[PEEKSKILL FINANCIAL CORPORATION LETTERHEAD]
September 21, 1999
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Peekskill
Financial Corporation (the "Company"), we cordially invite you to attend the
Company's Annual Meeting of Stockholders. The meeting will be held at 3:30 p.m.,
Peekskill, New York time, on October 20, 1999 at the Main office of the Company
located at 1019 Park Street, Peekskill, New York 10566.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. Stockholders are being asked to consider
and vote upon the election of two directors of the Company and the ratification
of the appointment of KPMG LLP as auditors of the Company for the fiscal year
ending June 30, 2000. The Board has carefully considered these proposals and
unanimously recommends that you vote "For" the proposals.
We encourage you to attend the meeting in person. Whether or not you
plan to attend, please read the enclosed Proxy Statement and then complete, sign
and date the enclosed proxy card and return it in the accompanying postage
prepaid return envelope as promptly as possible. This will save the Company
additional expense in soliciting proxies and will ensure that your shares are
represented at the meeting.
Sincerely,
/s/ Eldorus Maynard
---------------------------
Eldorus Maynard
Chairman of the Board and
Chief Executive Officer
<PAGE>
Peekskill Financial Corporation
1019 Park Street
Peekskill, New York 10566
(914) 737-2777
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 20, 1999
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Peekskill Financial Corporation (the "Company") will be held at
the Main office of the Company located at 1019 Park Street, Peekskill, New York
10566, at 3:30 p.m., Peekskill, New York time, on October 20, 1999.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of the appointment of KPMG LLP as auditors of
the Company for the fiscal year ending June 30, 2000; and
such other matters as may properly come before the Meeting, or any adjournments
thereof. The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on
September 9, 1999 are the stockholders entitled to vote at the Meeting and any
adjournments thereof.
You are requested to complete and sign the enclosed form of proxy,
which is solicited on behalf of the Board of Directors, and to mail it promptly
in the enclosed envelope. The proxy will not be used if you attend and vote at
the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Eldorus Maynard
---------------------------
Eldorus Maynard
Chairman of the Board and
Chief Executive Officer
Peekskill, New York
September 21, 1999
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
Peekskill Financial Corporation
1019 Park Street
Peekskill, New York 10566
(914) 737-2777
ANNUAL MEETING OF STOCKHOLDERS
October 20, 1999
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Peekskill Financial Corporation (the
"Company"), the parent company of First Federal Savings Bank ("First Federal" or
the "Bank"), of proxies to be used at the Annual Meeting of Stockholders of the
Company (the "Meeting") which will be held at the main office of the Company
located at 1019 Park Street, Peekskill, New York 10566 on October 20, 1999, at
3:30 p.m., Peekskill, New York time, and all adjournments or postponements of
the Meeting. The accompanying Notice of Annual Meeting and this Proxy Statement
are first being mailed to stockholders on or about September 21, 1999. Certain
of the information provided herein relates to First Federal, a wholly owned
subsidiary and the predecessor of the Company.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon the election of two directors of the Company and the ratification
of the appointment of KPMG LLP as auditors of the Company for the fiscal year
ending June 30, 2000.
Vote Required and Proxy Information
All shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the proposals set forth
in this Proxy Statement. The Company does not know of any matters, other than
those described in the Notice of Annual Meeting, that are to come before the
Meeting. If any other matters are properly presented at the Meeting for action,
the persons named in the enclosed form of proxy and acting thereunder will have
the discretion to vote on such matters in accordance with their best judgment.
Directors shall be elected by a plurality of the votes present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors. Approval of the ratification of the appointment of KPMG
LLP requires the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock present in person or represented by proxy at
the meeting and entitled to vote on the matter. Proxies marked to abstain with
respect to a proposal have the same effect as votes against the proposal. Broker
non-votes have no effect on the vote. A majority of the shares of the Common
Stock, present in person or represented by proxy, shall constitute a quorum for
purposes of the Meeting. Abstentions and broker non-votes are counted for
purposes of determining a quorum.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to William
LaCalamito, Corporate Secretary, Peekskill Financial Corporation, 1019 Park
Street, Peekskill, New York 10566.
1
<PAGE>
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on September 9, 1999
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 1,828,228 shares of Common Stock issued and
outstanding.
The following table sets forth information regarding share ownership of
(i) those persons or entities known by management to beneficially own more than
five percent of the Common Stock, (ii) each member of the Company's board of
directors, (iii) each officer of the Company and the Bank who made in excess of
$100,000 (salary and bonus) during the fiscal period ended June 30, 1999 (the
"Named Officers"); and (iv) all directors and executive officers of the Company
and the Bank as a group.
