<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File Number 0-27522
PITTSBURGH FINANCIAL CORP.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1772349
------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
225 Ross Street
Pittsburgh, Pennsylvania 15219
- --------------------------------------- ----------
(Address of principal executive office) (Zip Code)
(412) 227-1945
-------------------------------------
(Registrant's telephone number, including area code)
PITTSBURGH HOME FINANCIAL CORP.
-------------------------------
(Former name)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: As of May 15, 2000,
there were issued and outstanding 1,697,506 shares of the Registrant's Common
Stock, par value $.01 per share.
<PAGE> 2
PITTSBURGH FINANCIAL CORP.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of March 31, 2000
(unaudited) and September 30, 1999 3
Consolidated Statements of Income (unaudited) for the three and six
months ended March 31, 2000 and 1999. 4
Consolidated Statement of Changes in Stockholders' Equity
(unaudited) for the six months ended March 31, 2000. 5
Consolidated Statements of Cash Flows (unaudited) for the
six months ended March 31, 2000 and 1999. 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security-Holders 20
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES
</TABLE>
<PAGE> 3
PITTSBURGH FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, September 30,
2000 1999
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash $ 1,326,705 $ 1,589,834
Interest-bearing deposits 4,804,803 3,729,265
------------- -------------
6,131,508 5,319,099
Investment securities available for sale (cost of $92,427,421 and$113,557,150) 86,700,421 109,745,150
Loans receivable, net of allowance of $2,082,225 and $1,956,744 312,654,687 278,085,048
Accrued interest receivable 2,636,556 2,635,063
Premises and equipment, net 5,274,984 4,586,498
Goodwill 220,096 236,602
Federal Home Loan Bank stock - at cost 10,763,400 9,715,900
Deferred income taxes 2,333,812 1,682,812
Foreclosed real estate 1,607,539 1,956,740
Prepaid income taxes 1,396,615 1,242,673
Other assets 518,647 536,279
------------- -------------
Total assets $ 430,238,265 $ 415,741,864
============= =============
LIABILITIES
Deposits $ 172,936,839 $ 169,462,592
Advances from Federal Home Loan Bank 194,266,730 184,066,730
Reverse repurchase agreements 25,000,000 25,000,000
Guaranteed preferred beneficial interests in subordinated debt 10,817,925 10,805,672
Advances by borrowers for taxes and insurance 3,843,277 1,975,086
Other liabilities 2,956,947 2,405,650
------------- -------------
Total liabilities 409,821,718 393,715,730
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000 shares authorized,
none issued -- --
Common stock, $.01 par value, 10,000,000 shares authorized,
2,182,125 shares issued and outstanding 21,821 21,821
Additional paid-in capital 16,305,434 16,311,188
Treasury stock - at cost, 484,619 and 395,277 (6,874,791) (5,755,444)
Unearned shares of ESOP (1,247,390) (1,340,100)
Unearned shares of Recognition and Retention Plan (336,650) (442,970)
Accumulated other comprehensive (loss) (3,780,000) (2,516,000)
Retained earnings (substantially restricted) 16,328,123 15,747,639
------------- -------------
Total stockholders' equity 20,416,547 22,026,134
------------- -------------
Total liabilities and stockholders' equity $ 430,238,265 $ 415,741,864
============= =============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 4
PITTSBURGH FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
(Unaudited) (Unaudited)
----------------------------- -------------------------------
2000 1999 2000 1999
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $ 5,911,985 $ 4,517,005 $ 11,417,608 $ 8,734,331
Mortgage-backed securities 1,117,664 1,474,707 2,345,012 2,974,281
Investment securities:
Taxable 686,577 728,105 1,380,780 1,603,201
Tax exempt 42,761 103,009 147,938 205,955
Interest-bearing deposits 49,660 45,437 88,013 96,244
----------- ----------- ------------ ------------
Total interest income 7,808,647 6,868,263 15,379,351 13,614,012
Interest expense:
Deposits 1,868,604 1,718,420 3,724,862 3,524,861
Federal Home Loan Bank and other borrowings 3,374,607 2,647,823 6,549,718 5,329,829
