stock upon exercise of such options or warrants determined according to a formula set forth in the merger agreement. As of the effective time, all CFC Stock Options and CFC Warrants will cease to exist and each holder of such CFC Options or CFC Warrants will cease to have any rights with respect thereto other than the right to receive the consideration provided for in the merger agreement.

Immediately prior to the effective time (but contingent upon the closing), each award in respect of a share of CFC common stock subject to vesting, repurchase or other lapse restriction granted under a CFC stock plan that is unvested or contingent and outstanding immediately prior to the effective time (a “CFC Restricted Stock Award”) will fully vest (with any performance-based vesting condition applicable to such CFC Restricted Stock Award deemed satisfied to the extent provided in the applicable award agreement) and will be cancelled and converted automatically into the right to receive merger consideration in respect of each such share of CFC common stock under such CFC Restricted Stock Award, less applicable withholding taxes.

 

Q:

How will the merger affect CFC non-voting common stock and CFC preferred stock?

 

A:

The merger agreement provides that, at the effective time, each share of CFC non-voting common stock and each share of CFC preferred stock will automatically be cancelled and will cease to exist, and no consideration will be delivered in exchange therefor. As of the date hereof, there are no shares of CFC non-voting common stock or CFC preferred stock issued and outstanding.

 

3


Table of Contents
Q:

How does the CFC board of directors recommend that I vote at the CFC special meeting?

 

A:

The CFC board of directors unanimously recommends that you vote “FOR” the CFC merger proposal and “FOR” the CFC adjournment proposal. In considering the recommendations of the CFC board of directors, CFC shareholders should be aware that CFC directors and executive officers may have interests in the merger that are different from, or in addition to, the interests of CFC shareholders generally. For a more complete description of these interests, see the information provided in the section entitled “The Merger—Interests of Certain CFC Directors and Executive Officers in the Merger” beginning on page 58.

 

Q:

Who is entitled to vote at the CFC special meeting?

 

A:

The record date for the CFC special meeting is October 27, 2022. All CFC shareholders who held shares at the close of business on the record date for the CFC special meeting are entitled to receive notice of, and to vote at, the CFC special meeting. Each holder of CFC common stock is entitled to cast one (1) vote on each matter properly brought before the CFC special meeting for each share of CFC common stock that such holder owned of record as of the record date. As of October 27, 2022, there were 8,691,486 outstanding shares of CFC common stock.

Attendance at the special meeting is not required to vote. See below and the section entitled “The CFC Special Meeting—Proxies” beginning on page 31 for instructions on how to vote your shares of CFC common stock without attending the CFC special meeting.

 

Q:

What constitutes a quorum for the CFC special meeting?

 

A:

The presence at the CFC special meeting, virtually or by proxy, of holders of a majority of the outstanding shares of CFC common stock entitled to vote at the CFC special meeting will constitute a quorum for the transaction of business at the CFC special meeting. Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

 

Q:

How can I attend, vote and ask questions at the CFC special meeting?

 

A:

Record Holders. If you hold shares directly in your name as the holder of record of CFC common stock, you are a “record holder” and your shares may be voted at the CFC special meeting by you. If you choose to vote your shares virtually at the special meeting via the special meeting website, you will need the control number, as described below.

Beneficial Owners. If you hold shares in a brokerage or other account in “street name,” you are a “beneficial owner” and your shares may be voted at the CFC special meeting by you as described below. If you choose to vote your shares virtually at the special meeting via the special meeting website, you will need the control number, as described below.

CFC special meeting. The CFC special meeting will be completely virtual and conducted via live audio webcast because of the public health impact of the COVID-19 pandemic to enable our shareholders to participate from any location around the world that is convenient to them. You will be able to attend the CFC special meeting by first registering at http://viewproxy.com/Centric/2023SM/htype.asp. You will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date. Holders of CFC common stock will be able to listen, vote and submit questions during the virtual meeting.

We have created and implemented the virtual format in order to facilitate shareholder attendance and participation by enabling shareholders to participate fully, and equally, from any location around the world, at no cost. However, you will bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies. A virtual meeting makes it possible for more shareholders (regardless of size, resources or physical location) to have direct access to information more

 

4


Table of Contents

quickly. We also believe that the online tools we have selected will increase shareholder communication. For example, the virtual format allows shareholders to communicate with us in advance of, and during, the CFC special meeting so they can ask questions of CFC’s board of directors or management. During the live Q&A session of the CFC special meeting, we may answer questions as they come in and address those asked in advance, to the extent relevant to the business of the CFC special meeting, as time permits.

Both shareholders of record and street name shareholders will be able to attend the CFC special meeting via live audio webcast, submit their questions during the meeting and vote their shares electronically at the CFC special meeting.

If you are a registered holder, your virtual control number will be on your or proxy card.

If you hold your shares beneficially through a bank or broker, you must provide a legal proxy from your bank or broker during registration and you will be assigned a virtual control number in order to vote your shares during the CFC special meeting. If you are unable to obtain a legal proxy to vote your shares, you will still be able to attend the CFC special meeting (but will not be able to vote your shares) so long as you demonstrate proof of stock ownership. Instructions on how to connect and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at http://viewproxy.com/Centric/2023SM/htype.asp. On the day of the CFC special meeting, you may only vote during the meeting by e-mailing a copy of your legal proxy to virtualmeeting@viewproxy.com in advance of the meeting.

CFC encourages its shareholders to visit the meeting website above in advance of the CFC special meeting to familiarize themselves with the online access process. Shareholders should verify their internet connection prior to the CFC special meeting. There will be technicians ready to assist you with any technical difficulties you may have accessing the CFC special meeting live audio webcast. Please be sure to check in by 9:45 a.m., Eastern Time on January 25, 2023, the day of the meeting, so that any technical difficulties may be addressed before the Special Meeting live audio webcast begins. If you encounter any difficulties accessing the webcast during the check-in or meeting time, please email VirtualMeeting@viewproxy.com or call 866-612-8937. Shareholders will have substantially the same opportunities to participate in the virtual CFC special meeting as they would have at a physical, in-person meeting.

Please review this information prior to the CFC special meeting to ensure you have access.

Even if you plan to attend the CFC special meeting virtually, CFC recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the special meeting.

Additional information on attending the CFC special meeting can be found under the section entitled “The CFC Special Meeting—Attending the Special Meeting” on page 30.

 

Q:

How can I vote my shares without attending the special meeting?

 

A:

Whether you hold your shares directly as the holder of record of CFC common stock or beneficially in “street name,” you may direct your vote by proxy without attending the CFC special meeting.

If you are a record holder of CFC common stock, you can vote your shares by proxy over the internet, by telephone or by mail by following the instructions provided in the enclosed proxy card. If you hold shares beneficially in “street name” as a beneficial owner of CFC common stock, you should follow the voting instructions provided by your bank, broker, trustee or other nominee.

Additional information on voting procedures can be found under the section entitled “The CFC Special Meeting—Attending the Special Meeting” on page 30.

 

Q:

What do I need to do now?

 

A:

After carefully reading and considering the information contained in this proxy statement/prospectus, please vote as soon as possible. If you hold shares of CFC common stock, please respond by completing, signing

 

5


Table of Contents
  and dating the accompanying proxy card and returning it in the enclosed postage-paid envelope, or by submitting your proxy by telephone or through the internet, as soon as possible so that your shares may be represented at your meeting. Please note that if you are a beneficial owner with shares held in “street name,” you should follow the voting instructions provided by your bank, broker, trustee or other nominee.

 

Q:

If I am a beneficial owner with my shares held in “street name” by a bank, broker, trustee or other nominee, will my bank, broker, trustee or other nominee vote my shares for me?

 

A:

No. Your bank, broker, trustee or other nominee cannot vote your shares without instructions from you. You should instruct your bank, broker, trustee or other nominee how to vote your shares in accordance with the instructions provided to you. Please check the voting instruction form used by your bank, broker, trustee or other nominee.

 

Q:

What is a “broker non-vote”?

 

A:

Banks, brokers and other nominees who hold shares in street name for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers and other nominees are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine” without specific instructions from the beneficial owner.

A broker non-vote occurs when a bank, broker, trustee or other nominee is not permitted to vote on a “non-routine” matter without instructions from the beneficial owner of the shares and the beneficial owner fails to provide the bank, broker, trustee or other nominee with such instructions. Broker non-votes only count toward a quorum if at least one (1) proposal is presented with respect to which the bank, broker, trustee or other nominee has discretionary authority. It is expected that all proposals to be voted on at the CFC special meeting will be “non-routine” matters, and, as such, broker non-votes, if any, will not be counted as present and entitled to vote for purposes of determining a quorum at the CFC special meeting. If your bank, broker, trustee or other nominee holds your shares of CFC common stock in “street name,” such entity will vote your shares of CFC common stock only if you provide instructions on how to vote by complying with the instructions provided to you by your bank, broker, trustee or other nominee with this proxy statement/prospectus.

If you are a beneficial owner of CFC common stock and you do not instruct your bank, broker, trustee or other nominee on how to vote your shares of CFC common stock:

 

   

CFC merger proposal: your bank, broker, trustee or other nominee may not vote your shares on the CFC merger proposal, which broker non-votes, if any, will have the same effect as a vote “AGAINST” such proposal; and

 

   

CFC adjournment proposal: your bank, broker, trustee or other nominee may not vote your shares on the CFC adjournment proposal, which broker non-votes, if any, will have no effect on the outcome of such proposal.

 

Q:

What if I fail to vote or abstain?

For purposes of the CFC special meeting, an abstention occurs when a CFC shareholder attends the CFC special meeting and does not vote or returns a proxy with an “abstain” instruction.

 

   

CFC merger proposal: An abstention will have the same effect as a vote “AGAINST” the CFC merger proposal. If a CFC shareholder is not present at the CFC special meeting and does not respond by proxy, it will also have the same effect as a vote “AGAINST” the CFC merger proposal.

 

   

CFC adjournment proposal: An abstention will have the same effect as a vote “AGAINST” the CFC adjournment proposal. If a CFC shareholder is not present at the CFC special meeting and does not respond by proxy, it will have no effect on the outcome of such proposal.

 

6


Table of Contents
Q:

Why is my vote important?

 

A:

If you do not vote, it will be more difficult for CFC to obtain the necessary quorum to hold its special meeting and to obtain the shareholder approval that its board of directors is recommending and seeking. Assuming that a quorum is present, the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of CFC common stock is required to approve the CFC merger proposal. Failure to submit a proxy or vote virtually at the CFC special meeting, or failure to instruct your bank or broker how to vote, or abstention will have the same effect as a vote “AGAINST” the CFC merger proposal.

The CFC board of directors unanimously recommends that you vote “FOR” the CFC merger proposal and “FOR” the other proposals to be considered at the CFC special meeting.

 

Q:

What will happen if I return my proxy card without indicating how to vote?

 

A:

If you sign and return your proxy card without indicating how to vote on any particular proposal, the shares of CFC common stock represented by your proxy will be voted as recommended by the CFC board of directors with respect to such proposals.

 

Q:

Can I change my vote after I have delivered my proxy or voting instruction card?

 

A:

If you directly hold shares of CFC common stock in your name as a record holder, you can change your vote at any time before your proxy is voted at your meeting. You can do this by:

 

   

submitting a written statement that you would like to revoke your proxy to the corporate secretary of CFC;

 

   

signing and returning a proxy card with a later date;

 

   

attending the special meeting virtually and voting at the special meeting via the special meeting website; or

 

   

voting by telephone or the internet at a later time.

If you are a beneficial owner and your shares are held by a bank, broker, trustee or other nominee, you may change your vote by:

 

   

contacting your bank, broker, trustee or other nominee; or

 

   

attending the special meeting virtually and voting your shares via the special meeting website if you have your control number, which can be found on the voting instructions provided by your bank, broker, trustee or other nominee. Please contact your bank, broker, trustee or other nominee for further instructions.

 

Q:

Will CFC be required to submit the CFC merger proposal to its shareholders even if the CFC board of directors has withdrawn, modified or qualified its recommendation?

 

A:

Yes. Unless the merger agreement is terminated before the CFC special meeting, CFC is required to submit the CFC merger proposal to its shareholders even if the CFC board of directors has withdrawn, modified or qualified its recommendation in favor of the merger.

 

Q:

Are holders of CFC common stock entitled to dissenters’ rights?

 

A:

Yes. Holders of CFC common stock are entitled to dissenters’ rights under the Pennsylvania Business Corporation Law (the “PBCL”). For more information, see the section entitled “The Merger  Dissenters’ Rights” beginning on page 64, and the full text of Sections 1571 through 1580 of the PBCL, which is reproduced in full in Annex B.

 

7


Table of Contents
Q:

Are there any risks that I should consider in deciding whether to vote for the approval of the CFC merger proposal, or the other proposals to be considered at the CFC special meeting?

 

A:

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 21. You also should read and carefully consider the risk factors of FCF in the documents that are incorporated by reference into this proxy statement/prospectus.

 

Q:

What are the material U.S. federal income tax consequences of the merger to holders of CFC common stock?

 

A:

The merger has been structured to qualify as a “reorganization” for federal income tax purposes, and it is a condition to our respective obligations to complete the merger that each of FCF and CFC receives a legal opinion to the effect that the merger will so qualify. Accordingly, holders of CFC common stock generally will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of their CFC common stock for FCF common stock in the merger, except for any gain or loss that may result from the receipt of cash instead of a fractional share of FCF common stock. You should be aware that the tax consequences to you of the merger may depend upon your own situation. In addition, you may be subject to state, local or foreign tax laws that are not discussed in this proxy statement/prospectus. You should therefore consult with your own tax advisor for a full understanding of the tax consequences to you of the merger. For a more complete discussion of the material U.S. federal income tax consequences of the merger, see the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 82.

 

Q:

When is the merger expected to be completed?

 

A:

Neither FCF nor CFC can predict the actual date on which the merger will be completed, or if the merger will be completed at all, because completion is subject to conditions and factors outside the control of both companies. CFC must obtain the approval of CFC shareholders for the CFC merger proposal and FCF and CFC must also satisfy certain other closing conditions. FCF and CFC expect the merger to be completed promptly once CFC shareholders approve the CFC merger proposal, and once FCF and CFC have satisfied certain other closing conditions.

 

Q:

What are the conditions to complete the merger?

 

A:

The obligations of FCF and CFC to complete the merger are subject to the satisfaction or waiver of certain closing conditions contained in the merger agreement, including, but not limited to, the receipt of required regulatory approvals and the expiration of all statutory waiting periods without the imposition of any materially burdensome regulatory condition, the receipt of certain tax opinions and approval by CFC shareholders of the CFC merger proposal. As of the date hereof, FCF and CFC have received all regulatory approvals required to complete the merger. For more information, see “The Merger Agreement—Conditions to Complete the Merger” beginning on page 80.

 

Q:

What happens if the merger is not completed?

 

A:

If the merger is not completed, holders of CFC common stock will not receive any consideration for their shares of CFC common stock in connection with the merger. Instead CFC will remain an independent private company, CFC common stock will continue to be quoted on the OTC Pink market operated by the OTC Markets Group. In addition, if the merger agreement is terminated in certain circumstances, a termination fee of $6.0 million will be payable by CFC. See “The Merger Agreement—Termination Fee” beginning on page 83 for a more detailed discussion of the circumstances under which a termination fee will be required to be paid.

 

8


Table of Contents
Q:

What happens if I sell my shares after the applicable record date but before the CFC special meeting?

 

A:

The CFC record date is earlier than the date of the CFC special meeting and earlier than the date that the merger is expected to be completed. If you sell or otherwise transfer your shares of CFC common stock after the record date but before the date of the special meeting, you will retain your right to vote at the special meeting (provided that such shares remain outstanding on the date of the special meeting), but, with respect to the CFC common stock, you will not have the right to receive the merger consideration to be received by CFC shareholders in connection with the merger. In order to receive the merger consideration, you must hold your shares of CFC common stock through the completion of the merger.

 

Q:

Should I send in my stock certificates now?

 

A:

No. Please do not send in your stock certificates with your proxy. After the merger is completed, an exchange agent designated by FCF and mutually acceptable to CFC (the “exchange agent”) will send you instructions for exchanging CFC stock certificates for the consideration to be received in the merger. See “The Merger Agreement—Exchange of Shares” beginning on page 69.

 

Q:

What should I do if I receive more than one set of voting materials for the same special meeting?

 

A:

If you are a beneficial owner and hold shares of CFC common stock in “street name” and also are a record holder and hold shares directly in your name or otherwise or if you hold shares of CFC common stock in more than one (1) brokerage account, you may receive more than one (1) set of voting materials relating to the same special meeting.

Record Holders: For shares held directly, please complete, sign, date and return each proxy card (or cast your vote by telephone or internet as provided on each proxy card) or otherwise follow the voting instructions provided in this proxy statement/prospectus in order to ensure that all of your shares of CFC common stock are voted.

Beneficial Owners: For shares held in “street name” through a bank, broker, trustee or other nominee, you should follow the procedures provided by your bank, broker, trustee or other nominee in order to vote your shares.

 

Q:

Who can help answer my questions?

If you have any questions about the merger or how to submit your proxy or voting instruction card, or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card or voting instruction card, you should contact CFC’s proxy solicitor, Alliance Advisors LLC.

 

Q:

Where can I find more information about FCF?

 

A:

You can find more information about FCF from the various sources described under “Where You Can Find More Information” beginning on page 96.

 

9


Table of Contents

SUMMARY

This summary highlights selected information in this proxy statement/prospectus and may not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus and the other documents we refer you to for a more complete understanding of the matters being considered at the special meeting. In addition, we incorporate by reference important business and financial information about FCF into this proxy statement/prospectus. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 96 of this proxy statement/prospectus.

Information about the Companies (page 36)

FCF

First Commonwealth Financial Corporation

601 Philadelphia Street

Indiana, Pennsylvania 15701

(724) 349-7220

FCF, headquartered in Indiana, Pennsylvania, is a financial services Company with 118 community banking offices in 26 counties throughout western and central Pennsylvania and throughout Ohio, as well as business banking operations in Pittsburgh, Pennsylvania, and Canton, Cleveland, Columbus and Cincinnati, Ohio. FCF also operates mortgage offices in Wexford, Pennsylvania, as well as Hudson, and Lewis Center, Ohio. FCF provides a full range of commercial banking, consumer banking, mortgage, equipment finance, wealth management and insurance products and services through its subsidiaries FCF Bank and First Commonwealth Insurance Agency. At September 30, 2022, FCF had total assets of $9.6 billion, total loans of $7.3 billion, total deposits of $8.1 billion and shareholders’ equity of $1.0 billion. FCF’s common stock is listed on NYSE under the symbol “FCF.”

CFC

Centric Financial Corporation

1826 Good Hope Road

Enola, Pennsylvania 17025

(717) 657-7727

Founded in 2007, CFC, and its subsidiary, Centric Bank, is headquartered in Enola, Pennsylvania and has financial centers located in Harrisburg, Hershey, Mechanicsburg, Camp Hill, Doylestown, Devon, and Lancaster, Pennsylvania, and loan production offices in Lancaster and Devon, Pennsylvania. Centric Bank provides a full range of commercial banking, consumer banking, and mortgage services. At September 30, 2022, CFC had total assets of $1.04 billion, total net loans of $919.3 million, total deposits of $883.6 million and total equity of $104.3 million. CFC common stock is currently quoted on the OTC Pink market operated by the OTC Markets Group under the trading symbol “CFCX.”

The Merger and the Merger Agreement (pages 39 and 67)

The terms and conditions of the merger are contained in the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. You are encouraged to read the merger agreement carefully and in its entirety, as it is the primary legal document that governs the merger.

 

10


Table of Contents

Pursuant to the terms and subject to the conditions set forth in the merger agreement, at the effective time of the merger, FCF and CFC will merge, with FCF as the surviving entity. It is anticipated that following the merger, CFC Bank will merge into FCF Bank with FCF Bank as the surviving bank.

Merger Consideration (page 68)

Each share of CFC common stock issued and outstanding immediately prior to the effective time, except for certain shares owned by FCF or CFC and shares for which appraisal rights have been exercised, will be converted into the right to receive 1.09 shares of FCF common stock. CFC shareholders who would otherwise be entitled to a fraction of a share of FCF common stock in the merger will instead receive, for the fraction of a share, an amount in cash (rounded to the nearest cent) determined by multiplying the FCF Closing Price by the fraction of a share (rounded to the nearest thousandth when expressed in decimal form) of FCF common stock that such shareholder would otherwise be entitled to receive.

FCF common stock is listed on NYSE under the symbol “FCF,” and CFC common stock is currently quoted on the OTC Pink market operated by the OTC Markets Group under the trading symbol “CFCX.” CFC common stock has traded only sporadically and in limited volume. The following table shows the 10-day VWAP of FCF common stock and CFC common stock as reported on NYSE and OTC Pink, respectively, on August 29, 2022, the last trading day before the public announcement of the merger agreement, and on December 15, 2022, the last practicable trading day before the date of this proxy statement/prospectus. This table also shows the implied value of the merger consideration to be issued in exchange for each share of CFC common stock, which was calculated by multiplying the 10-day VWAP of FCF common stock by the exchange ratio of 1.09.

 

     FCF
Common
Stock
     CFC
Common
Stock
     Implied Value
of One Share
of CFC
Common Stock
 

August 29, 2022

   $ 14.86      $ 10.96      $ 16.20  

December 15, 2022

   $ 14.17      $ 15.45      $ 15.45  

For more information on the exchange ratio, see the section entitled “The Merger—Terms of the Merger” beginning on page 39 and “The Merger Agreement—Merger Consideration” beginning on page  68.

Treatment of CFC Equity Awards (page 68)

The merger agreement provides that, at the effective time, each option granted by CFC to purchase shares of CFC common stock under a CFC stock plan, whether vested or unvested, that is outstanding and unexercised immediately prior to the effective time (a “CFC Stock Option”) and each warrant to purchase shares of CFC Common Stock (a “CFC Warrant”) will without any further action on the part of any holder thereof, be cancelled and converted into the right to receive the “net number” of shares of CFC common stock upon exercise of such CFC Stock Option or CFC Warrant determined according to a formula set forth in the merger agreement. The “net number” of shares of FCF common stock that each such holder will have the right to receive upon exercise will be determined pursuant to the following formula:

Net Number = (A x D) - ((A x C) / B)

For purposes of the foregoing formula:

A = the total number of shares of CFC Common Stock underlying each such CFC Stock Option or CFC Warrant, as applicable;

B = FCF Closing Price;

 

11


Table of Contents

C = the exercise price then in effect for the applicable CFC Stock Option or CFC Warrant immediately prior to the effective time; and

D = 1.09.

Immediately prior to the effective time (but contingent upon the closing), each award in respect of a share of CFC common stock subject to vesting, repurchase or other lapse restriction granted under a CFC stock plan that is unvested or contingent and outstanding immediately prior to the effective time (a “CFC Restricted Stock Award”) will fully vest (with any performance-based vesting condition applicable to such CFC Restricted Stock Award deemed satisfied to the extent provided in the applicable award agreement) and will be cancelled and converted automatically into the right to receive merger consideration in respect of each such share of CFC common stock under such CFC Restricted Stock Award, less applicable withholding taxes.

For more information see “The Merger Agreement—Treatment of CFC Equity Awards” beginning on page 68.

Treatment of CFC Non-Voting Common Stock and CFC Preferred Stock (page 69)

The merger agreement provides that, at the effective time, each share of CFC non-voting common stock and each share of CFC preferred stock will automatically be cancelled and will cease to exist, and no consideration will be delivered in exchange therefor. As of the date hereof, there are no shares of CFC non-voting common stock or CFC preferred stock issued and outstanding.

For more information see “The Merger Agreement—Treatment of CFC Non-Voting Common Stock and CFC Preferred Stock” beginning on page 69.

Material U.S. Federal Income Tax Consequences of the Merger (page 86)

The merger has been structured to qualify as a “reorganization” for federal income tax purposes, and it is a condition to our respective obligations to complete the merger that each of FCF and CFC receives a legal opinion to the effect that the merger will so qualify. Accordingly, holders of CFC common stock generally will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of their CFC common stock for FCF common stock in the merger, except for any gain or loss that may result from the receipt of cash instead of a fractional share of FCF common stock. You should be aware that the tax consequences to you of the merger may depend upon your own situation. In addition, you may be subject to state, local or foreign tax laws that are not discussed in this proxy statement/prospectus.

For more detailed information, please refer to “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 86.

The United States federal income tax consequences described above may not apply to all holders of CFC common stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.

CFC’s Reasons for the Merger; Recommendation of CFC’s Board of Directors (page 43)

After careful consideration, the CFC board of directors, at a special meeting held on August 30, 2022, unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, are in the best interests of CFC and its shareholders, (ii) declared the merger agreement advisable and (iii) approved the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby, including the merger. Accordingly, the CFC board of directors unanimously

 

12


Table of Contents

recommends that the holders of CFC common stock vote “FOR” the CFC merger proposal and “FOR” the other proposals presented at the CFC special meeting. For a more detailed discussion of the CFC board of directors’ recommendation, see “The Merger—CFC’s Reasons for the Merger; Recommendation of CFC’s Board of Directors” beginning on page 43.

Opinion of CFC’s Financial Advisor (page 46)

Pursuant to an engagement letter, CFC retained Stephens, Inc. (“Stephens”) as its financial advisor in connection with the proposed merger.

At the meeting of the CFC board of directors on August 30, 2022, Stephens rendered its oral opinion, subsequently confirmed in Stephens’ written opinion dated as of August 30, 2022, to the CFC board of directors that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the exchange ratio in the merger was fair, from a financial point of view, to the holders of CFC common stock.

The full text of the written opinion of Stephens, dated as of August 30, 2022, which sets forth, among other things, the assumptions made, matters considered and limits on the review undertaken, is attached as Annex C to this proxy statement/prospectus and is incorporated herein by reference. The summary of the opinion of Stephens set forth in this proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Holders of CFC common stock are urged to read the opinion in its entirety. Stephens’ written opinion was addressed to the CFC board of directors (in its capacity as such) in connection with and for the purposes of its evaluation of the proposed merger, was directed only to the exchange ratio in the merger and did not address any other aspect of the merger. Stephens expressed no opinion as to the fairness of any consideration to be paid in connection with the merger to any other holders of any class of securities, creditors or other constituencies of CFC or as to the underlying decision by CFC to engage in the proposed merger. The opinion does not constitute a recommendation to any shareholder of CFC as to how such shareholder should vote with respect to the proposed merger or any other matter.

For more information, see “The Merger—Opinion of CFC’s Financial Advisor” beginning on page 46 and Annex C to this proxy statement/prospectus.

Interests of Certain CFC Directors and Executive Officers in the Merger (page 58)

In considering the recommendation of CFC’s board of directors with respect to the merger, CFC’s shareholders should be aware that the directors and executive officers of CFC have certain interests in the merger that may be different from, or in addition to, the interests of CFC’s shareholders generally. These interests include, among others, the following:

 

   

outstanding unvested restricted stock awards held by CFC’s employees (including executive officers) and directors will vest in full upon consummation of the merger and will be exchanged for the merger consideration;

 

   

outstanding options and warrants to purchase shares of CFC common stock held by CFC’s employees (including executive officers) and directors will, to the extent not otherwise vested, vest in full upon consummation of the merger and will be exchanged for a “net number” of shares of FCF common stock;

 

   

Patricia A. Husic, the President and Chief Executive Officer of CFC, Sandra J. Schultz, Senior Executive Vice President, Chief Operating Officer and Chief Financial Officer of CFC, and Jeffrey W. Myers, Senior Executive Vice President and Chief Lending Officer of CFC, have employment agreements with CFC and Centric Bank that provide for the payment of certain benefits if the executive’s employment is terminated in connection with a change in control such as the merger;

 

13


Table of Contents
   

Ms. Husic will be appointed to the boards of directors of each of FCF and FCF Bank and entered into a six-month consulting agreement with FCF related to integration matters;

 

   

FCF will provide retention bonuses to select employees of CFC and Centric Bank, including certain executive officers who do not have an employment or severance agreements, are eligible to participate in the retention bonus pool; and

 

   

CFC directors and officers are entitled to continued indemnification and insurance coverage under the merger agreement.

CFC’s board of directors was aware of these interests and considered them, among other matters, in making its recommendation that CFC’s shareholders vote to approve the merger proposal. For more information, see “The Merger—Background of the Merger” beginning on page 39 and “The Merger—CFC’s Reasons for the Merger; Recommendation of CFC’s Board of Directors” beginning on page 43. These interests are described in more detail below, and certain of them are quantified in the narrative and in the section entitled “The Merger—Interests of Certain CFC Directors and Executive Officers in the Merger” beginning on page 58.

Governance of FCF after the Merger (page 61)

As of the effective time, FCF will designate Patricia A. Husic, the president and chief executive officer of CFC, to the FCF board of directors. Except for that designation, the FCF board of directors and the committees thereof, will remain unchanged and will consist of the directors of FCF immediately prior to the effective time, each of whom will serve as the directors of FCF until the next annual meeting of shareholders and until such time as their respective successors have been duly elected and qualified, or until their earlier death, resignation or removal from office.

The executive officers of FCF will continue as executive officers of FCF immediately after the effective time, each of whom will serve until their respective successors are duly appointed and qualified or their earlier death, resignation or removal.

Name and Headquarters (page 61)

The merger agreement provides that the name of the surviving corporation and surviving bank will be First Commonwealth Financial Corporation and First Commonwealth Bank, respectively, and that the headquarters of FCF and the main office of FCF Bank will be located in Indiana, Pennsylvania.

Regulatory Approvals (page 61)

Subject to the terms of the merger agreement, FCF and CFC have agreed to cooperate with each other and use reasonable best efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and filings (and in the case of the applications, notices, petitions and filings in respect of the requisite regulatory approvals, to make such filings within forty-five (45) days of the date of the merger agreement), to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties and governmental entities which are necessary or advisable to consummate the transactions contemplated by the merger agreement (including the merger and the bank merger), and to comply with the terms and conditions of all such permits, consents, approvals and authorizations (collectively, “approvals”) of all such governmental entities. These approvals include, among others, the approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”) for the merger and the approval of the Federal Deposit Insurance Corporation (the “FDIC”) and the Pennsylvania Department of Banking and Securities (“PDBS”) for the bank merger. The initial submission of these regulatory applications occurred on or about September 20, 2022, and as of the date hereof, FCF and CFC have received all regulatory approvals required to complete the merger and the bank merger.

 

14


Table of Contents

Expected Timing of the Merger

Neither FCF nor CFC can predict the actual date on which the merger will be completed, or if the merger will be completed at all, because completion is subject to conditions and factors outside the control of both companies. CFC must first obtain the approval of CFC shareholders for the CFC merger proposal. FCF and CFC must also satisfy certain other closing conditions. FCF and CFC expect the merger to be completed promptly once CFC shareholders have approved the CFC merger proposal, and both FCF and CFC have satisfied the other closing conditions.

Conditions to Complete the Merger (page 80)

As more fully described in this proxy statement/prospectus and in the merger agreement, the completion of the merger depends on a number of conditions being satisfied or, where legally permissible, waived. These conditions include:

 

   

the requisite CFC vote having been obtained (see “The Merger Agreement—Meeting; Recommendation of CFC’s Board of Directors” beginning on page 79 for additional information regarding the “requisite CFC vote”);

 

   

the authorization for listing on NYSE, subject to official notice of issuance, of the FCF common stock to be issued in the merger;

 

   

all requisite regulatory approvals having been obtained and remaining in full force and effect, and all statutory waiting periods in respect thereof having expired or been terminated, without the imposition of any materially burdensome regulatory condition (see “The Merger—Regulatory Approvals” beginning on page 61 for additional information regarding the “requisite regulatory approvals” and the “materially burdensome regulatory condition”);

 

   

the effectiveness of the registration statement of which this proxy statement/prospectus is a part, and the absence of any stop order (or proceedings for such purpose initiated or threatened and not withdrawn);

 

   

no order, injunction or decree by any court or governmental entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the merger, the bank merger or any of the other transactions contemplated by the merger agreement being in effect, and no statute, rule, regulation, order, injunction or decree having been enacted, entered, promulgated or enforced by any governmental entity which prohibits or makes illegal the consummation of the merger;

 

   

the accuracy of the representations and warranties of the other party contained in the merger agreement as of the date on which the merger agreement was entered into and as of the date on which the merger is completed, subject to the materiality standards provided in the merger agreement (and the receipt by each party of an officers’ certificate from the other party to such effect);

 

   

the performance by the other party in all material respects of all obligations, covenants and agreements required to be performed by it under the merger agreement at or prior to the date on which the merger is completed (and the receipt by each party of an officers’ certificate from the other party to such effect);

 

   

receipt by each party of an opinion of legal counsel to the effect that on the basis of facts, representations and assumptions set forth or referred to in such opinion, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code; and

 

   

as of the closing date, the holders of not more than five percent (5.0%) of CFC common stock that is issued and outstanding will have taken the actions required by the PBCL to qualify their CFC common stock as dissenting shares.