Shares Beneficially
Owned at Percent
Beneficial Owner September 9, 1999 of Class
- -------------------------------------------- ------------------ --------------
Principal Owners
Peekskill Financial Corporation
Employee Stock Ownership Plan(1) 270,583 14.80%
1019 Park Street
Peekskill, New York 10566
Brandes Investment Partners, L.P.(2) 254,395 13.91%
12750 High Bluff Drive, Suite 420
San Diego, California 92130
First Manhattan Co.(3) 191,015 10.44%
437 Madison Avenue
New York, New York 10022
Directors and Named Officers(4)
Eldorus Maynard, Chairman of the Board and 99,936 5.29%
Chief Executive Officer
William LaCalamito, President, 89,746 4.75%
Chief Operating Officer and Director
Dominick Bertoline, Director 28,555 1.55%
Edward H. Dwyer, Director 49,552 2.69%
Robert E. Flower, Director 34,799 1.89%
John A. McGurty, Jr., M.D. 9,000 0.49%
Directors and executive officers of
the Company and the Bank, as a group
(7 persons)(5) 325,965 16.33%
(1) The amount reported represents shares held by the Employee Stock Ownership
Plan ("ESOP"), 57,397 of which have been allocated to accounts of
participants and are therefore excluded from the total. First Bankers
Trust, Quincy, Illinois, the trustee of the ESOP, may be deemed to
beneficially own the shares held by the ESOP which have not been allocated
to accounts of participants. Participants in the ESOP are entitled to
instruct the trustee as to the voting of shares allocated to their accounts
under the ESOP. Unallocated shares held in the ESOP's suspense account or
allocated shares for which no voting instructions are received are voted by
the trustee in the same proportion as allocated shares voted by
participants.
(2) As reported on Schedule 13G dated February 28, 1999 filed by Brandes
Investment Partners, L.P. ("Brandes") in which Brandes reported shared
voting power and dispositive power over 254,395 shares.
(3) As reported on Schedule 13G dated February 11, 1999 filed by First
Manhattan Co. ("First Manhattan") in which First Manhattan reported sole
voting and dispositive power in regards to 140,514 shares, shared voting
power in regards to 23,001 shares and shared dispositive power in regards
to 50,501 shares.
(4) The address of each Director and Named Officer is the same as that of the
Company.
(5) Amount includes shares held directly, as well as shares allocated to such
individuals under the ESOP, shares held jointly with family members, shares
held in retirement accounts, shares held in a fiduciary capacity or by
certain family members, with respect to which shares the group members may
be deemed to have sole voting and/or investment power. The amounts reported
include 167,889 shares awarded to such individuals pursuant to the Stock
Option Plan which shares are exercisable within 60 days of September 9,
1999 and exclude 128,596 shares awarded to such individuals pursuant to the
Stock Option Plan which shares are not exercisable within 60 days of
September 9, 1999. In addition, the amounts include 15,375, 6,156 and 4,920
vested shares which have been awarded to Chairman Maynard, President
LaCalamito and each outside director, except Directors Flower and McGurty,
respectively, pursuant to the Company's Recognition and Retention Plan
("RRP").
2
<PAGE>
The following table sets forth the beneficial ownership of the
Directors and Named Officers on page 2 using the same assumptions as the table
set forth on page 2 except that the amounts include unvested shares issued under
the RRP.
Shares Beneficially
Owned at Percent
Beneficial Owner September 9, 1999 of Class
- -------------------------------------------- ------------------ --------------
Directors and Named Officers
Eldorus Maynard, Chairman of the Board and 125,558 6.64%
Chief Executive Officer
William LaCalamito, President,
Chief Operating Officer and Director 115,368 6.10
Dominick Bertoline, Director 31,834 1.73
Edward H. Dwyer, Director 52,831 2.87
Robert E. Flower, Director 38,078 2.07
John A. McGurty, Jr., M.D. 13,000 0.71
Directors and executive officers of
the Company and the Bank, as a group
(7 persons) 394,046 19.74
3
<PAGE>
PROPOSAL I. ELECTION OF DIRECTORS
General
The Company's Board of Directors currently consists of six members,
each of whom is also a director of the Bank. The Board is divided into three
classes, each of which contains approximately one-third of the Board, and
approximately one-third of the directors are elected annually. Directors of the
Company are generally elected to serve for a three-year term or until their
respective successors are elected and qualified.
