<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only
[ X ] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ x ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Pittsburgh Home Financial Corp.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-1 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------
(5) Total fee paid:
------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------
(2) Form, Schedule or Registration No.:
--------------------------
(3) Filing Party:
--------------------------------------------------
(4) Date Filed:
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<PAGE> 2
PITTSBURGH HOME
FINANCIAL CORP.
438 Wood Street Pittsburgh, PA 15222
(412) 281-0780 FAX: (412) 281-3750
December 19, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Pittsburgh Home Financial Corp. The meeting will be held at The Library
Center, GRW Theatre, Second Level, 414 Wood Street, Pittsburgh, Pennsylvania, on
Thursday, January 22, 1998 at 11:00 a.m., Eastern Time. The matters to be
considered by stockholders at the Annual Meeting are described in the
accompanying materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign, and date your proxy card today and
return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of and interest in Pittsburgh Home Financial
Corp. are sincerely appreciated.
Sincerely,
/s/ J. ARDIE DILLEN
J. Ardie Dillen
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
PITTSBURGH HOME FINANCIAL CORP.
438 WOOD STREET
PITTSBURGH, PENNSYLVANIA 15222
(412) 281-0780
-------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 22, 1998
-------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Pittsburgh Home Financial Corp. (the "Company") will be held at The
Library Center, GRW Theatre, Second Level, 414 Wood Street, Pittsburgh,
Pennsylvania, on Thursday, January 22, 1998 at 11:00 a.m., Eastern Time, for the
following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(1) To elect four (4) directors for a three-year term or until
their successors are elected and qualified;
(2) To ratify the appointment by the Board of Directors of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
September 30, 1998; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of any other such
business.
The Board of Directors has fixed December 10, 1997 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting. Only those stockholders of record as of the close of
business on that date will be entitled to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ GREGORY G. MAXCY
Gregory G. Maxcy
Secretary
Pittsburgh, Pennsylvania
December 19, 1997
- --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU
MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- --------------------------------------------------------------------------------
<PAGE> 4
PITTSBURGH HOME FINANCIAL CORP.
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 22, 1998
This Proxy Statement is furnished to holders of common stock, $0.01 par
value per share ("Common Stock"), of Pittsburgh Home Financial Corp. (the
"Company"), a Pennsylvania corporation and registered bank holding company for
Pittsburgh Home Savings Bank (the "Savings Bank"). Proxies are being solicited
on behalf of the Board of Directors of the Company to be used at the Annual
Meeting of Stockholders ("Annual Meeting") to be held at The Library Center, GRW
Theatre, Second Level, 414 Wood Street, Pittsburgh, Pennsylvania, on Thursday,
January 22, 1998 at 11:00 a.m., Eastern Time, for the purposes set forth in the
Notice of Annual Meeting of Stockholders. This Proxy Statement is first being
mailed to stockholders on or about December 19, 1997.
The proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted FOR the nominees for director described herein, FOR
ratification of the appointment of Ernst & Young LLP for fiscal 1998 and upon
the transaction of such other business as may properly come before the meeting
in accordance with the best judgment of the persons appointed as proxies. Any
stockholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing with the Secretary of the Company written notice thereof
(Secretary, Pittsburgh Home Financial Corp., 438 Wood Street, Pittsburgh,
Pennsylvania 15222); (ii) submitting a duly-executed proxy bearing a later date;
or (iii) appearing at the Annual Meeting and giving the Secretary notice of his
or her intention to vote in person. Proxies solicited hereby may be exercised
only at the Annual Meeting and any adjournment thereof and will not be used for
any other meeting.
VOTING
Only stockholders of record at the close of business on December 10,
1997 ("Voting Record Date") will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 1,969,369 shares of Common Stock outstanding
and the Company had no other class of equity securities outstanding. Each share
of Common Stock is entitled to one vote at the Annual Meeting on all matters
properly presented at the meeting. Directors are elected by a plurality of the
votes cast with a quorum present. The four persons who receive the greatest
number of votes of the holders of Common Stock represented in person or by proxy
at the Annual Meeting will be elected directors of the Company. Abstentions are
considered in determining the presence of a quorum and will not affect the vote
required
<PAGE> 5
for the election of directors. The affirmative vote of the holders of a
majority of the total votes present in person or by proxy is required to ratify
the appointment of the independent auditors. Abstentions will not be counted as
votes cast, and accordingly will have no effect on the voting of this proposal.
Under rules of the New York Stock Exchange, all of the proposals for
consideration at the Annual Meeting are considered "discretionary" items upon
which brokerage firms may vote in their discretion on behalf of their clients
if such clients have not furnished voting instructions. Thus, there are no
proposals to be considered at the Annual Meeting which are considered
"non-discretionary" and for which there will be "broker non-votes."
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, each of which
contains approximately one-third of the Board. The directors are elected by the
stockholders of the Company for staggered three year terms, or until their
successors are elected and qualified. Stockholders of the Company are not
permitted to cumulate their votes for the election of directors.
On August 28, 1997, Frank J. Malone retired from the Board of
Directors. Mr. Malone had served as Chairman of the Board from the Company's
organization in September 1995 until November 1996. Mr. Kenneth R. Rieger, a
director of the Savings Bank, was elected to fill the unexpired term of Mr.
Malone which will expire in 2000. In October 1997, the Board adopted a
resolution to increase the size of the Board of Directors from nine to ten
members. Mr. James M. Droney, Jr., a director of the Savings Bank, was nominated
as a director for a three-year term expiring in 2001.
No director, executive officer or nominee for director of the Company
is related to any other director or executive officer of the Company by blood,
marriage or adoption, except for Kenneth F. Maxcy, Jr., a director, who is the
father of Gregory G. Maxcy, Senior Vice President/Secretary and director. Three
of the nominees currently serve as a director of the Company and the other
nominee serves as a director of the Savings Bank.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If the person or persons named as nominee should be unable or unwilling
to stand for election at the time of the Annual Meeting, the proxies will
nominate and vote for one or more replacement nominees recommended by the Board
of Directors. At this time, the Board of Directors knows of no reason why the
nominees listed below may not be able to serve as directors if elected.