 

15


Table of Contents

Termination of the Merger Agreement (page 81)

The merger agreement can be terminated at any time prior to completion of the merger, whether before or after the receipt of the requisite CFC vote in the following circumstances:

 

   

by mutual written consent of FCF and CFC;

 

   

by either FCF or CFC if any governmental entity that must grant a requisite regulatory approval has denied approval of the merger or the transactions contemplated by the merger agreement and such denial has become final and nonappealable or any governmental entity of competent jurisdiction has issued a final and nonappealable order permanently enjoining or otherwise prohibiting or making illegal the transactions contemplated by the merger agreement, unless the failure to obtain a requisite regulatory approval is due to the failure of the party seeking to terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement;

 

   

by either FCF or CFC if the merger has not been completed on or before August 30, 2023 (the “termination date”), unless the failure of the merger to be completed by such date is due to the failure of the party seeking to terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement;

 

   

by either FCF or CFC (provided that the terminating party is not then in material breach of any representation, warranty, obligation, covenant or other agreement contained in the merger agreement) if there is a breach of any of the covenants or agreements or any of the representations or warranties (or any such representation or warranty ceases to be true) set forth in the merger agreement on the part of CFC, in the case of a termination by FCF, or on the part of FCF, in the case of a termination by CFC, which either individually or in the aggregate would constitute, if occurring or continuing on the date the merger is completed, the failure of a closing condition of the terminating party and which is not cured within forty-five (45) days following written notice to the party committing such breach, or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the termination date); or

 

   

by FCF, if, prior to the time the requisite CFC vote is obtained, (i) CFC or the CFC board of directors (A) submits the merger agreement to its shareholders without a recommendation for approval, or otherwise withdraws or materially and adversely modifies (or publicly discloses its intention to withdraw or materially and adversely modify) its recommendation to approve the merger agreement, or recommends to its shareholders an acquisition proposal other than the merger, or (B) will have breached its obligations relating to non-solicitation of acquisition proposals or its obligations related to shareholder approval and the CFC board of directors recommendation; or (ii) a tender offer or exchange offer for 25% or more of the outstanding shares of CFC common stock is commenced (other than by FCF), and the CFC board of directors recommends that the shareholders of CFC tender their shares in such tender or exchange offer or otherwise fails to recommend that such shareholders reject such tender offer or exchange offer within ten (10) business days (or such fewer number of days as remains prior to the CFC special meeting) after the commencement of such tender or exchange offer.

CFC also may terminate the merger agreement at any time during the five (5) day period commencing on date on which the last regulatory approval required to permit the consummation of the transactions contemplated by the merger agreement is received (which we refer to as the “determination date”), if both following conditions are met:

 

   

the number obtained by dividing the VWAP of a share of FCF common stock during the ten (10) consecutive full trading days ending on the trading day prior to the determination date (which we refer to as the “average closing price”) by $14.86 is less than 0.8 (which we refer to as the “purchaser ratio”); and

 

16


Table of Contents
   

the purchaser ratio is less than the “index ratio” which is the number obtained by dividing the average of the closing prices of the Nasdaq Bank Index (the “Nasdaq Index Price”), or if the Nasdaq Bank Index is not available, the KBW National Bank Index (the “KBW Index Price” and, together with the Nasdaq Index Price, the “Index Group Price”) for the ten (10) consecutive full trading days ending on the last trading day immediately preceding the determination date by Index Group Price for the ten (10) consecutive full trading days ending on the date of the first public announcement of the entry into the merger agreement and subtracting 0.2 from such quotient.

If CFC elects to exercise this termination right, prompt written notice must be provided to FCF. FCF then has the option, within five business days following its receipt of such written notice, to increase the merger consideration to be received by holders of CFC common stock by, at FCF’s option, (i) increasing the exchange ratio (which we refer to as the “adjusted exchange ratio”) (calculated to the nearest one one-thousandth) to equal the lesser of (x) a number (rounded to the nearest one one-thousandth) obtained by dividing (1) the product of $14.86 multiplied by 0.8 and further multiplied by the merger consideration (as then in effect) by (2) the average closing price; and (y) a number (rounded to the nearest one one-thousandth) obtained by dividing (1) the product of the index ratio and the merger consideration (as then in effect) by (2) the purchaser ratio.

If FCF elects to make this adjustment, FCF must provide prompt written notice to CFC, which must contain the revised exchange ratio. Once this notice is received by CFC, the merger agreement will continue in full force and effect.

Termination Fee (page 83)

If the merger agreement is terminated under certain circumstances, including circumstances involving an alternative acquisition proposal and changes in the recommendation of CFC’s board of directors, CFC may be required to pay a termination fee to FCF equal to $6.0  million.

Accounting Treatment (page 61)

The merger will be accounted for as an acquisition of CFC by FCF under the acquisition method of accounting in accordance with accounting principles generally accepted in the United States (“GAAP”).

The Rights of CFC Shareholders Will Change as a Result of the Merger (page 89)

The rights of CFC shareholders are governed by Pennsylvania law and the CFC articles of incorporation and the CFC bylaws. In the merger, CFC shareholders will become FCF shareholders, and their rights will be governed by Pennsylvania law and the FCF articles of incorporation and the FCF by-laws. CFC shareholders will have different rights once they become FCF shareholders due to differences between the CFC governing documents, on the one hand, and the FCF governing documents, on the other hand. These differences are described in more detail under the section entitled “Comparison of the Rights of FCF Shareholders and CFC Shareholders” beginning on page 89.

Listing of FCF Common Stock (page 63)

The shares of FCF common stock to be issued in the merger will be listed for trading on NYSE. Following the merger, shares of FCF common stock will continue to be traded on NYSE.

The CFC Special Meeting (page 29)

The CFC special meeting will be completely virtual and conducted via live audio webcast on January 25, 2023 at 10:00 a.m., Eastern Time. At the CFC special meeting, CFC shareholders will be asked to vote on the following matters:

 

   

the CFC merger proposal; and

 

   

the CFC adjournment proposal.

 

17


Table of Contents

You may vote at the CFC special meeting if you owned shares of CFC common stock at the close of business on October 27, 2022. As of October 27, 2022, there were 8,691,486 shares of CFC common stock outstanding, of which approximately thirteen and fifty-eight hundredths percent (13.58%) were owned and entitled to be voted by CFC directors and executive officers and their affiliates. Each director and certain executive officers of CFC has entered into a voting agreement with FCF agreeing to, among other things, vote their shares of CFC common stock in favor of the merger agreement and the transactions contemplated thereby.

The CFC merger proposal will be approved if the holders of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of CFC common stock are voted in favor of such proposal. If a CFC shareholder present at the CFC special meeting abstains from voting, or responds by proxy with an “ABSTAIN”, it will have the same effect as a vote cast “AGAINST” such proposal. If a CFC shareholder is not present at the CFC special meeting and does not respond by proxy or does not provide his, her or its bank, broker, trustee or other nominee with instructions, as applicable and as may be required, it will have the same effect as a vote cast “AGAINST” such proposal.

Voting Agreements (page 85)

As an inducement for FCF to enter into the merger agreement, the directors and certain executive officers of CFC entered into a voting agreement (which we refer to as the “voting agreement”) in the form attached as Exhibit A to the merger agreement, which is attached as Annex A to this proxy statement/prospectus. Under the voting agreement, each such person agreed, among other things, to vote the shares of CFC common stock (1) in favor of the merger agreement and in favor of each of the other actions contemplated by the merger agreement, (2) against approval of any proposal made in opposition to, or in competition with, the merger or any other transactions contemplated by the merger agreement and (3) against any action that is intended, or could reasonably be expected to, impede, interfere with, delay, postpone, discourage or adversely affect the merger or any other transactions between FCF and CFC as contemplated by the merger agreement.

Appraisal or Dissenters’ Rights in the Merger (page 64)

FCF shareholders are not entitled to dissenters’ rights under the PCBL. CFC shareholders are entitled to appraisal rights under the PCBL. For more information, see “The Merger—Appraisal or Dissenters’ Rights in the Merger” beginning on page 64.

Trading Markets and Dividends

FCF common stock is listed on NYSE under the symbol “FCF.” CFC common stock is currently quoted on the OTC Pink market operated by the OTC Markets Group under the trading symbol “CFCX.” CFC common stock has traded only sporadically and in limited volume.

Under the merger agreement, FCF and CFC will coordinate with each other regarding declaration of any dividends in respect of FCF common stock and CFC common stock and the record dates and payment dates relating thereto so that holders of CFC common stock will not receive two dividends, or fail to receive one dividend, in any quarter with respect to their shares of CFC common stock and any shares of FCF common stock any such holder receives in exchange therefor in the merger.

Risk Factors (page 21)

In evaluating the merger agreement, the merger or the issuance of shares of FCF common stock, you should carefully read this proxy statement/prospectus and give special consideration to the factors discussed in the section entitled “Risk Factors” beginning on page 21.

 

18


Table of Contents

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained or incorporated by reference into this proxy statement/prospectus are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. Any statement that does not describe historical or current facts is a forward-looking statement, including statements with respect to CFC’s and FCF’s beliefs, goals, intentions, and expectations regarding the proposed transaction, revenues, earnings, asset quality, and capital levels, among other matters; our estimates of future costs and benefits of the actions we may take; our assessments of interest rate and other market risks; our ability to achieve our financial and other strategic goals; the expected timing of completion of the proposed transaction; the expected costs of the transaction; the expected cost savings, synergies and other anticipated benefits from the proposed transaction; and other statements that are not historical facts.

Forward-looking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “project,” “intend,” “target,” “estimate,” “continue,” “positions,” “prospects” or “potential,” by future conditional verbs such as “will,” “would,” “should,” “could,” or “may,” or by variations of such words or by similar expressions. Forward-looking statements are based on current expectations, estimates and projections about CFC’s and FCF’s businesses, beliefs of CFC’s and FCF’s management and assumptions made by CFC’s and FCF’s management. These statements are not guarantees of future performance and are subject to numerous risks, uncertainties and assumptions (“Future Factors”) which are difficult to predict, change over time, and many of which are beyond the control of FCF and CFC. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements.

Future Factors include, among others:

 

   

the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between FCF and CFC;

 

   

the outcome of any legal proceedings instituted against FCF or CFC;

 

   

the possibility that the proposed transaction will not close when expected or at all because required shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated;

 

   

the ability of FCF and CFC to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction;

 

   

the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of FCF;

 

   

the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of FCF and CFC or as a result of the strength of the economy and competitive factors in the areas where FCF and CFC do business;

 

   

certain restrictions during the pendency of the proposed transaction that may impact the parties’ ability to pursue certain business opportunities or strategic transactions;

 

   

the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

 

   

diversion of management’s attention from ongoing business operations and opportunities;

 

   

the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the merger within the expected timeframes or at all and to successfully integrate CFC’s operations and those of FCF;

 

19


Table of Contents
   

such integration may be more difficult, time consuming or costly than expected;

 

   

revenues following the proposed transaction may be lower than expected;

 

   

CFC’s and FCF’s success in executing their respective business plans and strategies and managing the risks involved in the foregoing;

 

   

the dilution caused by FCF’s issuance of additional shares of its capital stock in connection with the proposed transaction;

 

   

effects of the announcement, pendency or completion of the proposed transaction on the ability of FCF and CFC to retain customers and retain and hire key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally;

 

   

risks related to the potential impact of general economic, political and market factors on the companies or the proposed transaction and other factors that may affect future results of FCF and CFC;

 

   

uncertainty as to the extent of the duration, scope, and impacts of the COVID-19 pandemic and the effects of inflation on FCF, CFC and the proposed transaction; and

 

   

the impact of changing interest rates on CFC and FCF.

These are representative of the Future Factors that could affect the outcome of the forward-looking statements. In addition, such statements could be affected by general industry and market conditions and growth rates, general economic and political conditions, either nationally or in the states in which FCF, CFC, or their respective subsidiaries do business, including interest rate and currency exchange rate fluctuations, changes and trends in the securities markets, and other Future Factors.

For any forward-looking statements made in this proxy statement/prospectus or in any documents incorporated by reference into this proxy statement/prospectus, FCF and CFC claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this proxy statement/prospectus, or the dates of the documents incorporated by reference in this proxy statement/prospectus. Annualized, pro forma, projected and estimated numbers are used for illustrative purposes only, are not forecasts and may not reflect actual results. Except as required by applicable law, neither FCF nor CFC undertakes to update these forward-looking statements to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are made.

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the reports that FCF has filed with the SEC as described under “Where You Can Find More Information” beginning on page 96.

FCF and CFC expressly qualify in their entirety all forward-looking statements attributable to either of them or any person acting on their behalf by the cautionary statements contained or referred to in this proxy statement/prospectus.

 

20


Table of Contents

RISK FACTORS

In addition to the other information contained in or incorporated by reference into this proxy statement/prospectus, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 19, CFC shareholders should carefully consider the following risk factors in deciding whether to vote for the approval of the CFC merger proposal. You should also read and consider risk factors specific to FCF’s business that will also affect the combined company after the merger. These risks are described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of FCF’s Annual Report on Form 10-K for the year ended December 31, 2021, in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of FCF’s Quarterly Report on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022, and in other documents incorporated by reference into this proxy statement/prospectus. Please see the section entitled “Where You Can Find More Information” beginning on page 96 of this proxy statement/prospectus for the location of information incorporated by reference into this proxy statement/prospectus.

Risks Relating to the Consummation of the Merger

Because the market price of FCF common stock may fluctuate, CFC shareholders cannot be certain of the market value of the merger consideration they will receive.

In the merger, each share of CFC common stock issued and outstanding immediately prior to the effective time (except for certain shares owned by FCF or CFC), will be converted into 1.09 shares of FCF common stock. This exchange ratio is fixed and will not be adjusted for changes in the market price of either FCF common stock or CFC common stock. Changes in the price of FCF common stock between now and the time of the merger will affect the value that CFC shareholders will receive in the merger. FCF is not permitted to terminate the merger agreement as a result of any increase or decrease in the market price of FCF common stock or CFC common stock. CFC is not permitted to terminate the merger agreement as a result of any increase in the market price of CFC common stock. While CFC is permitted to terminate the merger agreement as a result of certain decreases in the market price of FCF common stock, such a right is subject to several limitations. See “The Merger Agreement—Termination of the Merger Agreement” beginning on page 81.

Stock price changes may result from a variety of factors, including general market and economic conditions, changes in FCF’s and CFC’s businesses, operations and prospects, volatility in the prices of securities in global financial markets, including market prices of FCF and other banking companies, the effects of the COVID-19 pandemic and regulatory considerations and tax laws, many of which are beyond FCF’s and CFC’s control. Therefore, at the time of the CFC special meeting, CFC shareholders will not know the market value of the consideration that CFC shareholders will receive at the effective time. You should obtain current market quotations for shares of FCF common stock (NYSE: FCF) and for shares of CFC common stock (OTC Pink: CFCX).

The market price of FCF common stock after the merger may be affected by factors different from those currently affecting the shares of FCF common stock or CFC common stock.

In the merger, CFC shareholders will become FCF shareholders. FCF’s business differs from that of CFC and certain adjustments may be made to FCF’s business as a result of this merger. Accordingly, the results of operations of the combined company and the market price of FCF common stock after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of FCF and CFC. For a discussion of the business of FCF and of certain factors to consider in connection with its businesses, see the documents incorporated by reference in this proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 96.

 

21


Table of Contents

The opinion delivered by Stephens to CFC’s board of directors prior to the entry into the merger agreement will not reflect changes in circumstances that may have occurred since the date of the opinion.

The opinion from Stephens, CFC’s financial advisor, to CFC’s board of directors was delivered on and dated August 30, 2022. Changes in the operations and prospects of FCF or CFC, general market and economic conditions and other factors which may be beyond the control of FCF and CFC, including the ongoing effects of the COVID-19 pandemic on such market and economic conditions, and the market prices of FCF and CFC, may have altered the value of FCF or CFC or the prices of shares of FCF common stock and shares of CFC common stock as of the date of this proxy statement/prospectus, or may alter such values and prices by the time the merger is completed. The opinion from Stephens does not speak as of the date of this proxy statement/prospectus or as of any other date subsequent to the date of the opinion.

As the result of a judicial proceeding, courts may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the merger.

The completion of the merger is conditioned on the absence of certain orders, injunctions or decrees by any court of competent jurisdiction, as the result of a judicial proceeding, that would prohibit or make illegal the completion of any of the transactions contemplated by the merger agreement.

In addition, despite the parties’ commitments to using their reasonable best efforts to comply with conditions imposed by regulators, under the terms of the merger agreement, neither FCF nor CFC, nor any of their respective subsidiaries, is permitted (without the written consent of the other party), to take, or agree to take, any action, or commit to take any action, or agree to any condition or restriction, in connection with obtaining the required permits, consents, approvals and authorizations of governmental entities that would reasonably be expected to have a material adverse effect on the combined company and its subsidiaries, taken as a whole, after giving effect to the merger and the bank merger. See “The Merger—Regulatory Approvals” beginning on page 61.

The COVID-19 pandemic may delay and adversely affect the completion of the merger.

The COVID-19 pandemic has created economic and financial disruptions that have adversely affected, and are likely to continue to adversely affect, the business, financial condition, liquidity, capital and results of operations of FCF and CFC. If the effects of the COVID-19 pandemic cause a continued or extended decline in the economic environment and the financial results of FCF or CFC, or the business operations of FCF or CFC are further disrupted as a result of the COVID-19 pandemic, efforts to complete the merger and integrate the businesses of FCF and CFC may also be delayed and adversely affected.

Certain of CFC’s directors and executive officers may have interests in the merger that may differ from, or are in addition to, the interests of CFC shareholders.

CFC shareholders should be aware that some of CFC’s directors and executive officers may have interests in the merger and have arrangements that are different from, or in addition to, those of CFC shareholders. These interests and arrangements may create potential conflicts of interest. The CFC board of directors were aware of these interests and considered these interests, among other matters, when making their decision to approve the merger agreement, and in recommending that the CFC shareholders vote to approve the merger agreement. For a more complete description of these interests, please see “The Merger—Interests of Certain CFC Directors and Executive Officers in the Merger” beginning on page 58.

The merger agreement may be terminated in accordance with its terms and the merger may not be completed.

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger. Those conditions include: (i) approval by CFC shareholders of the CFC merger proposal;

 

22


Table of Contents

(ii) authorization for listing on NYSE of the shares of FCF common stock to be issued in the merger, subject to official notice of issuance; (iii) the receipt of required regulatory approvals; (iv) effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part; and (v) the absence of any order, injunction, decree or other legal restraint preventing the completion of the merger or any of the other transactions contemplated by the merger agreement or making the completion of the merger or any of the other transactions contemplated by the merger agreement illegal. Each party’s obligation to complete the merger is also subject to certain additional customary conditions, including (a) subject to applicable materiality standards, the accuracy of the representations and warranties of the other party, (b) the performance in all material respects by the other party of its obligations under the merger agreement and (c) the receipt by each party of an opinion from its counsel to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. FCF’s obligation to complete the merger is also subject to no more than 5% of CFC common stock being held by persons who have exercised dissenters’ rights.

These conditions to the closing may not be fulfilled in a timely manner or at all, and, accordingly, the merger may not be completed. In addition, the parties can mutually decide to terminate the merger agreement at any time, before or after the requisite shareholder approvals, or FCF or CFC may elect to terminate the merger agreement in certain other circumstances. See “The Merger Agreement—Termination of the Merger Agreement” beginning on page 81.

Failure to complete the merger could negatively impact FCF or CFC.

If the merger is not completed for any reason, including as a result of CFC shareholders failing to approve the CFC merger proposal, there may be various adverse consequences and FCF and/or CFC may experience negative reactions from the financial markets and from their respective customers and employees. For example, FCF’s or CFC’s businesses may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger, without realizing any of the anticipated benefits of completing the merger. Additionally, if the merger agreement is terminated, the market price of FCF common stock or CFC common stock could decline to the extent that current market prices reflect a market assumption that the merger will be beneficial and will be completed. FCF and/or CFC also could be subject to litigation related to any failure to complete the merger or to proceedings commenced against FCF or CFC to perform their respective obligations under the merger agreement. If the merger agreement is terminated under certain circumstances, CFC may be required to pay a termination fee of $6.0 million to FCF.

Additionally, each of FCF and CFC has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, as well as the costs and expenses of preparing, filing, printing and mailing this proxy statement/prospectus, and all filing and other fees paid in connection with the merger. If the merger is not completed, FCF and CFC would have to pay these expenses without realizing the expected benefits of the merger.

FCF and CFC will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on FCF and CFC. These uncertainties may impair FCF’s or CFC’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with FCF or CFC to seek to change existing business relationships with FCF or CFC. In addition, subject to certain exceptions, FCF and CFC have each agreed to operate its business in the ordinary course in all material respects and to refrain from taking certain actions that may adversely affect its ability to consummate the transactions contemplated by the merger agreement on a timely basis without the consent of the other party. These restrictions may prevent FCF and/or CFC from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement—Covenants and Agreements” beginning on page 72 for a description of the restrictive covenants applicable to FCF and CFC.

 

23


Table of Contents

The announcement of the proposed merger could disrupt FCF’s and CFC’s relationships with their customers, suppliers, business partners and others, as well as their operating results and business generally.

Whether or not the merger is ultimately consummated, as a result of uncertainty related to the proposed transactions, risks relating to the impact of the announcement of the merger on FCF’s and CFC’s business include the following:

 

   

their employees may experience uncertainty about their future roles, which might adversely affect FCF’s and CFC’s ability to retain and hire key personnel and other employees;

 

   

customers, suppliers, business partners and other parties with which FCF and CFC maintain business relationships may experience uncertainty about its future and seek alternative relationships with third parties, seek to alter their business relationships with FCF and CFC or fail to extend an existing relationship with FCF and CFC; and

 

   

FCF and CFC have each expended and will continue to expend significant costs, fees and expenses for professional services and transaction costs in connection with the proposed merger.

If any of the aforementioned risks were to materialize, they could lead to significant costs which may impact each party’s results of operations and financial condition.

The merger agreement limits CFC’s ability to pursue alternatives to the merger and may discourage other companies from trying to acquire CFC.

The merger agreement contains “no shop” covenants that restrict CFC’s ability to, directly or indirectly, among other things, initiate, solicit, knowingly encourage or knowingly facilitate, inquiries or proposals with respect to, or, subject to certain exceptions generally related to the exercise of fiduciary duties by its board of directors, engage in any negotiations concerning, or provide any confidential or non-public information or data relating to, any alternative acquisition proposals. These provisions, which include a $6.0 million termination fee payable under certain circumstances, may discourage a potential third-party acquirer that might have an interest in acquiring all or a significant part of CFC from considering or proposing that acquisition. For more information, see “The Merger Agreement—Agreement Not to Solicit Other Offers; Termination of the Merger Agreement; Effect of Termination; Termination Fee” and “The Merger Agreement—Meeting; Recommendation of CFC’s Board of Directors” beginning on page 79.

The shares of FCF common stock to be received by CFC shareholders as a result of the merger will have different rights from the shares of CFC common stock.

In the merger, CFC shareholders will become FCF shareholders and their rights as shareholders will be governed by Pennsylvania law and the governing documents of the combined company following the merger. The rights associated with FCF common stock are different from the rights associated with CFC common stock. See “Comparison of the Rights of Holders of FCF Common Stock and Holders of CFC Common Stock” beginning on page 89 for a discussion of the different rights associated with FCF common stock.

Shareholder litigation could prevent or delay the completion of the merger or otherwise negatively impact the business and operations of FCF and CFC.

Shareholders of FCF and/or shareholders of CFC may file lawsuits against FCF, CFC and/or the directors and officers of either company in connection with the merger. One of the conditions to the closing is that no order, injunction or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint preventing the consummation of the merger or any of the other transactions contemplated by the merger agreement be in effect. If any plaintiff were successful in obtaining an injunction prohibiting FCF or CFC defendants from completing the merger or any of the other transactions contemplated by the merger agreement, then such injunction may delay or prevent the effectiveness of the merger and could result in significant costs to

 

24


Table of Contents

FCF and/or CFC, including any cost associated with the indemnification of directors and officers of each company. FCF and CFC may incur costs in connection with the defense or settlement of any shareholder lawsuits filed in connection with the merger. Such litigation could have an adverse effect on the financial condition and results of operations of FCF and CFC and could prevent or delay the completion of the merger.

Risks Relating to the Combined Company’s Business Following the Merger

FCF and CFC are expected to incur substantial costs related to the merger and integration.

FCF and CFC have incurred and expect to incur a number of non-recurring costs associated with the merger. These costs include legal, financial advisory, accounting, consulting and other advisory fees, severance/employee benefit-related costs, public company filing fees and other regulatory fees, financial printing and other printing costs and other related costs. Some of these costs are payable by either FCF or CFC regardless of whether or not the merger is completed. See “The Merger Agreement—Expenses and Fees” beginning on page 83.

FCF and CFC have incurred and expect to incur significant, non-recurring costs in connection with negotiating the merger agreement and closing the merger. In addition, the combined company will incur integration costs following the completion of the merger as FCF and CFC integrate their businesses, including facilities and systems consolidation costs and employment-related costs. FCF and CFC may also incur additional costs to maintain employee morale and to retain key employees. There are a large number of processes, policies, procedures, operations, technologies and systems that may need to be integrated, including purchasing, accounting and finance, payroll, compliance, treasury management, branch operations, vendor management, risk management, lines of business, pricing and benefits. While FCF and CFC have assumed that a certain level of costs will be incurred, there are many factors beyond their control that could affect the total amount or the timing of the integration costs. Moreover, many of the costs that will be incurred are, by their nature, difficult to estimate accurately. These integration costs may result in the combined company taking charges against earnings following the completion of the merger, and the amount and timing of such charges are uncertain at present. There can be no assurances that the expected benefits and efficiencies related to the integration of the businesses will be realized to offset these transaction and integration costs over time.

Combining FCF and CFC may be more difficult, costly or time-consuming than expected, and FCF and CFC may fail to realize the anticipated benefits of the merger.

The success of the merger will depend, in part, on the ability to realize the anticipated cost savings from combining the businesses of FCF and CFC. To realize the anticipated benefits and cost savings from the merger, FCF and CFC must successfully integrate and combine their businesses in a manner that permits those cost savings to be realized, without adversely affecting current revenues and future growth. If FCF and CFC are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected. In addition, the actual cost savings of the merger could be less than anticipated, and integration may result in additional and unforeseen expenses.

An inability to realize the full extent of the anticipated benefits of the merger and the other transactions contemplated by the merger agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, levels of expenses and operating results of the combined company following the completion of the merger, which may adversely affect the value of the common stock of the combined company following the completion of the merger.

FCF and CFC have operated and, until the completion of the merger, must continue to operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’ ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger. Integration efforts between the two companies

 

25


Table of Contents

may also divert management attention and resources. These integration matters could have an adverse effect on each of FCF and CFC during this transition period and for an undetermined period after completion of the merger on the combined company.

The future results of the combined company following the merger may suffer if the combined company does not effectively manage its expanded operations.

Following the merger, the size of the business of the combined company will increase beyond the current size of either FCF’s or CFC’s business. The combined company’s future success will depend, in part, upon its ability to manage this expanded business, which may pose challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. The combined company may also face increased scrutiny from governmental authorities as a result of the increased size of its business. There can be no assurances that the combined company will be successful or that it will realize the expected operating efficiencies, revenue enhancement or other benefits currently anticipated from the merger.

The combined company may be unable to retain FCF and/or CFC personnel successfully after the merger is completed.

The success of the merger will depend in part on the combined company’s ability to retain the talents and dedication of key employees currently employed by FCF and CFC. It is possible that these employees may decide not to remain with FCF or CFC, as applicable, while the merger is pending or with the combined company after the merger is consummated. If FCF and CFC are unable to retain key employees, including management, who are critical to the successful integration and future operations of the companies, FCF and CFC could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs. In addition, following the merger, if key employees terminate their employment, the combined company’s business activities may be adversely affected, and management’s attention may be diverted from successfully hiring suitable replacements, all of which may cause the combined company’s business to suffer. FCF and CFC also may not be able to locate or retain suitable replacements for any key employees who leave either company. See “The Merger—Governance of FCF after the Merger” beginning on page 61.

Holders of FCF and CFC common stock will have reduced ownership and voting interest in the combined company after the consummation of the merger and will exercise less influence over management.

FCF shareholders and CFC shareholders currently have the right to vote in the election of the board of directors and on other matters affecting FCF and CFC, respectively. When the merger is completed, each FCF shareholder and each CFC shareholder will become a holder of common stock of the combined company, with a percentage ownership of the combined company that is smaller than the holder’s percentage ownership of either FCF or CFC individually, as applicable, prior to the consummation of the merger. Based on the number of shares of FCF and CFC common stock outstanding as of December 15, 2022, and based on the number of shares of FCF common stock expected to be issued in the merger, the former CFC shareholders, as a group, are estimated to own approximately 9.4% of the fully diluted shares of the combined company immediately after the merger and current FCF shareholders as a group are estimated to own approximately 90.6% of the fully diluted shares of the combined company immediately after the merger. Because of this, CFC shareholders may have less influence on the management and policies of the combined company than they now have on the management and policies of CFC, and FCF shareholders may have less influence on the management and policies of the combined company than they now have on the management and policies of FCF.

Issuance of shares of FCF common stock in connection with the merger may adversely affect the market price of FCF common stock.

In connection with the payment of the merger consideration, FCF expects to issue approximately 9.7 million shares of FCF common stock to CFC shareholders. The issuance of these new shares of FCF common stock may result in fluctuations in the market price of FCF common stock, including a stock price decrease.

 

26


Table of Contents

In connection with the merger, FCF will assume CFC’s outstanding indebtedness. FCF’s existing debt, together with any future incurrence of additional indebtedness could have important consequences for the combined company’s creditors and the combined company’s shareholders.

Because FCF will assume CFC’s outstanding indebtedness, it could:

 

   

limit the combined company’s ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes;

 

   

restrict the combined company from making strategic acquisitions or cause the combined company to make non-strategic divestitures;

 

   

restrict the combined company from paying dividends to its shareholders;

 

   

increase the combined company’s vulnerability to general economic and industry conditions; and

 

   

require a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on the combined company’s indebtedness, thereby reducing the combined company’s ability to use cash flows to fund its operations, capital expenditures and future business opportunities.

The COVID-19 pandemic’s impact on the combined company’s business and operations following the completion of the merger is uncertain.

The extent to which the COVID-19 pandemic will negatively affect the business, financial condition, liquidity, capital and results of operations of the combined company following the completion of the merger will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the COVID-19 pandemic, the direct and indirect impact of the COVID-19 pandemic on employees, clients, counterparties and service providers, as well as other market participants, and actions taken by governmental authorities and other third parties in response to the COVID-19 pandemic. Given the ongoing and dynamic nature of the circumstances, it is difficult to predict the impact of the COVID-19 pandemic on the combined company’s business, and there is no guarantee that efforts by the combined company to address the adverse impacts of the COVID-19 pandemic will be effective.

Even after the COVID-19 pandemic has subsided, the combined company may continue to experience adverse impacts to its business as a result of the COVID-19 pandemic’s global economic impact, including reduced availability of credit, adverse impacts on liquidity and the negative financial effects from any recession or depression that may occur.

FCF and FCF Bank will grow to over $10 billion in total consolidated assets as a result of the mergers, which will lead to increased regulation.

Upon consummation of the mergers, FCF and FCF Bank will have approximately $10.6 billion in total consolidated assets. FCF and FCF Bank will accordingly become subject to certain regulations that apply only to depository institution holding companies or depository institutions with $10 billion or more in total consolidated assets.

An insured depository institution with $10 billion or more in total assets is subject to the debit card interchange fee restrictions set forth in section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, known as the Durbin Amendment, as implemented by regulations of the Federal Reserve, cap the maximum debit interchange fee that an issuer may receive per transaction at the sum of 21 cents plus five basis points. An issuer that adopts certain fraud prevention procedures may charge an additional one cent per transaction. Debit card issuers with less than $10 billion in total consolidated assets, currently including FCF Bank and Centric Bank, are exempt from these interchange fee restrictions. During 2021, FCF Bank and Centric Bank earned approximately $28.0 million and $0.3 million in card-related interchange income, respectively. FCF has previously disclosed that if it had not qualified for the exemption in 2021, its interchange income would have been reduced by

 

27


Table of Contents

approximately $13.8 million, or approximately 50%, due to the cap on interchange fees. The exemption for small issuers ceases to apply as of July 1st of the year following the calendar year in which the issuer has total consolidated assets of $10 billion or more at year-end. As a result, if the bank merger is consummated in 2023, FCF Bank will become subject to the interchange restrictions of the Durbin Amendment beginning July 1, 2024. As such, we estimate that the application of the Durbin Amendment will reduce annual card-related interchange income of the combined entity by approximately 25% in 2024 and by approximately 50% in 2025.