The following table sets forth certain information, as of September 9,
1999, regarding the Company's Board of Directors, including each director's term
of office. The Board of Directors acting as the nominating committee has
recommended and approved the nominees identified in the following table. It is
intended that the proxies solicited on behalf of the Board of Directors (other
than proxies in which the vote is withheld as to one or more nominees) will be
voted at the Meeting FOR the election of the nominees identified below. If a
nominee is unable to serve, the shares represented by all valid proxies will be
voted for the election of such substitute nominee as the Board of Directors may
recommend. At this time, the Board of Directors knows of no reason why the
nominees may be unable to serve, if elected. There are no arrangements or
understandings between any director or nominee and any other person pursuant to
which such director or nominee was selected.
<TABLE>
<CAPTION>
Shares of
Common Stock Percent
Position(s) Held Director Term to Beneficially of
Name Age in the Company Since(1) Expire Owned(2) Class
- --------------------------- ----- ---------------- -------- ------- ---------- ------
<S> <C> <C> <C> <C> <C>
NOMINEES
Edward H. Dwyer 73 Director 1973 2002 49,552 2.69%
John A. McGurty, Jr., M.D. 46 Director 1998 2002 9,000 0.49
DIRECTORS CONTINUING IN OFFICE
William J. LaCalamito 40 President, Chief 1995 2000 89,746(3) 4.75
Operating Officer and
Director
Dominick Bertoline 53 Director 1986 2000 28,555 1.55
Eldorus Maynard 64 Chairman of the Board 1993 2001 99,936(3) 5.29
and Chief Executive
Officer
Robert E. Flower 62 Director 1987 2001 34,799 1.89
<FN>
(1) Includes service as a director of the Bank prior to the formation of the
Company.
(2) Includes shares held directly, in retirement accounts, in a fiduciary
capacity or by certain affiliated entities or members of the named
individuals' families, with respect to which shares the named individuals
may be deemed to have sole or shared voting and/or dispositive powers. Also
includes 15,375, 5,125 and 4,920 vested shares granted to Chairman Maynard,
President LaCalamito and each outside director, except Directors Flower and
McGurty, respectively, pursuant to the RRP and 61,496, 61,496 and 12,299
shares subject to option awarded pursuant to the stock option plan which
are exercisable within 60 days of September 9, 1999.
(3) Includes 8,490 and 8,180 shares allocated to Chairman Maynard and President
LaCalamito, respectively, pursuant to the ESOP.
</FN>
</TABLE>
The business experience of each nominee and Director for at least the
past five years is set forth below.
Edward H. Dwyer is the owner of Dwyer Agency, a Real Estate and
Insurance Agency. Mr. Dwyer has been a member of the Board of Directors since
1973.
4
<PAGE>
John A. McGurty, Jr., M.D. is the Director of Emergency Services at the
Hudson Valley Hospital Center, a position he has held since 1996. Dr. McGurty
also maintains a private practice in Peekskill, New York.
William J. LaCalamito is President, Chief Operating Officer, Chief
Financial Officer and Secretary of the Company and the Bank. Mr. LaCalamito
joined the Bank in 1988 as Vice President. In 1993, Mr. LaCalamito was named
Secretary of the Bank and in 1995 he was also named Chief Financial Officer. In
his capacity as President and Chief Operating Officer, Mr. LaCalamito is
responsible for overseeing all the primary business functions of the Bank.
Dominick Bertoline is President and Chief Executive Officer of D.
Bertoline & Sons, Inc., an Anheuser- Busch product distributor. Mr. Bertoline
has been a member of the Board of Directors since 1986.
Eldorus Maynard is Chairman of the Board and Chief Executive Officer of
the Bank. Mr. Maynard first joined the Bank as a teller and bookkeeper in 1958.
Mr. Maynard served as Secretary of the Bank beginning in 1964, Assistant Vice
President and Secretary beginning in 1977, and Vice President and Secretary
beginning in 1985. Mr. Maynard was named Chairman and Chief Executive Officer in
1995.
Robert E. Flower is the owner of Bliss Manufacturing, Inc., a
manufacturer of women's clothing. Mr. Flower has been a member of the Board of
Directors since 1987.
Meetings and Committees of the Board of Directors
The Company. The Company's Board of Directors has standing Audit and
Compensation Committees which meet and act in conjunction with the like
committees of the Bank's Board of Directors. The Board of Directors met 19 times
in fiscal 1999. During fiscal 1999, no incumbent director of the Company
attended fewer than 75% of the total number of meetings held by the Board of
Directors, except Director Flower, who attended 75% of the meetings held except
during the time he was recuperating from illness.
The entire Board of Directors acts as a nominating committee for
selecting nominees for election as directors. While the Board of Directors will
consider nominees recommended by stockholders, the Board has not actively
solicited such nominations. Pursuant to the Company's Bylaws, nominations by
stockholders generally must be delivered in writing to the Secretary of the
Company at least 30 days prior to the date of the Meeting. The Board of
Directors met once during fiscal 1999 in its capacity as a nominating committee.