-2-
<PAGE> 6
The following tables present information concerning the nominees for
director of the Company and each director whose term continues.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2001
--------
Director
Name Age(1) Since(2)
- -------------------- ------ --------
Kenneth F. Maxcy, Jr. 78 1957
Gregory G. Maxcy 43 1986
Richard F. Lerach 57 1990
James M. Droney, Jr. 45 1997
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTOR.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE TERMS EXPIRE IN 1999
Director
Name Age(1) Since(2)
- -------------------- ------ --------
Stephen Spolar 76 1986
Charles A. Topnick 70 1990
Joseph G. Lang 72 1986
DIRECTORS WHOSE TERMS EXPIRE IN 2000
Director
Name Age(1) Since(2)
- -------------------- ------ --------
Jess B. Mellor 79 1954
J. Ardie Dillen 39 1992
Kenneth R. Rieger 52 1997
- ------------------
(1) As of December 10, 1997.
(2) Includes service as a director of the Savings Bank.
-3-
<PAGE> 7
Information concerning the principal position with the Company and the
Savings Bank and principal occupation of each nominee for director and members
of the Board continuing in office during the past five years is set forth below.
J. Ardie Dillen. Mr. Dillen was named Chairman of the Board of the
Company and the Savings Bank in November 1996 and August 1997, respectively. Mr.
Dillen is President and Chief Executive Officer of the Savings Bank and has held
the same position with the Company since its inception in September 1995. Mr.
Dillen has been President and Chief Executive Officer of the Savings Bank since
1992 and was Senior Vice President of Finance and Administration of the Savings
Bank from 1986 to 1992. Prior to joining the Savings Bank, Mr. Dillen was an
auditor with Main Hurdman, Pittsburgh, Pennsylvania, a certified public
accounting firm, from 1980 to 1986. Mr. Dillen is a certified public
accountant.
Jess B. Mellor. Mr. Mellor has been Secretary of the Savings Bank since
1955. Mr. Mellor served as Secretary of the Company from its inception in
September 1995 to June 1997. Mr. Mellor is retired and was formerly Vice
President of the Savings Bank from 1954 to 1986. Mr. Mellor has been with the
Savings Bank since its inception in 1942 and has been a director of the Savings
Bank since 1954.
Joseph G. Lang. Mr. Lang has been retired since 1991. Prior thereto,
from 1961 to 1991, Mr. Lang was an associate architect with W.D. Slowik &
Associates, Pittsburgh, Pennsylvania, an architectural firm, and also was
employed by its predecessor firms.
Richard F. Lerach. Mr. Lerach has been Senior General Attorney -
Litigation with U.S. Steel Group, a unit of USX Corporation, Pittsburgh,
Pennsylvania, since 1985 and has been an attorney with such corporation since
1968.
Gregory G. Maxcy. Mr. Maxcy has been Senior Vice President and
Secretary of the Company since May 1997 and July 1997, respectively. Mr. Maxcy
has been Senior Vice President - Director of Strategic Planning of the Savings
Bank since May 1997. Mr. Maxcy was President of Maxcy, Gmys & Company, PC,
Pittsburgh, Pennsylvania, a certified public accounting firm, from 1992 to May
1997. Mr. Maxcy also was employed by Resource Capital, Inc., Pittsburgh,
Pennsylvania, an investment management services and financial planning company
from 1988 to 1994. Mr. Maxcy is a certified public accountant and a certified
financial planner. Mr. Maxcy is the son of Kenneth F. Maxcy, Jr. See "Consent to
Findings of Securities Violations."
Kenneth F. Maxcy, Jr. Mr. Maxcy has been retired since 1985. Mr. Maxcy
was Assistant to the Chairman of Wheeling Pittsburgh Steel Corporation,
Pittsburgh, Pennsylvania from 1975 to 1985. Mr. Maxcy is the father of Gregory
G. Maxcy.
Stephen Spolar. Mr. Spolar has been retired since 1992. Mr. Spolar was
President and Chief Executive Officer of the Savings Bank from 1986 to 1992. Mr.
Spolar has been
-4-
<PAGE> 8
a director of the Savings Bank since 1986 and served as an officer of the
Savings Bank from 1961 to 1986.
Charles A. Topnick. Mr. Topnick has been retired since 1992. Mr.
Topnick served as Senior Vice President of the Savings Bank from 1991 to 1992.
From 1983 to 1991, Mr. Topnick was President of Columbia Savings and Loan
Association, Pittsburgh, Pennsylvania.
James M. Droney, Jr. Mr. Droney, Jr. has been the President and Chief
Executive Officer of Mt. Lebanon Office Equipment Co. Inc., Pittsburgh,
Pennsylvania, an office equipment retailer, since 1976.
Kenneth R. Rieger. Mr. Rieger is co-founder of and an investment
advisor with G&R Investment Consultants, Inc., Pittsburgh, Pennsylvania, a
consulting firm, since January 1980.
DIRECTOR EMERITUS
Effective August 1997, Frank J. Malone became a Director Emeritus of
the Savings Bank. Mr. Malone served as Chairman of the Board of Directors of the
Savings Bank from 1986 to August 1997 and held the same position with the
Company from its inception in September 1995 until November 1996. Mr. Malone is
retired and was formerly the President and Chief Executive Officer of the
Savings Bank from 1955 to 1986. Mr. Malone was a director of the Savings Bank
from its inception in 1942 to August 1997.
STOCKHOLDER NOMINATIONS
Article 7.F. of the Company's Amended and Restated Articles of
Incorporation ("Articles") governs nominations for election to the Board of
Directors and requires all such nominations, other than those made by or at the
direction of the Board, to be made at a meeting of stockholders called for the
election of directors, and only by a stockholder who has complied with the
notice provisions in that section. Stockholder nominations must be made pursuant
to timely notice in writing to the Secretary of the Company. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company not later than 90 days prior to the
anniversary date of the mailing of proxy materials by the Company in connection
with the immediately preceding annual meeting of stockholders of the Company. No
such proposals were received. Each written notice of a stockholder nomination is
required to set forth certain information specified in the Articles.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES OF THE COMPANY AND THE SAVINGS BANK
Regular meetings and special meetings of the Board of Directors of the
Company are held as necessary. During the fiscal year ended September 30, 1997,
the Board of Directors met 14 times. No director attended fewer than 75% of the
total number of Board meetings or committee meetings on which he served that
were held during this period. The entire
-5-
<PAGE> 9
Board of Directors of the Company acts as a Nominating Committee. The Board of
Directors of the Company has established the following committees:
Executive Committee. The Executive Committee of the Company has the
authority to act on general Company matters between Board meetings. Prior to
January 1, 1997, the members of the Executive Committee were Messrs. Kenneth F.