Additionally, an insured depository institution with $10 billion or more in total assets is subject to supervision, examination, and enforcement with respect to consumer protection laws by the Consumer Financial Protection Bureau, or CFPB. Under its current policies, the CFPB will assert jurisdiction in the first quarter after the call reports of merging insured depository institutions, on a combined basis, show total consolidated assets of $10 billion or more for four consecutive quarters, including quarters ended prior to the merger. As a result, FCF expects FCF Bank to become subject to CFPB supervision, examination, and enforcement at the beginning of the quarter following consummation of the bank merger.

Other regulatory requirements apply, and have previously applied, to insured depository institution holding companies and insured depository institutions with $10 billion or more in total consolidated assets. In addition, Congress and/or regulatory agencies may impose new requirements or surcharges on such institutions in the future. The Economic Growth, Regulatory Reform, and Consumer Protection Act, enacted on May 24, 2018, includes provisions that, as they are implemented, relieve banking organizations with less than $10 billion in total consolidated assets (and that satisfy certain other conditions) from risk-based capital requirements, restrictions on proprietary trading and investment and sponsorship in hedge funds and private equity funds known as the Volcker Rule, and certain other regulatory requirements. By exceeding $10 billion in total consolidated assets, FCF and FCF Bank will not qualify for any of this relief.

There is no assurance that the benefits of the mergers will outweigh the regulatory costs resulting from FCF and FCF Bank growing to more than $10 billion in total consolidated assets.

 

28


Table of Contents

THE CFC SPECIAL MEETING

This section contains information for CFC shareholders about the special meeting that CFC has called to allow CFC shareholders to consider and vote on the CFC merger proposal and the CFC adjournment proposal. This proxy statement/prospectus is accompanied by a notice of the CFC special meeting and a form of proxy card that the CFC board of directors is soliciting for use by CFC shareholders at the special meeting and at any adjournments or postponements of the special meeting.

Date, Time and Place of the Meeting

The CFC special meeting will be completely virtual and conducted via live audio webcast on January 25, 2023 at 10:00 a.m., Eastern Time. In light of the ongoing developments related to the COVID-19 pandemic and to support the health and safety of our shareholders, employees and community, the CFC special meeting will be held in a virtual-only meeting format conducted via live webcast. Shareholders may participate in the virtual meeting by first registering at http://viewproxy.com/Centric/2023SM/htype.asp by 11:59 p.m., Eastern Time, on January 22, 2023. You will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date.

Matters to Be Considered

At the CFC special meeting, CFC shareholders will be asked to consider and vote upon the following proposals:

 

   

the CFC merger proposal; and

 

   

the CFC adjournment proposal.

Recommendation of CFC’s Board of Directors

The CFC board of directors recommends that you vote “FOR” the CFC merger proposal and “FOR” the CFC adjournment proposal. See “The Merger—CFC’s Reasons for the Merger; Recommendation of CFC’s Board of Directors” beginning on page 43 for a more detailed discussion of the CFC board of directors’ recommendation.

Record Date and Quorum

The CFC board of directors has fixed the close of business on October 27, 2022 as the record date for the determination of CFC shareholders entitled to notice of and to vote at the CFC special meeting. As of the record date, there were 8,691,486 shares of CFC common stock outstanding and 280 shareholders of record.

Holders of a majority of the outstanding shares of CFC common stock entitled to vote at the CFC special meeting must be present, either in attendance virtually via the CFC special meeting website or by proxy, to constitute a quorum at the CFC special meeting. If you fail to submit a proxy prior to the special meeting, or to vote at the CFC special meeting via the CFC special meeting website, your shares of CFC common stock will not be counted towards a quorum. Abstentions are considered present for the purpose of establishing a quorum.

At the CFC special meeting, each share of CFC common stock is entitled to one (1) vote on all matters properly submitted to CFC shareholders.

As of the close of business on the CFC record date, CFC directors and executive officers and their affiliates owned and were entitled to vote approximately 1,180,656 shares of CFC common stock, representing less than fourteen percent (14%) of the outstanding shares of CFC common stock. Each of CFC’s directors and certain of its executive officers will vote their shares in favor of the CFC merger proposal and the CFC adjournment proposal pursuant to voting and support agreements entered into with FCF.

 

29


Table of Contents

Broker Non-Votes

A broker non-vote occurs when a bank, broker, trustee or other nominee is not permitted to vote on a “non-routine” matter without instructions from the beneficial owner of the shares and the beneficial owner fails to provide the bank, broker, trustee or other nominee with such instructions. Broker non-votes only count toward a quorum if at least one (1) proposal is presented with respect to which the bank, broker, trustee or other nominee has discretionary authority. It is expected that all proposals to be voted on at the CFC special meeting will be “non-routine” matters, and, as such, broker non-votes, if any, will not be counted as present and entitled to vote for purposes of determining a quorum at the CFC special meeting. If your bank, broker, trustee or other nominee holds your shares of CFC common stock in “street name,” such entity will vote your shares of CFC common stock only if you provide instructions on how to vote by complying with the instructions provided to you by your bank, broker, trustee or other nominee with this proxy statement/prospectus.

Vote Required; Treatment of Abstentions and Failure to Vote

CFC Merger Proposal

 

   

Vote required: Approval of the CFC merger proposal requires the affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of CFC common stock. Approval of the CFC merger proposal is a condition to the completion of the merger.

 

   

Effect of abstentions and failure to vote: If you are present at the CFC special meeting and abstain from voting, or respond by proxy with an “ABSTAIN”, it will have the same effect as a vote cast “AGAINST” such proposal. If you are not present at the CFC special meeting and do not respond by proxy or do not provide your bank, broker, trustee or other nominee with instructions, as applicable and as may be required, it will have the same effect as a vote cast “AGAINST” such proposal.

CFC Adjournment Proposal

 

   

Vote required: Whether or not a quorum will be present at the meeting, approval of the CFC adjournment proposal requires the affirmative vote of a majority of the shares of CFC common stock present in attendance at the CFC special meeting or represented by proxy at the CFC special meeting. Approval of the CFC adjournment proposal is not a condition to the completion of the merger.

 

   

Effect of abstentions and failure to vote: If you are present at the CFC special meeting and abstain from voting, or respond by proxy with an “ABSTAIN”, it will have the same effect as a vote cast “AGAINST” such proposal. If you are not present at the CFC special meeting and do not respond by proxy or do not provide your bank, broker, trustee or other nominee with instructions, as applicable and as may be required, it will have no effect on the vote count for such proposal.

Attending the Special Meeting

The CFC special meeting may be accessed via the CFC special meeting website, where CFC shareholders will be able to listen to the CFC special meeting, submit questions and vote online. You are entitled to attend the CFC special meeting via the CFC special meeting website only if you were a shareholder of record at the close of business on the record date (a “record holder”) or you held your CFC shares beneficially in the name of a bank, broker, trustee or other nominee as of the record date (a “beneficial owner”), or you hold a valid proxy for the CFC special meeting.

If you are a record holder, you will be able to attend the CFC special meeting online, ask questions and vote during the meeting by first registering at http://viewproxy.com/Centric/2023SM/htype.asp by 11:59 a.m., Eastern Time, on January 22, 2023. You will receive a meeting invitation by e-mail with your unique join link along with a password prior to the meeting date. Please have your 11-digit control number, which can be found on your proxy card, notice or e-mail previously received, to access the meeting.

 

30


Table of Contents

If you are a beneficial owner, see “—Shares Held in Street Name” below for further information. Please review this information prior to the CFC special meeting to ensure you have access.

We have created and implemented the virtual format in order to facilitate shareholder attendance and participation by enabling shareholders to participate fully, and equally, from any location around the world, at no cost. However, you will bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies. A virtual meeting makes it possible for more shareholders (regardless of size, resources or physical location) to have direct access to information more quickly. We also believe that the online tools we have selected will increase shareholder communication. For example, the virtual format allows shareholders to communicate with us in advance of, and during, the CFC special meeting so they can ask questions of CFC’s board of directors or management. During the live Q&A session of the CFC special meeting, we may answer questions as they come in and address those asked in advance, to the extent relevant to the business of the CFC special meeting, as time permits.

Both shareholders of record and street name shareholders will be able to attend the CFC special meeting via live audio webcast, submit their questions during the meeting and vote their shares electronically at the CFC special meeting.

CFC encourages its shareholders to visit the meeting website above in advance of the CFC special meeting to familiarize themselves with the online access process. Shareholders should verify their internet connection prior to the CFC special meeting. There will be technicians ready to assist you with any technical difficulties you may have accessing the CFC special meeting live audio webcast. Please be sure to check in by 9:45 a.m., Eastern Time on January 25, 2023, the day of the meeting, so that any technical difficulties may be addressed before the Special Meeting live audio webcast begins. If you encounter any difficulties accessing the webcast during the check-in or meeting time, please email VirtualMeeting@viewproxy.com or call 866-612-8937. Shareholders will have substantially the same opportunities to participate in the virtual CFC special meeting as they would have at a physical, in-person meeting.

Please review this information prior to the CFC special meeting to ensure you have access.

Even if you plan to attend the CFC special meeting virtually, CFC recommends that you vote your shares in advance as described below so that your vote will be counted if you later decide not to or become unable to attend the special meeting.

Proxies

A holder of CFC shares may vote by proxy or at the CFC special meeting via the CFC special meeting website. If you hold your shares of CFC common stock in your name as a record holder, to submit a proxy, you, as a holder of CFC common stock, may use one (1) of the following methods:

 

   

by telephone: by calling the toll-free number indicated on the accompanying proxy card and following the recorded instructions;

 

   

through the internet: by visiting the website indicated on the accompanying proxy card and following the instructions; or

 

   

by proxy card: by completing and returning the accompanying proxy card in the enclosed postage-paid envelope. The envelope requires no additional postage if mailed in the United States.

CFC requests that CFC shareholders vote as soon as possible by telephone, over the internet or by completing and signing the accompanying proxy card and returning it to CFC in the enclosed postage-paid envelope. When the accompanying proxy card is returned properly executed, the shares of CFC common stock represented by it will be voted at the CFC special meeting in accordance with the instructions contained on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted “FOR” the CFC merger proposal and “FOR” the CFC adjournment proposal.

 

31


Table of Contents

If you are a beneficial owner, you should check the voting form used by your bank, broker, trustee or other nominee to determine whether you may vote by telephone or the internet.

Every vote is important. Accordingly, you should sign, date and return the enclosed proxy card, or vote via the internet or by telephone, whether or not you plan to attend the CFC special meeting virtually via the CFC special meeting website. Sending in your proxy card or voting by telephone or on the internet will not prevent you from voting your shares personally via the CFC special meeting website at the meeting because you may subsequently revoke your proxy. See “—Revocability of Proxies” below for further information

Shares Held in Street Name

If you do not attend the CFC special meeting and wish to vote, you must instruct the bank, broker, trustee or other nominee on how to vote your shares. Your bank, broker, trustee or other nominee will vote your shares only if you provide specific instructions on how to vote by following the instructions provided to you by your bank, broker, trustee or other nominee.

Further, banks, brokers, trustees or other nominees who hold shares on behalf of their customers may not give a proxy to CFC to vote those shares with respect to any of the proposals without specific instructions from their customers, as banks, brokers, trustees and other nominees do not have discretionary voting power on the proposals that will be voted upon at the CFC special meeting, including the CFC merger proposal and the CFC adjournment proposal.

If you hold your shares beneficially through a bank or broker, you must provide a legal proxy from your bank or broker during registration and you will be assigned a virtual control number in order to vote your shares during the CFC special meeting. If you are unable to obtain a legal proxy to vote your shares, you will still be able to attend the CFC special meeting (but will not be able to vote your shares) so long as you demonstrate proof of stock ownership. Instructions on how to connect and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at http://viewproxy.com/Centric/2023SM/htype.asp. On the day of the CFC special meeting, you may only vote during the meeting by e-mailing a copy of your legal proxy to virtualmeeting@viewproxy.com in advance of the meeting.

Revocability of Proxies

If you directly hold shares of CFC common stock in your name as a record holder, you can change your proxy vote at any time before your proxy is voted at the CFC special meeting. You can do this by:

 

   

submitting a written statement that you would like to revoke your proxy to the corporate secretary of CFC, whose mailing address is 1826 Good Hope Road, Enola, Pennsylvania 17025;

 

   

signing and returning a proxy card that is dated and received on a later date;

 

   

attending the CFC special meeting virtually and voting at the CFC special meeting via the CFC special meeting website; or

 

   

voting by telephone or the internet at a later time.

If you are a beneficial owner and your shares are held by a bank, broker, trustee or other nominee, you may change your vote by:

 

   

contacting your bank, broker, trustee or other nominee; or

 

   

attending the special meeting virtually and voting your shares via the special meeting website if you have your control number, which can be found on the voting instructions provided by your bank, broker, trustee or other nominee. Please contact your bank, broker, trustee or other nominee for further instructions.

 

32


Table of Contents

Attendance virtually at the CFC special meeting will not in and of itself constitute revocation of a proxy. A revocation or later-dated proxy received by CFC after the vote will not affect the vote at the CFC special meeting. If the CFC special meeting is postponed or adjourned, it will not affect the ability of CFC shareholders of record as of the record date to exercise their voting rights or to revoke any previously granted proxy using the methods described above.

Shares Subject to Voting Agreement; Shares Held by Directors and Executive Officers

Each director of CFC as well as certain executive officers of CFC have entered into a voting and support agreement (which we refer to as the “voting agreement”) in the form attached as Exhibit A to the merger agreement, which is attached as Annex A to this proxy statement/prospectus. Under the voting agreement, each such person agreed, among other things, to vote the shares of CFC common stock (1) in favor of the merger agreement and in favor of each of the other actions contemplated by the merger agreement, (2) against approval of any proposal made in opposition to, or in competition with, the merger or any other transactions contemplated by the merger agreement and (3) against any action that is intended, or could reasonably be expected to, impede, interfere with, delay, postpone, discourage or adversely affect the merger or any other transactions between FCF and CFC as contemplated by the merger agreement. As of the CFC record date, 1,180,656 shares of CFC common stock, or approximately 13.58% of the outstanding shares of CFC common stock entitled to vote at the CFC special meeting, are bound by the voting agreement.

Delivery of Proxy Materials

As permitted by applicable law, only one (1) copy of this proxy statement/prospectus is being delivered to CFC shareholders residing at the same address, unless such CFC shareholders have notified CFC of their desire to receive multiple copies of the proxy statement/prospectus.

CFC will promptly deliver, upon oral or written request, a separate copy of the proxy statement/prospectus to any holder of CFC common stock residing at an address to which only one (1) copy of such document was mailed. Requests for additional copies should be directed to CFC’s proxy solicitor, Alliance Advisors LLC, by calling toll-free at (877) 728-5018 or by e-mail at CFCX@allianceadvisors.com

Dissenters’ Rights

Holders of CFC common stock are entitled to assert dissenters’ rights with respect to the CFC merger proposal. These dissenters’ rights are conditioned on strict compliance with the requirements of Sections 1571 through 1580 of the PBCL. Please see “The Merger  Dissenters’ Rights,” beginning on page 64, and the full text of Sections 1571 through 1580 of the PBCL, which is reproduced in full in Annex B to this proxy statement/prospectus, for additional information.

Solicitation of Proxies

FCF and CFC will share equally the expenses incurred in connection with the printing and mailing of this proxy statement/prospectus. To assist in the solicitation of proxies, CFC has retained Alliance Advisors LLC, for a fee of $6,000 plus reimbursement of certain costs and expenses incurred in connection with the solicitation. CFC and its proxy solicitor will also request banks, brokers, trustees and other intermediaries holding shares of CFC common stock beneficially owned by others to send this proxy statement/prospectus to, and obtain proxies from, the beneficial owners and may reimburse such record holders for their reasonable out-of-pocket expenses in so doing. Solicitation of proxies by mail may be supplemented by telephone and other electronic means, advertisements and personal solicitation by the directors, officers or employees of CFC. No additional compensation will be paid to CFC’s directors, officers or employees for solicitation.

You should not send in any CFC stock certificates with your proxy card (or, if you are a beneficial owner, your voting instruction card). The exchange agent will mail a transmittal letter with instructions for the surrender of stock certificates to CFC shareholders as soon as practicable after completion of the merger.

 

33


Table of Contents

Other Matters to Come Before the CFC Special Meeting

CFC management knows of no other business to be presented at the CFC special meeting, but if any other matters are properly presented to the meeting or any adjournments thereof, the persons named in the proxies will vote upon them in accordance with the CFC board of directors’ recommendations.

Assistance

If you need assistance in completing your proxy card, have questions regarding CFC’s special meeting or would like additional copies of this proxy statement/prospectus, please contact Investor Relations Department of CFC by telephone ((717) 657-7727) or by e-mail (investors@centricbank.com), or CFC’s proxy solicitor, Alliance Advisors LLC, by calling toll-free at (877) 728-5018 or by e-mail at CFCX@allianceadvisors.com.

 

34


Table of Contents

CFC PROPOSALS

PROPOSAL 1: CFC MERGER PROPOSAL

Pursuant to the merger agreement, CFC is asking CFC shareholders to approve the adoption of the merger agreement and the transactions contemplated thereby, including the merger. CFC shareholders should read this proxy statement/prospectus carefully and in its entirety, including the annexes, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this proxy statement/prospectus as Annex A.

After careful consideration, the CFC board of directors, by a unanimous vote of all directors, approved the merger agreement and declared the merger agreement and the transactions contemplated thereby, including the merger, to be advisable and in the best interest of CFC and CFC shareholders. See “The Merger—CFC’s Reasons for the Merger; Recommendation of CFC’s Board of Directors” beginning on page 43 for a more detailed discussion of the CFC board of directors’ recommendation.

The approval of the CFC merger proposal by CFC shareholders is a condition to the completion of the merger.

The CFC board of directors unanimously recommends a vote “FOR” the CFC merger proposal.

PROPOSAL 2: CFC ADJOURNMENT PROPOSAL

The CFC special meeting may be adjourned to another time or place, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the CFC special meeting to approve the CFC merger proposal or to ensure that any supplement or amendment to this proxy statement/prospectus is timely provided to CFC shareholders.

If, at the CFC special meeting, the number of shares of CFC common stock present or represented and voting in favor of the CFC merger proposal is insufficient to approve the CFC merger proposal, CFC intends to move to adjourn the CFC special meeting in order to enable the CFC board of directors to solicit additional proxies for approval of the CFC merger proposal. In that event, CFC will ask CFC shareholders to vote upon the CFC adjournment proposal, but not the CFC merger proposal.

In this proposal, CFC is asking CFC shareholders to authorize the holder of any proxy solicited by the CFC board of directors on a discretionary basis (i) if there are not sufficient votes at the time of the CFC special meeting to approve the CFC merger proposal or (ii) if necessary or appropriate to ensure that any supplement or amendment to this proxy statement/prospectus is timely provided to CFC shareholders, to vote in favor of adjourning the CFC special meeting to another time and place for the purpose of soliciting additional proxies, including the solicitation of proxies from CFC shareholders who have previously voted. Pursuant to the CFC bylaws, if a new record date is set for the adjourned meeting, a notice of the adjourned meeting must be given to each shareholder of record entitled to vote at the meeting.

The approval of the CFC adjournment proposal by CFC shareholders is not a condition to the completion of the merger.

The CFC board of directors unanimously recommends a vote “FOR” the CFC adjournment proposal.

 

35


Table of Contents

INFORMATION ABOUT THE COMPANIES

FCF

FCF is a financial holding company headquartered in Indiana, Pennsylvania. FCF’s subsidiaries include, FCF Bank, First Commonwealth Insurance Agency, Inc., FRAMAL and First Commonwealth Financial Advisors, Inc. FCF provides a diversified array of consumer and commercial banking services through FCF Bank. FCF also provides trust and wealth management services and offers insurance products through FCF Bank and its other operating subsidiaries. At September 30, 2022, FCF had total assets of $9.6 billion, total loans of $7.3 billion, total deposits of $8.1 billion and shareholders’ equity of $1.0 billion.

FCF Bank is a Pennsylvania bank and trust company. At September 30, 2022, FCF Bank operated 118 community banking offices throughout western and central Pennsylvania, and northeastern, central and southwestern Ohio, as well as corporate banking centers in Pittsburgh, Pennsylvania, and Columbus, Canton and Cleveland, Ohio, and mortgage banking offices in Wexford, Pennsylvania, and Hudson, Westlake and Lewis Center, Ohio. FCF Bank also operates a network of 136 automated teller machines, or ATMs, at various branch offices and offsite locations. All of FCF Bank’s ATMs are part of the NYCE and MasterCard/Cirrus networks, both of which operate nationwide. FCF Bank is a member of the Allpoint ATM network, which allows surcharge-free access to over 55,000 ATMs. FCF Bank is also a member of the “Freedom ATM Alliance,” which affords cardholders surcharge-free access to a network of over 350 ATMs in over 50 counties in Pennsylvania, Maryland, New York, and Ohio.

FCF’s common stock is traded on NYSE under the symbol “FCF.” FCF’s principal executive office is located at 601 Philadelphia Street, Indiana, Pennsylvania 15701 and its telephone number is (724) 349-7220.

CFC

CFC is a bank holding company headquartered in Enola, Pennsylvania. CFC’s sole subsidiary is Centric Bank. CFC provides a diversified array of consumer and commercial banking services through Centric Bank. At September 30, 2022, CFC had total assets of $1.04 billion, total net loans of $919.3 million, total deposits of $883.6 million and total equity of $104.3 million.

Centric Bank is a Pennsylvania banking institution. Centric Bank has financial centers located in Harrisburg, Hershey, Mechanicsburg, Camp Hill, Doylestown, Devon, and Lancaster, Pennsylvania, and loan production offices in Lancaster and Devon, Pennsylvania.

CFC common stock is currently quoted on the OTC Pink market operated by the OTC Markets Group under the trading symbol “CFCX.” Below is a table setting forth the range of high and low bid information for each quarterly period during the last two years.

 

Period

   High      Low  

Quarter ended March 31, 2021

   $ 9.70      $ 8.50  

Quarter ended June 30, 2021

     9.85        9.00  

Quarter ended September 30, 2021

     9.75        9.10  

Quarter ended December 31, 2021

     9.70        9.00  

Quarter ended March 31, 2022

   $ 10.05      $ 9.33  

Quarter ended June 30, 2022

     10.25        9.02  

Quarter ended September 30, 2022

     14.52        9.50  

Quarter ended December 31, 2022
(from October 1, 2022 through December 15, 2022)

     15.77        13.50  

CFC’s principal executive office is located at 1826 Good Hope Road, Enola, Pennsylvania 17025 and its telephone number is (717) 657-7727.

 

36


Table of Contents

SECURITY OWNERSHIP OF CERTAIN CFC BENEFICAL OWNERS AND MANAGEMENT

The following table sets forth, as of September 30, 2022, the beneficial ownership of CFC common stock by (i) each of CFC’s directors, (ii) certain of CFC’s executive officers, (iii) CFC’s directors and executive officers as a group, and (iv) each person known to CFC to beneficially own more than 5% ownership of the issued and outstanding CFC common stock. Unless otherwise indicated, the address of each listed CFC shareholder is c/o Centric Financial Corporation, 1826 Good Hope Road, Enola, Pennsylvania 17025.

Beneficial ownership is determined in accordance with the rules of the SEC, which generally attribute beneficial ownership of securities to persons who possess sole or shared voting or investment power with respect to those securities. Unless otherwise indicated, and subject to the voting agreements entered into with FCF in connection with entering into the merger agreement, to CFC’s knowledge, the persons or entities identified on the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them.

 

Name and Address of Beneficial Owner

   Amount and
Nature of
Beneficial
Ownership(1)
           Percent of CFC
Common Stock
 

Directors:

       

Frank A. Conte

     97,933       (2  )(3)       1.12

Steven P. Dayton

     146,679       (4  )       1.69

Donald E. Enders, Jr.

     315,368       (5  )       3.63

Thomas H. Flowers

     81,819       (2  )(6)       *  

Patricia A. Husic

     136,767       (2  )       1.57

Nicole Stezar Kaylor

     23,810       (2  )(7)       *  

Jeffrey W. Keiser

     154,839       (2  )       1.78

John A. Maher

     163,212       (2  )       1.88

Jessica E. Meyers

     2,226          *  

Kerry A. Pae

     98,571       (2  )(8)       1.13

Certain Executive Officers:

       

Jeffrey W. Myers

     57,610       (2  )(9)       *  

Sandra J. Schultz

     27,643       (2  )       *  

All Directors and Executive Officers as a Group (12 persons)

     1,306,477          14.72

5% Shareholders:

       

Endeavor Capital Advisors Inc.
410 Greenwich Avenue
Greenwich, Connecticut 06830

     685,601          7.89

Banc Fund Co. LLC
20 N. Upper Wacker Dr. #3300
Chicago, Illinois 60606

     622,573          7.17

Strategic Value Bank Partners LLC
127 Public Square
Cleveland, Ohio 44114

     460,973          5.31

 

*

Represents less than one percent of outstanding CFC common stock.

(1)

Each beneficial owner’s percentage ownership is determined by assuming that CFC Stock Options and CFC Stock Warrants held by such person (and not those held by any other person) and that are exercisable within 60 days of September 30, 2022 have been exercised. As of September 30, 2022, there were 8,688,963 shares of CFC common stock issued and outstanding.

 

37


Table of Contents
(2)

Includes CFC Stock Options, CFC Stock Warrants and CFC Restricted Stock Awards which are exercisable, or vest, within 60 days of September 30, 2022 or become exercisable, or vest, upon the closing date, as follows:

 

Name

   CFC Stock
Options
     CFC Stock
Warrants
     CFC Restricted
Stock Awards
 

Frank A. Conte

     9,302        31,500        —    

Thomas H. Flowers

     —          31,500        —    

Patricia A. Husic

     12,250        —          11,329  

Nicole Stezar Kaylor

     7,316        —          —    

Jeffrey W. Keiser

     8,640        —          —    

John A. Maher

     2,000        2,000        —    

Kerry A. Pae

     9,302        31,500        —    

Jeffrey W. Myers

     10,500        —          4,413  

Sandra J. Schultz

     11,100        —          5,407  

All directors and executive officers as a group (9 persons)

     70,410        96,500        21,149  

 

(3)

Includes 1,542 shares of CFC common stock held in a retirement plan and 407 shares of CFC common stock held in an HAS custodial account, each for the benefit of Mr. Conte.

(4)

Includes 25,420 shares of CFC common stock held in a retirement plan for the benefit of Mr. Dayton.

(5)

Includes 23,349 shares of CFC common stock held by Cocoa Associates LTD and 38,273 shares of CFC common stock held by Colonial Park Realty Company.

(6)

Includes 150 shares of CFC common stock held as custodian for Mr. Flower’s child.

(7)

Includes 14,248 shares of CFC common stock held in a retirement plan for the benefit of Ms. Kaylor.

(8)

Includes 38,062 shares of CFC common stock held in a retirement plan for the benefit of Mr. Pae.

(9)

Includes 10,000 shares of CFC common stock held in a retirement plan for the benefit of Mr. Myers.

 

38


Table of Contents

THE MERGER

This section of the proxy statement/prospectus describes material aspects of the merger. This summary may not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus and the other documents we refer you to for a more complete understanding of the merger. In addition, we incorporate important business and financial information about each of us into this proxy statement/prospectus by reference. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 96.

Terms of the Merger

Each of FCF’s and CFC’s respective board of directors has unanimously approved the merger agreement. The merger agreement provides that, pursuant to the terms and subject to the conditions set forth in the merger agreement, FCF and CFC will merge, with FCF as the surviving corporation, which is referred to as the merger. Following the merger, FCF Bank and CFC Bank will merge, with FCF Bank as the surviving bank, which is referred to as the bank merger.

Each share of CFC common stock issued and outstanding immediately prior to the effective time, except for shares of CFC common stock owned by CFC as treasury stock or owned by CFC or FCF or a subsidiary of either (in each case other than in a fiduciary or agency capacity or as a result of debts previously contracted) and except for shares for which appraisal rights have been exercised, will be converted into the right to receive 1.09 shares of FCF common stock. Holders of CFC common stock who would otherwise be entitled to a fractional share of FCF common stock in the merger will instead receive an amount in cash (rounded to the nearest cent) determined by multiplying the volume weighted average closing price (“VWAP”) of FCF common stock reported on NYSE for the consecutive period of ten (10) full trading days ending on the day that is three trading days preceding the closing date (the “FCF Closing Price”) by the fraction of a share (rounded to the nearest thousandth when expressed in decimal form) of FCF common stock that such shareholder would otherwise be entitled to receive.

CFC shareholders are being asked to approve the CFC merger proposal. See the section entitled “The Merger Agreement” beginning on page 67 for additional and more detailed information regarding the legal documents that govern the merger, including information about the conditions to the completion of the merger and the provisions for terminating or amending the merger agreement.

Background of the Merger

CFC’s board of directors regularly reviews and discusses CFC’s business strategy, performance and strategic prospects in the context of the local and national economic environment, developments in the regulation of financial institutions, the mergers and acquisitions environment for financial institutions, capital management strategies and the competitive landscape, always with the goal of exploring the way to best enhance value for its shareholders. To assist CFC’s board of directors in these reviews, CFC’s board of directors authorized the engagement of Stephens in December 2021 as CFC’s financial advisor, and an engagement letter was executed in January 2022. The board’s decision to engage Stephens was based upon several factors, including Stephens’ familiarity with CFC and its strategic goals as well as Stephens’ experience and reputation generally with respect to representing financial institutions in mergers and acquisitions as well as in the capital markets for financial institutions.

As part of its engagement, among other things, Stephens regularly reviewed and discussed with the CFC board of directors possible strategic initiatives available to CFC to enhance shareholder value, including capital management strategies, in particular focusing on stock repurchases and potential business combinations. These discussions and reviews included analysis of trends and developments in the merger and acquisitions market, including the prices being paid in such transactions, expressed as multiples of various financial measures and

 

39


Table of Contents

premiums paid with respect to a financial institution’s shares. Such analyses also reviewed and assessed possible partners for CFC, both for business combinations as an acquiror or acquiree, as well as for strategic mergers. In connection with the evaluation of these strategic alternatives, Ms. Patricia Husic, the President and Chief Executive Officer of CFC, had, from time to time, informal discussions with representatives of several other financial institutions. These discussions enabled CFC to develop relationships and facilitate business development opportunities with such institutions and to assess the potential merits of a business combination transaction with any such institutions. Ms. Husic, together with representatives of Stephens, regularly apprised CFC’s board of directors of such informal discussions.

In the second half of 2020, Ms. Husic and representatives of Stephens had several discussions with the president and chief executive officer of a bank holding company (“Party A”) regarding a potential sale to Party A. Ms. Husic also had discussions with the president and chief executive officer of another bank holding company (“Party B”) regarding a potential sale to Party B. During the second half of 2021, Ms. Husic also had several discussions with the president and chief executive officer of a bank holding company (“Party C”) regarding a potential merger of equals with Party C. None of these discussions resulted in a letter of intent.

During the first, second and third quarters of 2021, Ms. Husic had several conversations with T. Michael Price, FCF’s president and chief executive officer, regarding FCF’s possible interest in a potential strategic transaction with CFC. As a result of these discussions, on August 10, 2021, Ms. Husic and Mr. Price met in-person and discussed topics related to a strategic combination. However, no terms regarding a possible transaction were discussed.

During the fourth quarter of 2021, Ms. Husic had several discussions with the president and chief executive officer of a bank holding company (“Party D”) regarding a potential sale to Party D. This included entering into nondisclosure agreements, and the parties conducting limited due diligence in December 2021. On February 4, 2022, Party D presented CFC and Stephens with a non-binding indication of interest which, among other things, valued each share of CFC at $16.75 via a fixed stock exchange for shares of Party D’s common stock. This valuation of CFC was verbally increased to $17.00 per share by Party D on February 14, 2022 by increasing the fixed stock exchange ratio. After further due diligence and the parties discussing the terms of the indication of interest, including, among other things, CFC seeking a further increase in the fixed stock exchange ratio as a result of the value of Party D’s common stock decreasing by 6.4% since February 4, 2022, on April 10, 2022, the parties mutually decided to no longer pursue a potential combination.

Ms. Husic and Mr. Price reconnected on May 12, 2022, regarding a potential combination and both provided updates of their respective businesses since their last meeting. Ms. Husic inquired whether Mr. Price would be interested in presenting a letter of intent for CFC’s board of directors to consider.

On May 17, 2022, FCF’s board of directors engaged Keefe, Bruyette & Woods, Inc. to assist FCF in evaluating a potential business combination with CFC. On May 20, 2022, both parties entered into nondisclosure agreements and commenced preliminary due diligence on each other.