The Audit Committee is responsible for recommending the selection of
the independent auditors of the Company and the Bank and meeting with the
independent auditors to outline the scope and review the results of the annual
audit. The current members of this committee are Directors Bertoline, Dwyer,
Flower and McGurty. This committee held one meeting during the fiscal year ended
June 30, 1999.
The Company's Compensation Committee is responsible for the design and
administration of the Company's overall compensation program. The current
members of this Committee are Directors Bertoline, Dwyer, Flower and McGurty.
The Compensation Committee held two meetings during the fiscal year ended June
30, 1999.
The Bank. The Bank's Board of Directors met 15 times during the fiscal
year ended June 30, 1999. During fiscal 1999, no incumbent director of the Bank
attended fewer than 75% of the aggregate of the total number of Board meetings
and the total number of meetings held by the committees of the Board of
Directors on which he served, except Director Flower, who attended 75% of the
meetings held except during the time he was recuperating from illness.
The Bank has standing Executive, Audit and Compensation Committees.
The Bank's Executive Committee meets on a monthly basis and exercises
the powers of the full Board of Directors between Board meetings. The Executive
Committee is composed of Directors Maynard, Dwyer and Flower. The Executive
Committee met 12 times during the fiscal year ended June 30, 1999.
5
<PAGE>
The Bank's Compensation Committee is responsible for the design and
administration of the Bank's overall compensation program. In addition, the
committee reviews and approves all executive officers' compensation plans,
evaluates executive performance, and considers other related matters. The
current members of this committee are Directors Bertoline, Dwyer, Flower and
McGurty. The Compensation Committee held one meeting during the fiscal year
ended June 30, 1999.
Director Compensation
Each director on the Board of Directors of the Company is paid a fee of
$500 for each Board meeting attended. Each director on the Board of Directors is
also paid a fee of $500 for each regular meeting of the Bank's Board attended.
Executive Committee Members also receive $150 per month for attendance at
Executive Committee Meetings.
Executive Compensation
The Company has not paid any compensation to its executive officers
since its formation. The Company does not presently anticipate paying any
compensation to such persons until it becomes actively involved in the operation
or acquisition of businesses other than the Bank.
The following table sets forth information concerning the compensation
paid to the Named Officers for services in all capacities to the Company for the
fiscal year ended June 30, 1999.
<TABLE>
<CAPTION>
Summary Compensation Table
- ------------------------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
Awards
-----------------------------
Options/
Annual Compensation Stock
------------------------------------------ Restricted Appreciation
Other Annual Stock Rights All Other
Name and Principal Position Year Salary Bonus Compensation($)(1) Award($) ("SARs")(#) Compensation($)(4)
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------ ------ ------------- ------- ------------------- ------------ --------------- -------------------
Eldorus Maynard, Chairman of 1999 $135,800(5) $9,308 --- --- $ --- $93,098
the Board and Chief Executive 1998 134,800(5) 9,308 --- --- --- 68,011
Officer 1997 134,800(5) 9,308 --- 486,839(2) 102,494(3) 58,126
William LaCalamito, 1999 $130,500(5) $9,038 --- --- $ --- $49,152
President and Chief 1998 129,500(5) 9,038 --- --- --- 58,173
Operating Officer 1997 129,500(5) 9,038 --- 486,839(2) 102,494(3) 46,983
- ------------------------------ ------ ------------- ------- ------------------- ------------ --------------- -------------------
<FN>
(1) Neither Mr. Maynard nor Mr. LaCalamito received additional benefits or
perquisites which, in the aggregate, exceeded 10% of their salary and
bonus.
(2) Amount reflects dollar value of award of 40,997 shares of restricted stock
granted to Messrs. Maynard and LaCalamito each pursuant to the RRP on July
3, 1996. The dollar value per share of such award on the date of grant was
$11.875.
(3) On July 3, 1996, pursuant to the 1996 Stock Option and Incentive Plan, the
Company granted to Mr. Maynard and Mr. LaCalamito options to purchase
102,494 shares of common stock each at an exercise price equal to the
market value per share on the date of the grant.