Maxcy, Jr. (Chairman), Gregory G. Maxcy, Mellor, Spolar and Dillen. Effective
January 23, 1997, Mr. Mellor was named Chairman of the Committee. Effective May
19, 1997, Gregory G. Maxcy resigned from the Committee upon his employment with
the Savings Bank and Mr. Topnick was added to the Committee. The Executive
Committee did not meet during fiscal 1997.
Audit Committee. The Audit Committee of the Company recommends
independent auditors to the Board annually and reviews the Company's financial
statements and the scope and results of the audit performed by the Company's
independent auditors and the Company's system of internal control with
management and such independent auditors and reviews regulatory examination
reports. The Audit Committee, which is comprised of Messrs. Topnick (Chairman),
Mellor, Lerach and Spolar, met twice during fiscal 1997.
The Compensation Committee of the Savings Bank's Board of Directors
reviews the compensation for the Savings Bank's officers, along with employee
benefits, and recommends to the Board adjustments in such compensation. See
"Management Compensation - Compensation Committee Interlocks and Insider
Participation." Prior to January 23, 1997, the members of the Compensation
Committee were Messrs. Kenneth F. Maxcy, Jr. (Chairman), Dillen, Malone, Gregory
G. Maxcy, Mellor and Spolar. Effective January 23, 1997, Mr. Dillen resigned
from the Compensation Committee and Mr. Topnick was added to the Committee.
Effective May 19, 1997, Gregory G. Maxcy resigned from the Committee. Effective
August 28, 1997, Mr. Malone resigned from the Committee. Mr. Dillen did not
participate in the Compensation Committee's consideration of his own
compensation. Messrs. Malone and Mellor formerly served as officers of the
Company and the Savings Bank, and Messrs. Spolar and Topnick formerly served as
officers of the Savings Bank. The Compensation Committee met three times during
fiscal 1997.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information concerning the executive officers of the
Company and the Savings Bank who do not serve on the Board of Directors of the
Company. All executive officers are elected by the Board of Directors and serve
until their successors are elected and qualified. No executive officer is
related to any director or other executive officer of the Company by blood,
marriage or adoption, and there are no arrangements or understandings between a
director of the Company and any other person pursuant to which such person was
elected an executive officer.
Michael J. Kirk. Mr. Kirk has been Senior Vice President and Chief
Financial Officer of the Company and the Savings Bank since January 1996. Mr.
Kirk became Vice President
-6-
<PAGE> 10
and Chief Financial Officer of the Savings Bank in 1992 and was Vice President
and Chief Financial Officer of the Company from its inception in September 1995
through January 1996. Mr. Kirk served as an Analyst and Controller of Community
Savings Association, Monroeville, Pennsylvania from 1988 to 1992 and as an
auditor with Ernst & Whinney, the predecessor to Ernst & Young, LLP, from 1985
to 1988. Mr. Kirk is a certified public accountant.
Joseph E. Archer. Mr. Archer has been Senior Vice President of Lending
of the Savings Bank since 1988. Mr. Archer served as Vice President of the
Savings Bank from 1986 to 1988 and Assistant Vice President from 1970 to 1986.
Mr. Archer joined the Savings Bank in 1962.
Albert L. Winters. Mr. Winters has been Senior Vice President of
Operations of the Savings Bank since 1994. Mr. Winters served as Vice President
of the Savings Bank from 1991 to 1993 and Assistant Vice President of the
Savings Bank from 1989 to 1990. Mr. Winters joined the Savings Bank in 1970.
Patricia J. Nesbit. Ms. Nesbit has been Vice President of Retail
Banking of the Savings Bank since January 1996. Ms. Nesbit served as a Branch
Manager of the Savings Bank from 1994 to 1995. Prior to 1994, Ms. Nesbit was
employed by Integra Bank, Pittsburgh, Pennsylvania and certain predecessor
institutions from 1969 to 1994 as a Branch Manager and in other related
capacities.
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table on the following page sets forth, as of the Voting Record
Date, certain information as to the Common Stock beneficially owned by (i) each
person or entity, including any "group" as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended ("Exchange Act"), who or
which was known to the Company to be the beneficial owner of more than 5% of the
issued and outstanding Common Stock, (ii) the directors and nominees of the
Company, (iii) those executive officers of the Company whose salary and bonus
exceeded $100,000 in fiscal 1997, and (iv) all directors and executive officers
of the Company and the Savings Bank as a group.
-7-
<PAGE> 11
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group December 10, 1997(1) Common Stock
------------------ -------------------- ------------
<S> <C> <C>
Pittsburgh Home Financial Corp. 174,570(2) 8.9%
Employee Stock Ownership Plan Trust
438 Wood Street
Pittsburgh, Pennsylvania 15222
John Hancock Mutual Life Insurance 190,000(3) 9.6
Company
John Hancock Subsidiaries, Inc.
John Hancock Asset Management
John Hancock Place
P.O. Box 111
Boston, Massachusetts 02117
The Berkeley Financial Group
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Directors and Nominees:
J. Ardie Dillen 42,196(4)(5) 2.1
James M. Droney, Jr. 502 *
Jess B. Mellor 7,421(6) *
Joseph G. Lang 4,282(6) *
Richard F. Lerach 35,247(6) 1.8
Gregory G. Maxcy 22,508 1.1
Kenneth F. Maxcy, Jr. 9,247(5)(6) *
Kenneth R. Rieger 3,750 *
Stephen Spolar 10,813(5)(6) *
Charles A. Topnick 8,747(6) *
All directors and executive officers 195,131(7) 9.8%
of the Company and the Savings Bank
as a group (14 persons)
</TABLE>
- -----------------
* Represents less than 1% of the outstanding Common Stock.
(Footnotes continued on following page)
-8-
<PAGE> 12
- -----------------
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of Common Stock are deemed to be
beneficially owned by a person if he or she directly or indirectly has
or shares (i) voting power, which includes the power to vote or to
direct the voting of the shares, or (ii) investment power, which
includes the power to dispose or to direct the disposition of the
shares. Unless otherwise indicated, the named beneficial owner has sole
voting and dispositive power with respect to the shares. Shares which
are subject to stock options and which may be exercised within 60 days
of December 10, 1997 are deemed to be outstanding for the purpose of
computing the percentage of Common Stock beneficially owned by such
person.