On June 2, 2022, FCF submitted a non-binding letter of intent to CFC proposing, among other things, a purchase price of $14 to $16 per share, a commitment to the ongoing meaningful role for Ms. Husic post-closing and the appointment of one mutually acceptable director of CFC to serve on FCF’s board of directors. The Strategic Initiatives Committee of CFC’s board of directors held a number of meetings to review the terms of the letter of intent with representatives of Stephens and Stevens & Lee, P.C., legal counsel to CFC (“S&L”). Over the next two weeks, the parties continued to negotiate the purchase price and other terms of a potential merger. This included CFC seeking more clarification regarding the proposal for Ms. Husic and the mutually acceptable director. Following a meeting of the Strategic Initiatives Committee of CFC’s board of directors on June 13, 2022, Ms. Husic communicated to Mr. Price and Stephens communicated to Keefe, Bruyette & Woods, Inc. that CFC would consider a revised non-binding letter of intent with a fixed exchange ratio for a stock transaction.

On June 14, 2022, FCF submitted a revised non-binding letter of intent, including a fixed exchange ratio for a stock transaction. The non-binding letter of intent proposed, among other things, a fixed exchange ratio of 1.2 shares of FCF common stock for each share of CFC common stock, a meaningful role for Ms. Husic post-closing including a regional leadership position for the current CFC footprint and the appointment of one

 

40


Table of Contents

mutually acceptable director of CFC to serve on the board of directors of each of FCF and FCF Bank. At a special meeting held June 21, 2022, CFC’s board of directors, in addition to reviewing the revised letter of intent, also discussed the ability of CFC to remain independent. While the board discussed the fact that CFC was not required to sell, based upon the pricing indication received, it appeared that a transaction would likely yield greater value to CFC’s shareholders than would remaining independent. Following additional discussion, the CFC board of directors approved the execution of the non-binding letter of intent by Ms. Husic. At this meeting, CFC’s board also discussed with S&L and Stephens the process to be followed now that CFC was entering into a non-binding letter of intent and potential timing. On that same date, CFC and FCF executed the non-binding indication of interest.

As the parties continued to conduct due diligence on each other, Squire Patton Boggs (US) LLP, FCF’s legal counsel (“SPB”), circulated an initial draft of the merger agreement on July 15, 2022. Over the next six weeks, representatives of S&L and SPB exchanged drafts of the merger agreement and related documents, and the two firms and the respective management teams worked towards finalizing the terms of the business combination. During this period, CFC and FCF also continued their reciprocal due diligence efforts.

On July 12, 2022, Mr. Price discussed with Ms. Husic the regional leadership position and, alternatively, a board role. On August 9, 2022, S&L circulated an initial draft of an employment agreement and change in control agreement for Ms. Husic to SPB.

On August 11, 2022, the FCF management team advised Ms. Husic that its estimate of credit costs and other one-time merger expenses was higher than anticipated when the parties entered into the non-binding letter of intent. Due to the higher costs, FCF proposed revised terms for the merger consideration of a fixed exchange ratio of 1.09 shares of FCF common stock for each share of CFC common stock. After extensive discussions at a regular CFC board of directors meeting on August 18, 2022, which included a review of the 1.09 fixed exchange ratio by Stephens, the CFC board of directors determined to approve the revised terms and to proceed with reverse due diligence and finalization of the definitive merger agreement.

On August 23, 2022, SPB circulated a draft of an employment agreement and change in control agreement for Ms. Husic to S&L. Also, on August 23, 2022, Ms. Husic advised Mr. Price that she would prefer the director role that Mr. Price offered on July 12, 2022 rather than a regional leadership position, which was accepted by Mr. Price. During that conversation, Mr. Price asked Ms. Husic to consider assisting FCF and FCF Bank with the transition by serving as a consultant for six months following the closing. On August 26, 2022, SPB circulated an initial draft of the consulting agreement for Ms. Husic to S&L, which was entered into on August 30, 2022.

CFC’s board of directors met on the morning of August 30, 2022. Representatives of Stephens and S&L attended the meeting. The representative of S&L again reviewed with CFC’s board of directors the fiduciary duties owed to CFC shareholders, and then reviewed the terms of the proposed merger, the merger agreement and other transaction documents. The representative of Stephens provided its financial analyses of the proposed transaction and rendered Stephen’s opinion, to the effect that, as of August 30, 2022 and subject to the procedures followed, assumptions made, matters considered and qualifications and limitations on review undertaken by Stephens as set forth in its opinion, the merger consideration, as set forth in the merger agreement, was fair, from a financial point of view, to holders of CFC common stock.

After considering the proposed terms of the merger agreement and related transaction documents, and taking into consideration the matters discussed during that meeting and prior meetings of the CFC board of directors, including the strategic alternatives discussed at those meetings and the factors described under the section of this proxy statement/prospectus entitled “CFC’s Reasons for the Merger; Recommendation of CFC’s Board of Directors, the CFC board of directors determined that the merger, the merger agreement and the other transactions contemplated by the merger agreement were in the best interests of CFC and its shareholders, and the directors approved and adopted the merger agreement and the transactions contemplated by it.

Following the meeting of the CFC board of directors on August 30, 2022, CFC and FCF executed the merger agreement in the late afternoon on August 30, 2022. FCF and CFC announced the transaction in the evening of August 30, 2022, after the close of the financial markets, in a press release jointly issued by CFC and FCF.

 

41


Table of Contents

FCF’s Reasons for the Merger

In reaching its decision to authorize and approve the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby, including the merger, the FCF board of directors evaluated the merger agreement, the merger and the other transactions contemplated by the merger agreement in consultation with FCF’s senior management, as well as with FCF’s legal and financial advisors, and considered a number of factors, including the following principal factors, which are not presented in order of priority:

 

   

each of FCF’s and CFC’s business, operations, financial condition, asset quality, earnings, markets and prospects;

 

   

the strategic rationale for the merger, including expansion of FCF’s business into higher growth, contiguous and demographically attractive metro markets;

 

   

the acceleration of FCF’s growth beyond the $10 billion asset threshold, which will result in additional regulatory burden and associated costs and expenses, which costs and expenses are expected to be mitigated due to the additional revenue and expense reductions provided by the size of the combined company following the merger;

 

   

the expanded possibilities for growth that would be available to FCF, given its expanded suite of product offerings and larger capital and deposit base;

 

   

the compatibility of FCF’s and CFC’s cultures and philosophies;

 

   

the complementary nature of the products, customers and markets of the two (2) companies, which FCF believes should provide the opportunity to mitigate risks and increase potential returns;

 

   

the benefits and opportunities CFC will bring to FCF, including enhanced scale, product offerings and footprint, which should improve the ability of the combined company to attract and retain talent and customers;

 

   

its review and discussions with FCF’s senior management concerning FCF’s due diligence examination of, among other areas, the operations, financial condition and regulatory compliance programs and prospects of CFC;

 

   

the fact that the exchange ratio is fixed, with no adjustment in the merger consideration to be received by CFC shareholders as a result of possible increases or decreases in the trading price of CFC or FCF stock following the announcement of the merger, which the FCF board of directors believed was consistent with market practice for transactions of this type and with the strategic purpose of the transaction;

 

   

its review with FCF’s outside legal counsel of the material terms of the merger agreement, including the representations, warranties, covenants, deal protection and termination provisions;

 

   

its expectation that the required regulatory approvals could be obtained in a timely fashion; and

 

   

the fact that FCF’s current headquarters in Indiana, Pennsylvania will remain the headquarters for FCF and FCF Bank.

The FCF board of directors also considered the potential risks related to the transaction and concluded that the anticipated benefits of combining with CFC were likely to outweigh these risks substantially. These potential risks included, among others:

 

   

the possibility that the anticipated benefits of the transaction will not be realized when expected or at all, including as a result of the impact of, or difficulties arising from, the integration of the two (2) companies or as a result of the strength of the economy, general market conditions and competitive factors in the areas where FCF and CFC operate businesses;

 

42


Table of Contents
   

the costs to be incurred in connection with the merger and the integration of CFC’s and FCF’s respective businesses and the possibility that the transaction and the integration may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

 

   

the possibility of encountering difficulties in achieving anticipated cost savings and synergies in the amounts currently estimated or within the time frame currently contemplated;

 

   

the possible diversion of management focus and resources from the operation of FCF’s business while working to implement the transaction and integrate the two (2) companies;

 

   

the risk that, because the exchange ratio under the merger agreement would not be adjusted for changes in the market price of FCF common stock or CFC common stock, the value of the shares of FCF common stock to be issued to CFC shareholders upon the completion of the merger could be significantly more than the value of such shares immediately prior to the announcement of the parties’ entry into the merger agreement;

 

   

the risk that the regulatory and other approvals required in connection with the merger may not be received in a timely manner or at all or may impose conditions that may adversely affect the anticipated operations, synergies and financial results of FCF following the completion of the merger;

 

   

the potential for legal claims challenging the merger;

 

   

the additional regulatory burden and corresponding costs and expenses associated with crossing the $10 billion asset threshold, which costs and expenses are expected to be mitigated due to the additional revenue and expense reductions provided by the size of the combined company following the merger; and

 

   

the other risks described under the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

The foregoing discussion of the information, factors and risks considered by the FCF board of directors is not intended to be exhaustive, but includes the material factors and risks considered by the board of directors. In reaching its decision to approve the merger agreement and the transactions contemplated by the merger agreement, the FCF board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. The board of directors considered all these factors as a whole, and overall considered the factors to support its determination. This explanation of the reasoning of the FCF board of directors and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” on page 21.

CFC’s Reasons for the Merger; Recommendation of CFC’s Board of Directors

CFC’s board of directors has determined that the merger is fair to and in the best interests of CFC and its shareholders and, by the unanimous vote of all of the members of CFC’s board of directors, approved and adopted the merger agreement and the merger. ACCORDINGLY, THE CFC’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT ALL HOLDERS OF CFC COMMON STOCK VOTE “FOR” THE MERGER PROPOSAL.

In reaching its decision to approve the merger agreement and the transactions contemplated thereby, CFC’s board of directors evaluated the merger agreement in consultation with CFC’s senior management and determined that the merger was the best option reasonably available for its shareholders in the current challenging and uncertain banking market. CFC’s board of directors also consulted with its legal counsel regarding its fiduciary duties, the terms of the merger agreement and related issues, and consulted with CFC’s financial advisor regarding the financial aspects of the proposed transaction.

In reaching its determination to approve the merger agreement, CFC’s board of directors considered all factors it deemed material. CFC’s board of directors analyzed information with respect to the financial condition, results of

 

43


Table of Contents

operations, business and prospects of CFC. In this regard, CFC’s board of directors considered the performance trends of CFC over the past several years. CFC’s board of directors also considered the ability of CFC to grow as an independent institution and its ability to further enhance shareholder value without engaging in a strategic transaction. In this regard, CFC’s board of directors considered the long-term as well as the short-term interests of CFC and its shareholders, including whether those interests might best be served by continued independence.

In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement and recommend that its shareholders vote “FOR” the merger agreement, CFC’s board of directors evaluated the merger agreement, the merger and the other transactions contemplated by the merger agreement in consultation with CFC management, as well as CFC’s financial and legal advisors, and considered a number of factors, including the following material factors, which are not presented in any order of priority:

 

   

CFC’s board of directors’ knowledge of CFC’s business, operations, regulatory and financial condition, asset quality, earnings, loan portfolio, capital and prospects both as an independent organization, and as a part of a combined company with FCF;

 

   

CFC’s board of directors’ understanding of FCF’s business, operations, regulatory and financial condition, asset quality, earnings, capital and prospects taking into account discussions with senior management regarding its due diligence review of FCF;

 

   

the belief of CFC’s board of directors that significant growth in earnings would be necessary for CFC to be in a position to deliver a competitive return to its shareholders and the achievement of such growth in earnings would require significant investment in both resources and time;

 

   

CFC’s board of directors’ belief that the merger consideration offered by FCF equaled or exceeded the consideration that could reasonably be expected from other potential acquirors with the apparent interest and ability to consummate an acquisition of CFC;

 

   

CFC’s board of directors’ belief that the merger is a combination with a substantially larger banking organization with strong capital ratios and an attractive funding base that has the potential to deliver a higher value to CFC’s shareholders as compared to continuing to operate as a stand-alone entity;

 

   

the expanded possibilities, including organic growth and future acquisitions, that would be available to the combined company, given its materially larger size, asset base, capital, market capitalization and footprint than CFC;

 

   

the anticipated pro forma impact of the merger on FCF, including potential synergies, and the expected impact on financial metrics such as earnings and tangible common equity per share, as well as on regulatory capital levels;

 

   

the challenges facing CFC’s management to grow CFC’s business and enhance shareholder value given current market conditions;

 

   

the difficulty of scaling CFC’s infrastructure and hiring qualified personnel as CFC’s business continued to grow given current market conditions;

 

   

the merger consideration offered CFC shareholders the opportunity to participate as shareholders of FCF in the future performance of the combined company;

 

   

the substantially more active trading market in FCF common stock that was expected to provide CFC shareholders greater liquidity for their investment;

 

   

the benefits to CFC and its customers of operating as a substantially larger organization, including enhancements in products and services, higher lending limits, and greater financial resources;

 

   

the geographic fit with FCF and the increased customer convenience of the expanded FCF branch network;

 

   

the increasing importance of operational scale and financial resources in maintaining efficiency and remaining competitive over the long term and in being able to capitalize on technological

 

44


Table of Contents
 

developments that significantly impact industry competitive conditions and to absorb operational expenses resulting from regulatory compliance mandates, including potential additional capital requirements;

 

   

the effects of the merger on CFC employees, including the prospects for continued employment in a larger organization and various benefits agreed to be provided to CFC employees;

 

   

CFC’s board of directors’ understanding of the current and prospective environment in which CFC and FCF operate, including national and local economic conditions, the interest rate environment, increasing operating costs resulting from regulatory initiatives and compliance mandates, and the competitive effects of the continuing consolidation in the banking industry;

 

   

the efforts made to solicit interest from financial institutions considered to have the ability and potential interest in acquiring CFC and the believed low probability of securing a more attractive proposal from another institution capable of consummating the transaction;

 

   

the low probability of CFC completing a more desirable acquisition in the near term;

 

   

the ability of FCF to complete the merger from a financial and regulatory perspective;

 

   

the expectation that the required regulatory approvals could be obtained in a timely manner, considering recent delays and processing times occurring with respect to certain recent transactions;

 

   

CFC’s board of directors’ understanding that the merger will qualify as a “reorganization” under Section 368(a) of the Code, providing favorable tax consequences to CFC’s shareholders with respect to the stock portion of the consideration;

 

   

the opinion, dated August 30, 2022, of Stephens, CFC’s financial advisor, to CFC’s board of directors as to the fairness, from a financial point of view and as of the date of the opinion, to the holders of CFC common stock of the merger consideration in the merger, as more fully described below under “Opinion of CFC’s Financial Advisor;” and

 

   

CFC’s board of directors’ review with its legal advisor, Stevens & Lee, of the material terms of the merger agreement, including CFC’s board of directors’ ability, under certain circumstances, to withhold, withdraw, qualify or modify its recommendation to CFC’s shareholders and to consider a better unsolicited acquisition proposal, subject to the potential payment by CFC of a termination fee to FCF, which CFC’s board of directors concluded was reasonable in the context of termination fees in comparable transactions and in light of the overall terms of the merger agreement, as well as the nature of the covenants, representations and warranties and termination provisions in the merger agreement.

CFC’s board of directors also considered a number of potential risks and uncertainties associated with the merger in connection with its deliberation of the proposed transaction, including, without limitation, the following:

 

   

with the merger consideration based on a fixed exchange ratio, the risk that the consideration to be paid to CFC shareholders could be adversely affected by a decrease in the trading price of FCF common stock during the pendency of the merger;

 

   

the potential risk of diverting management attention and resources from the operation of CFC’s business and towards the completion of the merger;

 

   

the restrictions on the conduct of CFC’s business prior to the completion of the merger, which are customary for public company merger agreements involving financial institutions, but which, subject to specific exceptions, could delay or prevent CFC from undertaking business opportunities that may arise or any other action it would otherwise take with respect to the operations of CFC absent the pending merger;

 

   

the potential risks associated with achieving anticipated cost synergies and savings and successfully integrating CFC’s business, operations and workforce with FCF;

 

45


Table of Contents
   

the fact that the interests of certain of CFC’s directors and executive officers may be different from, or in addition to, the interests of CFC’s other shareholders as described under the heading “The Merger – Interests of CFC’s Directors and Executive Officers”;

 

   

that, while CFC expects that the merger will be consummated, there can be no assurance that all conditions to the parties’ obligations to complete the merger agreement will be satisfied, including the risk that necessary regulatory approvals required in connection with the merger may not be received or may not be received in a timely manner or may impose burdensome or unacceptable conditions or CFC shareholder approval might not be obtained and, as a result, the merger may not be consummated;

 

   

the risk of potential employee attrition and/or adverse effects on business and customer relationships as a result of the pending merger;

 

   

the fact that: (i) CFC would be prohibited from affirmatively soliciting acquisition proposals after execution of the merger agreement; and (ii) CFC would be obligated to pay to FCF a termination fee if the merger agreement is terminated under certain circumstances, which may discourage other parties potentially interested in a strategic transaction with CFC from pursuing such a transaction; and

 

   

the possibility of litigation challenging the merger and the costs associated with such litigation.

The foregoing discussion of the information and factors considered by CFC’s board of directors is not intended to be exhaustive, but is believed to include all the material factors considered by CFC’s board of directors. In reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, CFC’s board of directors did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different factors. CFC’s board of directors considered all these factors as a whole, including through discussions with, and questioning of CFC’s management and CFC’s financial and legal advisors, and overall considered the factors to be favorable to, and to support, its determination.

CFC’s board of directors unanimously recommends that holders of CFC common stock vote “FOR” the approval of the merger proposal and “FOR” the adjournment proposal. CFC shareholders should be aware that CFC’s directors and executive officers have interests in the merger that are different from, or in addition to, those of other CFC shareholders. CFC’s board of directors was aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement, and in recommending that the merger proposal be approved by the shareholders of CFC. After numerous and exhaustive deliberations with respect to the merger and the merger agreement, considering, among other things, the reasons discussed above, CFC’s board of directors approved the merger agreement and the merger as being in the best interests of CFC and its shareholders based on the total mix of information available to CFC’s board of directors. See the section entitled “The Merger—Interests of CFC’s Directors and Executive Officers in the Merger”.

This summary of the reasoning of CFC’s board of directors and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Cautionary Statement Regarding Forward-Looking Statements”.

Opinion of CFC’s Financial Advisor

On December 29, 2021, CFC engaged Stephens to act as financial adviser to CFC in connection with the proposed merger of CFC with and into FCF. Subsequently, on June 26, 2022, as part of its engagement, Stephens was asked to undertake a study of the fairness, from a financial point of view, of the consideration payable in connection with the proposed merger. CFC engaged Stephens because, among other factors, Stephens is a nationally recognized investment banking firm with substantial experience in similar transactions. As part of its investment banking business, Stephens is regularly engaged in the valuation of financial services businesses and their securities in connection with mergers and acquisitions.

 

46


Table of Contents

As part of Stephens’ engagement, representatives of Stephens participated in a meeting of CFC’s board of directors held on August 30, 2022, in which CFC’s board of directors considered and approved the proposed merger. At this meeting, Stephens reviewed the financial aspects of the proposed merger and rendered its oral opinion, which was subsequently confirmed by delivery of a written opinion to CFC’s board of directors dated as of August 30, 2022, that, as of such date, the consideration to be received by holders of CFC common stock (solely in their capacity as such) in the proposed merger was fair to such shareholders from a financial point of view, based upon and subject to the qualifications, assumptions and other matters considered by Stephens in connection with the preparation of its opinion.

The full text of Stephens’ written opinion letter (the “Opinion Letter”) is attached as Annex C to this proxy statement/prospectus. The Opinion Letter outlines the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Stephens in rendering its opinion. The summary of the opinion set forth in this document is qualified in its entirety by reference to the full text of such written Opinion Letter. Investors are urged to read the entire Opinion Letter carefully in connection with their consideration of the proposed merger. CFC did not give any instruction to or impose any limitations on Stephens as it related to the issuance of its opinion.

Stephens’ opinion speaks only as of the date of the Opinion Letter, and Stephens has undertaken no obligation to update or revise its opinion. The opinion was directed to CFC’s board of directors (solely in its capacity as such) in connection with, and for purposes of, its consideration of the proposed merger. The opinion only addresses whether the consideration to be received by holders of CFC common stock (solely in their capacity as such) in the proposed merger was fair to them from a financial point of view as of the date of the opinion. The opinion does not address the underlying business decision of CFC to engage in the proposed merger or any other term or aspect of the merger agreement or the transactions contemplated thereby. Stephens’ opinion does not constitute a recommendation to CFC’s board of directors or any of CFC’s shareholders as to how such person should vote or otherwise act with respect to the proposed merger or any other matter. CFC and FCF determined the merger consideration through a negotiation process.

In connection with developing its opinion, Stephens:

 

(i)

reviewed certain publicly available financial statements and reports regarding CFC and FCF;

 

(ii)

reviewed certain audited financial statements regarding CFC and FCF;

 

(iii)

reviewed certain internal financial statements, management reports and other financial and operating data concerning CFC and FCF prepared by management of CFC and management of FCF, respectively;

 

(iv)

reviewed, on a pro forma basis, in reliance upon consensus research estimates and upon financial projections and other information and assumptions concerning CFC and FCF provided by management of CFC and management of FCF, respectively, the effect of the proposed merger on the balance sheet, capitalization ratios, earnings and tangible book value both in the aggregate and, where applicable, on a per share basis of FCF;

 

(v)

reviewed the reported prices and trading activity for CFC common stock and FCF common stock;

 

(vi)

compared the financial performance of CFC and FCF with that of certain other publicly-traded companies and their securities that Stephens deemed relevant to Stephens’ analysis of the proposed merger;

 

(vii)

reviewed the financial terms, to the extent publicly available, of certain merger or acquisition transactions that Stephens deemed relevant to Stephens’ analysis of the proposed merger;

 

(viii)

reviewed the then most recent draft of the merger agreement and related documents provided to Stephens by CFC;

 

(ix)

discussed with management of CFC and management of FCF the operations of and future business prospects for CFC and FCF, respectively and the anticipated financial consequences of the proposed merger to CFC and FCF, respectively;

 

47


Table of Contents
(x)

assisted in CFC’s deliberations regarding the material terms of the proposed merger and CFC’s negotiations with FCF; and

 

(xi)

performed such other analyses and provided such other services as Stephens deemed appropriate.

Stephens relied on the accuracy and completeness of the information, financial data and financial forecasts provided to Stephens by CFC and FCF and of the other information reviewed by Stephens in connection with the preparation of Stephens’ opinion, and its opinion was based upon such information. Stephens did not independently verify or undertake any responsibility to independently verify the accuracy or completeness of any of such information, data or forecasts. Management of CFC and management of FCF assured Stephens that they were not aware of any relevant information that had been omitted or remained undisclosed to Stephens. Stephens did not assume any responsibility for making or undertaking an independent evaluation or appraisal of any of the assets or liabilities of CFC or of FCF, and Stephens was not furnished with any such evaluations or appraisals; nor did Stephens evaluate the solvency or fair value of CFC or of FCF under any laws relating to bankruptcy, insolvency or similar matters. Stephens did not assume any obligation to conduct any physical inspection of the properties, facilities, assets or liabilities (contingent or otherwise) of CFC or FCF. Stephens did not receive or review any individual loan or credit files nor did Stephens make an independent evaluation of the adequacy of the allowance for loan and lease losses of CFC or FCF. Stephens did not make an independent analysis of the effects of the COVID-19 pandemic, the invasion of Ukraine, potential future changes in the inflation rate or other related market developments or disruptions, or of any other disaster or adversity, on the business or prospects of CFC or FCF. With respect to the financial forecasts prepared by management of CFC and management of FCF, including the forecasts of potential cost savings and potential synergies, Stephens assumed that such financial forecasts had been reasonably prepared and reflected the best then currently available estimates and judgments of management of CFC and management of FCF, respectively, as to the future financial performance of CFC and FCF, respectively, and provided a reasonable basis for Stephens’ analysis. Stephens recognized that such financial forecasts were based on numerous variables, assumptions and judgments that were inherently uncertain (including, without limitation, factors related to general economic and competitive conditions) and that actual results could vary significantly from such forecasts, and Stephens expressed no opinion as to the reliability of such financial projections and estimates or the assumptions upon which they were based.

Stephens does not provide legal, accounting, regulatory, or tax advice or expertise, and Stephens relied solely, and without independent verification, on the assessments of CFC and its other advisors with respect to such matters. Stephens assumed, with CFC’s consent, that the proposed merger will not result in any materially adverse legal, regulatory, accounting or tax consequences for CFC or its shareholders and that any reviews of legal, accounting, regulatory or tax issues conducted as a result of the proposed merger will be resolved favorably to CFC and its shareholders. Stephens did not express any opinion as to any tax or other consequences that might result from the proposed merger.

Stephens’ opinion was necessarily based upon market, economic and other conditions as they existed and could be evaluated on the date of the opinion, and on the information made available to Stephens as of the date of the opinion. Market price data used by Stephens in connection with its opinion was based on reported market closing prices as of August 29, 2022. It should be understood that subsequent developments may affect the opinion and that Stephens did not undertake any obligation to update, revise or reaffirm the opinion or otherwise comment on events occurring after the date of the opinion. Stephens further noted that the current volatility and disruption in the credit and financial markets relating to, among other things, the COVID-19 pandemic, the invasion of Ukraine or potential future changes in inflation rates may or may not have an effect on CFC or FCF, and Stephens did not express an opinion as to the effects of such volatility or such disruption on the proposed merger or any party to the proposed merger. Stephens further expressed no opinion as to the prices at which shares of CFC common stock or FCF common stock may trade at any time subsequent to the announcement of the proposed merger.

 

48


Table of Contents

In connection with developing its opinion, Stephens assumed that, in all respects material to its analyses:

 

(i)

the proposed merger and any related transactions will be consummated on the terms of the latest draft of the merger agreement provided to Stephens, without material waiver or modification;

 

(ii)

the representations and warranties of each party in the merger agreement and in all related documents and instruments referred to in the merger agreement are true and correct;

 

(iii)

each party to the merger agreement and all related documents will perform all of the covenants and agreements required to be performed by such party under such documents;

 

(iv)

all conditions to the completion of the proposed merger will be satisfied within the time frames contemplated by the merger agreement without any waivers;

 

(v)

that in the course of obtaining the necessary regulatory, lending or other consents or approvals (contractual or otherwise) for the proposed merger and any related transactions, no restrictions, including any divestiture requirements or amendments or modifications, will be imposed that would have a material adverse effect on the contemplated benefits of the proposed merger to holders of CFC common stock;

 

(vi)

there has been no material change in the assets, liabilities, financial condition, results of operations, business or prospects of CFC or FCF since the date of the most recent financial statements made available to Stephens, and that no legal, political, economic, regulatory or other development has occurred that will adversely impact CFC or FCF; and

 

(vii)

the proposed merger will be consummated in a manner that complies with applicable law and regulations.

Stephens’ opinion was limited to whether the consideration to be received by holders of CFC common stock (solely in their capacity as such) in the proposed merger was fair to them from a financial point of view as of the date of the opinion. Stephens was not asked to, and it did not, offer any opinion as to the terms of the merger agreement or the form of the proposed merger or any aspect of the proposed merger, other than the fairness, from a financial point of view, of the consideration to be received in the proposed merger by holders of CFC common stock (solely in their capacity as such). The opinion did not address the merits of the underlying decision by CFC to engage in the proposed merger, the merits of the proposed merger as compared to other alternatives potentially available to CFC or the relative effects of any alternative transaction in which CFC might engage, nor is it intended to be a recommendation to any person or entity as to any specific action that should be taken in connection with the proposed merger, including with respect to how to vote or act with respect to the proposed merger. Moreover, Stephens did not express any opinion as to the fairness of the amount or nature of the compensation to any of CFC’s officers, directors or employees, or to any group of such officers, directors or employees, whether relative to the compensation to other shareholders of CFC or otherwise.

The following is a summary of the material financial analyses performed and material factors considered by Stephens in connection with developing its opinion. Stephens performed certain procedures, including each of the financial analyses described below, and reviewed with CFC’s executive management and board of directors the assumptions upon which the analyses were based, as well as other factors. Although this summary does not purport to describe all of the analyses performed or factors considered by Stephens, it does set forth those analyses considered by Stephens to be material in arriving at its opinion. The preparation of a fairness opinion is a complex analytic process involving various determinations as to the appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. The order of the summaries of analyses described does not represent the relative importance or weight given to those analyses by Stephens. It should be noted that in arriving at its opinion, Stephens did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Stephens believes that its analysis must be considered as a whole and that considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion. The financial analyses

 

49


Table of Contents

summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the financial analyses summarized below. Accordingly, Stephens’ analyses and the summary of its analyses must be considered as a whole, and selecting portions of its analyses and factors or focusing on the information presented below in tabular format, without considering all analyses and factors or the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the process underlying Stephens’ analyses and opinion.

Summary of Proposed Transaction:

Pursuant to the merger agreement and subject to the terms, conditions and limitations set forth therein, and for purposes of its opinion, Stephens understood that, subject to potential adjustments as described in the merger agreement, each outstanding share of CFC common stock (including restricted shares) will be converted into the right to receive 1.090 shares of FCF common stock. Stephens also understood that under the terms of the merger agreement outstanding options and warrants on CFC common stock will be converted into rights to receive FCF common stock on the terms set forth in the merger agreement. Based on FCF’s closing stock price of $14.13 on August 29, 2022, Stephens understood that the implied value of each share of CFC common stock would be approximately $15.40 and that the shares expected to be exchanged by FCF to acquire all of the equity interests in CFC would have an aggregate value of approximately $136.4 million as of August 29, 2022. Based upon the unaudited financial information of CFC as of and for the twelve months ended June 30, 2022, and market data as of August 29, 2022, Stephens calculated the following implied transaction multiples:

 

Transaction Value / Reported Tangible Book Value:

     1.31x  

Transaction Value / Diluted Tangible Book Value(1):

     1.37x  

Transaction Value / LTM GAAP Earnings:

     15.4x  

Transaction Value / LTM Adjusted Earnings(2):

     14.2x  

Transaction Value / 2022Q2 Annualized Earnings:

     11.6x  

Transaction Value / 2023 Estimated Earnings(3):

     8.2x  

Core Deposit Premium(4):

     4.7

Note: The most recent quarter net earnings of CFC is based on the most recent available financial statements prior to announcement. Estimated 2023 net earnings based on assumptions provided by CFC’s management.

  (1)

Aggregate deal value (inclusive of non-vested warrants and in-the-money option value) divided by target tangible common equity at 6/30/2022.

  (2)

Represents LTM earnings as of 6/30/2022, adjusted for $4.7 million of PPP fees and a $5.4 million charge-off in Q3 2021, effected with a normalized provision and taxes.

  (3)

Estimated 2023 net income based on assumptions provided by CFC’s management.

  (4)

Calculated using tangible common equity at 6/30/2022 and deposits less time deposits > $100k.

 

50


Table of Contents

 

Based upon recent fluctuations in the trading price of FCF’s stock on and before August 29, 2022, Stephens calculated the following approximate transaction aggregate values:

 

As of

8/29/2022

   FCF
Price
p/s

($)
     CFCX
Purchase

Price p/s
($)
     Agg.
Deal
Value(1)
($M)
     Current
Market
Premium(2)
(%)
    Unaffected
Market

Premium(3)
(%)
    Price /
TBV
p/s
(x)
     Price /
Diluted

TBV(4)
(x)
 

Spot Price

   $ 14.13      $ 15.40      $ 136.4        42     55     1.31x        1.37x  

VWAPS

                  

5 day

   $ 14.49      $ 15.79      $ 139.9        46     59     1.35x        1.40x  

10 day

   $ 14.86      $ 16.20      $ 143.6        50     63     1.38x        1.44x  

15 day

   $ 14.90      $ 16.24      $ 144.0        50     63     1.39x        1.44x  

20 day

   $ 14.81      $ 16.14      $ 143.1        49     62     1.38x        1.44x  

30 day

   $ 14.65      $ 15.97      $ 141.5        48     61     1.36x        1.42x  

60 day

   $ 13.98      $ 15.24      $ 134.9        41     53     1.30x        1.35x  

YTD

   $ 14.96      $ 16.31      $ 144.6        51     64     1.39x        1.45x  

Note: S&P Global Market Intelligence, CFC documents.

  (1)

Aggregate deal value (inclusive of non-vested warrants and in-the-money option value).

  (2)

Market premium based on CFC stock price of $10.81 per share as of 8/29/2022.

  (3)

Unaffected is market premium based on CFC common stock price of $9.94 per share as of 8/9/2022 before the stock jumped up due to a high volume day.

  (4)

Aggregate deal value (inclusive of non-vested warrants and in-the-money option value) divided by target tangible common equity at 6/30/2022.