(4) Amounts include contributions by the Company on behalf of the employee to
the ESOP and Supplemental Executive Retirement Agreement "SERA" as follows:
ESOP SERA
------------------------------- ----------------------------
1999 1998 1997 1999 1998 1997
---------- -------- ----------- -------- ---------- -------
Eldorus Maynard $28,594 $45,134 $36,900 $64,504 $22,877 $21,226
William LaCalamito 27,560 43,436 35,475 21,592 14,737 11,508
(5) Amounts include directors fees paid to Mr. Maynard of $14,800, $13,800 and
$13,800, respectively, for fiscal years 1999, 1998 and 1997 and $13,000,
$12,000 and $12,000 paid to Mr. LaCalamito for fiscal years 1999, 1998 and
1997 respectively.
</FN>
</TABLE>
6
<PAGE>
The following table sets forth certain information concerning the
number and value of stock options at June 30, 1999 held by the Named Officers,
none of which have been exercised.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Value of Unexercised
Number of Unexercised In-the-Money Options at
Options at FY-End (#)(1) FY-End ($)(2)
Shares Acquired ----------------------------- ----------------------------
Name on Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ---------------- ------------------ ------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Eldorus Maynard N/A N/A 61,496 40,998 $96,087 $64,059
William LaCalamito N/A N/A 61,496 40,998 96,087 64,059
=================== ================ ================== ============= =============== ============ ===============
<FN>
(1) Represents options to purchase Common Stock awarded to Messrs.
Maynard and LaCalamito, respectively. The options vest in five equal
annual installments. The first installment vested on July 3, 1997,
the second installment vested on July 3, 1998, the third installment
vested on July 3, 1999, with the remaining installments to vest
equally on July 3, 2000 and 2001.
(2) Represents the aggregate market value (market price of the Common
Stock less the exercise price) of the option granted based upon the
average of the closing bid and ask price of $13.44 per share of
Common Stock as reported on the NASDAQ National Market system on
June 30, 1999.
</FN>
</TABLE>
Employment Agreements
The Company has entered into employment agreements with Eldorus
Maynard and William LaCalamito. The agreements have initial terms of three years
and provide for daily extensions, subject to a performance evaluation by
disinterested members of the Board of Directors of the Company. The employment
agreements require the payment of the employee's annual salaries, bonuses and
benefits from the Company and the Bank for the remaining term of the contract
unless the employee dies, voluntarily resigns or is terminated for cause.
The employment agreements provide for payment to the employee (in
addition to, if applicable, his salary, bonus and benefits for the remainder of
the term of the contract) of an amount equal to 299% of the employee's
compensation in the event that his employment terminates (whether voluntarily or
otherwise) in connection with a "change in control" of the Bank or the Company
or within eighteen months thereafter. For the purposes of the employment
agreements, a "change in control" is defined to include, among other things, any
event which would require the filing of an application for acquisition of
control or notice of change in control pursuant to 12 C.F.R. ss. 574.3 or 4.
Such events are generally triggered upon the acquisition or control of 10% of
the Company's common stock. Based on their current salaries, if the employment
of Messrs. Maynard and LaCalamito had been involuntarily terminated as of June
30, 1999 under circumstances entitling them to severance pay as described above,
they would have been entitled to receive cash payments of up to $1.31 million
and $1.18 million, respectively, depending on the remaining term of the
agreements.
The Company has also entered into an employment agreement with Vice
President of Finance Scott Nogles. The employment agreement is designed to
assist the Company in maintaining a stable and competent management team. The
employment agreement provides for an annual base salary in an amount not less
than Mr. Nogles' current salary and an initial term of three years. The
agreement provides for daily extensions, subject to a formal performance
evaluation performed by disinterested members of the Board of Directors of the
Company. The agreement provides for termination upon the employee's death, for
cause or in certain other events. The employment agreement is also terminable by
the employee upon 90-days' notice to the Company.
The employment agreement provides for payment to Mr. Nogles of up to
299% of his base compensation, in the event there is a "change in control" of
the Company where employment terminates (whether voluntarily or otherwise) in
connection with such change in control or within 12 months thereafter. For the
purposes of the employment agreement, a "change in control" is defined as any
event which would require the filing of an application for acquisition of
control or notice of change in control pursuant to 12 C.F.R. ss. 574.3 or 4. The
agreement also
7
<PAGE>
guarantees participation in an equitable manner in health benefits substantially
the same as his health insurance benefits on the date of termination.
Based on his current salary, if Mr. Nogles' employment had been
terminated as of June 30, 1999, under circumstances entitling him to severance
pay as described above, he would have been entitled to receive a lump sum cash
payment of approximately $300,000.