(2) The Pittsburgh Home Financial Corp. Employee Stock Ownership Plan Trust
("Trust") was established pursuant to the Pittsburgh Home Financial
Corp. Employee Stock Ownership Plan ("ESOP") by an agreement between
the Company and Messrs. J. Ardie Dillen, Kenneth F. Maxcy, Jr., and
Stephen Spolar who act as trustees of the plan ("Trustees"). As of the
Voting Record Date, 23,421 shares held in the Trust had been allocated
to the accounts of participating employees. Under the terms of the
ESOP, the Trustees will generally vote the allocated shares held in the
ESOP in accordance with the instructions of the participating
employees. Unallocated shares held in the ESOP will generally be voted
in the same ratio on any matter as those allocated shares for which
instructions are given, subject in each case to the fiduciary duties of
the ESOP trustees and applicable law. Any allocated shares which either
abstain on a proposal or are not voted will be disregarded in
determining the percentage of stock voted for and against each proposal
by the participants and beneficiaries. The amount of Common Stock
beneficially owned by directors who serve as Trustees of the ESOP and
by all directors and executive officers as a group does not include the
unallocated shares held by the Trust.
(3) Based on a Schedule 13G joint filing on January 31, 1997 made on behalf
of John Hancock Mutual Life Insurance Company ("JHMLICO"), JHMLICO's
direct, wholly-owned subsidiary, John Hancock Subsidiaries, Inc.
("JHSI"), JHSI's direct, wholly-owned subsidiary, John Hancock Asset
Management ("JHAM"), JHAM's wholly-owned subsidiary, The Berkeley
Financial Group ("TBFG") and TBFG's wholly-owned subsidiary, John
Hancock Advisers, Inc. ("JHA"). Pursuant to an advisory agreement with
the John Hancock Bank and Thrift Opportunity Fund dated July 21, 1994,
JHA has sole voting and dispositive power as to 100,000 shares of
Common Stock. Pursuant to an advisory agreement with the John Hancock
Regional Bank Fund dated July 1, 1996, JHA has sole voting and
dispositive power as to 90,000 shares of Common Stock. Through their
parent-subsidiary relationship to JHA, JHMLICO, JHSI, JHAM and TBFG
have indirect, beneficial ownership of these same shares.
(Footnotes continued on following page)
-9-
<PAGE> 13
- ---------------
(4) Includes 1,500 shares held by Mr. Dillen's spouse in her Individual
Retirement Account, 600 shares held by Mr. Dillen as custodian for his
children, 2,072 shares which are held by the ESOP which have been
allocated to the account of Mr. Dillen, and 6,982 shares which may be
acquired by Mr. Dillen upon the exercise of stock options.
(5) Excludes the shares held by the ESOP, of which the named director is
one of three trustees.
(6) Includes 1,636 shares which may be acquired by the named director upon
the exercise of stock options.
(7) Includes 28,271 shares which may be acquired by all directors and
executive officers of the Company and the Savings Bank as a group upon
the exercise of stock options. Also includes 6,320 shares which are
held by the Company's ESOP which have been allocated to the accounts of
executive officers.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who own more than 10% of the Company's Common Stock to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("Commission") and the National Association of Securities
Dealers, Inc. Officers, directors and greater than 10% stockholders are required
by regulation to furnish the Company with copies of all forms they file pursuant
to Section 16(a) of the Exchange Act. The Company knows of no person who owns
more than 10% of the Company's Common Stock.
Based solely on review of the copies of such forms furnished to the
Company, or written representations from its officers and directors, the Company
believes that during, and with respect to, fiscal 1997, the Company's officers
and directors complied in all respects with the reporting requirements
promulgated under Section 16(a) of the Exchange Act.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The Company does not pay separate compensation to its officers. The
following table sets forth a summary of certain information concerning the
compensation paid by the Savings Bank for services rendered in all capacities
during the three fiscal years ended September 30, 1997 to the Chairman,
President and Chief Executive Officer of the Savings Bank. No other executive
officer of the Savings Bank had total compensation during the fiscal year which
exceeded $100,000.
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<PAGE> 14
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------- -------------------
Restricted
Fiscal Stock Number of All Other
Name and Principal Position Year Salary (1) Bonus Awards(2) Options(3) Compensation(4)
--------------------------- ---- ---------- ------- --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Ardie Dillen 1997 $106,875 $20,000 $182,640 34,913 $29,063
Chairman, President and Chief 1996 97,500 11,212 -- -- 11,475
Executive Officer 1995 86,167 8,500 -- -- --
</TABLE>
- -------------
(1) Does not include amounts attributable to miscellaneous benefits
received by the named executive officer. In the opinion of management
of the Savings Bank, the costs to the Savings Bank of providing such
benefits to the named executive officer during the indicated period did
not exceed the lesser of $50,000 or 10% of the total of annual salary
and bonus reported for the individual.
(2) Represents the grant of 15,711 shares of restricted Common Stock to Mr.
Dillen pursuant to the Company's Recognition and Retention Plan and
Trust ("Recognition Plan"), which were deemed to have had the indicated
value at the date of grant. The restricted Common Stock awarded to Mr.
Dillen had a fair market value of $300,473 at September 30, 1997, based
on the $19.125 per share closing market price on September 29, 1997,
the last date in fiscal 1997 on which shares of the Common Stock were
traded. The awards vest 20% each year beginning October 15, 1997, and
dividends are paid on restricted shares.
(3) Consists of stock options granted pursuant to the Company's Stock
Option Plan ("Stock Option Plan") which are exercisable at the rate of
20% each year beginning October 15, 1997.
(4) Represents $25,857, $8,550 and $0, the allocation on behalf of Mr.
Dillen under the Company's ESOP, and $3,206, $2,925 and $0 in
contributions pursuant to the Savings Bank's Thrift Plan, in each case
in fiscal 1997, 1996 and 1995, respectively. See "Benefits - Thrift
Plan."
The following table discloses the total options granted to the
executive officer named in the Summary Compensation Table during the year ended
September 30, 1997:
<TABLE>
<CAPTION>
Number of % of Total Options
Options Granted To Exercise Grant Date
Name Granted Employees(1) Price(2) Expiration Date Present Value(3)
- --------------- ------- ------------ -------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
J. Ardie Dillen 34,913 19.78% $11.625 October 15, 2006 $129,178
</TABLE>
(Footnotes on following page)
-11-
<PAGE> 15
- --------------
(1) Percentage of options granted to all employees during fiscal 1997.
(2) The exercise price was based on the closing market price of a share of
the Company's Common Stock on the date of grant.
(3) Present Value of the grant at the date of grant under the Black-Scholes
option pricing model.