Relevant Public Companies Analysis – Company:

Stephens compared the financial condition, operating statistics and market valuation of CFC to certain public companies selected by Stephens and their respective public trading values. Stephens selected the companies outlined below because their relative asset size and financial performance, among other factors, were reasonably similar to CFC; however, no selected company below was identical or directly comparable to CFC. A complete analysis involves complex considerations and qualitative judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading values of the relevant public companies. Mathematical analysis (such as determining the median) is not in itself a meaningful method of using relevant public company data.

Stephens selected the following sixteen (16) public companies based on the criteria set forth below:

Includes major exchange-traded(1) banks and thrifts headquartered in the Mid-Atlantic Region (DC, DE, MD, NJ, NY, PA) with between $500 million and $2 billion in most recent quarter total assets and TCE /TA less than 15%, excluding merger targets, mutuals and specialty situations (CARV):

 

Parke Bancorp Inc. (PKBK)

Penns Woods Bancorp, Inc. (PWOD)

Meridian Corp. (MRBK)

ESSA Bancorp, Inc. (ESSA)

Franklin Financial Services (FRAF)

First United Corp. (FUNC)

FNCB Bancorp, Inc. (FNCB)

The Bank of Princeton (BPRN)

  

Hanover Bancorp, Inc. (HNVR)

CB Financial Services, Inc. (CBFV)

Pathfinder Bancorp, Inc. (PBHC)

AmeriServ Financial, Inc. (ASRV)

Esquire Financial Holdings, Inc. (ESQ)

Malvern Bancorp, Inc. (MLVF)

Magyar Bancorp (MGYR)

HV Bancorp, Inc. (HVBC)

Note:

  (1)

Major exchange-traded banks includes banks traded on NYSE, NYSEAM and NASDAQ exchanges.

 

51


Table of Contents

To perform this analysis, Stephens reviewed publicly available financial information as of and for the last twelve-month period ended June 30, 2022, or the most recently reported period available, and the market trading multiples of the selected public companies based on August 29, 2022 closing prices. The financial data included in the table presented below may not correspond precisely to the data reported in historical financial statements as a result of the assumptions and methods used by Stephens to compute the financial data presented. The table below contains information reviewed and utilized by Stephens in its analysis:

 

                                                          Price /        

Company

  Ticker     Total
Assets
($M)
    TCE /
TA
(%)
    Loans /
Deposits
(%)
    NPAs /
Assets(1)
(%)
    LTM
GAAP
ROAA
(%)
    LTM
Core
ROAA(2)
(%)
    LTM
GAAP
ROATCE
(%)
    Market
Cap.
($M)
    TBV
(x)
    LTM
EPS
(x)
    MRQ
EPS
(x)
    Dividend
Yield
(%)
 

Parke Bancorp Inc.

    PKBK     $ 1,990       12.5       96.4       0.19       1.99       1.99       17.8     $ 269       1.08       6.6       6.8       2.8  

Penns Woods Bancorp Inc.

    PWOD       1,892       7.9       93.7       0.25       0.87       0.87       11.2       169       1.14       10.1       9.9       5.3  

Meridian Corp.

    MRBK       1,853       8.1       96.9       1.24       1.62       1.61       18.8       185       1.27       6.8       8.2       2.5  

ESSA Bancorp Inc.

    ESSA       1,846       10.9       102.0       0.44       0.98       0.99       9.5       190       1.02       10.5       9.5       3.1  

Franklin Financial Services

    FRAF       1,832       6.2       61.6       0.31       0.92       0.82       11.6       141       1.26       8.9       10.0       4.0  

First United Corp.

    FUNC       1,752       6.9       83.1       0.38       1.31       1.36       18.5       121       1.00       5.2       5.8       3.3  

FNCB Bancorp Inc.

    FNCB       1,693       7.4       76.3       0.28       1.24       1.24       13.4       159       1.26       7.9       7.0       4.5  

The Bank Princeton

    BPRN       1,625       12.4       100.4       0.06       1.46       1.49       12.2       182       0.91       7.9       7.6       3.4  

Hanover Bancorp Inc.

    HNVR       1,610       9.3       104.9       0.78       1.68       1.70       21.9       146       0.99       4.8       6.4       2.0  

CB Financial Services Inc.(3)

    CBFV       1,386       7.3       84.6       0.28       0.84       0.78       11.9       112       1.12       9.6       9.5       4.4  

Pathfinder Bancorp Inc.

    PBHC       1,363       7.6       76.1       0.87       1.05       1.04       9.8       117       1.14       8.8       8.9       1.8  

AmeriServ Financial Inc.

    ASRV       1,321       7.1       84.4       0.25       0.56       0.61       7.7       65       0.70       8.5       8.3       3.1  

Esquire Financial Holdings Inc

    ESQ       1,310       11.1       74.4       0.00       1.85       1.87       14.9       289       2.11       14.6       13.0       0.9  

Malvern Bancorp Inc

    MLVF       1,030       14.1       103.0       0.57       (0.16     (0.16     (1.2     119       0.83       NM       16.5       0.0  

Magyar Bancorp

    MGYR       791       12.8       94.7       0.61       0.89       0.89       7.6       87       0.86       11.8       10.0       1.0  

HV Bancorp Inc.

    HVBC       571       7.2       81.3       0.46       0.49       0.45       6.5       48       1.17       16.4       17.2       0.0  

75th Percentile

    $ 1,836       11.4       97.7       0.25       1.50       1.52       15.6     $ 183       1.19       10.3       10.0       3.6  

Median

    $ 1,617       8.0       89.1       0.35       1.02       1.01       11.8     $ 144       1.10       8.8       9.2       3.0  

25th Percentile

    $ 1,318       7.3       80.0       0.58       0.86       0.81       9.0     $ 116       0.97       7.3       7.5       1.6  

Centric Financial Corporation(4)

    CFCX     $ 1,036       9.6       102.9       1.20       0.85       0.85       9.3     $ 92       0.92       9.8       7.9       —    

Source: S&P Global Market Intelligence, FactSet.

Note: Dollars in millions. LTM=Last Twelve Months reported. MRQ=Most Recent Quarter reported. Market data as of August 29, 2022. “—” indicates data not applicable or data not available.

  (1)

NPAs / Assets excludes restructured loans from nonperforming assets.

  (2)

As defined by S&P Global Market Intelligence.

  (3)

Price / MRQ EPS normalized for provision expense in 2022Q2.

  (4)

For purposes of calculating P/LTM EPS, CFC LTM EPS is adjusted to remove PPP fees and implement a normalized provision expense based on estimates provided by CFC management.

Relevant Regional(1) Bank & Thrift Transactions Analysis – Company:

Stephens reviewed certain publicly available transaction multiples and related financial data for Regional bank and thrift transactions announced since January 1st, 2021, where (i) the deal value was publicly disclosed and (ii) the target’s assets were between $300 million and $2 billion, excluding any merger of equals (as defined by S&P Global Market Intelligence), HPS Investment Partners, LLC / Marlin Business Services Corp. (Management Buyout) and NMB Financial Corp / Noah Bank (Hostile LOI).

 

52


Table of Contents

The following sixteen (16) transactions were selected by Stephens because each target’s relative asset size, financial performance and operations, among other factors, was reasonably similar to CFC; however, no selected company or transaction below was identical or directly comparable to CFC or the proposed merger:

 

Acquirer    Target    Announcement
Date
 

Somerset Savings Bank SLA

   Regal Bancorp Inc.      7/25/2022  

Middlefield Banc Corp.

   Liberty Bancshares (Ada OH)      5/26/2022  

Brookline Bancorp Inc.

   PCSB Financial Corporation      5/24/2022  

Farmers National Banc Corp.

   Emclaire Financial Corp      3/24/2022  

Fulton Financial Corporation

   Prudential Bancorp, Inc.      3/2/2022  

Civista Bancshares Inc.

   Comunibanc Corp.      1/10/2022  

OceanFirst Financial Corp.

   Partners Bancorp      11/4/2021  

Community Bank System, Inc.

   Elmira Savings Bank      10/3/2021  

Spencer Savings Bank, Savings and Loan Association

   Mariner’s Bank      7/16/2021  

Lakeland Bancorp, Inc.

   1st Constitution Bancorp      7/12/2021  

Mid Penn Bancorp, Inc.

   Riverview Financial Corporation      6/30/2021  

Valley National Bancorp

   Westchester Bank Holding Corporation      6/29/2021  

Farmers National Banc Corp.

   Cortland Bancorp      6/23/2021  

Farmers & Merchants Bancorp, Inc.

   Perpetual Federal Savings Bank      5/4/2021  

Shore Bancshares, Inc.

   Severn Bancorp, Inc.      3/3/2021  

Fidelity D & D Bancorp Inc.

   Landmark Bancorp Inc.      2/26/2021  

Note:

  (1)

Regional states include Pennsylvania, New York, New Jersey, Maryland and Ohio.

 

53


Table of Contents

Stephens considered these selected transactions to be reasonably similar, but not identical or directly comparable, to the proposed merger. A complete analysis involves complex considerations and qualitative judgments concerning differences in the selected transactions and other factors that could affect the transaction values in those selected transactions as compared with the proposed merger. Mathematical analysis (such as determining the median) is not in itself a meaningful method of using selected transaction data. Stephens compared certain transaction multiples implied by the proposed merger to the 25th percentile, median and 75th percentile transaction multiples of the selected transactions:

 

Acquirer

 

Target

  Announce
Date
    Deal
Value
($M)
    Target
Total

Assets
($M)
    Target
NPA /
Assets
(%)
    Target
LTM
ROAA
(%)
    Price /
Tangible
Book
Value
(x)
    Price /
LTM
Earnings
(x)
    Core
Deposit
Premium
(%)
    Day 1
Market
Premium
(%)
 

Somerset Savings Bank SLA

  Regal Bancorp Inc.     7/25/2022       58       544       0.0       0.6       1.28       20.2       3.4       —    

Middlefield Banc Corp.

  Liberty Bancshares (Ada OH)     5/26/2022       64       437       0.2       1.0       1.19       13.5       —         2  

Brookline Bancorp Inc.

  PCSB Financial Corp.     5/24/2022       313       1,985       0.4       0.8       1.18       20.3       3.3       130  

Farmers National Banc Corp.

  Emclaire Financial Corp     3/24/2022     $ 107     $ 1,060       0.3       1.0       1.42       10.4       4.1       30  

Fulton Financial Corp.

  Prudential Bancorp Inc.     3/2/2022       138       1,084       1.2       0.7       1.07       17.9       1.7       21  

Civista Bancshares Inc.

  Comunibanc Corp.     1/10/2022       50       329       1.1       0.6       1.53       27.6       7.9       60  

OceanFirst Financial Corp.

  Partners Bancorp     11/4/2021       188       1,638       0.8       0.5       1.46       26.3       5.3       20  

Community Bank System Inc.

  Elmira Savings Bank     10/3/2021       83       644       —         0.8       1.61       15.0       7.0       73  

Spencer Savings Bank SLA

  Mariner’s Bank     7/16/2021       51       422       2.3       1.1       1.24       14.3       3.1       —    

Lakeland Bancorp

  1st Constitution Bancorp     7/12/2021       244       1,789       1.0       1.2       1.52       11.5       5.9       14  

Mid Penn Bancorp Inc.

  Riverview Financial Corp.     6/30/2021       125       1,215       1.0       0.7       1.21       12.2       2.3       12  

Valley National Bancorp

  Westchester Bank Holding Corp.     6/29/2021       220       1,313       0.2       1.1       1.69       18.1       8.7       —    

Farmers National Banc Corp.

  Cortland Bancorp     6/23/2021       124       792       1.0       1.2       1.51       12.6       6.8       12  

Farmers & Merchants Bancorp

  Perpetual Federal Savings Bank     5/4/2021       104       391       0.3       1.2       1.31       21.6       13.8       39  

Shore Bancshares Inc.

  Severn Bancorp Inc.     3/3/2021       146       953       1.3       0.8       1.34       21.7       —         39  

Fidelity D & D Bancorp Inc.

  Landmark Bancorp Inc.     2/26/2021       44       354       0.4       0.4       1.21       32.4       3.0       37  
  75th Percentile     $ 157     $ 1,239       0.3       1.1       1.52       21.7       6.9       39  
  Median     $ 115     $ 872       0.8       0.8       1.32       18.0       4.7       30  
  25th Percentile     $ 63     $ 433       1.1       0.7       1.21       13.3       3.1       14  

First Commonwealth Financial Corporation

  Centric Financial Corporation(2)     —       $ 136     $ 1,036       1.2       0.9       1.37       14.2       4.7       42  

Note:

  (1)

Regional states include Pennsylvania, New York, New Jersey, Maryland and Ohio.

  (2)

Represents CFC LTM earnings as of 6/30/2022, adjusted for $4.7 million of PPP fees and a $5.4 million charge-off in Q3 2021, effected with a normalized provision and taxes.

 

54


Table of Contents

Discounted Cash Flow Analysis – Company:

Stephens performed a standalone discounted cash flow analysis using projections developed by the executive management team of CFC, and then calculated a range of implied equity values for CFC based upon the discounted net present value of the projected after-tax free cash flows for the projected period. Stephens determined the amount of cash flow assuming (i) a terminal earnings multiple of 10.0x and (ii) a present value of the Company’s implied standalone terminal value of $221.5 million based on 2027 estimated earnings.

In selecting a terminal earnings multiple, Stephens considered a range implied by major exchange-traded $1.5 billion asset-sized banks of 9.0x to 11.0x. Stephens selected the midpoint of the selected range of 10.0x as the terminal earnings multiple. Stephens calculated the terminal value of CFC by applying the selected terminal earnings multiple to CFC’s calendar year 2027 projected net income of $22.1 million. The resulting terminal value for CFC was approximately $221.5 million based on the 10.0x price to forward earnings multiple.

Stephens considered discount rates implied by major exchange-traded $1-5 billion asset-sized banks from 13.0% to 17.0%. Using the CAPM methodology, Stephens calculated the range of discount rates using values for 3-year unlevered beta relative to the S&P 500, re-levered for the tax and capital structure of CFC. Stephens considered the equity risk premium and size based premium as outlined in the 2021 Duff & Phelps Valuation Handbook and the risk free rate based on the U.S. 30 year treasury rate of 3.2% as of August 29, 2022.

Based on this analysis, Stephens derived a range for the implied equity value of CFC from $11.32 per share to $16.18 per share.

The discounted cash flow analysis is a widely used valuation methodology, but the results of this methodology are highly dependent on the assumptions that must be made, including asset and earnings growth rates, terminal values, capital levels, and discount rates. The analysis did not purport to be indicative of the actual values or expected values of CFC. The actual results may vary from the projected results, any of these assumptions might not be realized in future operations and the variations may be material.

Miscellaneous:

The preparation of a fairness opinion is a complex process and is not susceptible to a partial analysis or summary description. Stephens believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering the analyses taken as a whole, would create an incomplete view of the process underlying its opinion. In addition, Stephens considered the results of all such analyses and did not assign relative weights to any of the analyses, but rather made qualitative judgments as to significance and relevance of each analysis and factor, so the results from any particular analysis described above should not be taken to be the view of Stephens.

In performing its analyses, Stephens made numerous assumptions with respect to industry performance, general business, economic and regulatory conditions and other matters, many of which are beyond the control of CFC. The analyses performed by Stephens are not necessarily indicative of actual values, trading values or actual future results which might be achieved, all of which may be significantly more or less favorable than suggested by such analyses. The analyses do not purport to be appraisals or to reflect the prices at which companies may actually be sold, and such estimates are inherently subject to uncertainty.

Stephens is serving as financial adviser to CFC in connection with the proposed merger and is entitled to receive from CFC reimbursement of its expenses and a fee for its services as financial advisor to CFC, a significant portion of which is contingent upon the consummation of the proposed merger. Stephens also received a $215,000 fee from CFC upon rendering its fairness opinion and a $250,000 advisory services fee upon the execution of the definitive merger agreement and the public announcement of the proposed merger. Upon the closing of the proposed merger, Stephens will be entitled to a fee in an amount equal to $1,577,535, reduced by

 

55


Table of Contents

the $250,000 advisory services fee previously paid by CFC. The remaining portion of the fees payable to Stephens in connection with the proposed merger ($1,327,535) represents 74.1% of the total fees paid or payable to Stephens ($1,792,535). CFC has also agreed to indemnify Stephens against certain claims and liabilities that could arise out of Stephens’ engagement, including certain liabilities that could arise out of Stephens’ providing its opinion.

Stephens is familiar with CFC and FCF. Stephens issues periodic research reports regarding the business and prospects of FCF, and Stephens makes a market in the stock of FCF. Stephens has not received fees for providing investment banking services to CFC or FCF within the past two years. Stephens expects to pursue future investment banking services assignments with participants in the proposed merger transaction.

In the ordinary course of its business, Stephens and its affiliates and employees at any time may hold long or short positions, and may trade or otherwise effect transactions as principal or for the accounts of customers, in debt, equity or derivative securities of participants in the proposed merger.

Certain Unaudited Prospective Financial Information

FCF and CFC do not, as a matter of course, publicly disclose forecasts or internal projections as to their respective future performance, earnings or other results due to, among other reasons, the inherent uncertainty of the underlying assumptions and estimates.

However, in connection with the merger, FCF’s senior management and CFC’s senior management prepared or approved for use certain unaudited prospective financial information which was provided to and considered by Stephens for the purpose of performing financial analyses in connection with its fairness opinion, as described in this proxy statement/prospectus under “—Opinion of CFC’s Financial Advisor” beginning on page 46. We refer to this information collectively as the “prospective financial information”.

The prospective financial information was not prepared for the purpose of, or with a view toward, public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, published guidelines of the SEC regarding forward-looking statements or generally accepted accounting principles. A summary of certain significant elements of this information is set forth below, and is included in this proxy statement/prospectus solely for the purpose of providing holders of CFC common stock access to certain nonpublic information made available to CFC’s financial advisor for the purpose of performing financial analyses in connection with its fairness opinion.

Although presented with numeric specificity, the prospective financial information reflects numerous estimates and assumptions made by FCF’s senior management or CFC’s senior management, as applicable, at the time such prospective financial information was prepared or approved for use by CFC’s financial advisor and represents, as applicable, FCF senior management’s or CFC senior management’s respective evaluation of FCF’s expected future financial performance on a stand-alone basis, without reference to the merger, and CFC’s expected future financial performance on a stand-alone basis, without reference to the merger. These and the other estimates and assumptions underlying the prospective financial information involve judgments with respect to, among other things, economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic conditions affecting the industry in which FCF and CFC operate and the risks and uncertainties described under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in this proxy statement/prospectus and in the reports that FCF files with the SEC from time to time, all of which are difficult to predict and many of which are outside the control of FCF and CFC and will be beyond the control of the combined company. There can be no assurance that the underlying assumptions would prove to be accurate or that the projected results would be realized, and actual results could differ materially from

 

56


Table of Contents

those reflected in the prospective financial information, whether or not the merger is completed. Neither FCF nor CFC endorses the prospective financial information as necessarily predictive of actual future results. Further, these assumptions do not include all potential actions that the senior management of FCF or CFC could or might have taken during these time periods. The inclusion in this proxy statement/prospectus of the unaudited prospective financial information below should not be regarded as an indication that FCF, CFC or their respective boards of directors or CFC’s financial advisor considered, or now consider, this prospective financial information to be material information to any holders of FCF common stock or holders of CFC common stock, as the case may be, particularly in light of the inherent risks and uncertainties associated with such prospective financial information. This information should not be construed as financial guidance and it should not be relied on as such. This information was prepared solely for internal use and is subjective in many respects and thus is susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. The prospective financial information is not fact and should not be relied upon as being necessarily indicative of actual future results. The prospective financial information also reflects numerous variables, expectations and assumptions available at the time it was prepared as to certain business decisions that are subject to change and do not take into account any circumstances or events occurring after the date they were prepared. Further, the prospective financial information does not take into account the effect of any possible failure of the merger to occur. No assurances can be given that if the prospective financial information and the underlying assumptions had been prepared as of the date of this proxy statement/prospectus, similar assumptions would be used. In addition, the prospective financial information may not reflect the manner in which the combined company would operate after the merger.

The prospective financial information included in this document has been prepared by, and is the responsibility of, management of FCF and CFC. Neither FCF’s independent registered public accounting firm nor CFC’s independent auditor have audited, reviewed, examined, compiled nor applied agreed upon procedures with respect to the prospective financial information and, accordingly, no independent registered public accounting firm has expressed any opinion or given any other form of assurance with respect thereto and no independent registered public accounting firm assumes any responsibility for the prospective financial information. The report of FCF’s independent registered public accounting firm, Ernst & Young LLP, incorporated by reference in this proxy statement/prospectus relates to the historical financial information of FCF. Such report does not extend to the prospective financial information and should not be read to do so.

Prospective Financial Information Regarding FCF

In performing its financial analysis, Stephens used the following prospective financial information regarding FCF, which was based on research analyst consensus estimates for 2022 and 2023 and on information provided to Stephens by FCF management and was approved by FCF and CFC for use by Stephens in connection with developing its fairness opinion: (i) estimated earnings per share for FCF of $0.76 for the period from July 1, 2022 to December 31, 2022, $1.56 for the year ending December 31, 2023, and $1.56 for the year ending December 31, 2024; and (ii) an estimated annual earnings per share growth rate thereafter of 7.0%, per FCF management. FCF’s earnings per share for the year ending December 31, 2024 was projected to be unchanged from the prior year, as the additional regulatory burden and corresponding costs and expenses associated with crossing the $10 billion asset threshold, including the reduction in annual card-related interchange income, was assumed to offset normal earnings growth.

Prospective Financial Information Regarding CFC

In performing its financial analysis with respect to CFC on a stand-alone basis, Stephens used the following prospective financial information regarding CFC, which was provided to Stephens by CFC management and was approved by CFC for use by Stephens in connection with developing its fairness opinion: (i) estimated annual asset growth rate of 6.4% in 2022, 9.3% in 2023 and 7.5% in 2024 and thereafter; (ii) estimated net income available to common shareholders of CFC of $12.4 million for the year ending December 31, 2022 and $16.6 million for the year ending December 31, 2023; and (iii) assumed net income growth rate of 7.5% for 2024 and thereafter.

 

57


Table of Contents

The following table presents certain unaudited prospective financial information for CFC for the years ending December 31, 2022 through December 31, 2026.

 

     As of or for the Year Ended,  
     December 31,
2022
     December 31,
2023
     December 31,
2024
     December 31,
2025
     December 31,
2026
 

Net Income ($M)

   $ 12.4      $ 16.6      $ 17.8      $ 19.2      $ 20.6  

Earnings Per Share

   $ 1.41      $ 1.89      $ 2.04      $ 2.19      $ 2.35  

Dividends Per Share

   $ 0.00      $ 0.00      $ 0.00      $ 0.00      $ 0.00  

Tangible Book Value per Share

   $ 12.31      $ 14.23      $ 16.29      $ 18.50      $ 20.89  

General

The prospective financial information was prepared separately using, in some cases, different assumptions, and the different estimates are not intended to be added together. Adding the prospective financial information together for the two companies is not intended to represent the results the combined company will achieve if the merger is completed and is not intended to represent forecasted financial information for the combined company if the merger is completed.

By including in this proxy statement/prospectus a summary of the prospective financial information, neither FCF nor CFC nor any of their respective representatives has made or makes any representation to any person regarding the ultimate performance of FCF or CFC compared to the information contained in the prospective financial information. Neither FCF, CFC, nor, after completion of the merger, the combined company, undertakes any obligation to update or otherwise revise the prospective financial information or financial information to reflect circumstances existing since their preparation or to reflect the occurrence of subsequent or unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions.

The prospective financial information summarized in this section is not being included in this proxy statement/prospectus in order to induce any holder of CFC common stock to vote in favor of the CFC merger proposal or any of the other proposals to be voted on at the CFC special meeting.

In light of the foregoing, and taking into account that the CFC special meeting will be held several months after the financial forecasts were prepared, as well as the uncertainties inherent in any forecasted information, CFC shareholders are strongly cautioned not to place unwarranted reliance on such information.

Interests of Certain CFC Directors and Executive Officers in the Merger

In considering the recommendation of CFC’s board of directors to vote for the merger proposal, CFC shareholders should be aware that directors and executive officers of CFC have interests in the merger that are in addition to, or different from, their interests as shareholders of CFC. CFC’s board of directors was aware of these interests and considered them in approving the merger agreement and the transactions contemplated by the merger agreement, including the merger, and the decision to recommend that the CFC shareholders approve the merger proposal. These interests are described below.

CFC Stock Options, Warrants and Restricted Stock

Under the terms of CFC’s equity compensation plans, outstanding equity awards and CFC Warrants held by CFC’s employees (including executive officers) and directors vest in full upon consummation of a change in control transaction. The merger will constitute a change in control for purposes of the plans and unvested CFC Warrants. On the closing date, each outstanding CFC Stock Option (including unvested options, which will immediately vest on the closing date) and outstanding CFC Warrant will be canceled and converted into the right to receive the “net number” of shares of FCF common stock determined according to a formula set forth in the

 

58


Table of Contents

merger agreement. For more information, see “The Merger Agreement – Treatment of CFC Equity Awards” below. Because the CFC Stock Options and CFC Warrants may not otherwise vest and the value of each share of CFC common stock will fluctuate between the date of the merger agreement and the closing date, CFC’s directors and officers who hold CFC Stock Options and CFC Warrants may receive consideration for each such security that is, on a per share basis, more, less or the same as the merger consideration paid to shareholders for each CFC share, which will fluctuate with the value of FCF’s common stock between the date of this proxy statement/prospectus and the closing date.

The following table sets forth, for each of CFC’s executive officers and non-employee directors, the number of all outstanding CFC Stock Options, CFC Warrants and CFC Restricted Stock Awards held by each such person as of September 30, 2022, and the estimated consideration that each will receive at or after the effective time of the merger in connection with such awards:

 

Name

  Number of
Shares
Underlying
Outstanding
CFC Stock
Options (#)
    Resulting Option
Consideration ($)(1)
    Number of
Shares
Underlying
Outstanding
CFC
Warrants (#)
    Resulting Warrant
Consideration ($)(1)
    Number of
CFC
Restricted
Stock
Awards (#)
    Resulting
Restricted Stock
Award
Consideration ($)(1)
 

Executive Officers:

           

Patricia A. Husic

    12,250       97,397       —         —         11,329       171,522  

Sandra J. Schultz

    11,100       78,409       —         —         5,407       81,863  

Jeffrey W. Myers

    10,500       73,714       —         —         4,413       66,813  

Non-Executive Directors:

           

Frank A. Conte

    9,302       71,117       31,500       305,524       —         —    

Steven P. Dayton

    —         —         —         —         —         —    

Donald E. Enders, Jr.

    —         —         —         —         —         —    

Thomas H. Flowers

    —         —         31,500       305,524       —         —    

Nicole S. Kaylor

    7,316       52,213       —         —         —         —    

Jeffrey W. Keiser

    8,640       65,061       —         —         —         —    

John A. Maher

    2,000       9,487       2,000       19,404       —         —    

Jessica E. Meyers

    —         —         —         —         —         —    

Kerry A. Pae

    9,302       71,117       31,500       305,524       —         —    

 

(1)

In accordance with regulations of the SEC, based on the average per share closing price of the CFC shares for the first five trading days following the first public announcement of the merger, which average price was $13.89 per share. The value of the merger consideration may be higher or lower on the closing date than the above average price.

For further information regarding the beneficial ownership of CFC shares by the directors and officers of CFC, see “Security Ownership of Certain CFC Beneficial Owners and Management.”

Employment Agreements with CFC

CFC and Centric Bank are each a party to employment agreements with Patricia A. Husic, Sandra J. Schultz and Jeffrey W. Myers. The employment agreements provide that if the executive’s employment is terminated concurrently with or within two years subsequent to a change in control, as defined in the employment agreements, for other than cause, disability, retirement or death or the executive terminates his employment as a result of certain adverse actions which are taken with respect to the executive’s employment (i.e., good reason) following a change in control, then the executive will be entitled to (a) a lump sum cash severance payment equal to 2.99 times (Ms. Husic), or two times (Ms. Schultz and Mr. Myers), their respective current annual base salary and the average annual cash bonuses for the three calendar years preceding the date of termination, and (b) the maintenance for twenty-four months from the date of termination of the executive’s continued participation in all group insurance, life insurance, health, dental and accident insurance and disability insurance plans at no cost to

 

59


Table of Contents

the executive; provided, however, if FCF is not permitted by insurance carriers to provide such benefits because such executive is no longer employed, such executive shall be entitled to a dollar amount equal to the cost to such executive to obtain such benefits.

If the payments and benefits to be received by Ms. Husic, Ms. Schultz or Mr. Myers under their employment agreements or otherwise in connection with the change in control are deemed to constitute “parachute payments” within the meaning of Section 280G of the Code and trigger the loss of a corporate tax deduction and the imposition of a 20% excise tax on the executive under Section 4999 of the Code, then such payments and benefits payable to such individual will be grossed up to result in such individual receiving the same net-after-tax benefit being retained as if such excise tax was not applicable. Based on certain assumptions regarding the timing of the completion of the merger and the value of the merger consideration on the closing date, CFC believes the change in control payments and benefits to be received by Ms. Husic, Ms. Schultz and Mr. Myers will not need to be grossed up under Section 280G of the Code.

For quantification of the amounts that would be payable to each of Ms. Husic, Ms. Schultz and Mr. Myers under their respective employment agreements, see the section entitled “Change in Control Compensation”, below.

Retention Bonuses

FCF has agreed to provide retention bonuses of up to approximately $200,000 in the aggregate to those employees of CFC and Centric Bank as mutually agreed upon by CFC and FCF, and who remain employed by CFC and its subsidiaries through the completion of the merger (or such other date mutually agreed to by CFC and FCF). Executive officers who do not have an employment or severance agreement with CFC or its subsidiaries are eligible to participate in the retention bonus pool.

Post-Closing Consulting Agreement

FCF has agreed to enter into a six-month post-closing consulting agreement with Ms. Husic related to integration matters, for which she will receive up to $100,000.

Indemnification of Directors and Officers

Following the effective time, FCF has agreed to indemnify present and former directors and officers of CFC and Centric Bank for a period of six years after the effective time of the merger to the fullest extent permitted by applicable laws and under the articles of incorporation or bylaws of CFC or Centric Bank. FCF has also agreed to maintain in effect a directors’ and officers’ liability insurance policy for a period of six years after the effective time of the merger with respect to claims arising from facts or circumstances which occurred prior to the effective time of the merger and covering persons who are currently covered by such insurance. The insurance policy must contain at least the same coverage and amounts, and contain terms and conditions no less advantageous to the directors and officers as currently provided, subject to a cap on the cost of such policy equal to 200% of the last annual premium paid by CFC.

Change in Control Compensation

The following table sets forth the information required by Item 402(t) of Regulation S-K promulgated by the SEC regarding certain compensation which CFC’s named executive officers may receive that is based on or that otherwise relates to the merger. The amounts are calculated assuming that the effective date of the merger and a qualifying termination of employment occurred on September 30, 2022, and that all required conditions to the payment of these amounts have been satisfied. None of the named executive officers in the table will receive any enhanced benefits under pension or nonqualified deferred compensation plans or tax reimbursements.

 

60


Table of Contents

Golden Parachute Compensation

 

Name

   Cash ($)(1)      Equity ($)(2)      Perquisites/
benefits ($)(3)
     Total ($)  

Patrica A. Husic

   $ 1,485,603      $ 23,807      $ 704,309      $ 2,213,719  

Sandra J. Schultz

     538,634        17,250        339,034        894,919  

Jeffrey W. Myers

     564,866        14,860        270,979        850,704  

 

(1)

Reflects the lump sum cash severance payable to each of the executives shown in the event the executive’s employment is involuntarily terminated for any reason other than cause, death or disability, or if the executive terminates his employment for good reason (double-trigger), as required by the current terms of the executive’s employment agreement.

(2)

Reflects the value of single-trigger accelerated vesting of CFC Restricted Stock Awards that will become fully vested on the closing date of the merger, assuming (in accordance with SEC regulations) the value on the closing date is equal to the $13.89 average per share closing price of the CFC shares for the first five trading days following the first public announcement of the merger. Such assumption was made in accordance with applicable regulations of the SEC. The value of the merger consideration may be higher or lower on the closing date than the $13.89 average price. Also includes the value of all outstanding CFC Stock Options and CFC Warrants held by the executives.

(3)

Represents the estimated value of the continued coverage for medical, dental, vision, life and disability insurance premiums under their respective employment agreement, as applicable, as well as additional payments under their respective supplemental executive retirement plan.

Governance of FCF after the Merger

As of the effective time, FCF will designate Patricia A. Husic, the president and chief executive officer of CFC, to the FCF board of directors. Except for that designation, the FCF board of directors, and the committees thereof, will remain unchanged and will consist of the directors of FCF immediately prior to the effective time, each of whom will serve as the directors of FCF until the next annual meeting of shareholders and until such time as their respective successors have been duly elected and qualified, or until their earlier death, resignation or removal from office.