Supplemental Executive Retirement Agreements. The Bank has entered
into a non-qualified Supplemental Executive Retirement Agreement (a "SERA") with
Chairman and Chief Executive Officer Maynard to provide him with a supplemental
retirement benefit equal to what would have been provided to him under the
Retirement Income Plan but for the limitations contained in Sections 401, 414
and 415 of the Internal Revenue Code of 1986, as amended. In addition, the Bank
has entered into a SERA with President LaCalamito. Under this SERA, the Bank
will provide for payment of a monthly supplemental retirement benefit equal to
up to 24% of his average monthly compensation during the three highest 12-month
periods prior to retirement. Such benefit shall be payable upon normal
retirement at age 65 or, under certain circumstances, age 55 if his termination
is without cause. Upon the employee's death, 50% of the amount payable under the
Agreement shall be payable to his spouse until her death.
The Bank plans to establish an irrevocable grantor trust in
connection with the SERAs. This trust will be funded with contributions from the
Bank for the purpose of providing the benefits promised under the terms of the
SERAs. Under such circumstances, the SERA participants will have only the rights
of unsecured creditors with respect to the trust's assets, and do not recognize
income with respect to benefits provided by the SERA until such benefits are
received by the participants. The assets of the grantor trust will be considered
part of the general assets of the Bank and will be subject to the claims of the
Bank's creditors in the event of the Bank's insolvency. Earnings on the trust's
assets will be taxable to the Bank. The trustee of the trust may invest the
trust's assets in the Company's stock.
The Agreements described above are unfunded and all obligations
arising thereunder are payable from the general assets of the Bank.
Benefit Plans
General. The Bank currently provides insurance benefits to its
employees, including health, life, dental, short and long term disability and
major medical, subject to certain deductibles and copayments by employees.
Savings and Investment Plan. The Bank maintains a Savings and
Investment Plan for the benefit of its employees (the "401(k) Plan"). The Plan
and its related Trust comply with the applicable provisions of Sections 401(a),
401(k) and 501(a) of the Internal Revenue Code of 1986. An employee is eligible
to participate in the Plan after completing three months of service.
Participants are permitted to make salary reduction contributions to
the 401(k) Plan of between 2% and 16% of the participant's annual salary. Each
participant's salary reduction contribution is matched by the Bank in an amount
equal to 100% of the participant's salary reduction contribution up to a maximum
of 6% of the participant's compensation for the payroll period.
The Bank's contributions to the 401(k) plan on behalf of an employee
vest to that employee in the amount of 20% for each succeeding year up to five
years, after which the employee is fully vested. Participants' contributions to
the 401(k) Plan are fully and immediately vested. Withdrawals are not permitted
before age 59 and six months except in the event of death, disability,
termination of employment or reasons of proven financial hardship. Upon
termination of employment, the participant's account will be distributed, unless
he or she elects to defer the payment.
The funds included in the 401(k) Plan are invested at the direction
of the participant into one of the investment options available under the 401(k)
Plan. Changes in investment directions among the funds are permitted on a
quarterly basis pursuant to procedures established by the Plan Administrator.
Each participant receives a quarterly statement which provides information
regarding, among other things, the market value of his investments
8
<PAGE>
and contributions made to the 401(k) Plan on his behalf. Upon the implementation
of the Company's ESOP, the 401(k) Plan was frozen and all contributions to the
Plan ceased. Management is considering reactivation of the 401(k) Plan, however,
without matching contributions.
Retirement Income Plan. The Bank sponsors a Retirement Income Plan
for its employees (the "Retirement Plan"). This non-contributory defined benefit
retirement plan covers all employees who have completed one year and 1,000 hours
of service and have attained age 18.
The Retirement Plan is funded solely by contributions made by the
Bank. The Bank's contribution to the Pension Plan for the plan year ended
December 31, 1998 was $145,342. Employees become fully vested after 5 years of
service or after attaining age 65.
A participant may receive upon normal retirement either a lump sum
payment or a level monthly benefit payment. The normal retirement age is 65 and
the early retirement age is under most circumstances after age 55. Employees who
terminate employment after becoming vested will be eligible to receive a pension
benefit.
Normal retirement benefits are equal to 50% of: (i) average earnings
(not to exceed $150,000 adjusted annually for the cost of living) for any three
consecutive calendar years during the ten years prior to termination,
retirement, or death multiplied by (ii) the ratio of number of years credited
service (up to a maximum of 15 years) to 15 or (iii) the ratio which the number
of years of credited service bears to the greater of 15 years or the number of
years of credited service an employee would have had at normal retirement date
had his service not ceased.
The following table illustrates annual pension benefits payable upon
normal retirement, which are not subject to offset for Social Security payments,
based on various levels of compensation and years of service and assuming
payment in the form of a straight-line annuity.