The following table sets forth, with respect to the executive officer
named in the Summary Compensation Table, information with respect to the
aggregate amount of options exercised during the last fiscal year, any value
realized thereon, the number of unexercised options at the end of the fiscal
year (exercisable and unexercisable) and the value with respect thereto under
specified assumptions.
<TABLE>
<CAPTION>
Shares Value of Unexercised
Acquired on Value Number of Unexercised in the Money Options at
Name Exercise Realized Options at Fiscal Year End September 30, 1997
- --------------- -------- -------- -------------------------- ------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Ardie Dillen -- -- -- 34,913(1) -- $261,848(2)
</TABLE>
- ---------------
(1) Shares are exercisable at the rate of 20% per year on each annual
anniversary of the date the options were granted (October 15, 1996)
at $11.625 per share.
(2) Value is calculated as the difference between the market price of the
Company's stock at September 29, 1997 ($19.125), the last date in
fiscal 1997 on which shares of the Company's stock were traded, and the
$11.625 exercise price.
COMPENSATION OF DIRECTORS
The Company pays non-employee directors a quarterly retainer of $500.
As of January 23, 1997, the monthly Savings Bank Board retainer was increased to
$400 from $300 and the per meeting fee was increased to $500 from $450. Members
of committees of the Board of the Company and the Savings Bank are paid $250
($350 for committee chairmen) for each committee meeting attended. In addition
to the foregoing, Messrs. Malone and Mellor received $5,400 and $4,375,
respectively, for service as Chairman of the Board and Secretary of the Savings
Bank, respectively, for fiscal 1997. Mr. Dillen and Mr. Gregory G. Maxcy receive
no additional compensation as Chairman of the Board of the Company and the
Savings Bank and Secretary of the Company, respectively. Mr. Malone receives
$400 per month as director emeritus of the Savings Bank.
-12-
<PAGE> 16
EMPLOYMENT AGREEMENTS
The Company and the Savings Bank (collectively, the "Employers") have
entered into employment agreements with each of Messrs. Dillen, Kirk, and
Gregory G. Maxcy, and the Savings Bank has entered into employment agreements
with Messrs. Archer and Winters (the "Executives"). Messrs. Dillen and Kirk are
the Chairman, President and Chief Executive Officer, and the Senior Vice
President and Chief Financial Officer of the Company and the Savings Bank,
respectively. Mr. Maxcy is the Senior Vice President and Secretary of the
Company and Senior Vice President of the Savings Bank. Messrs. Archer and
Winters are Senior Vice Presidents of the Savings Bank. The Employers have
agreed to employ Mr. Dillen for a term of three years and each of the other
Executives for a term of two years in their current respective positions at
their current salary levels. The employment agreements will be reviewed annually
by the Boards of Directors of the Employers, and the term of employment
agreements shall be extended each year for a successive additional one-year
period upon approval of the Employers' Board of Directors, unless either party
elects, not less than 30 days prior to the annual anniversary date, not to
extend the employment term.
Each of the employment agreements are terminable with or without cause
by the Employers. The Executives shall have no right to compensation or other
benefits pursuant to the employment agreements for any period after voluntary
termination or termination by the Employers for cause. The agreements provide
for certain benefits in the event of an Executives' death, disability or
retirement. In the event that (i) the Executive terminates his employment (a)
because of failure of the Employers to comply with any material provision of the
agreement or (b) as a result of certain adverse actions which are taken with
respect to the officer's employment following a Change in Control of the
Company, as defined, or (ii) the employment agreement is terminated by the
Employers other than for cause, disability, retirement or death, the Executive
will be entitled to a cash severance amount equal to three times the officer's
base salary, as defined, in the case of Mr. Dillen, and two times base salary
for the other Executives payable in installments over three years (in the case
of Mr. Dillen) or two years (in the case of the other Executives). Based upon
compensation levels at September 30, 1997, in the event of a termination of
employment following a Change in Control, Mr. Dillen would receive $330,000 in
cash severance and each of the other four Executives would receive between
$113,000 and $150,000. Mr. Dillen's agreement also provides for a severance
payment in the event of a termination of the agreement resulting from a change
by the Employers to his title or duties. Severance payments are generally
reduced by 50% of the compensation paid by another employer during the payment
period. In certain cases of voluntary resignation, the reduction would not
apply.
A Change in Control is generally defined in the employment agreement to
include any change in control of the Company required to be reported under the
federal securities laws, as well as (i) the acquisition by any person of 25% or
more of the Company's outstanding voting securities and (ii) a change in a
majority of the directors of the Company
-13-
<PAGE> 17
during any two-year period without the approval of at least two-thirds of the
persons who were directors of the Company at the beginning of such period.
Each employment agreement provides that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment are
deemed to constitute "excess parachute payments" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), then such
payments and benefits received thereunder shall be reduced, in the manner
determined by the officer, by the amount, if any, which is the minimum necessary
to result in no portion of the payments and benefits being non-deductible by the
Employers for federal income tax purposes. Excess parachute payments generally
are payments contingent on a change of control with a present value equal to or
in excess of three times the base amount, which is defined to mean the
recipient's average annual compensation from the employer includable in the
recipient's gross income during the most recent five taxable years ending before
the date on which a change in control of the employer occurred. Recipients of
excess parachute payments are subject to a 20% excise tax on the amount by which
such payments exceed the base amount, in addition to regular income taxes, and
payments in excess of the base amount are generally not deductible by the
employer as compensation expense for federal income tax purposes.
Although the above-described employment agreements could increase the
cost of any acquisition of control of the Company, management of the Company
does not believe that the terms thereof would have a significant anti-takeover
effect.
BENEFITS
Employee Stock Ownership Plan. The Company has established the ESOP for
employees of the Company and the Savings Bank. Employees of the Company and the
Savings Bank who have been credited with at least 1,000 hours of service during
a twelve month period and who have attained age 21 are eligible to participate
in the ESOP.
The ESOP borrowed funds from the Company to purchase 174,570 shares of
Common Stock in the Savings Bank's conversion from mutual to stock form. The
loan to the ESOP will be repaid from the Company's contributions to the ESOP
over a period of 10 years, and the collateral for the loan is the Common Stock
purchased by the ESOP. The Company may, in any plan year, make additional
discretionary contributions for the benefit of plan participants in either cash
or shares of Common Stock, which may be acquired through the purchase of
outstanding shares in the market or from individual stockholders, upon the
original issuance of additional shares by the Company or upon the sale of
treasury shares by the Company. Such purchases, if made, would be funded through
additional borrowing by the ESOP or additional contributions from the Company.