The executive officers of FCF will continue as executive officers of FCF immediately after the effective time, each of whom will serve until their respective successors are duly appointed and qualified or their earlier death, resignation or removal.

Name and Headquarters

The merger agreement provides that the name of the surviving corporation and surviving bank will be First Commonwealth Financial Corporation and First Commonwealth Bank, respectively, and that the headquarters of FCF and the main office of FCF Bank will be located in Indiana, Pennsylvania.

Accounting Treatment

FCF and CFC prepare their respective financial statements in accordance with GAAP. The merger will be accounted for as an acquisition of CFC by FCF under the acquisition method of accounting, and FCF will be treated as the acquirer for accounting purposes.

Regulatory Approvals

To complete the merger, FCF and CFC need to obtain approvals or consents from, or make filings with, a number of U.S. federal and state bank and other regulatory authorities. Subject to the terms of the merger agreement, FCF and CFC have agreed to cooperate with each other and use reasonable best efforts to promptly

 

61


Table of Contents

prepare and file all necessary documentation, to effect all applications, notices, petitions and filings (and in the case of the applications, notices, petitions and filings in respect of the requisite regulatory approvals, make such filings as soon as practical and in no event later than forty-five (45) days of the date of the merger agreement), to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties, regulatory agencies and governmental entities which are necessary or advisable to consummate the transactions contemplated by the merger agreement (including the merger), and to comply with the terms and conditions of all such permits, consents, approvals and authorizations of all such regulatory agencies and governmental entities. The term “requisite regulatory approvals” means all regulatory authorizations, consents, orders and approvals from the Federal Reserve Board for the merger and the approval of the FDIC and the PDBS for the bank merger, along with any other approvals set forth in the merger agreement which are necessary to consummate the transactions contemplated by the merger agreement, including the merger and the bank merger, or those the failure of which to be obtained would reasonably be expected to have, individually or in the aggregate, a material adverse effect on FCF, as the survivor in the merger, or any of its subsidiaries. The initial submission of these regulatory applications occurred on or about September 20, 2022, and as of the date hereof, FCF and CFC have received all requisite regulatory approvals required to complete the merger and the bank merger.

Under the terms of the merger agreement, FCF and CFC will not be required to take actions or agree to conditions in connection with obtaining the foregoing permits, consents, approvals and authorizations of governmental entities that would reasonably be expected to have a material adverse effect on FCF and its subsidiaries, taken as a whole, after giving effect to the merger and the bank merger (a “materially burdensome regulatory condition”).

The approval of an application means only that the regulatory criteria for approval have been satisfied or waived. It does not mean that the approving authority has determined that the consideration to be received by CFC shareholders in the merger is fair. Regulatory approval does not constitute an endorsement or recommendation of the merger.

There can be no assurances that U.S. federal or state regulatory authorities will not attempt to challenge the merger or, if such a challenge is made, what the result of such challenge will be.

Federal Reserve Board

The transactions contemplated by the merger agreement require approval by the Federal Reserve Board pursuant to Section 3 of the Bank Holding Company Act of 1956, as amended, which we refer to as the BHC Act, unless the Federal Reserve Board waives that requirement. FCF intends to request such a waiver. The Federal Reserve Board takes into consideration a number of factors when acting on applications under Section 3 of the BHC Act (12 U.S.C. § 1842(c)) and Section 225.13 of Regulation Y (12 C.F.R. § 225.13). These factors include the financial condition of the holding companies and banks involved and the future prospects of the combined organization (including consideration of the current and projected capital positions and the levels of indebtedness) and the managerial resources (including the competence, experience, and integrity of the officers, directors, and principal shareholders, as well as their record of compliance with laws and regulations). The Federal Reserve Board also considers the effectiveness of the applicant in combating money laundering, the convenience and needs of the communities to be served, as well as the extent to which the proposal would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. The Federal Reserve Board may not approve a proposal that would have significant adverse effects on competition or on the concentration of resources in any banking market. FCF filed a written request that the Federal Reserve Board waive the application requirements of the BHC Act with regard to its acquisition of CFC on November 7, 2022 and received the waiver on November 16, 2022.

 

62


Table of Contents

FDIC

The prior approval of the FDIC will be required under the Bank Merger Act to merge CFC Bank with and into FCF Bank. In evaluating an application filed under the Bank Merger Act, the FDIC generally considers: (1) the competitive impact of the transaction, (2) financial and managerial resources of the banks party to the bank merger, (3) the convenience and needs of the community to be served and the record of the banks under the Community Reinvestment Act, which we refer to as the CRA, including their CRA ratings, (4) the banks’ effectiveness in combating money-laundering activities, and (5) the extent to which the bank merger would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. An application for approval of the bank merger was filed with the FDIC on September 20, 2022, and the parties received approval from the FDIC on November 4, 2022.

PDBS

To complete the merger, FCF Bank is required to submit an application to, and receive approval from, the PDBS. FCF submitted the requisite application to PDBS on September 20, 2022, and FCF received approval from PDBS on November 16, 2022. The criteria considered by the PDBS is similar to those considered by the Federal Reserve Board and the FDIC.

Department of Justice

In addition to the Federal Reserve Board and the FDIC, the Antitrust Division of the Department of Justice (the “DOJ”) conducts a concurrent competitive review of the merger to analyze the merger’s competitive effects and determine whether the merger would result in a violation of the antitrust laws. Transactions approved under section 3 of the BHC Act, or the Bank Merger Act generally may not be completed until thirty (30) days after the approval of the applicable federal agency is received, during which time the DOJ may challenge the transaction on antitrust grounds. With the approval of the applicable federal agency and the concurrence of the DOJ, the waiting period may be reduced to no less than fifteen (15) days. The commencement of an antitrust action would stay the effectiveness of such an approval unless a court specifically ordered otherwise. In reviewing the merger, the DOJ could analyze the merger’ effect on competition differently than the Federal Reserve Board, and, thus, it is possible that the DOJ could reach a different conclusion than the Federal Reserve Board regarding the merger’ effects on competition. A determination by the DOJ not to object to the merger may not prevent the filing of antitrust actions by private persons or state attorneys general. There can be no assurance if and when DOJ clearance will be obtained, or as to the conditions or limitations that such DOJ approval may contain or impose.

Additional Regulatory Approvals and Notices

Additional notifications and/or applications requesting approval may be submitted to various other federal, state and non-U.S. regulatory authorities and self-regulatory organizations.

Stock Exchange Listings

FCF common stock is listed for trading on NYSE under the symbol “FCF.” CFC common stock is quoted on OTC Pink under the symbol “CFCX.”

Under the terms of the merger agreement, FCF will cause the shares of FCF common stock to be issued in the merger to be approved for listing on NYSE, subject to official notice of issuance. The merger agreement provides that neither FCF nor CFC will be required to complete the merger if such shares are not authorized for listing on NYSE, subject to notice of issuance. Following the merger, shares of FCF common stock will continue to be traded on NYSE.

 

63


Table of Contents

Dissenters’ Rights

General

Holders of CFC common stock have the right under Pennsylvania law to dissent from the merger agreement and obtain the “fair value” of their shares in cash as determined by an appraisal process in accordance with the procedures under Subchapter D of Chapter 15 of the PBCL. Following is a summary of the rights of dissenting shareholders. The summary is qualified in its entirety by reference to Annex B, which sets forth the applicable dissenters’ rights provisions of Pennsylvania law. If you are considering exercising your dissenters’ rights, you should carefully read the summary below and the full text of the law set forth in Annex B.

In the discussion of dissenters’ rights, the term “fair value” means the value of a share of CFC common stock immediately before the day of the effective date of the merger, taking into account all relevant factors, but excluding any appreciation or depreciation in anticipation of the merger. Before the effective date of the merger, CFC shareholders should send any written notice or demand required in order to exercise dissenters’ rights to Centric Financial Corporation, 1826 Good Hope Road, Enola, Pennsylvania 17025 (Attn: Secretary).

After the effective date of the merger, all dissenters should send any correspondence to First Commonwealth Financial Corporation, 601 Philadelphia Street, Indiana, Pennsylvania 15701 (Attn: Secretary).

Notice of Intention to Dissent

If you wish to dissent from the merger, you must do the following:

 

   

Prior to the vote on the merger agreement at the CFC special meeting, file with CFC a written notice of your intention to demand payment of the fair value of your shares of common stock if the merger is completed;

 

   

Make no change in your beneficial ownership of CFC common stock with respect to which you are dissenting from the date you give notice of your intention to demand fair value of your shares through the day of the merger; and

 

   

Not vote your shares of CFC common stock with respect to which you are dissenting in favor of adoption of the merger agreement at the CFC special meeting.

Simply voting against the proposed merger, whether virtually or by proxy, will not constitute notice of your intention to dissent. Further, if you submit a proxy, but do not indicate how you wish to vote, your shares will be voted in favor of the adoption and approval of the merger, and your right to dissent will be lost.

Notice to Demand Payment

If the merger is adopted by the required vote of CFC shareholders, CFC will mail a notice to all those dissenting shareholders who gave due notice of their intention to demand payment of the fair value of their shares and who did not vote to adopt the merger agreement. The notice will state where and when dissenting shareholders must deliver a written demand for payment and where such dissenting shareholder must deposit certificates for the shares of common stock for which they dissented in order to obtain payment. The notice will include a form for demanding payment and a copy of the relevant provisions of Pennsylvania law. The time set for receipt of the demand for payment and deposit of stock certificates will be not less than 30 days from the date of mailing of the notice.

Failure to Comply with Required Steps to Dissent

You must take each step in the indicated order and in strict compliance with Pennsylvania law in order to maintain your dissenters’ rights. If you fail to follow these steps, you will lose the right to dissent, and you will receive the same merger consideration as shareholders who do not dissent.

 

64


Table of Contents

Payment of Fair Value of Shares

Promptly after the effective date of the merger, or upon timely receipt of demand for payment if the closing of the merger has already taken place, FCF will send each dissenting shareholder who has deposited his, her or its stock certificates, the amount that FCF estimates to be the fair value of the common stock held by such dissenting shareholder. The remittance or notice will be accompanied by:

 

   

a closing balance sheet and statement of income of CFC for the fiscal year ending not more than 16 months before the date of remittance or notice, together with the latest available interim financial statements;

 

   

a statement of FCF’s estimate of the fair value of CFC common stock; and

 

   

a notice of the right of the dissenting shareholder to demand supplemental payment, accompanied by a copy of the relevant provisions of Pennsylvania law.

Estimate by Dissenting Shareholder of Fair Value of Shares

If a dissenting shareholder believes that the amount stated or remitted by FCF is less than the fair value of their common stock, the dissenting shareholder must send its estimate of the fair value (deemed a demand for the deficiency) of such common stock to FCF within 30 days after FCF mails its remittance. If the dissenting shareholder does not file its estimated fair value within 30 days after the mailing by FCF of its remittance, the dissenting shareholder will be entitled to no more than the amount remitted by FCF.

Valuation Proceedings

If any demands for payment remain unsettled within 60 days after the latest to occur of:

 

   

the effective date of the merger;

 

   

timely receipt by CFC of any demands for payment; or

 

   

timely receipt by FCF of any estimates by dissenters of the fair value,

then FCF may file an application in the Court of Common Pleas requesting that the court determine the fair value of the common stock. If this happens, all dissenting shareholders whose demands have not been settled, no matter where they reside, will become parties to the proceeding. In addition, a copy of the application will be delivered to each dissenting shareholder.

If FCF were to fail to file the application, then any dissenting shareholder, on behalf of all dissenting shareholders who have made a demand and who have not settled their claim against FCF, may file an application in the name of FCF at any time within the 30-day period after the expiration of the 60-day period and request that the Court of Common Pleas determine the fair value of the shares. The fair value determined by the Court of Common Pleas may, but need not, equal the dissenting shareholders’ estimates of fair value. If no dissenter files an application, then each dissenting shareholder entitled to do so shall be paid no more than FCF’s estimate of the fair value of their common stock, and may bring an action to recover any amount not previously remitted, plus interest at a rate the Court of Common Pleas finds fair and equitable.

FCF intends to negotiate in good faith with any dissenting shareholder. If, after negotiation, a claim cannot be settled, then FCF will file an application requesting that the fair value of the CFC common stock, as the case may be, be determined by the Court of Common Pleas.

Cost and Expenses

The costs and expenses of any valuation proceedings performed by the Court of Common Pleas, including the reasonable compensation and expenses of any appraiser appointed by such court to recommend a decision on

 

65


Table of Contents

the issue of fair value, will be determined by such court and assessed against FCF, except that any part of the costs and expenses may be apportioned and assessed by such court against any or all of the dissenting shareholders who are parties and whose action in demanding supplemental payment is dilatory, obdurate, arbitrary, vexatious or in bad faith, in the opinion of such court.

CFC shareholders wishing to exercise their dissenters’ rights should consult their own counsel to ensure that they fully and properly comply with applicable requirements.

Income Tax Consequences

See “Material United States Federal Income Tax Consequences” on page 86 for a discussion on how the federal income tax consequences of your action will change if you elect to dissent from the merger.

FAILURE TO FOLLOW THE PROCEDURES SET FORTH IN SUBCHAPTER D OF CHAPTER 15 OF THE PBCL REGARDING DISSENTERS’ RIGHTS WILL CONSTITUTE A WAIVER OF THOSE RIGHTS. SHAREHOLDERS MAY WISH TO CONSULT INDEPENDENT COUNSEL BEFORE EXERCISING DISSENTERS’ RIGHTS.

 

66


Table of Contents

THE MERGER AGREEMENT

This section of the proxy statement/prospectus describes the material terms of the merger agreement. The description in this section and elsewhere in this proxy statement/prospectus is subject to, and qualified in its entirety by reference to, the complete text of the merger agreement, which is attached as Annex A to this proxy statement/prospectus and incorporated by reference herein. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. We urge you to read the full text of the merger agreement, as it is the legal document governing the merger. This section is not intended to provide you with any factual information about FCF or CFC. Such information can be found elsewhere in this proxy statement/prospectus and in the public filings FCF makes with the SEC, as described in the section entitled “Where You Can Find More Information” beginning on page 96 of this proxy statement/prospectus.

Explanatory Note Regarding the Merger Agreement

The merger agreement and this summary of terms are included to provide you with information regarding the terms of the merger agreement. Factual disclosures about FCF and CFC contained in this proxy statement/prospectus or in the public reports of FCF filed with the SEC may supplement, update or modify the factual disclosures about FCF and CFC contained in the merger agreement. The merger agreement contains representations and warranties by CFC, on the one hand, and by FCF, on the other hand, made solely for the benefit of the other. The representations, warranties and covenants made in the merger agreement by FCF and CFC were qualified and subject to important limitations agreed to by FCF and CFC in connection with negotiating the terms of the merger agreement. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of establishing circumstances in which a party to the merger agreement may have the right not to consummate the merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the merger agreement, rather than establishing matters as facts. The representations and warranties also may be subject to a contractual standard of materiality different from that generally applicable to shareholders and reports and documents filed with the SEC, and some were qualified by the matters contained in the confidential disclosure schedules that FCF and CFC each delivered in connection with the merger agreement and certain documents filed with the SEC. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the merger agreement. Accordingly, the representations and warranties in the merger agreement should not be relied on by any persons as characterizations of the actual state of facts about FCF and CFC at the time they were made or otherwise.

Structure of the Merger

Each of CFC’s and FCF’s respective boards of directors has unanimously approved and adopted the merger agreement. The merger agreement provides for the merger of CFC with FCF, with FCF as the surviving entity. It is anticipated that following the completion of the merger, CFC Bank, a wholly owned subsidiary of CFC, and FCF Bank, a wholly owned subsidiary of FCF, will merge, with FCF Bank as the surviving bank in the bank merger.

Prior to the consummation of the merger, FCF and CFC may, by mutual agreement, change the method or structure of effecting the combination of FCF and CFC if and to the extent they both deem such change to be necessary, appropriate or desirable; provided, however that no such change may (i) alter or change the exchange ratio or the number of shares of FCF common stock received by holders of CFC common stock in exchange for each share of CFC common stock; (ii) adversely affect the tax treatment of CFC’s shareholders pursuant to the merger agreement; (iii) adversely affect the tax treatment of CFC or FCF pursuant to the merger agreement; or (iv) materially impede or delay the consummation of the transactions contemplated by the merger agreement in a timely manner.

 

67


Table of Contents

Merger Consideration

Each share of CFC common stock issued and outstanding immediately prior to the effective time, except for shares of CFC common stock owned by CFC as treasury stock or owned by CFC or FCF or a subsidiary of either (in each case other than in a fiduciary or agency capacity or as a result of debts previously contracted) and except for shares for which dissenters’ rights have been exercised, will be converted into the right to receive 1.09 shares of FCF common stock (the “exchange ratio”).

If the outstanding shares of CFC common stock or FCF common stock are increased, decreased, changed into or exchanged for a different number or kind of shares or securities as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar change in capitalization, or there is any extraordinary dividend or distribution, an appropriate and proportionate adjustment will be made to the exchange ratio to give CFC shareholders the same economic effect as contemplated by the merger agreement prior to such event.

Fractional Shares

FCF will not issue any fractional shares of FCF common stock in the merger. Instead, a former holder of CFC common stock who otherwise would have received a fraction of a share of FCF common stock will receive an amount in cash (rounded to the nearest cent) determined by multiplying the VWAP of FCF common stock reported by NYSE for the consecutive period of ten (10) full trading days ending on the day that is three trading days preceding the closing date (the “FCF Closing Price”) by the fraction of a share (rounded to the nearest thousandth when expressed in decimal form) of FCF common stock that such shareholder would otherwise be entitled to receive.

Governing Documents

Effective as of the effective time, the FCF by-laws will continue to be the by-laws for FCF and the FCF articles of incorporation will continue to be the articles of incorporation of FCF.

Treatment of CFC Equity Awards

Stock Options and Warrants

The merger agreement provides that, at the effective time, each option granted by CFC to purchase shares of CFC common stock under a CFC stock plan, whether vested or unvested, that is outstanding and unexercised immediately prior to the effective time (a “CFC Stock Option”) and each warrant to purchase shares of CFC Common Stock (a “CFC Warrant”) will without any further action on the part of any holder thereof, be cancelled and converted into the right to receive the “net number” of shares of FCF common stock upon exercise of such CFC Stock Option or CFC Warrant determined according to a formula set forth in the merger agreement. The “net number” of shares of FCF common stock that each such holder will have the right to receive upon exercise will be determined pursuant to the following formula:

Net Number = (A x D) - ((A x C) / B)

For purposes of the foregoing formula:

A = the total number of shares of CFC Common Stock underlying each such CFC Warrant or CFC Stock Option, as applicable;

B = FCF Closing Price;

C = the exercise price then in effect for the applicable CFC Warrant or FCF Stock Option immediately prior to the effective time; and

D = 1.09.

 

68


Table of Contents

Restricted Stock Awards

Immediately prior to the effective time (but contingent upon the closing), each award in respect of a share of CFC common stock subject to vesting, repurchase or other lapse restriction granted under a CFC stock plan that is unvested or contingent and outstanding immediately prior to the effective time (a “CFC Restricted Stock Award”) will fully vest (with any performance-based vesting condition applicable to such CFC Restricted Stock Award deemed satisfied to the extent provided in the applicable award agreement) and will be cancelled and converted automatically into the right to receive merger consideration in respect of each such share of CFC common stock under such CFC Restricted Stock Award, less applicable withholding taxes.

Treatment of CFC Non-Voting Common Stock and CFC Preferred Stock

The merger agreement provides that, at the effective time, each share of CFC non-voting common stock and each share of CFC preferred stock will automatically be cancelled and will cease to exist, and no consideration will be delivered in exchange therefor. As of the date hereof, there are no shares of CFC non-voting common stock or CFC preferred stock issued and outstanding.

Closing and Effective Time of the Merger

The merger will become effective at such date and time specified in the statement of merger to be filed with the Pennsylvania Department of State, or at such other date and time provided by applicable law. The closing will occur remotely by electronic exchange of documents the later of (i) January 1, 2023, and (ii) three (3) business days after the satisfaction or waiver (subject to applicable law) of all of the conditions set forth in the merger agreement (other than those conditions that by their nature can only be satisfied at the closing, but subject to the satisfaction or waiver thereof), unless another date, time or place is agreed to in writing by FCF and CFC.

Exchange of Shares

Exchange Procedures

As promptly as practicable after the effective time, but in no event later than ten (10) business days thereafter, FCF will cause the exchange agent to mail to each holder of record of one (1) or more old certificates (which, for purposes of this proxy statement/prospectus, will be deemed to include certificates or book-entry account statements) representing shares of CFC common stock immediately prior to the effective time a letter of transmittal and instructions for use in effecting the surrender of such old certificate(s) in exchange for new certificates (which, for purposes of this proxy statement/prospectus, will be deemed to include certificates or, at FCF’s option, evidence in book-entry form) representing the number of whole shares of FCF common stock and any cash in lieu of fractional shares, which shares of CFC common stock represented by such old certificate(s) will have been converted into the right to receive pursuant to the merger agreement, as well as any dividends or distributions to be paid as described in “—Dividends and Distributions” below.

If an old certificate for CFC common stock has been lost, stolen or destroyed, the exchange agent will issue the consideration in the merger upon receipt of (i) an affidavit of that fact by the claimant and (ii) if required by FCF or the exchange agent, the posting of a bond in an amount as FCF or the exchange agent may determine is reasonably necessary as indemnity against any claim that may be made against it with respect to such old certificate.

After the effective time, there will be no further transfers on the stock transfer books of CFC of CFC common stock that were issued and outstanding immediately prior to the effective time.

Withholding

FCF will be entitled to deduct and withhold, or cause the exchange agent to deduct and withhold, from any cash in lieu of fractional shares, any dividends or distributions or any other cash amounts payable under the merger

 

69


Table of Contents

agreement to any holder of CFC common stock or equity awards such amounts it is required to deduct and withhold under the Code or any provision of state, local, or foreign tax law. If any such amounts are withheld and paid over to the appropriate governmental authority, such amounts will be treated for all purposes of the merger agreement as having been paid to the holder from whom they were withheld.

Dividends and Distributions

No dividends or other distributions declared with respect to FCF common stock will be paid to the holder of any unsurrendered old certificate representing shares of CFC common stock until the holder surrenders such old certificate in accordance with the merger agreement. After the surrender of an old certificate in accordance with the merger agreement, the record holder thereof will be entitled to receive any such dividends or other distributions, without any interest, which had previously become payable with respect to the whole shares of FCF common stock which the shares of CFC common stock, represented by such old certificate have been converted into the right to receive under the merger agreement.

Representations and Warranties

The merger agreement contains representations and warranties made by CFC to FCF and FCF to CFC relating to a number of matters, including the following:

 

   

corporate matters, including due organization and qualification and subsidiaries;

 

   

capitalization;

 

   

authority relative to execution and delivery of the merger agreement and the absence of conflicts with, or violations of, organizational documents or other obligations as a result of the mergers;

 

   

required governmental and other regulatory and self-regulatory filings and consents and approvals in connection with the mergers;

 

   

reports to regulatory authorities;

 

   

financial statements, internal controls, books and records, and absence of undisclosed liabilities;

 

   

broker’s fees payable in connection with the merger;

 

   

the absence of certain changes or events;

 

   

legal proceedings;

 

   

tax matters;

 

   

employee matters and employee benefit matters;

 

   

compliance with applicable laws;

 

   

certain material contracts;

 

   

absence of agreements with regulatory authorities;

 

   

risk management instruments;

 

   

environmental matters;

 

   

investment securities and commodities;

 

   

real property;

 

   

intellectual property;

 

   

related party transactions;

 

   

inapplicability of takeover statutes;

 

70


Table of Contents
   

absence of action or circumstance that would prevent the merger from qualifying as a “reorganization” under Section 368(a) of the Code;

 

   

in the case of CFC, opinion from CFC’s financial advisor;

 

   

the accuracy of information supplied for inclusion in this proxy statement/prospectus and other similar documents;

 

   

loan portfolio matters;

 

   

insurance matters; and

 

   

information security.

The representations and warranties in the merger agreement are (i) subject, in some cases, to specified exceptions and qualifications contained in the confidential disclosure schedules delivered by FCF and CFC, respectively, and (ii) qualified by the reports of FCF filed with the SEC during the period from January 1, 2019 through the time prior to the execution and delivery of the merger agreement (excluding, in each case, any risk factor disclosures in the risk factor section or any “forward-looking statements” disclaimer or any other statements that are similarly non-specific or cautionary, predictive or forward-looking in nature).

In addition, certain representations and warranties of FCF and CFC are qualified as to “materiality” or “material adverse effect.” For purposes of the merger agreement, a “material adverse effect,” when used in reference to either FCF and CFC or FCF as the surviving entity in the merger, means a material adverse effect on (i) the business, properties, assets, liabilities, results of operations or financial condition of such party and its Subsidiaries taken as a whole or (ii) the ability of such party to timely consummate the transactions contemplated hereby.

However, with respect to clause (i), a material adverse effect will not be deemed to include the impact of:

 

   

changes, after the date of the merger agreement, in U.S. generally accepted accounting principles or applicable regulatory accounting requirements;

 

   

changes, after the date of the merger agreement, in laws, rules or regulations (including any COVID-19 pandemic measures) of general applicability to companies in the industries in which such party and its subsidiaries operate, or interpretations thereof by courts or governmental entities;

 

   

changes, after the date of the merger agreement, in global, national or regional political conditions (including the outbreak of war or acts of terrorism) or in economic or market (including equity, credit and debt markets, as well as changes in interest rates) conditions affecting the financial services industry generally and not specifically relating to such party or its subsidiaries (including any such changes arising out of the COVID-19 pandemic or any COVID-19 pandemic measures);

 

   

changes, after the date of the merger agreement, resulting from hurricanes, earthquakes, tornadoes, floods or other natural disasters or from any outbreak of any disease or other public health event (including the COVID-19 pandemic);

 

   

public disclosure of the consummation of the transactions contemplated by the merger agreement or actions expressly required by the merger agreement or that are taken with the prior written consent of the other party in contemplation of the transactions contemplated by the merger agreement;

 

   

a decline in the trading price of a party’s common stock or the failure, in and of itself, to meet internal or other estimates, predictions, projections or forecasts of revenue, net income or any other measure of financial performance or budget, business or strategic plan for any period (provided that the underlying causes of such decline or failure may be taken into account in determining whether a material adverse effect has occurred);

 

   

the expenses incurred by FCF and CFC in negotiating, documenting, effecting and consummating the transactions contemplated by the merger agreement; or

 

71


Table of Contents
   

changes proximately caused by the impact of the execution or announcement of the merger agreement and the consummation of the transactions contemplated thereby on relationships with customers or employees (including the loss of personnel subsequent to the date of the merger agreement).

except, with respect to the first, second, third and fourth bullets described above, to the extent that the effects of such change are materially disproportionately adverse to the business, properties, assets, liabilities, results of operations or financial condition of such party and its subsidiaries, taken as a whole, as compared to other companies in the industry in which such party and its subsidiaries operate.

The representations and warranties in the merger agreement do not survive the effective time.

Covenants and Agreements

Conduct of the Businesses Prior to the Consummation of the Merger

Prior to the effective time (or earlier termination of the merger agreement), except as expressly contemplated or permitted by the merger agreement, required by law or as consented to in writing by FCF (or, in the case of clause (b), below, CFC) (such consent not to be unreasonably withheld, conditioned or delayed), (a) CFC will, and will cause its subsidiaries to, conduct its business in the ordinary course in all material respects and use commercially reasonable efforts to maintain and preserve intact its business organization, the services of its employees and its advantageous business relationships, and (b) except as expressly required by the merger agreement, required by law or as consented to in writing by the other party, each of CFC and FCF will not, and will cause their respective subsidiaries not to, knowingly take any action that would reasonably be expected to adversely affect or materially delay the ability to obtain any necessary approvals of any regulatory agency or other governmental entity required for the transactions contemplated by the merger agreement or to perform its respective covenants and agreements under the merger agreement or to consummate the transactions contemplated by the merger agreement on a timely basis.

Additionally, prior to the effective time (or earlier termination of the merger agreement), subject to specified exceptions, CFC will not take, and will not permit any of its subsidiaries to, without the prior written consent of FCF (such consent not to be unreasonably withheld, conditioned or delayed), take any of the following actions:

 

   

other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money (other than indebtedness of CFC or any of its wholly-owned subsidiaries to CFC or any of its subsidiaries), assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity;

 

   

adjust, split, combine or reclassify any capital stock;

 

   

make, declare or pay any dividend, or make any other distribution on, or directly or indirectly redeem, purchase or otherwise acquire, any shares of its capital stock or any securities or obligations convertible (whether currently convertible or convertible only after the passage of time or the occurrence of certain events) into or exchangeable for any shares of its capital stock (except (A) dividends paid by any of the subsidiaries of CFC to CFC or any of its wholly-owned subsidiaries, or (B) the acceptance of shares of CFC common stock as payment for the exercise price of CFC stock options or for withholding taxes incurred in connection with the exercise of CFC stock options or the vesting or settlement of CFC equity awards, in each case in accordance with past practice and the terms of the applicable award agreements);

 

   

grant any CFC equity awards (or any similar award that would be a CFC equity award had it been issued under a CFC stock plan) or other equity-based awards or interests, or grant any individual, corporation or other entity any right to acquire any shares of its capital stock;

 

   

issue, sell or otherwise permit to become outstanding any additional shares of capital stock or securities convertible or exchangeable into, or exercisable for, any shares of its capital stock or any options,

 

72


Table of Contents
 

warrants, or other rights of any kind to acquire any shares of capital stock, except pursuant to the exercise of stock options or the settlement of equity compensation awards outstanding as of the date of the merger agreement in accordance with their terms;

 

   

sell, transfer, mortgage, encumber or otherwise dispose of any of its material properties or assets or any business to any person, or cancel, release or assign any indebtedness to any such person or any claims held by any such person, in each case other than in the ordinary course of business consistent with past practice or pursuant to contracts or agreements in force at the date of the merger agreement;

 

   

except for transactions in the ordinary course of business consistent with past practice, make any material investment either by purchase of stock or securities, contributions to capital, property transfers, or purchase of any property or assets of any other individual, corporation or other entity other than a wholly-owned subsidiary of CFC;

 

   

terminate, materially amend, or waive any material provision of, any material contract, or make any change in any instrument or agreement governing the terms of any of its securities, or material lease or contract, other than normal renewals of contracts and leases without material adverse changes of terms with respect to CFC, or enter into any contract that would constitute a material contract if it were in effect on the date of the merger agreement, except for transactions in the ordinary course of business consistent with past practice;

 

   

except as required under applicable law or the terms of any Company Benefit Plan existing as of the date of the merger agreement, (i) enter into, establish, adopt, amend or terminate any Company Benefit Plan, or any arrangement that would be a Company Benefit Plan if in effect on the date hereof, other than with respect to broad-based welfare benefit plans (other than severance) in the ordinary course of business consistent with past practice and as would not reasonably be expected to materially increase the cost of benefits under any such Company Benefit Plan, as the case may be, (ii) increase the compensation or benefits payable to any current or former employee, director or individual consultant, other than (A) the payment of incentive compensation for completed performance periods in the ordinary course of business consistent with past practice based upon actual performance or as set forth in Section 5.2(f)(i)(A) of the Company Disclosure Schedule and (B) annual base salary or wage increases for employees who are not party to an individual change in control or similar agreement with the Company in the ordinary course of business, consistent with past practice and to a level consistent with similarly situated peer employees, that do not exceed, in the aggregate, three percent (3%) of the aggregate base salaries and wage rates in effect as of the date hereof, (iii) accelerate the vesting of any equity-based awards or other compensation or benefits, (iv) enter into any new, or amend any existing, employment, severance, change in control, retention, collective bargaining agreement or similar agreement or arrangement, (v) fund any rabbi trust or similar arrangement, or in any other way secure the payment of compensation or benefits under any Company Benefit Plan, (vi) terminate the employment or services of any employee with a job level of senior vice president or above, other than for cause, or (vii) hire or promote any employee with an annual base salary equal to or in excess of $75,000 (other than as a replacement hire or promotion on substantially similar terms of employment as the departed employee), or significantly change the responsibilities assigned to any such employee;

 

   

settle any material claim, suit, action or proceeding, other than those relating to any foreclosure action by CFC or except in the ordinary course of business consistent with past practice in an amount and for consideration not in excess of $100,000 individually or $500,000 in the aggregate and that would not impose any material restriction on the business of it or its subsidiaries or FCF, as the surviving corporation;

 

   

take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to prevent the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;

 

   

amend the CFC articles of incorporation, the CFC bylaws or comparable governing documents of its subsidiaries;

 

73


Table of Contents
   

merge or consolidate itself or any of its subsidiaries with any other person, or restructure, reorganize or completely or partially liquidate or dissolve it or any of its subsidiaries;

 

   

materially restructure or materially change its investment securities or derivatives portfolio or its interest rate exposure, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported or purchase any security rated below investment grade, in each case, other than (i) in the ordinary course of business consistent with past practice or (ii) as may be required by GAAP or any applicable laws, regulations, guidelines or policies imposed by a governmental entity;

 

   

take any action that is intended or expected to result in any of its representations and warranties set forth in the merger agreement being or becoming untrue in any material respect at any time prior to the effective time, or in any of the conditions to the merger not being satisfied or in a violation of any provision of the merger agreement, except, in every case, as may be required by applicable law;

 

   

implement or adopt any change in its accounting principles, practices or methods, other than as may be required by GAAP or applicable law;

 

   

enter into any new line of business or change in any material respect its lending, investment, underwriting, risk and asset liability management and other banking and operating, securitization and servicing policies (including any change in the maximum ratio or similar limits as a percentage of its capital exposure applicable with respect to its loan portfolio or any segment thereof), except as required by applicable law, regulation or policies imposed by any governmental entity;

 

   

except for any loans or extensions of credit approved prior to the date of the merger agreement (i) make, acquire or issue any new commitments for any loan or extension of credit of $750,000 or greater or (ii) renegotiate, renew, increase or modify any existing loan or extension of $750,000 or greater; provided, however, that FCF will be required to respond to any requests for a consent to make such loan or extension of credit in writing within two (2) business days after the loan package is delivered to FCF;

 

   

make any material changes in its policies and practices with respect to (i) underwriting, pricing, originating, acquiring, selling, servicing, or buying or selling rights to service, loans or (ii) its investment, risk and asset liability management or hedging practices and policies, in each case except as required by law or requested by a regulatory agency;

 

   

make, or commit to make, any individual capital expenditures in excess of $50,000 individually or $100,000 in the aggregate;

 

   

make, change or revoke any tax election, change an annual tax accounting period, adopt or change any tax accounting method, file any amended tax return, enter into any closing agreement with respect to taxes, or settle any Tax claim, audit, assessment or dispute or surrender any right to claim a refund of taxes;

 

   

make application for the opening, relocation or closing of any, or open, relocate or close any, branch office, loan production office or other significant office or operations facility of it or its subsidiaries;

 

   

knowingly take any action that is intended to or would reasonably be likely to prevent, materially impede or materially delay the ability of FCF, CFC or their respective subsidiaries to obtain any necessary approvals of any governmental entity required for the merger (including the requisite regulatory approvals) or to perform their covenants and agreements under the merger agreement or to consummate the transactions contemplated thereby;

 

   

agree to take, make any commitment to take, or adopt any resolutions of its board of directors or similar governing body in support of, any of the foregoing.