Average Annual Years of Service
Compensation 10 15 20 25 30 35 40
- ---------------- -------- --------- -------- -------- ------- ------- -------
$ 40,000...... $13,333 20,000 20,000 20,000 20,000 20,000 20,000
60,000...... 20,000 30,000 30,000 30,000 30,000 30,000 30,000
80,000...... 26,667 40,000 40,000 40,000 40,000 40,000 40,000
100,000...... 33,333 50,000 50,000 50,000 50,000 50,000 50,000
120,000...... 40,000 60,000 60,000 60,000 60,000 60,000 60,000
140,000...... 46,667 70,000 70,000 70,000 70,000 70,000 70,000
160,000...... 53,333 80,000 80,000 80,000 80,000 80,000 80,000
At June 30, 1999, Messrs. Maynard and LaCalamito had 41 and 10 years
of credited service under the Plan, respectively.
Compensation Committee Report on Executive Compensation
Under rules established by the Securities and Exchange Commission
("SEC"), the Company is required to provide certain data and information in
regard to the compensation and benefits provided to the Company's Chief
Executive Officer and other executive officers of the Company. The disclosure
requirements for the Chief Executive Officer and other executive officers
include the use of tables and a report explaining the rationale for and
considerations that led to fundamental executive compensation decisions
affecting those individuals. In fulfillment of this requirement, the
Compensation Committee of the Bank, at the direction of the Board of Directors,
has prepared the following report for inclusion in this proxy statement.
General. The Board of Directors of the Bank has delegated to the
Compensation Committee the responsibility and authority to oversee the general
compensation policies of the Bank, to establish compensation plans and specific
compensation levels for executive officers, and to review the recommendations of
management for compensation and benefits for other officers and employees of the
Bank. The Compensation Committee is composed solely of independent outside
directors.
9
<PAGE>
In light of the conversion of the Bank from a mutually owned to a
publicly owned financial services company, the Compensation Committee developed
an executive compensation policy designed to: (i) offer competitive compensation
packages in order to attract, motivate, retain and reward those key executive
officers who are crucial to the long-term success of the Bank; and (ii)
encourage decision making that maximizes long-term stockholder value. The
Compensation Committee's primary compensation objective is to ensure that such
compensation be tied to the achievement of both short term and longer term
objectives established in conjunction with the Company's annual planning
process.
Executive Compensation Policy. The compensation package provided to
the executive officers of the Bank is composed principally of base salary and
annual incentive bonus awards. Executive officers also participate in other
benefit plans available to all eligible employees including the ESOP. The
Compensation Committee periodically reviews the various elements of the
compensation package available to executive officers in consideration of the
policies described above. The Compensation Committee met two times in fiscal
1999 to review employee related compensation/benefit issues in general and to
review and recommend the base salary and bonuses of the Chief Executive Officer
and the President.
Base Salary. It is the policy of the Compensation Committee to
annually review executive compensation packages, including base salaries paid or
proposed to be paid, with compensation packages and base salaries offered by
other financial institutions with total assets and performance results
comparable to those of the Bank, as well as to compare the complexities of the
positions under consideration with similar jobs in other financial institutions
regardless of asset size. This information is primarily derived from third party
sources that provide compensation data and analysis from publicly held companies
in the Bank's market area. Specific factors considered include the level of
responsibility delegated to a particular officer, the complexity of the job
being evaluated, the position's impact on both short term and long term
corporate objectives, the expertise and skill level of the individual under
consideration, the degree to which the officer has achieved his management
objectives for the plan year, and the officer's overall performance in managing
his area of responsibility. The Compensation Committee's decisions are
discretionary and no quantifiable formula is utilized in the decision making
process.
Benefit Plans. The Compensation Committee's policy with respect to
employee benefit plans is to provide competitive benefits to employees of the
Bank, including executive officers. Additionally, the ESOP provides employees,
including executive officers, with an additional equity-based incentive to
maximize long-term shareholder value. The Compensation Committee believes that a
competitive employee benefit package is essential to achieving the goals of
attracting and retaining highly qualified employees.
Chief Executive Officer. Total compensation paid to the Chief
Executive Officer for fiscal 1999 (including directors' fees) was $145,108,
essentially the same as fiscal 1998. In determining total compensation paid to
the Chief Executive Officer, the Compensation Committee considered factors
relating to the performance of the Bank including (i) the successful completion
of the Bank's conversion to stock form, (ii) the level of operating profit and
(iii) goals relating to efficiency ratios, fee income, loan volume, asset
quality, Community Reinvestment Act compliance and the Bank's infrastructure.
Dominick Bertoline
Edward H Dwyer
Robert E. Flower
John A. McGurty, Jr.