The timing, amount and manner of future contributions to the ESOP will be
affected by various factors, including prevailing regulatory policies, the
requirements of applicable laws and regulations and market conditions.
-14-
<PAGE> 18
Shares purchased by the ESOP with the proceeds of the loan are held in
a suspense account and will be released on a pro rata basis as debt service
payments are made. Discretionary contributions to the ESOP and shares released
from the suspense account will be allocated among participants on the basis of
compensation. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount the Company might otherwise have contributed
to the ESOP. Participants will be 100% vested in their rights to receive their
account balances within the ESOP after completing five years of service. Credit
is given for years of service with the Savings Bank prior to adoption of the
ESOP. In the case of a "change in control," as defined, however, participants
will become immediately fully vested in their account balances, subject to
certain tax considerations. Benefits may be payable upon retirement or
separation from service. The Company's contributions to the ESOP are not fixed,
so benefits payable under the ESOP cannot be estimated.
The ESOP is subject to the requirements of the Employment Retirement
Income Securities Act of 1974, as amended, and the regulations of the IRS and
the Department of Labor thereunder.
Stock Option Plan. The Company's stockholders approved the Stock Option
Plan at a special meeting held on October 15, 1996. The Stock Option Plan is
designed to attract and retain qualified personnel in key positions, provide
officers and key employees with a proprietary interest in the Company as an
incentive to contribute to the success of the Company and reward key employees
for outstanding performance. The Stock Option Plan is also designed to retain
qualified directors for the Company. The Stock Option Plan provides for the
grant of incentive stock options intended to comply with the requirements of
Section 422 of the Code ("incentive stock options"), non-qualified or
compensatory stock options and stock appreciation rights (collectively
"Awards"). Awards will be available for grant to directors and key employees of
the Company and any subsidiaries, except that directors will not be eligible to
receive incentive stock options. A total of 218,212 shares of Common Stock has
been reserved for issuance pursuant to the Stock Option Plan. The Stock Option
Plan is administered and interpreted by a committee of the Board of Directors
("Committee") that is composed solely of two or more "Non-Employee Directors."
Unless sooner terminated, the Stock Option Plan shall continue in effect for a
period of ten years from the adoption by the Board of Directors.
Under the Stock Option Plan, the Board of Directors or the Committee
determines which officers and key employees will be granted options, whether
such options will be incentive or compensatory options, the number of shares
subject to each option, whether such options may be exercised by delivering
other shares of Common Stock and when such options become exercisable. The per
share exercise price of a stock option shall be equal to the fair market value
of a share of Common Stock on the date the option is granted. Subject to certain
exceptions, all options granted to participants under the Stock Option Plan
shall become vested and exercisable at the rate of 20% per year on each annual
-15-
<PAGE> 19
anniversary of the date the options were granted, and the right to exercise
shall be cumulative.
At September 30, 1997, the Company had granted stock options to
directors and officers of the Company and the Savings Bank to purchase an
aggregate of 176,511 shares of Common Stock at exercise prices ranging from
$11.625 per share to $15.00 per share.
Recognition and Retention Plan. The Company's stockholders also
approved the Recognition Plan at the special meeting held on October 15, 1996.
The objective of the Recognition Plan is to retain qualified personnel in key
positions, provide officers, key employees and directors with a proprietary
interest in the Company as an incentive to contribute to its success and reward
key employees for outstanding performance. Officers and key employees of the
Company who are selected by the Board of Directors of the Company or a committee
thereof, as well as non-employee directors of the Company, will be eligible to
receive benefits under the Recognition Plan. The Recognition Plan Trust acquired
87,285 shares of Common Stock on behalf of the Recognition Plan. These shares
were acquired through open market purchases. The Recognition Plan is
administered and interpreted by a committee of the Board of Directors that is
composed solely of two or more "Non-Employee Directors."
Shares of Common Stock granted pursuant to the Recognition Plan will be
in the form of restricted stock payable over a five-year period at a rate of 20%
per year, beginning one year from the anniversary date of the grant. A recipient
will be entitled to all voting and other stockholder rights with respect to
shares which have been earned and allocated under the Recognition Plan. However,
until such shares have been earned and allocated, they may not be sold, pledged
or otherwise disposed of and are required to be held in the Recognition Plan
Trust. Under the terms of the Recognition Plan, all shares which have not yet
been earned and allocated are required to be voted by the trustees in their sole
discretion. In addition, any cash dividends or stock dividends declared in
respect of unvested share awards will be held by the Recognition Plan Trust for
the benefit of the recipients and such dividends, including any interest
thereon, will be paid out proportionately by the Recognition Plan Trust to the
recipients thereof as soon as practicable after the share awards become earned.
Any cash dividends or stock dividends declared in respect of each vested share
held by the Recognition Plan Trust will be paid by the Recognition Plan Trust as
soon as practicable after the Recognition Plan Trust's receipt thereof to the
recipient on whose behalf such share is then held by the Recognition Plan Trust.
At September 30, 1997, the Company had granted an aggregate of 79,490 shares to
directors and executive officers of the Company and the Savings Bank, including
15,711 shares to Mr. Dillen.
Pension Plan. The Savings Bank participates in a multiple employer
defined benefit pension plan that covers all employees that have attained 21
years of age and have completed one full year of service (consisting of 1,000
hours worked during the year). In general, the pension plan provides for
benefits payable monthly at retirement or normal
-16-
<PAGE> 20
retirement age 65 in an amount equal to a percentage of the participant's
average annual salary for the five consecutive years of highest salary during
his service with the Savings Bank, multiplied by the number of his years of
service, with a reduced level of benefits in the event of early retirement prior
to having attained age 65.
Payment of benefits under the pension plan generally will be made in
the form of a life annuity to an unmarried participant or in the form of a
qualified joint and survivor annuity to a married participant, although
alternative forms of benefits are available.
The pension plan provides a death benefit payment, in the event of death prior
to retirement.
For the years ended September 30, 1997, 1996 and 1995 pension expense
amounted to $60,000, $60,000 and $60,000, respectively. The amounts expended as
contributions to the pension plan for financial reporting purposes on behalf of
any particular individual or group of individuals participating in the pension
plan cannot be determined.