 

74


Table of Contents

Prior to the effective time (or earlier termination of the merger agreement), subject to specified exceptions, FCF will not take, and will not permit any of its subsidiaries to, without the prior written consent of CFC (such consent not to be unreasonably withheld, conditioned or delayed), take any of the following actions:

 

   

amend the FCF articles of incorporation, the FCF by-laws, its regulations or comparable governing documents of its subsidiaries in a manner that would adversely affect the economic benefits of the merger to the holders of the CFC common stock;

 

   

adjust, split, combine or reclassify any capital stock;

 

   

adopt or publicly propose a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution of FCF;

 

   

make any written communications to the employees of CFC or any of its subsidiaries without the prior consent of CFC, which consent will not be unreasonably withheld, conditioned or delayed;

 

   

take any action or knowingly fail to take any action where such action or failure to act could reasonably be expected to prevent the merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code; or

 

   

agree to take, make any commitment to take, or adopt any resolutions of its board of directors or similar governing body in support of, any of the foregoing.

Regulatory Matters

FCF and CFC have agreed to cooperate with each other and use their respective reasonable best efforts to prepare and file all necessary documentation, to effect all applications, notices, petitions and filings, (and in the case of the applications, notices, petitions and filings in respect of the requisite regulatory approvals, use their reasonable best efforts to make such filings as soon as practicable but in no event later than forty-five (45) days of the date of the merger agreement), to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties, and governmental entities which are necessary or advisable to consummate the transactions contemplated by the merger agreement, and to comply with the terms and conditions of all such permits, consents, approvals and authorizations of all such governmental entities.

Each of FCF and CFC has agreed to use its reasonable best efforts to (i) avoid the entry of, or to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that would restrain, prevent or delay the closing, and (ii) avoid or eliminate each and every impediment, including with respect to obtaining the requisite regulatory approvals, so as to enable the closing to occur as soon as possible. Notwithstanding the foregoing, nothing in the merger agreement requires FCF or permits CFC to take, or agree to take, any action, or commit to take any action, or agree to any condition or restriction, in connection with the grant of a requisite regulatory approval, that would reasonably be expected to have a material adverse effect on FCF and its subsidiaries, taken as a whole, after giving effect to the merger.

FCF and CFC have also agreed to furnish each other with all information reasonably necessary or advisable in connection with any statement, filing, notice or application to any governmental entity in connection with the merger and the other transactions contemplated by the merger agreement, as well as to keep each other apprised of the status of matters related to the consummation of the transactions contemplated by the merger agreement.

Employee Matters

The merger agreement provides that, for a period of twelve (12) months after the effective time (or such shorter period if the employee is employed for less than twelve (12) months), FCF will provide each of the employees of CFC and its subsidiaries who continue to be employed by FCF and its subsidiaries immediately following the effective time (whom we refer to as “continuing employees”) with (i) a base salary or wage rate, as applicable, that is no less than the base salary or wage rate, as applicable, provided to the continuing employee prior to

 

75


Table of Contents

Closing, (ii) target cash bonus opportunities that are no less favorable than the target cash bonus opportunities that are generally made available to similarly situated employees of FCF and its subsidiaries and (iii) employee benefits that, in the aggregate, are substantially the same as those that are generally made available to similarly situated employees of FCF and its Subsidiaries. Any employee of CFC and its subsidiaries who is terminated by CFC without cause at FCF’s request on the closing date or by FCF without cause within six (6) months following the closing date will be entitled to severance payments equal to two (2) weeks of base salary for each full year of service with Company, with a minimum benefit of four (4) weeks of base salary and a maximum benefit of twenty-six (26) weeks of base salary, in all cases subject to FCF’s severance practices and such employee’s execution of a release of claims in a form reasonably acceptable to FCF and paid without duplication of any other severance or termination benefit for which such employee is eligible. Notwithstanding the foregoing, these requirements will not apply to any CCF employee who has or is party to any employment agreement, severance agreement, change in control agreement or any other agreement or arrangement that provides a change in control payment.

The merger agreement provides that, with respect to any employee benefit plans of FCF or its subsidiaries in which any continuing employees become eligible to participate on or after the effective time (the “new plans”), FCF will use commercially reasonable efforts to, (i) waive all pre-existing conditions, exclusions or waiting periods with respect to participation and coverage requirements applicable to such continuing employees and their eligible dependents under any new plans, except to the extent such pre-existing conditions, exclusions or waiting periods would apply under an analogous CFC benefit plan, (ii) provide each such employee and their eligible dependents with credit for any eligible expenses incurred prior to the effective time under a CFC benefit plan (to the same extent that such credit was given under the analogous CFC benefit plan prior to the effective time) in satisfying any applicable deductible, co-payment or out-of-pocket requirements under any new plan and (iii) recognize all service of such employees with CFC and its subsidiaries for all purposes in any new plan to the same extent such service was taken into account under the analogous CFC benefit plan prior to the effective time. The merger agreement provides that the foregoing service recognition will not apply (a) to the extent it would result in duplication of benefits for the same period of service, (b) for purposes of any defined benefit pension or post-retirement welfare plan or (c) where such service is with respect to a newly established benefit plan of FCF for which similarly situated employees of FCF do not receive past service credit.

If requested by FCF in writing at least thirty (30) days prior to the effective time, CFC will take any and all actions, to the extent permitted by law and the terms of the applicable plan, required (including without limitation, the adoption of resolutions by its board of directors) to amend, freeze and/or terminate any or all CFC benefit plans immediately prior to the effective time (as permitted by the terms of the applicable CFC benefit plan), and, if requested by FCF, to implement any such actions. Without limiting the generality of the foregoing, prior to the effective time, CFC will take any and all actions and adopt such necessary resolutions to terminate the CFC 401(k) Plan effective as of the date immediately preceding the closing date and adopt such amendments to the CFC 401(k) Plan to terminate the CFC 401(k) Plan. The form and substance of all such resolutions and amendments will be subject to the review and approval of FCF, which will not be unreasonably withheld, and CFC will deliver to FCF an executed copy of the resolutions and amendment as soon as practicable following their adoption by the CFC board of directors and will fully comply with such resolutions and amendments. In connection with the termination of the CFC 401(k) Plan and the merger, CFC will, or will cause its applicable affiliate to, provide that (i) all CFC 401(k) Plan participant accounts will be fully vested, (ii) all benefit accruals under the CFC 401(k) Plan will be frozen and no new participants will be admitted to the CFC 401(k) Plan on or after the CFC 401(k) Plan termination date, and (iii) any contributions due to the CFC 401(k) Plan for the period before the CFC 401(k) Plan termination date and not yet paid on the CFC 401(k) Plan termination date will be contributed by CFC as soon as administratively feasible after the CFC 401(k) Plan termination date. As soon as practicable following the termination of the CFC 401(k) Plan, the account balances in the CFC 401(k) Plan will either be distributed to participants and beneficiaries or transferred to an eligible tax-qualified retirement plan or individual retirement account as a participant or beneficiary may direct. Prior to the distribution of account balances in the CFC 401(k) Plan, FCF will take any and all actions as may be required, including amendments to the tax-qualified defined contribution retirement plan designated by FCF (the “FCF 401(k) Plan”) to permit each

 

76


Table of Contents

continuing employee to make rollover contributions of “eligible rollover distributions” (within the meaning of Section 401(a)(31) of the Code, but excluding participant loans) at the time of such distribution from the CFC 401(k) Plan in the form of cash in an amount equal to the full account balance distributed to such continuing employee (excluding all participant loans) from the CFC 401(k) Plan to the FCF 401(k) Plan.

Nothing in the merger agreement will confer upon any employee, officer, director or consultant of CFC or any of its subsidiaries or affiliates any right to continue in the employ or service of the surviving entity, CFC, FCF or any subsidiary or affiliate thereof, or will interfere with or restrict in any way the rights of the surviving entity, CFC, FCF or any subsidiary or affiliate thereof to discharge or terminate the services of any employee, officer, director or consultant of CFC or any of its subsidiaries or affiliates at any time for any reason whatsoever, with or without cause. Nothing in the merger agreement will be deemed to (i) establish, amend, or modify any CFC benefit plan, FCF benefit plan, new plan or any other benefit or employment plan, program, agreement or arrangement, or (ii) alter or limit the ability of the surviving entity or any of its subsidiaries or affiliates to amend, modify or terminate any particular CFC benefit plan, FCF benefit plan, new plan or any other benefit or employment plan, program, agreement or arrangement after the effective time. Without limiting the generality of the terms of the merger agreement, nothing in the merger agreement, express or implied, is intended to or will confer upon any person, including any current or former employee, officer, director or consultant of CFC or any of its subsidiaries or affiliates, any right, benefit or remedy of any nature whatsoever under or by reason of the merger agreement.

Any CFC employee who has or is party to any employment agreement, severance agreement, change in control agreement or any other agreement or arrangement that provides for any payment that may be triggered by the merger or the bank merger (each, a “CIC Payment”) will not receive any severance benefits that would otherwise be provided by FCF to continuing employees but instead will receive a CIC Payment to the extent it is required to be paid under such agreement. Any employee who waives and relinquishes his or her right to a CIC Payment will be eligible for a severance payment as provided by FCF to continuing employees, unless such CFC employee enters into an employment agreement, severance agreement, change in control agreement or any written similar agreement or arrangement with the surviving corporation or a subsidiary of the surviving corporation.

FCF has agreed to assume and honor in accordance with their terms all employment or change in control agreements or equity award agreements, vested as of the closing date under the CFC benefit plans; provided, that FCF may replace such CFC benefit plans with a similar benefit plan of FCF.

The merger agreement provides that CFC and FCF will cooperate and use their commercially reasonable efforts to establish an aggregate retention bonus amount and identify key employees of CFC or FCF who will be offered a retention bonus prior to the effective time upon such terms and conditions as the chief executive officers of CFC and FCF will mutually agree.

Director and Officer Indemnification and Insurance

The merger agreement provides that from and after the effective time, FCF as the surviving entity in the merger will indemnify and hold harmless all present and former directors, officers and employees of CFC and its subsidiaries against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, damages or liabilities incurred in connection with any threatened or actual claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, whether arising before or after the effective time, arising out of the fact that such person is or was a director, officer or employee of CFC or any of its subsidiaries and pertaining to matters existing or occurring at or prior to the effective time, including the transactions contemplated by the merger agreement to the same extent as such persons are indemnified as of the date of the merger agreement by CFC pursuant to the CFC articles of incorporation, the CFC bylaws, the governing or organizational documents of any subsidiary of CFC and any indemnification agreements in existence as of the date of the merger agreement; and FCF as the surviving entity in the merger will also advance

 

77


Table of Contents

expenses as incurred by such indemnified party to the same extent as such persons were entitled to advancement of expenses as of the date of the merger agreement by CFC.

The merger agreement requires FCF, as the surviving entity in the merger, to maintain for a period of six (6) years after consummation of the merger CFC’s existing directors’ and officers’ liability insurance policy, or policies with a substantially comparable insurer of at least the same coverage and amounts and containing terms and conditions that are no less advantageous to the insured, with respect to claims arising from facts or events that occurred at or prior to the consummation of the merger. However, FCF is not required to spend annually more than two hundred percent (200%) of the current annual premium paid as of the date of the merger agreement by CFC for such insurance (the “premium cap”), and if such premiums for such insurance would at any time exceed that amount, then FCF will maintain policies of insurance which, in its good faith determination, provide the maximum coverage available at an annual premium equal to the premium cap. In lieu of the foregoing, CFC, in consultation with, but only upon the consent of FCF, may (and at the request of FCF, CFC will use its reasonable best efforts to), obtain at or prior to the effective time a six (6)-year “tail” policy under CFC’s existing directors and officers insurance policy providing equivalent coverage to that described in the preceding sentence if such a policy can be obtained for an amount that, in the aggregate, does not exceed the premium cap.

Name and Headquarters

The merger agreement provides that the name of the surviving corporation and surviving bank will be First Commonwealth Financial Corporation and First Commonwealth Bank, respectively; that the headquarters of FCF and FCF Bank will be located in Indiana, Pennsylvania.

Restructuring Efforts

The merger agreement provides that if CFC fails to obtain the required vote of CFC shareholders to approve the CFC merger proposal, each of the parties will in good faith use its reasonable best efforts to negotiate a restructuring of the transactions contemplated by the merger agreement (provided that neither party will have any obligation to alter or change any material terms, including the amount or kind of the consideration to be issued to holders of the capital stock of CFC as provided for in the merger agreement, in a manner adverse to such party or its shareholders) and/or resubmit the merger agreement or the transactions contemplated thereby (or as restructured) to CFC’s shareholders for adoption or approval.

Certain Additional Covenants

The merger agreement also contains additional covenants, including, among others, covenants relating to the filing of this proxy statement/prospectus, obtaining required consents, the listing of the shares of FCF common stock to be issued in the merger, access to information of the other company, additional agreements, advice of changes, exemption from takeover restrictions, the coordination of dividend declarations, the assumption by FCF of CFC’s indebtedness and public announcements with respect to the transactions contemplated by the merger agreement.

Governance of FCF after the Merger

As of the effective time, FCF will designate Patricia A. Husic, the president and chief executive officer of CFC, to the FCF board of directors. Except for that designation, the FCF board of directors, and the committees thereof, will remain unchanged and will consist of the directors of FCF immediately prior to the effective time, each of whom will serve as the directors of FCF until the next annual meeting of shareholders and until such time as their respective successors have been duly elected and qualified, or until their earlier death, resignation or removal from office.

 

78


Table of Contents

The executive officers of FCF will continue as executive officers of FCF immediately after the effective time, each of whom will serve until their respective successors are duly appointed and qualified or their earlier death, resignation or removal.

Meeting; Recommendation of CFC’s Board of Directors

CFC has agreed to call a meeting of its shareholders for the purpose of voting upon the approval of the merger agreement (the “requisite CFC vote”), and to use its reasonable best efforts to cause the meeting to occur as soon as reasonably practicable.

CFC and its board of directors has agreed to use its reasonable best efforts to obtain from CFC shareholders the requisite CFC vote, including by communicating to CFC shareholders its recommendation that CFC shareholders adopt and approve the merger agreement and the transactions contemplated thereby (the “CFC board recommendation”). However, subject to certain termination rights described in “—Termination of the Merger Agreement” below, if the CFC board of directors, after receiving the advice of its outside counsel and, with respect to financial matters, its outside financial advisors, determines in good faith that it would be reasonably likely to result in a violation of its fiduciary duties under applicable law to continue to make the CFC board recommendation, then, prior to the receipt of the requisite CFC vote, the CFC board of directors may submit the merger agreement to its shareholders without recommendation (although the resolutions approving the merger agreement may not be rescinded or amended) and may communicate the basis for its lack of a recommendation to its shareholders to the extent required by law, provided that (i) it gives the other party at least five (5) business days’ prior written notice of its intention to take such action and a reasonable description of the event or circumstances giving rise to its determination to take such action (including, in the event such action is taken in response to an acquisition proposal, the latest material terms and conditions of, and the identity of the third party making any such acquisition proposal, or any amendment or modification thereof, and a copy thereof if in writing and any related documentation or correspondence) and (ii) at the end of such notice period, it takes into account any amendment or modification to the merger agreement proposed by the other party and, after receiving the advice of its outside counsel and, with respect to financial matters, its outside financial advisors, determines in good faith that it would nevertheless be reasonably likely to result in a violation of its fiduciary duties under applicable law to continue to make the CFC board recommendation. Any material amendment to any acquisition proposal will require a new notice period.

CFC must adjourn or postpone the CFC shareholders meeting if there are insufficient shares of CFC common stock represented (either in attendance or by proxy) to constitute a quorum necessary to conduct the business of such meeting, or if on the date of such meeting, CFC has not received proxies representing a sufficient number of shares necessary to obtain the requisite CFC vote, and subject to the terms and conditions of the merger agreement, CFC will continue to use reasonable best efforts to solicit proxies from its shareholders. Notwithstanding any recommendation change by the CFC board of directors, but subject to the obligation to adjourn or postpone such meeting as described in the immediately preceding sentence, unless the merger agreement has been terminated in accordance with its terms, CFC is required to convene a meeting of its shareholders and to submit the merger proposal to a vote of such shareholders.

Agreement Not to Solicit Other Offers

CFC has agreed that it will, and will cause each of its subsidiaries and representatives to, immediately cease, and cause to be terminated, any activities, discussions or negotiations conducted before the date of the merger agreement with any person other than FCF with respect to any acquisition proposal.

CFC has agreed that it will not, and will cause each of its subsidiaries and its and their respective officers, directors, employees, agents, advisors and representatives not to, directly or indirectly, (i) initiate, solicit, knowingly encourage or knowingly facilitate any inquiries or proposals with respect to any acquisition proposal, (ii) engage or participate in any negotiations concerning any acquisition proposal or (iii) provide any confidential

 

79


Table of Contents

or nonpublic information or data to, or have or participate in any discussions with, any person relating to any acquisition proposal.

For purposes of the merger agreement, an “acquisition proposal” means, with respect to CFC, other than the transactions contemplated by the merger agreement, any offer, proposal or inquiry relating to, or any third party indication of interest in, (i) any acquisition or purchase, direct or indirect, of twenty-five percent (25%) or more of the consolidated assets of CFC and its subsidiaries or twenty-five percent (25%) or more of any class of equity or voting securities of CFC or its subsidiaries whose assets, individually or in the aggregate, constitute twenty-five percent (25%) or more of the consolidated assets of CFC, (ii) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in such third party beneficially owning twenty-five percent (25%) or more of any class of equity or voting securities of CFC or its subsidiaries whose assets, individually or in the aggregate, constitute twenty-five percent (25%) or more of the consolidated assets of CFC, or (iii) a merger, consolidation, share exchange, business combination, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving CFC or its subsidiaries whose assets, individually or in the aggregate, constitute twenty-five percent (25%) or more of the consolidated assets of CFC.

However, in the event that after the date of the merger agreement and prior to the receipt of the requisite CFC vote, CFC receives an unsolicited bona fide written acquisition proposal, it may, and may permit its subsidiaries and its and their subsidiaries’ officers, directors, agents, advisors and representatives to, furnish or cause to be furnished nonpublic information or data and participate in negotiations or discussions with the person making the acquisition proposal if the CFC board of directors concludes in good faith (after receiving the advice of its outside counsel, and with respect to financial matters, its financial advisors) that failure to take such actions would be reasonably likely to result in a violation of its fiduciary duties under applicable law, provided that, prior to furnishing any confidential or nonpublic information, CFC enters into a confidentiality agreement with the person making such acquisition proposal on terms no less favorable to it than the confidentiality agreement between FCF and CFC, and which confidentiality agreement does not provide such person with any exclusive right to negotiate with such party.

CFC has also agreed to (i) promptly (and, in any event, within twenty-four (24) hours) advise FCF following receipt of any acquisition proposal or any inquiry which could reasonably be expected to lead to an acquisition proposal, and the substance thereof (including the terms and conditions of and the identity of the person making such inquiry or acquisition proposal and a copy thereof if in writing and any related documentation or correspondence), and will keep FCF apprised of any related developments, discussions and negotiations on a current basis, including any amendments to or revisions of the material terms of such inquiry or acquisition proposal and (ii) use its reasonable best efforts to enforce any existing confidentiality or standstill agreements to which it or any of its subsidiaries is a party.

Conditions to Complete the Merger

FCF’s and CFC’s respective obligations to complete the merger are subject to the satisfaction or, where legally permissible, waiver, at or prior to the effective time, of the following conditions:

 

   

the requisite CFC vote having been obtained;

 

   

the authorization for listing on NYSE, subject to official notice of issuance, of the FCF common stock to be issued in the merger;

 

   

all requisite regulatory approvals having been obtained and remaining in full force and effect, and all statutory waiting periods in respect thereof having expired or been terminated, without the imposition of any materially burdensome regulatory condition;

 

   

the effectiveness of the registration statement of which this proxy statement/prospectus is a part, and the absence of any stop order (or proceedings for such purpose initiated or threatened and not withdrawn);

 

80


Table of Contents
   

no order, injunction or decree by any court or governmental entity of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the merger or any of the other transactions contemplated by the merger agreement being in effect, and no statute, rule, regulation, order, injunction or decree having been enacted, entered, promulgated or enforced by any governmental entity which prohibits or makes illegal the consummation of the merger;

 

   

the accuracy of the representations and warranties of the other party contained in the merger agreement as of the date on which the merger agreement was entered into and as of the date on which the merger is completed, subject to the materiality standards provided in the merger agreement (and the receipt by each party of an officers’ certificate from the other party to such effect);

 

   

the performance by the other party in all material respects of all obligations, covenants and agreements required to be performed by it under the merger agreement at or prior to the date on which the merger is completed (and the receipt by each party of an officers’ certificate from the other party to such effect);

 

   

receipt by each party of an opinion of legal counsel to the effect that on the basis of facts, representations and assumptions set forth or referred to in such opinion, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code; and

 

   

in the case of FCF’s obligations to complete the merger, immediately prior to the closing, not more than five (5%) of CFC common stock will be held by persons who either have exercised, or are then entitled to exercise, appraisal rights under the PBCL.

Neither CFC nor FCF can provide assurance as to when or if all of the conditions to the merger can or will be satisfied or waived by the appropriate party.

Termination of the Merger Agreement

The merger agreement can be terminated at any time prior to the consummation of the merger, whether before or after the receipt of the requisite CFC vote, in the following circumstances:

 

   

by mutual written consent of FCF and CFC;

 

   

by either FCF or CFC if any governmental entity that must grant a requisite regulatory approval has denied approval of the merger or the transactions contemplated by the merger agreement and such denial has become final and nonappealable or any governmental entity of competent jurisdiction has issued a final and nonappealable order permanently enjoining or otherwise prohibiting or making illegal the transactions contemplated by the merger agreement, unless the failure to obtain a requisite regulatory approval is due to the failure of the party seeking to terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement;

 

   

by either FCF or CFC if the merger has not been completed on or before August 30, 2023 (the “termination date”), unless the failure of the merger to be completed by such date is due to the failure of the party seeking to terminate the merger agreement to perform or observe its covenants and agreements under the merger agreement;

 

   

by either FCF or CFC (provided that the terminating party is not then in material breach of any representation, warranty, obligation, covenant or other agreement contained in the merger agreement) if there is a breach of any of the covenants or agreements or any of the representations or warranties (or any such representation or warranty ceases to be true) set forth in the merger agreement on the part of CFC, in the case of a termination by FCF, or on the part of FCF, in the case of a termination by CFC, which either individually or in the aggregate would constitute, if occurring or continuing on the date the merger is completed, the failure of a closing condition of the terminating party and which is not cured within forty-five (45) days following written notice to the party committing such breach, or by its nature or timing cannot be cured during such period (or such fewer days as remain prior to the termination date); or

 

81


Table of Contents
   

by FCF, if, prior to the time the requisite CFC vote is obtained, (i) CFC or the CFC board of directors (A) submits the merger agreement to its shareholders without a recommendation for approval, or otherwise withdraws or materially and adversely modifies (or publicly discloses its intention to withdraw or materially and adversely modify) its recommendation to approve the merger agreement, or recommends to its shareholders an acquisition proposal other than the merger, or (B) will have breached its obligations relating to non-solicitation of acquisition proposals or its obligations related to shareholder approval and the CFC board recommendation; or (ii) a tender offer or exchange offer for 25% or more of the outstanding shares of CFC common stock is commenced (other than by FCF), and the board of directors of CFC recommends that the shareholders of CFC tender their shares in such tender or exchange offer or otherwise fails to recommend that such shareholders reject such tender offer or exchange offer within ten (10) business days (or such fewer number of days as remains prior to the CFC special meeting) after the commencement of such tender or exchange offer.

CFC also may terminate the merger agreement at any time during the five (5) day period commencing on date on which the last regulatory approval required to permit the consummation of the transactions contemplated by the merger agreement is received (which we refer to as the “determination date”), if both following conditions are met:

 

   

the number obtained by dividing the VWAP of a share of FCF common stock during the ten (10) consecutive full trading days ending on the trading day prior to the determination date (which we refer to as the “average closing price”) by $14.86 is less than 0.8 (which we refer to as the “purchaser ratio”); and

 

   

the purchaser ratio is less than the “index ratio” which is the number obtained by dividing the average of the closing prices of the Nasdaq Bank Index (the “Nasdaq Index Price”), or if the Nasdaq Bank Index is not available, the KBW National Bank Index (the “KBW Index Price” and, together with the Nasdaq Index Price, the “Index Group Price”) for the ten (10) consecutive full trading days ending on the last trading day immediately preceding the determination date by Index Group Price for the ten (10) consecutive full trading days ending on the date of the first public announcement of the entry into the merger agreement and subtracting 0.2 from such quotient.

If CFC elects to exercise this termination right, prompt written notice must be provided to FCF. FCF then has the option, within five business days following its receipt of such written notice, to increase the merger consideration to be received by holders of CFC common stock by, at FCF’s option, (i) increasing the exchange ratio (which we refer to as the “adjusted exchange ratio”) (calculated to the nearest one one-thousandth) to equal the lesser of (x) a number (rounded to the nearest one one-thousandth) obtained by dividing (1) the product of $14.86 multiplied by 0.8 and further multiplied by the merger consideration (as then in effect) by (2) the average closing price; and (y) a number (rounded to the nearest one one-thousandth) obtained by dividing (1) the product of the index ratio and the merger consideration (as then in effect) by (2) the purchaser ratio.

If FCF elects to make this adjustment, FCF must provide prompt written notice to CFC, which will contain the revised exchange ratio. Once this notice is received by CFC, the merger agreement will continue in full force and effect.

Effect of Termination

If the merger agreement is terminated, it will become void and have no effect, except that (i) none of CFC or FCF will be relieved or released from any liabilities or damages arising out of its fraud or willful and material breach of any provision of the merger agreement and (ii) designated provisions of the merger agreement will survive the termination, including those relating to payment of fees and expenses, the confidential treatment of information and the termination fee described below.

 

82


Table of Contents

Termination Fee

CFC will pay FCF a termination fee equal to $6.0 million in cash (the “termination fee”) if the merger agreement is terminated in the following circumstances:

 

   

in the event that the merger agreement is terminated by FCF pursuant to the fifth bullet set forth under “—Termination of the Merger Agreement” above.

 

   

in the event, after the date of the merger agreement and prior to the termination of the merger agreement, a bona fide acquisition proposal has been communicated to or otherwise made known to the CFC board of directors or CFC’s senior management or has been made directly to the CFC shareholders generally, or any person has publicly announced (and not withdrawn) an acquisition proposal with respect to CFC, and (i) (a) thereafter the merger agreement is terminated by either FCF or CFC because the merger has not been completed prior to the termination date, and CFC has not obtained the requisite CFC vote or (b) thereafter the merger agreement is terminated by FCF based on a breach of the merger agreement by CFC that would constitute the failure of an applicable closing condition or because of a failure to obtain the requisite CFC vote at the CFC special meeting or any adjournment or postponement thereof, and (ii) prior to the date that is twelve (12) months after the date of such termination, CFC enters into a definitive agreement or consummates a transaction with respect to an acquisition proposal (whether or not the same acquisition proposal as that referred to above), provided that for purposes of the foregoing, all references in the definition of acquisition proposal to “twenty-five percent (25%)” will instead refer to “fifty percent (50%).” In such case, the termination fee must be paid to FCF on the earlier of the date CFC enters into such definitive agreement and the date of consummation of such transaction.

The termination fee and any amounts payable by CFC in connection therewith, constitute liquidated damages and not a penalty, and, except in the case of willful and material breach, will be the maximum aggregate amount of monetary fees, liabilities or damages payable by CFC under the merger agreement in the event of a termination of the merger agreement under specified circumstances.

Expenses and Fees

Except as otherwise provided in the merger agreement, all costs and expenses incurred in connection with the merger agreement and the transactions contemplated thereby will be paid by the party incurring such expense. The merger agreement provides that the costs and expenses of printing and mailing this proxy statement/prospectus will be borne equally by FCF and CFC.

Amendment, Waiver and Extension of the Merger Agreement

Subject to compliance with applicable law, the merger agreement may be amended by the parties at any time before or after the receipt of the requisite CFC vote or the requisite FCF vote, except that after the receipt of the requisite CFC vote, there may not be, without further approval of CFC shareholders any amendment to the merger agreement that requires such further approval under applicable law.

At any time prior to the effective time, each of the parties may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained in the merger agreement or in any document delivered by such other parties pursuant to the merger agreement, and (iii) waive compliance with any of the agreements or satisfaction of any conditions for its benefit contained in the merger agreement, except that after the receipt of the requisite CFC vote or the requisite FCF vote, there may not be, without further approval of FCF shareholders or CFC shareholders, as applicable, any extension or waiver of the merger agreement or any portion thereof that requires such further approval under applicable law.

 

83


Table of Contents

Governing Law

The merger agreement is governed by and will be construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to any applicable conflicts of law.

Specific Performance

FCF and CFC will be entitled to specific performance of the terms of the merger agreement, including an injunction or injunctions to prevent breaches or threatened breaches of the merger agreement or to enforce specifically the performance of the terms and provisions of the merger agreement (including the parties’ obligations to consummate the merger), in addition to any other remedy to which they are entitled at law or in equity.

 

84


Table of Contents

VOTING AGREEMENTS

In connection with, and as a condition to, FCF entering into the merger agreement, each director and certain executive officers of CFC entered into a voting agreement with FCF (which we refer to as the “voting agreement”). The following summary of the voting agreement is subject to, and qualified in its entirety by reference to, the form of voting agreement attached as Exhibit A to the merger agreement, which is attached as Annex A to this proxy statement/prospectus.

Under the voting agreements, each such director and executive officer has agreed to appear at the CFC special meeting (in person or by proxy) and to vote his or her shares of CFC common stock:

 

   

in favor of the adoption of the merger agreement, and in favor of each of the other actions contemplated by the merger agreement;

 

   

against approval of any proposal made in opposition to, or in competition with, the merger or any other transactions contemplated by the merger agreement; and

 

   

against any of the following actions (other than those actions that relate to the merger and any other transactions between the FCF and CFC as contemplated by the merger agreement): (i) any merger, consolidation, business combination, sale of assets, or reorganization of CFC or any subsidiary of CFC, (ii) any sale, lease or transfer of any significant part of the assets of CFC or any subsidiary of CFC, (iii) any reorganization, recapitalization, dissolution, liquidation or winding up of CFC or any subsidiary of CFC, (iv) any material change in the capitalization of CFC or any subsidiary of CFC, or the corporate structure of CFC or any subsidiary of CFC, or (iv) any other action that is intended, or could reasonably be expected to, impede, interfere with, delay, postpone, discourage or adversely affect the merger or any other transactions between FCF and CFC as contemplated by the merger agreement.