10
<PAGE>
Comparative Stock Performance Presentation
Set forth below is a line graph comparing the cumulative total
return on the Company's Common Stock to the cumulative total return of the
Nasdaq Market Index and the Media General Savings and Loan Index for each annual
period beginning on December 29, 1995 (the date the Company's Common Stock first
reported on the Nasdaq Stock Market) through June 30, 1999. The presentation
assumes $100 was invested on December 29, 1995.
[GRAPHIC OMITTED]
12/29/95 6/30/96 6/30/97 6/30/98 6/30/99
-------- ------- ------- ------- -------
Peekskill 100 117.50 150.00 178.80 143.47
S&L Index 100 103.84 168.03 227.24 190.10
NASDAQ Index 100 112.37 135.37 179.44 251.46
Certain Transactions
The Bank follows a policy of granting loans to eligible directors,
officers, employees and members of their immediate families for the financing of
their personal residences and for consumer purposes. Under current policy, all
loans to directors and executive officers are required to be made in the
ordinary course of business and on the same terms, including collateral and
interest rates, as those prevailing at the time for comparable transactions and
do not involve more than the normal risk of collectibility at the time of
origination. At June 30, 1999, the Bank's loans to directors, officers,
employees and members of their immediate families totaled approximately $565,000
or 2.1% of the Company's stockholders' equity. All of these loans were current
at June 30, 1999.
Set forth below is information concerning loans made to executive
officers, directors and affiliates of the Company, which loans at the time they
were originated, were originated at more favorable terms than those prevailing
at the time for comparable transactions.
<TABLE>
<CAPTION>
Largest Amount
Outstanding
Date of Since Balance at Interest
Name and Position Loan Type of Loan June 30, 1998 June 30, 1999 Rate
- -------------------------- ---------- ---------------------- -------------- ------------- --------
<S> <C> <C> <C> <C> <C>
Scott Nogles 5/15/97 First mortgage loan on $134,000 $131,595 7.50%
Vice President of Finance primary residence
========================== ========== ====================== ============== ============= ========
</TABLE>
11
<PAGE>
PROPOSAL II - RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed KPMG LLP,
independent accountants, to be the Company's auditors for the fiscal year ending
June 30, 2000. Representatives of KPMG LLP are expected to attend the Meeting to
respond to appropriate questions and to make a statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY'S AUDITORS FOR THE
FISCAL YEAR ENDING JUNE 30, 2000.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy
materials for the next Annual Meeting of Stockholders, any stockholder proposal
to take action at such meeting must be received at the Company's main office
located at 1019 Park Street, Peekskill, New York 10566, no later than August 11,
2000. Any such proposal shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934, as amended. In the event that
the Annual Meeting is held before October 1, 2000 or after December 19, 2000,
notice by the stockholder to be timely must be delivered to the Company's main
office located at 1019 Park Street, Peekskill, New York 10566 by the close of
business on the later of (i) the 70th day prior to such annual Meeting or (ii)
the close of business on the tenth day following the day on which such notice of
the date of the annual meeting was mailed or such public disclosure was made.
All stockholder proposals must also comply with the Company's by-laws and
Delaware law.
OTHER MATTERS
The Board of Directors is not aware of any business to come before
the Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition, directors, officers and
regular employees of the Company and/or the Bank may solicit proxies personally
or by telegraph or telephone without additional compensation.
Peekskill, New York
September 21, 1999
12
<PAGE>
PEEKSKILL FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 20, 1999
The undersigned hereby appoints the Board of Directors of Peekskill
Financial Corporation (the "Company"), with full powers of substitution, to act
as attorneys and proxies for the undersigned to vote all shares of capital stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting") to be held at the main office of the Company,
located at 1019 Park Street, Peekskill, New York on October 20, 1999 at 3:30
p.m. and at any and all adjournments and postponements thereof.
1. The election as directors of all nominees listed below (except as marked to
the contrary):
FOR VOTE WITHHELD
------- -------
INSTRUCTION: To withhold your vote for any individual nominee,
strike a line in that nominee's name below.
EDWARD H. DWYER JOHN A. MCGURTY, JR., M.D.
2. The ratification of the appointment of KPMG LLP as auditors for the Company
for the fiscal year ending June 30, 2000.
FOR AGAINST ABSTAIN
------- ------- -------
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment or
postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSAL AND EACH OF THE NOMINEES
LISTED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL
BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT
TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
MEETING.
The Board of Directors recommends a vote "FOR" the proposal and the election of
the nominees listed above.
(Continued and to be SIGNED on Reverse Side)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and choose to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders.
Dated: , 1999
----------- --------------------------------------------------------
Signature of Stockholder
Please sign exactly as your name(s) appear(s) to the
left. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title.
If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