Guaranteed preferred beneficial interest
in subordinated debt 252,227 252,227 504,453 506,846
----------- ----------- ------------ ------------
Total interest expense 5,495,438 4,618,470 10,779,033 9,361,536
----------- ----------- ------------ ------------
Net interest income 2,313,209 2,249,793 4,600,318 4,252,476
Provision for loan losses 150,000 150,000 300,000 300,000
----------- ----------- ------------ ------------
Net interest income after provision for loan losses 2,163,209 2,099,793 4,300,318 3,952,476
Noninterest income:
Service charges and other fees 213,096 193,282 467,482 374,122
Extinguishment of facility lease (201,500) -- (201,500) --
Net gain on sale of fixed assets 77,297 -- 77,297 --
Net (loss) on trading securities -- (14,625) -- (181,856)
Net gain/(loss) on available for sale securities (174,896) 80,000 (171,539) 177,292
Other income 34,876 27,058 78,293 55,583
----------- ----------- ------------ ------------
Total noninterest income (loss) (51,127) 285,715 250,033 425,141
Noninterest expenses:
Compensation and employee benefits 904,720 840,377 1,792,927 1,587,783
Premises and occupancy costs 212,227 166,293 409,448 315,319
Amortization of goodwill 8,253 8,253 16,507 16,507
Federal insurance premium 9,002 23,861 33,352 46,364
Loss on sale of foreclosed real estate 87,591 -- 85,344 14,662
Marketing 56,441 69,440 153,466 118,159
Data processing costs 76,633 84,182 154,183 158,208
Other expenses 370,420 299,343 693,245 504,789
----------- ----------- ------------ ------------
Total noninterest expense 1,725,287 1,491,749 3,338,472 2,761,791
----------- ----------- ------------ ------------
Income before income taxes 386,795 893,759 1,211,879 1,615,826
Income taxes 67,243 278,000 319,243 502,000
----------- ----------- ------------ ------------
Net income $ 319,552 $ 615,759 $ 892,636 $ 1,113,826
=========== =========== ============ ============
Diluted earnings per share $ 0.20 $ 0.37 $ 0.56 $ 0.67
=========== =========== ============ ============
Dividends per share $ 0.09 $ 0.07 $ 0.18 $ 0.14
=========== =========== ============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE> 5
PITTSBURGH FINANCIAL CORP.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Accumulated
Unearned other
Additional shares of Unearned compre- Total
Comprehensive Common Paid In Retained Treasury Employee Stock shares hensive Stockholders'
Income Stock Capital Earnings Stock Ownership Plan of RRP income Equity
----------- ------- ----------- ----------- ---------- -------------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as of
September 30, 1999 $21,821 $16,311,188 $15,747,639 $(5,755,444) $(1,340,100) $(442,970) $(2,516,000) $22,026,134
Treasury stock
purchased (1,119,347) (1,119,347)
ESOP shares released -- (5,754) -- -- 92,710 -- -- 86,956
Exercise of
stock options -- -- -- -- -- -- --
RRP amortization -- -- -- -- -- 106,320 -- 106,320
Cash dividends declared -- -- (312,152) -- -- -- -- (312,152)
Change in unrealized
gain (loss)
on investment
securities available
for sale,
net of taxes $(1,092,461) -- -- -- -- -- -- -- --
Less reclassification
adjustment for
gains included
in net income (171,539)
-----------
Other comprehensive
income (loss) (1,264,000) (1,264,000) (1,264,000)
Net income for period $ 892,636 -- -- 892,636 -- -- -- -- 892,636
-----------
Comprehensive
Income (loss) $ (371,364)
===========
-----------------------------------------------------------------------------------------------
Balance as of
March 31, 2000 $21,821 $16,305,434 $16,328,123 $(6,874,791) $(1,247,390) $(336,650) $(3,780,000) $20,416,547
===============================================================================================
</TABLE>
5
<PAGE> 6
PITTSBURGH FINANCIAL CORP
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the six months ended March 31,
2000 1999
------------- ------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 892,636 $ 1,113,826
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and goodwill amortization 151,936 155,330
Amortization and accretion of premiums and discounts on
assets and deferred loan fees 684,952 (386,600)
Amortization of RRP and release of ESOP shares 193,276 206,646
Provision for loan losses 300,000 300,000