In addition, the voting agreement provides that each such shareholder party will not directly or indirectly, sell, pledge, encumber, assign, transfer or otherwise dispose of or encumber prior to the expiration date of the voting agreement, any or all of his or her shares of CFC common stock, subject to limited exceptions. The voting agreement further provides that each such shareholder party will not exercise or assert any appraisal rights to demand payment for any shares of CFC common stock that may arise with respect to the merger.

The voting agreements will terminate upon the earlier of (i) the termination of the merger agreement, (ii) the effective time of the merger, or (iii) any material modification, waiver or amendment of the merger agreement that affects adversely the consideration payable to the holders of CFC common stock as compared to that payable under the merger agreement as originally in effect.

As of the CFC record date, CFC shareholders who are party to the voting agreements beneficially owned and were entitled to vote an aggregate of approximately 1,180,656 shares of CFC common stock, which represented approximately 13.58% of the shares of CFC stock outstanding on that date.

 

85


Table of Contents

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following discussion sets forth the anticipated material United States federal income tax consequences of the merger to U.S. holders (as defined below) of CFC common stock that exchange their shares of CFC common stock for the merger consideration. This discussion does not address any tax consequences arising under the laws of any state, local or foreign jurisdiction, or under any United States federal laws other than those pertaining to income tax. This discussion is based upon the Code, the regulations promulgated under the Code and court and administrative rulings and decisions, all as in effect on the date of this proxy statement/prospectus. These laws may change, possibly retroactively, and any change could affect the accuracy of the statements and conclusions set forth in this discussion. To the extent this section consists of statements as to matters of U.S. federal income tax law, this section constitutes the opinion of Stevens & Lee, P.C. and the opinion of Squire Patton Boggs (US) LLP.

This discussion addresses only those holders of CFC common stock that hold their shares of CFC common stock as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not address all aspects of United States federal income taxation that may be relevant to you in light of your particular circumstances or that may be applicable to you if you are subject to special treatment under the United States federal income tax laws, including if you are:

 

   

a financial institution;

 

   

a tax-exempt organization;

 

   

a pass-through entity (or an investor in a pass-through entity);

 

   

an insurance company;

 

   

a mutual fund;

 

   

a dealer or broker in stocks and securities, or currencies;

 

   

a trader in securities that elects mark-to-market treatment;

 

   

a holder of CFC common stock that received CFC common stock through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation;

 

   

a person that is not a U.S. holder;

 

   

a person that has a functional currency other than the U.S. dollar;

 

   

a real estate investment trust;

 

   

regulated investment companies;

 

   

a holder of CFC common stock that holds CFC common stock as part of a hedge, straddle, constructive sale, wash sale, conversion or other integrated transaction; or

 

   

a United States expatriate.

In addition, the discussion does not address any alternative minimum tax or any state, local or foreign tax consequences of the merger, nor does it address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010. Determining the actual tax consequences of the merger to you may be complex. They will depend on your specific situation and on factors that are not within the control of CFC or FCF. You should consult with your own tax advisor as to the tax consequences of the merger in your particular circumstances.

For purposes of this discussion, the term “U.S. holder” means a beneficial owner of CFC common stock that is for United States federal income tax purposes (i) an individual citizen or resident of the United States, (ii) a corporation, or entity treated as a corporation, organized in or under the laws of the United States or any state

 

86


Table of Contents

thereof or the District of Columbia, (iii) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or (iv) an estate, the income of which is includible in gross income for United States federal income tax purposes regardless of its source.

The United States federal income tax consequences to a partner in an entity or arrangement that is treated as a partnership for United States federal income tax purposes and that holds CFC common stock generally will depend on the status of the partner and the activities of the partnership. Partners in a partnership holding CFC common stock should consult their own tax advisors.

Tax Consequences of the Merger Generally

The parties intend for the merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to FCF’s obligation to complete the merger that FCF receive an opinion from Squire Patton Boggs (US) LLP, dated the closing date, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to CFC’s obligation to complete the merger that CFC receive an opinion from Stevens & Lee, P.C., dated the closing date, to the effect that the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Neither of the opinions described above will be binding on the IRS. FCF and CFC have not sought and will not seek any ruling from the IRS regarding any matters relating to the merger, and, as a result, there can be no assurance that the IRS will not assert, or that a court would not sustain, a position contrary to any of the conclusions set forth below. In addition, if any of the representations, warranties, covenants or assumptions upon which the opinions described above are based (the “Representations and Assumptions”) are inconsistent with the actual facts, or if any condition contained in the merger agreement and affecting these opinions is breached or is waived by any party, the U.S. federal income tax consequences of the merger could be adversely affected.

As a “reorganization,” the material U.S. federal income tax consequences of the merger to U.S. holders of CFC common stock are set forth in the remainder of this discussion:

 

   

a holder who receives solely shares of FCF common stock (or receives FCF common stock and cash solely in lieu of a fractional share) in exchange for shares of CFC common stock generally will not recognize any gain or loss upon the merger, except with respect to the cash received in lieu of a fractional share of FCF common stock;

 

   

the aggregate tax basis of the FCF common stock received in the merger (including fractional share interests in FCF common stock deemed received and exchanged for cash) will be equal to the holder’s aggregate tax basis in the CFC common stock for which it is exchanged;

 

   

the holding period of FCF common stock received in the merger (including any fractional shares deemed received and redeemed as described below) will include the holder’s holding period of the CFC common stock for which it is exchanged.

If holders acquired different blocks of CFC common stock at different times and at different prices, a holder’s tax basis and holding period in FCF common stock may be determined with reference to each block of CFC common stock.

Cash Instead of a Fractional Share

A holder of CFC common stock who receives cash instead of a fractional share of FCF common stock will be treated as having received the fractional share of FCF common stock pursuant to the merger and then as having sold that fractional share for cash. As a result, generally such a holder will recognize gain or loss equal to the difference between the amount of cash received and the basis allocable to such holder’s fractional share of FCF common stock. This gain or loss generally will be capital gain or loss, and will be long-term capital gain or loss

 

87


Table of Contents

if, as of the effective time of the merger, the holding period for the shares (including the holding period of CFC common stock surrendered therefor) is greater than one (1) year. The deductibility of capital losses is subject to limitations.

Backup Withholding

Payments of cash to a non-corporate holder of CFC common stock in connection with the merger may be subject to information reporting and backup withholding (currently at a rate of twenty-four percent (24%)). Such holders of CFC common stock generally will not be subject to backup withholding, however, if the holder:

 

   

furnishes a correct taxpayer identification number, certifies that the holder is not subject to backup withholding on IRS form W-9 (or an applicable substitute or successor form) included in the election form/letter of transmittal the holder will receive and otherwise complies with all the applicable requirements of the backup withholding rules; or

 

   

provides proof of an applicable exemption from backup withholding.

Any amounts withheld under the backup withholding rules are not additional tax and will generally be allowed as a refund or credit against the holder’s United States federal income tax liability, provided the required information is timely furnished to the Internal Revenue Service.

This summary of certain material United States federal income tax consequences is for general information only and is not tax advice. You are urged to consult your tax advisor with respect to the application of United States federal income tax laws to your particular situation as well as any tax consequences arising under the United States federal estate or gift tax rules, or under the laws of any state, local, foreign or other taxing jurisdiction.

 

88


Table of Contents

COMPARISON OF THE RIGHTS OF HOLDERS OF FCF COMMON STOCK AND HOLDERS OF CFC COMMON STOCK

CFC is incorporated under the laws of the Commonwealth of Pennsylvania, and the rights of CFC shareholders are governed by the laws of the Commonwealth of Pennsylvania, the CFC articles of incorporation and the CFC bylaws. As a result of the merger, CFC shareholders will receive shares of FCF common stock and will become FCF shareholders. FCF is also incorporated under the laws of the Commonwealth of Pennsylvania, and the rights of FCF shareholders are governed by the laws of the Commonwealth of Pennsylvania, the FCF articles of incorporation and the FCF by-laws. Thus, following the merger, the rights of CFC shareholders who become FCF shareholders in the merger will no longer be governed by the CFC articles of incorporation and the CFC bylaws and instead will be governed by the FCF articles of incorporation and the FCF by-laws.

The following summary is not a complete statement of the rights of shareholders or shareholders of the two (2) companies or a complete description of the specific provisions referred to below. The summary is qualified in its entirety by reference to CFC’s and FCF’s governing documents, which we urge you to read carefully and in their entirety. Copies of FCF’s governing documents have been filed with the SEC. See “Where You Can Find More Information” beginning on page 96.

 

    

CFC

  

FCF

Capital Stock   

The CFC articles of incorporation authorize 12,000,000 shares of common stock, including 11,000,000 shares of CFC common stock, $1.00 par value per share, and 1,000,000 shares of CFC non-voting common stock, $1.00 par value per share, and 1,000,000 shares of preferred stock.

 

As of December 15, 2022, there were (i) 8,700,793 shares of CFC common stock issued and outstanding, (ii) 85,166 of CFC common stock held, directly or indirectly, by CFC as treasury stock, (iii) 329,301 shares reserved for issuance upon exercise of outstanding CFC Stock Options, CFC Warrants or otherwise, and (iv) no shares of CFC non-voting common stock or CFC preferred stock issued or outstanding.

  

The FCF articles of incorporation authorize 200,000,000 shares of common stock, par value $1.00 per share, and 3,000,000 shares of preferred stock, par value $1.00 per share.

 

As of December 15, 2022, there were (i) 93,376,314 shares of FCF common stock issued and outstanding, (ii) 20,537,838 of FCF common stock held, directly or indirectly, by FCF as treasury stock, (iii) no shares reserved for issuance upon exercise of outstanding stock options, warrants or otherwise, and (iv) no shares of FCF preferred stock issued or outstanding.

Board of Directors; Classification   

The PBCL provides that the board of directors of a Pennsylvania corporation must consist of one or more directors. The articles or by-laws of a corporation may fix the number of directors.

 

The CFC by-laws provide that the number of directors shall not be less than three (3) nor more than twenty-five (25), as may be determined from time to time by a majority of the board of directors. The number of CFC directors is currently fixed at ten (10).

  

The PBCL provides that the board of directors of a Pennsylvania corporation must consist of one or more directors. The articles or by-laws of a corporation may fix the number of directors.

 

The FCF by-laws provide that the number of directors shall not be less than three (3) nor more than twenty-five (25), as may be determined from time to time by a majority of the board of directors. The number of FCF directors is currently fixed at fourteen (14).

 

89


Table of Contents
    

CFC

  

FCF

  

 

The terms of CFC’s directors are divided into three classes servicing staggered three-year terms.

  

 

If the merger is completed, the size of FCF’s board of directors will be expanded by one additional member. All of FCF’s directors are elected annually to a one (1) year term.

Removal of Directors    The PBCL provides that the entire board of directors or any individual director may be removed from office for cause by vote of the shareholders entitled to elect the directors.   

The PBCL provides that the entire board of directors or any individual director may be removed from office by vote of the shareholders entitled to elect the directors.

 

Under the FCF by-laws, the board of directors may remove and declare vacant the office of a director who has been judicially declared of unsound mind or who has been convicted of a felony or for other proper cause.

Vacancies on the Board of Directors and Additional Directors    Both CFC and FCF may fill vacancies by a majority vote of the remaining members of the board.
Cumulative Voting for Election of Directors    Neither CFC nor FCF permits cumulative voting for the election of directors]
Ability to Call a Special Meeting of Shareholders    Both CFC and FCF shareholders may call a special meeting of shareholders, subject to certain minimum vote requirements.
Notice of Shareholder Meetings    The governing documents of CFC and FCF contain similar notice requirements for meetings of shareholders. FCF’s by-laws provide for electronic transmission of notice.
Shareholder Nominations and Proposals    CFC and FCF shareholders have the ability to nominate directors and bring proposals before a meeting of shareholders, subject to certain procedural requirements.
Shareholder Quorum    For both CFC and FCF a majority of the votes entitled to be cast on a particular matter constitutes a quorum.
Amendment of Articles of Incorporation    The articles of incorporation of both CFC and FCF may be amended only by vote of their shareholders, subject to certain minimum vote requirements and, except in certain circumstances, any amendment to FCF’s articles of incorporation must also be approved by the board of directors.
Amendment of By-Laws    The procedures to amend CFC’s by-laws and FCF’s by-laws are similar, but the minimum shareholder vote required for such an amendment is 80% for FCF compared with a majority vote of all outstanding shares of CFC common stock for CFC for most provisions.
Action without a Meeting    CFC and FCF have similar requirements for shareholders to act by written consent without a meeting.
Rights of Dissenting Shareholders    CFC shareholders have appraisal rights in connection with the merger, subject to certain exceptions and limitations. FCF shareholders do not have appraisal rights in connection with the merger.

 

90


Table of Contents
    

CFC

  

FCF

Preemptive Rights   

Preemptive rights generally allow shareholders to maintain their proportionate share of ownership of a corporation by permitting the shareholders to purchase a proportionate share of any new stock issuances. Preemptive rights protect the shareholders from dilution of value and control upon new stock issuances.

 

Neither CFC shareholders nor FCF shareholders have preemptive rights.

Dividends    CFC and FCF may each declare and pay dividends within the restrictions provided by Pennsylvania law.
Business Combinations   

Subject to certain exceptions, the PBCL provides that the affirmative vote of a majority of the outstanding shares entitled to vote shall be required in order to effect the merger or consolidation of a corporation. However, shareholder approval is not required to adopt a plan of merger if (i) the articles of incorporation of the surviving corporation are unchanged as a result of the merger, (ii) each share of the corporation outstanding immediately prior to the effectiveness of the merger is to continue as or be converted into an identical share of the surviving corporation, and (iii) shareholders of the corporation will continue to hold in the aggregate shares of the surviving corporation entitled to cast at least a majority of the votes entitled to be cast generally for the election of directors.

 

The CFC articles of incorporation provide that in order to effect the merger or consolidation of CFC into another corporation (other than a merger in which shareholder approval is not required as described above), the affirmative vote of at least 75% of the outstanding shares of CFC common stock is required, unless such transaction is approved in advance by at least 75% of the members of CFC’s board of directors, in which case such transaction must be approved by holders of 66 2/3% of the outstanding shares entitled to vote.

  

Subject to certain exceptions, the PBCL provides that the affirmative vote of a majority of the outstanding shares entitled to vote shall be required in order to effect the merger or consolidation of a corporation. However, shareholder approval is not required to adopt a plan of merger if (i) the articles of incorporation of the surviving corporation are unchanged as a result of the merger, (ii) each share of the corporation outstanding immediately prior to the effectiveness of the merger is to continue as or be converted into an identical share of the surviving corporation, and (iii) shareholders of the corporation will continue to hold in the aggregate shares of the surviving corporation entitled to cast at least a majority of the votes entitled to be cast generally for the election of directors.

 

The FCF articles of incorporation provide that in order to effect the merger or consolidation of FCF into another corporation (other than a merger in which shareholder approval is not required as described above), the affirmative vote of 75% of the outstanding shares entitled to vote is required.

Pennsylvania Anti-Takeover Provisions

Under the PBCL, certain anti-takeover provisions apply to Pennsylvania publicly traded companies including those relating to (i) control share acquisitions, (ii) disgorgement of profits by certain controlling persons, (iii) business combination transactions with interested shareholders and (iv) the rights of shareholders to demand fair value for their stock following a control transaction. Pennsylvania law allows registered corporations

 

91


Table of Contents

to opt-out of any of these anti-takeover provisions. Neither CFC nor FCF has not opted out of the anti-takeover provisions listed above. A general summary of the applicable anti-takeover provisions is set forth below.

Control Share Acquisitions. The PBCL limits control share acquisitions relating to the act of acquiring for the first time voting power over voting shares equal to at least 20%, 33 1/3% and 50% of the voting power of the corporation. Once a control share acquisition has occurred, then all shares in excess of the number required to meet the applicable threshold, plus shares purchased at any time with the intention of acquiring such voting power and shares purchased within 180 days of the date the triggering threshold was exceeded, are considered control shares. Control shares cannot vote either until their voting rights have been restored by two separate votes of the shareholders, as described below, at a meeting or until they have been transferred to a person who does not thereby also become the holder of control shares.

The holder of control shares may wait until the next annual or special meeting after the acquisition took place to submit the request for the restoration of voting rights to the shareholders, or the acquiring person may accelerate the process by agreeing to underwrite the cost of a special meeting of shareholders for that purpose. In either case, the acquiring person is required to furnish for distribution to the shareholders an information statement containing a detailed disclosure concerning the acquiring person, its intentions with respect to ownership of securities of the corporation and other matters. The restoration of voting rights may only be approved by the affirmative vote of the holders of a majority of the voting power entitled to vote in two separate votes of all of (i) the disinterested shareholders and (ii) the voting shares of the corporation.

For a period of 24 months after the later of (i) a control share acquisition by an acquiring person who does not properly request consideration of voting rights, or (ii) the denial of such a request or lapse of voting rights, the corporation may redeem all the control shares at the average public market sales price of the shares on the date notice of the call for redemption is given by the corporation.

Disgorgement of Profits by Certain Controlling Persons. Under the PBCL, controlling persons (as defined herein) may be required to disgorge profits in the event that (i) any person or group publicly discloses that such person or group may acquire control of the corporation, in any manner, or (ii) a person or group acquires (or publicly discloses an intent to acquire) 20% or more of the voting power of the corporation (each, a “controlling person”) and, in either case, the controlling person sells shares within 18 months of becoming a controlling person. Any profits from sales of equity securities of the corporation received by the controlling person during such 18-month period will belong to the corporation if the securities that were sold were acquired during the 18-month period or within the 24-month period prior to becoming a controlling person.

Business Combination Transactions with Interested Shareholders. The PBCL prohibits certain business combinations with “interested shareholders,” defined as persons who acquire the direct or indirect beneficial ownership of shares entitled to cast at least 20% of the votes entitled to be cast for the election of directors. A corporation subject to this provision may not effect mergers or certain other business combinations with the interested shareholder for a period of five years, unless:

 

   

the business combination or the acquisition of stock by means of which the interested shareholder became an interested shareholder is approved by the corporation’s board of directors prior to such stock acquisition;

 

   

the business combination is approved by the affirmative vote of the holders of all the outstanding common shares of the corporation; or

 

   

the business combination is approved by the affirmative vote of the holders of a majority of all shares entitled to vote, excluding shares held by the interested shareholders, and at the time of such vote, the interested shareholder is the beneficial owner of at least 80% of the voting shares of the corporation. This exception applies only if the value of the consideration to be paid by the interested shareholder in connection with the business combination satisfies certain fair price requirements.

 

92


Table of Contents

After the five-year restricted period, an interested shareholder of the corporation may engage in a business combination with the corporation if (i) the business combination is approved by the affirmative vote of a majority of the shares other than those beneficially owned by the interested shareholder and its affiliates, or (ii) the merger is approved at a shareholders’ meeting and certain fair price requirements are met.

Rights of Shareholders to Demand Fair Value for Stock Following a Control Transaction. The PBCL provides, generally, that following a control transaction, any holder of voting shares may, prior to or within a reasonable time following the giving of notice by the controlling person, demand that the controlling person pay them the fair value of their shares under specified procedures. Fair value may not be less than the highest price paid per share by the controlling person at any time during the 90-day period ending on and including the date on which the controlling person became such, plus any increment representing any value, such as a control premium, that is not reflected in such price.

 

93


Table of Contents

LEGAL MATTERS

The validity of FCF common stock to be issued in connection with the merger will be passed upon for FCF by Matthew C. Tomb, Chief Risk Officer and General Counsel of FCF.

Squire Patton Boggs (US) LLP, Cincinnati, Ohio, counsel for FCF, and Stevens & Lee, P.C., Harrisburg, Pennsylvania, counsel for CFC, will provide, prior to the effective time, opinions regarding certain federal income tax consequences of the merger for FCF and CFC, respectively.

EXPERTS

The consolidated financial statements of First Commonwealth Financial Corporation appearing in First Commonwealth Financial Corporation’s Annual Report (Form 10-K) for the year ended December 31, 2021, and the effectiveness of First Commonwealth Financial Corporation’s internal control over financial reporting as of December 31, 2021 have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon, included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

 

94


Table of Contents

DEADLINES FOR SUBMITTING SHAREHOLDER OR STOCKHOLDER PROPOSALS

FCF

FCF held its 2022 annual meeting of shareholders on April 26, 2022. FCF will hold its 2023 annual meeting of shareholders (the “FCF 2023 annual meeting”), regardless of whether the merger has been completed. Any shareholder nominations or proposals for other business intended to be presented at FCF’s next annual meeting must be submitted to FCF as set forth below.

SEC Rule 14a-8

In order for a shareholder proposal for the FCF 2023 annual meeting to be eligible for inclusion in FCF’s proxy statement pursuant to SEC Rule 14a-8, FCF must have received the proposal and supporting statements at its principal executive offices no later than November 16, 2022. Any such proposals were required to be sent to the attention of the Corporate Secretary of FCF at 601 Philadelphia Street, Indiana, Pennsylvania 15701.

Advance Notice Procedures

With respect to shareholder proposals not wishing to be included in FCF’s proxy statement, but rather to be brought as business at FCF’s annual meeting, the FCF by-laws prescribe certain advance notice procedures independent of the notice requirement and deadline described above. The FCF by-laws state that, to be timely, notice and certain related information must be received at FCF’s principal executive offices not earlier than the close of business on the 180th day and not later than close of business on the 150th day prior to the first anniversary of the preceding year’s annual meeting. For the 2023 Annual Meeting of Shareholders, this would mean that timely notice would be delivered between October 28, 2022 and November 28, 2022. If the date of next year’s annual meeting is more than 30 days before, or 60 days after, April 26, 2023, timely notice must be delivered not earlier than (1) the close of business on the 120th day prior to the date of the 2023 Annual Meeting of Shareholders and not later than (2) the close of business on the later of the 90th day prior to the date of the 2023 Annual Meeting of Shareholders or, if the first public announcement of the date of the 2023 Annual Meeting is less than 100 days prior to the date of the meeting, the 10th day following the day on which we make a public announcement of the meeting date. Any such proposals should be sent to the attention of the Corporate Secretary of FCF at 601 Philadelphia Street, Indiana, Pennsylvania 15701.

 

95


Table of Contents

WHERE YOU CAN FIND MORE INFORMATION

FCF files annual, quarterly and current reports, proxy statements and other information with the SEC. FCF’s SEC filings, including this registration statement and the exhibits and schedules thereto, are available over the Internet at the SEC’s website at http://www.sec.gov and on FCF’s website at www.fcbanking.com. Except as specifically incorporated by reference in this prospectus, information on those websites is not part of this prospectus. You may also read and copy any documents FCF files with the SEC by visiting the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain further information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, you may inspect FCF’s SEC reports and other information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.

The SEC allows FCF to “incorporate by reference” the information in the documents FCF files with the SEC. This means FCF can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this prospectus, and information that FCF files later with the SEC will automatically update and supersede this information.

FCF incorporates by reference the documents listed below and any documents subsequently filed with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (other than, in each case, documents or information deemed to have been furnished and not “filed” in accordance with SEC rules) after the date of this prospectus and before termination of the offering of securities under this prospectus:

 

   

FCF’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 1, 2022;

 

   

FCF’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 9, 2022;

 

   

FCF’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, filed with the SEC on August 9, 2022;

 

   

FCF’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed with the SEC on November 7, 2022;

 

   

FCF’s Current Reports on Form 8-K filed with the SEC on April 28, 2022 and August 30, 2022; and

 

   

The description of FCF’s common stock contained in FCF’s registration statement filed pursuant to Section 12 of the Exchange Act, and any amendment or report filed for the purpose of updating this description.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to purchase, the securities offered by this proxy statement/prospectus, or the solicitation of a proxy, in any jurisdiction to or from any person to whom or from whom it is unlawful to make such offer, solicitation of an offer or proxy solicitation in such jurisdiction. Neither the delivery of this proxy statement/prospectus nor any distribution of securities pursuant to this proxy statement/prospectus shall, under any circumstances, create any implication that there has been no change in the information set forth or incorporated into this proxy statement/prospectus by reference or in FCF’s and CFC’s affairs since the date of this proxy statement/prospectus. FCF provided the information contained in this proxy statement/prospectus with respect to FCF and CFC provided the information contained in this proxy statement/prospectus with respect to CFC.

 

96


Table of Contents

ANNEX A

AGREEMENT AND PLAN OF MERGER

by and between

First Commonwealth Financial Corporation

and

Centric Financial Corporation

Dated as of August 30, 2022

 

 


Table of Contents

TABLE OF CONTENTS

 

         Page  

ARTICLE I     THE MERGER

     A-1  

1.1

 

The Merger

     A-1  

1.2

 

Effective Time

     A-1  

1.3

 

Effects of the Merger

     A-1  

1.4

 

Conversion of Company Common Stock

     A-2  

1.5

 

Treatment of Company Preferred Stock

     A-2  

1.6

 

Purchaser Common Stock

     A-2  

1.7

 

Treatment of Company Equity Awards

     A-2  

1.8

 

Treatment of Company Warrants

     A-4  

1.9

 

Articles of Incorporation of Surviving Corporation

     A-4  

1.10

 

Bylaws of Surviving Corporation

     A-4  

1.11

 

Tax Consequences

     A-4  

1.12

 

Bank Merger

     A-4  

1.13

 

Principal Executive Offices of Surviving Corporation

     A-4  

ARTICLE II     EXCHANGE OF SHARES

     A-4  

2.1

 

Purchaser to Make Shares Available

     A-4  

2.2

 

Exchange of Shares

     A-5  

ARTICLE III     REPRESENTATIONS AND WARRANTIES OF COMPANY

     A-7  

3.1

 

Corporate Organization

     A-7  

3.2

 

Capitalization

     A-9  

3.3

 

Authority; No Violation

     A-10  

3.4

 

Consents and Approvals

     A-10  

3.5

 

Reports

     A-11  

3.6

 

Financial Statements

     A-12  

3.7

 

Broker’s Fees

     A-13  

3.8

 

Absence of Certain Changes or Events

     A-13  

3.9

 

Legal Proceedings

     A-13  

3.10

 

Taxes and Tax Returns

     A-13  

3.11

 

Employee Benefits; Employees

     A-14  

3.12

 

Compliance with Applicable Law

     A-17  

3.13

 

Certain Contracts

     A-19  

3.14

 

Agreements with Regulatory Agencies

     A-19  

3.15

 

Risk Management Instruments

     A-20  

3.16

 

Environmental Matters

     A-20  

3.17

 

Investment Securities and Commodities

     A-20  

3.18

 

Real Property

     A-21  

3.19

 

Intellectual Property

     A-21  

3.20

 

Related Party Transactions

     A-22  

3.21

 

State Takeover Laws

     A-22  

3.22

 

Reorganization

     A-22  

3.23

 

Opinion

     A-22  

3.24

 

Company Information

     A-22  

3.25

 

Loan Portfolio

     A-22  

3.26

 

Insurance

     A-23  

3.27

 

Information Security

     A-23  

3.28

 

Dissenters’ Rights

     A-23  

3.29

 

Subordinated Indebtedness

     A-23  

3.30

 

Mortgage Banking Business

     A-24  

3.31

 

No Other Representations or Warranties

     A-24  

 

A-i


Table of Contents

TABLE OF CONTENTS

 

         Page  

ARTICLE IV     REPRESENTATIONS AND WARRANTIES OF PURCHASER

     A-25  

4.1

 

Corporate Organization

     A-25  

4.2

 

Capitalization

     A-26  

4.3

 

Authority; No Violation

     A-27  

4.4

 

Consents and Approvals

     A-27  

4.5

 

Reports

     A-28  

4.6

 

Financial Statements

     A-28  

4.7

 

Broker’s Fees

     A-29  

4.8

 

Absence of Certain Changes or Events

     A-29  

4.9

 

Legal Proceedings

     A-29  

4.10

 

Taxes and Tax Returns

     A-29  

4.11

 

SEC Reports

     A-30  

4.12

 

Compliance with Applicable Law

     A-30  

4.13

 

Certain Contracts

     A-31  

4.14

 

Agreements with Regulatory Agencies

     A-31  

4.15

 

State Takeover Laws

     A-31  

4.16

 

Reorganization

     A-31  

4.17

 

Purchaser Information

     A-31  

4.18

 

Information Security

     A-32  

4.19

 

No Other Representations or Warranties

     A-32  

ARTICLE V     COVENANTS RELATING TO CONDUCT OF BUSINESS

     A-32  

5.1

 

Conduct of Business Prior to the Effective Time

     A-32  

5.2

 

Company Forbearances

     A-33  

5.3

 

Purchaser Forbearances

     A-35  

ARTICLE VI     ADDITIONAL AGREEMENTS

     A-36  

6.1

 

Regulatory Matters

     A-36  

6.2

 

Access to Information

     A-37  

6.3

 

Shareholders’ Approvals

     A-38  

6.4

 

Legal Conditions to Merger

     A-39  

6.5

 

Stock Exchange Listing

     A-39  

6.6

 

Employee Benefit Plans

     A-39  

6.7

 

Indemnification; Directors’ and Officers’ Insurance

     A-41  

6.8

 

Additional Agreements

     A-42  

6.9

 

Advice of Changes

     A-42  

6.10

 

Dividends

     A-42  

6.11

 

Corporate Governance

     A-42  

6.12

 

Acquisition Proposals

     A-43  

6.13

 

Public Announcements

     A-43  

6.14

 

Change of Method

     A-44  

6.15

 

Restructuring Efforts

     A-44  

6.16

 

Takeover Statutes

     A-44  

6.17

 

Exemption from Liability Under Section 16(b)

     A-44  

6.18

 

Assumption of Company Debt

     A-45  

6.19

 

Bank Merger

     A-45  

ARTICLE VII     CONDITIONS PRECEDENT

     A-45  

7.1

 

Conditions to Each Party’s Obligation to Effect the Merger

     A-45  

7.2

 

Conditions to Obligations of Purchaser

     A-45  

7.3

 

Conditions to Obligations of Company

     A-46  

 

A-ii


Table of Contents

TABLE OF CONTENTS

 

         Page  

ARTICLE VIII     TERMINATION AND AMENDMENT

     A-47  

8.1

 

Termination

     A-47  

8.2

 

Effect of Termination

     A-49  

8.3

 

Amendment

     A-50  

8.4

 

Extension; Waiver

     A-50  

ARTICLE IX     GENERAL PROVISIONS

     A-50  

9.1

 

Closing

     A-50  

9.2

 

Nonsurvival of Representations, Warranties and Agreements

     A-50  

9.3

 

Expenses

     A-50  

9.4

 

Notices

     A-51  

9.5

 

Interpretation

     A-51  

9.6

 

Counterparts

     A-52  

9.7

 

Entire Agreement

     A-52  

9.8

 

Governing Law; Jurisdiction

     A-52  

9.9

 

Waiver of Jury Trial

     A-52  

9.10

 

Assignment; Third Party Beneficiaries

     A-53  

9.11

 

Confidential Supervisory Information

     A-53  

9.12

 

Specific Performance

     A-53  

9.13

 

Severability

     A-53  

9.14

 

Delivery by Facsimile or Electronic Transmission

     A-53  

Exhibit A -    Forms of Voting Agreement

  

Exhibit B -    Agreement of Merger of Centric Bank with and Into First Commonwealth Bank

  

 

A-iii


Table of Contents

INDEX

 

     Page  

Acquisition Proposal

     61  

affiliate

     72  

Agreement

     1  

Bank Merger

     6  

Bank Merger Agreement

     6  

Bank Merger Certificates

     6  

Bank Regulatory Applications

     51  

BHC Act

     10  

business day

     72  

Certificate

     2  

certificates

     6  

Chosen Courts

     73  

CIC Payment

     58  

Closing

     70  

Closing Date

     70  

Code

     1  

Company

     1  

Company 401(k) Plan

     21  

Company Articles

     11  

Company Bank

     6  

Company Benefit Plans

     20  

Company Bylaws

     11  

Company Common Stock

     2  

Company Contract

     27  

Company Designated Directors

     61  

Company Disclosure Schedule

     9  

Company ERISA Affiliate

     20  

Company Indemnified Parties

     59  

Company Insiders

     63  

Company Leased Properties

     29  

Company Meeting

     54  

Company Owned Properties

     29  

Company Preferred Stock

     3  

Company Qualified Plans

     21  

Company Real Property

     30  

Company Regulatory Agreement

     28  

Company Reports

     15