Thrift Plan. Effective October 1, 1996, the Bank began maintaining a
Thrift Plan for the benefit of employees who have been employed for at least one
year and who have attained the age of 21. The Thrift Plan is a contributory
defined contribution plan which is intended to qualify under Section 401(k) of
the Code. Participants may contribute to the Thrift Plan by salary reduction up
to 15% of annual compensation for the year. Such contributions defer the
employee's earnings up to a maximum of $9,500 in each plan year, indexed
annually. The Bank matches 50% of an employee's contribution to the Thrift Plan
up to 6% of an employee's compensation. An employee is immediately vested in his
or her contributions to the Thrift Plan and is vested in the Bank's matching
contributions after five years of service. All funds contributed to the Thrift
Plan are held in a trust fund, which are invested at the direction of the
employee in five separate funds: a short term government money market fund, a
diversified equity portfolio fund, a government bond fund, a fund that invests
solely in companies that make up the Standard & Poor's Stock Index, and a fund
that invests solely in companies that make up the Standard & Poor's MidCap
Index.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
All loans or extensions of credit to executive officers and directors
must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with the
general public, unless the loans are made pursuant to a benefit or compensation
program that (i) is widely available to employees of the institution and (ii)
does not give preference to any director, executive officer or principal
stockholder, or certain affiliated interests of either, over other employees of
the savings institution, and must not involve more than the normal risk of
repayment or present other unfavorable features.
The Savings Bank's policy provides that all loans made by the Savings
Bank to its directors and officers are made in the ordinary course of business,
are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for
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<PAGE> 21
comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features. As of
September 30, 1997, mortgage and consumer loans to executive officers and
directors aggregated $50,000 or .2% of the Savings Bank's equity as of such
date. The Savings Bank believes that such loans do not involve more than the
normal risk of collectibility.
CONSENT TO FINDINGS OF SECURITIES VIOLATIONS
Mr. Gregory G. Maxcy, Senior Vice President of the Savings Bank,
Secretary of the Company, and a director of the Company and the Savings Bank,
previously served as an officer and director of Equity Management Associates
("EMA"), a Delaware corporation, whose purpose was to acquire, finance, lease,
develop, purchase, manage and syndicate real estate. Between approximately March
1985 to March 1986, Mr. Maxcy allegedly offered and sold securities of EMA to
the public. In October 1991, the Pennsylvania Securities Commission (the
"Pennsylvania Commission"), agreed to the entry of Mr. Maxcy's Offer for
Settlement pursuant to which, without admitting or denying the allegations
thereof, Mr. Maxcy accepted findings by the Pennsylvania Commission that he
caused violations of Section 401(b) of the Pennsylvania Securities Act of 1972,
as amended relating to violations of the securities anti-fraud provisions for
allegedly offering and selling securities through the use of untrue statements
of material facts and omissions of material facts necessary in order to make the
statements made, in light of the circumstances in which they were made, not
misleading and agreed to an Order of the Pennsylvania Commission that, among
other things, (i) suspended Mr. Maxcy's registration as an agent in the
Commonwealth of Pennsylvania for a period of one year, (ii) barred Mr. Maxcy
from offering or selling securities, acting as an investment adviser or being
affiliated with a broker-dealer, agent or investment adviser in the Commonwealth
of Pennsylvania for a period of one year, and (iii) barred Mr. Maxcy from
holding a position as an officer or director of a company offering or selling
securities in the Commonwealth of Pennsylvania for a period of eighteen months.
In March 1993, the United States District Court for the Western
District of Pennsylvania entered into a final judgment and order against Mr.
Maxcy for his dealings with EMA described above, pursuant to which Mr. Maxcy did
not admit or deny the allegations, which permanently enjoined Mr. Maxcy from
future violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of
1933, as amended ("Securities Act") and Section 10(b) of the Exchange Act and
Rule 10b-5 promulgated thereunder for his alleged misrepresentations and
omissions of material facts. In April 1993, Mr. Maxcy entered into an Offer of
Settlement and related Order with the Commission pursuant to which, without
admitting or denying the allegations contained therein, the Commission found
that Mr. Maxcy had violated Sections 5(a), 5(c) and 17(a) of the Securities Act
and Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder.
Under the provisions of the Order, Mr. Maxcy was barred from associating with
any broker, dealer, municipal securities dealer, investment adviser or
investment company for a period of five years.
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<PAGE> 22
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Savings Bank's Board of Directors
reviews the compensation for the Savings Bank's officers, along with employee
benefits, and recommends to the Board adjustments in such compensation.
The report of the Compensation Committee with respect to compensation
for the Chairman, President and Chief Executive Officer and all other executive
officers for the fiscal year ended September 30, 1997 is set forth below:
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The purpose of the Committee is to provide oversight of the personnel
related policies of the Company and the Savings Bank, including the
establishment of an executive compensation philosophy for the organization and
the monitoring of compensation plans and strategies to determine conformity with
the overall philosophy. The Committee also is responsible for ensuring that the
financial costs of current or proposed compensation and benefit programs are
reasonable and consistent with industry standards, management performance and
stockholders' interest. A competitive comprehensive benefit program is essential
to achieving the goal of retaining and attracting highly qualified employees.
The Committee considers the following criteria when establishing its
recommendation to the Board of Directors regarding the compensation level of the
Chief Executive Officer and other executive officers of the Company and the
Savings Bank:
1. The overall competitive performance of the Company and the
Savings Bank during the fiscal year under consideration.
2. The level of, and/or increases in, return on equity and return
on assets without encouraging short-term profitability through
unreasonable risk-taking or a deterioration of long-term asset
quality.
3. Consideration of the individual, as well as combined measures
of progress of the Company and the Savings Bank in different
areas, including the quality of the loan portfolio, the
overall growth of the Savings Bank, the improvement in market
share, the level of non-performing loans and real estate
owned, efficiency ratio levels as compared to peer groups and
other objectives as may be established by the Board of
Directors.
4. The Company's and the Savings Bank's regulatory ratings.
5. The compensation and benefit levels of comparable management
positions to peer group institutions of similar asset size and
operating characteristics, with a concentration on those
institutions operating within the Mid-Atlantic region and
specifically Pennsylvania.
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<PAGE> 23
6. The individual effectiveness of the Chief Executive Officer
relative to overall management efficiency and leadership and
his commitment to professional involvement, civic activities
and the maintenance of corporate stature enhancing the image
of the Company and the Savings Bank in its market place.
The compensation arrangements and recommendations of the Committee
include a base salary and a bonus component if the Executive's performance is
judged to warrant such a bonus. The officers of the Company are not specifically
compensated for their service in such capacity and are paid only for their
services as officers of the Savings Bank.
The base compensation of J. Ardie Dillen, Chairman, President and Chief
Executive Officer of the Company, was established at $110,000 as of January 1,
1997. This level of compensation represented a 12.8% increase over the previous
year's base compensation which had been established as of January 1, 1996. Mr.
Dillen's compensation level, determined with the aforementioned criteria, was
based on an examination of the peer group companies relative to salary and bonus
compensation for Chief Executive Officers. Mr. Dillen was awarded a bonus of
$20,000 for his service during fiscal 1997 based on his overall performance.
Following extensive review by the Committee, all issues pertaining to
executive compensation are submitted to the full Board of Directors for their
approval.
Kenneth F. Maxcy, Jr., Chairman
Jess B. Mellor
Stephen Spolar
Charles A. Topnick
-20-
<PAGE> 24
PERFORMANCE GRAPH
The following graph compares the cumulative total returns for the
Common Stock of the Company, the SNL All Thrift Index and the Nasdaq Total
Return Index since the Company's initial public offering in April 1996. All of
these cumulative returns are computed assuming the reinvestment of dividends at
the frequency with which dividends were paid during the period.
<TABLE>
<CAPTION>
PERIOD ENDING
-------------------------------------------------------------------------------
Index 4/1/96 6/30/96 9/30/96 12/31/96 3/31/96 6/30/97 9/30/97
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pittsburgh Home Financial 100.00 91.45 108.48 122.70 137.08 141.12 177.67
Nasdaq 100.00 107.63 111.46 116.93 110.60 130.87 152.99
SNL All Thrift Index 100.00 120.20 112.76 127.61 139.16 165.43 195.93
</TABLE>
Pittsburgh Home Financial Corp.'s Common Stock commenced trading on the
Nasdaq Stock Market on April 1, 1996. The above graph represents $100 invested
in the Company's initial public offering of Common Stock at $11.00 per share,
which was the closing price on April 1, 1996.
-21-
<PAGE> 25
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Ernst & Young LLP,
independent certified public accountants, to perform the audit of the Company's
financial statements for the year ending September 30, 1998, and further
directed that the selection of auditors be submitted for ratification by the
stockholders at the Annual Meeting.
The Company has been advised by Ernst & Young LLP that neither that
firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
certified public accountants and clients. Ernst & Young LLP will have one or
more representatives at the Annual Meeting who will have an opportunity to make
a statement, if they so desire, and who will be available to respond to
appropriate questions.
The Board of Directors recommends that you vote FOR the ratification of
the appointment of Ernst & Young LLP as independent auditors for the fiscal year
ending September 30, 1998.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which currently is scheduled to be held in January 1999, must be
received at the principal executive offices of the Company, 438 Wood Street,
Pittsburgh, Pennsylvania 15222, Attention: Gregory G. Maxcy, Secretary, no later
than August 21, 1998.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Article 10.D. of the Company's
Articles, which provides that business at an annual meeting of stockholders must
be (a) properly brought before the meeting by or at the direction of the Board
of Directors, or (b) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Company. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of the
Company not later than 90 days prior to the anniversary date of the immediately
preceding annual meeting of stockholders of the Company. No such proposals were
received. Such stockholder's notice is required to set forth certain information
specified in the Articles.
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<PAGE> 26
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year
ended September 30, 1997 accompanies this Proxy Statement. Such annual report is
not part of the proxy solicitation materials.
Upon receipt of a written request, the Company will furnish to any
stockholder without charge a copy of the Company's Annual Report on Form 10-K
for fiscal 1997 required to be filed under the 1934 Act. Such written requests
should be directed to Michael J. Kirk, Senior Vice President and Chief Financial
Officer, Pittsburgh Home Financial Corp., 438 Wood Street, Pittsburgh,
Pennsylvania 15222. The Form 10-K is not part of the proxy solicitation
materials.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the approval
of the minutes of the last meeting of stockholders, the election of any person
as a director if the nominee is unable to serve or for good cause will not
serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the Annual Meeting. Management is not aware
of any business that may properly come before the Annual Meeting other than the
matters described above in this Proxy Statement. However, if any other matters
should properly come before the meeting, it is intended that the proxies
solicited hereby will be voted with respect to those other matters in accordance
with the judgment of the persons voting the proxies.
The cost of the 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 the proxy
materials to the beneficial owners of the Company's Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
By Order of the Board of Directors
/s/ GREGORY G. MAXCY
Gregory G. Maxcy
Secretary
December 19, 1997
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<PAGE> 27
REVOCABLE PROXY
PITTSBURGH HOME FINANCIAL CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PITTSBURGH HOME FINANCIAL CORP. (the "COMPANY") FOR USE AT THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JANUARY 22, 1998 AND AT ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of the Company as of December
10, 1997, hereby authorizes the Board of Directors of the Company or any
successors thereto as proxies with full powers of substitution, to represent
the undersigned at the Annual Meeting of Stockholders of the Company to be held
at The Library Center, GRW Theatre, Second Level, 414 Wood Street,
Pittsburgh, Pennsylvania, on Thursday, January 22, 1998 at 11:00 a.m., Eastern
Time, and at any adjournment of said meeting, and thereat to act with respect
to all votes that the undersigned would be entitled to cast, if then personally
present, as follows:
1. ELECTION OF DIRECTORS
Nominees for a three-year term: Kenneth F. Maxcy, Jr., Gregory G. Maxcy,
Richard F. Lerach and James M. Droney, Jr.
[ ] FOR [ ] WITHHOLD
AUTHORITY
NOTE: To withhold authority to vote for an individual nominee,
strike a line through that nominee's name. Unless authority
to vote for all of the foregoing nominees is withheld, this
Proxy will be deemed to confer authority to vote for each
nominee whose name is not struck.
2. PROPOSAL to ratify the appointment by the Board of Directors of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
September 30, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 28
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF
RETURNED BUT NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS, FOR RATIFICATION
OF THE COMPANY'S INDEPENDENT AUDITORS AND OTHERWISE AT THE DISCRETION OF THE
PROXIES. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED AT
THE ANNUAL MEETING.
Dated:
-------------------------------
--------------------------------------
Signature of Stockholder
--------------------------------------
Signature of Stockholder
NOTE: PLEASE SIGN THIS EXACTLY AS YOUR
NAME(S) APPEAR(S) ON THIS PROXY. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY,
PLEASE GIVE FULL TITLE. WHEN SHARES
ARE HELD JOINTLY, ONLY ONE HOLDER NEED
SIGN.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