Sale of equity securities, trading -- 1,371,416
Deferred tax provision (benefit) (651,000) (893,870)
Other, net 2,293,937 1,708,526
------------ ------------
Net cash provided by operating activities 3,865,737 3,575,274
CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations (55,681,793) (48,357,115)
Loan principal repayments 23,976,525 23,136,943
Net REO activity 349,201 --
Purchases of:
Available for sale securities (2,092,500) (20,181,374)
Proceeds from sales, maturities and principal repayments of:
Available for sale securities 18,325,405 23,015,696
Held to maturity securities -- 10,000,000
Purchase of land, premises and equipment (823,915) (845,176)
Other, net 651,000 (535,205)
------------ ------------
Net cash (used) provided by investing activities (15,296,077) (13,766,231)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in checking, passbook, and money market
deposit accounts 3,847,909 4,896,957
Net increase in certificates of deposit (373,662) (2,500,097)
Increase in advances from the Federal Home Loan Bank 10,200,000 8,250,000
Cash dividends paid to shareholders (312,152) (253,342)
Purchase of treasury stock (1,119,346) (1,352,526)
------------ ------------
Net cash provided by financing activities 12,242,749 9,040,992
Net (decrease) increase in cash and cash equivalents 812,409 (1,149,965)
Cash and cash equivalents at beginning of year 5,319,099 4,476,181
------------ ------------
Cash and cash equivalents at end of year $ 6,131,508 $ 3,326,216
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest (includes interest credited on deposits
of $3,670,204 and $3,631,276 in 2000 and 1999
respectively) $ 10,064,109 $ 9,483,364
============ ============
Income taxes paid $ 473,185 $ 1,413,000
============ ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
Foreclosed mortgage loans transferred to real estate owned 834,016 294,869
Unrealized gain on securities available for sale (1,915,000) (1,750,000)
Deferred income taxes 651,000 595,000
------------ ------------
Accumulated other comprehensive income $ (1,264,000) $ (1,155,000)
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE> 7
PITTSBURGH FINANCIAL CORP.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements of
Pittsburgh Financial Corp. (formerly Pittsburgh Home Financial Corp.)
(the "Company") have been prepared in accordance with instructions to
Form 10-Q. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. However, such information reflects all
adjustments (consisting solely of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair statement of
results for the interim periods.
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, BankPittsburgh (formerly
Pittsburgh Home Savings Bank) (the "Bank") and Pittsburgh Home Capital
Trust I. All significant intercompany balances and transactions have
been eliminated in consolidation.
Components of Comprehensive Income include net income and unrealized
gains or losses on the Company's available-for-sale securities. During
the six months ended March 31, 2000, total comprehensive loss amounted
to $371,364, as compared to $41,174 for the six months ended March 31,
1999.
The results of operations for the three and six months ended March 31,
2000 are not necessarily indicative of the results to be expected for
the year ending September 30, 2000. The unaudited consolidated financial
statements and notes thereto should be read in conjunction with the
audited financial statements and notes thereto for the year ended
September 30, 1999.
Note 2 - Business
The Bank is a state chartered stock savings bank primarily engaged in
attracting retail deposits from the general public and using such
deposits to originate loans (primarily single-family residential loans.)
The Bank conducts business from eight offices in Allegheny and Butler
counties of western Pennsylvania and primarily lends in this geographic
area. The Bank is subject to competition from other financial
institutions and other companies which provide financial services. The
Bank is subject to the regulations of certain federal and state agencies
and undergoes periodic examinations by those regulatory authorities.
The Company's trust subsidiary, Pittsburgh Home Capital Trust I (the
"Trust") was formed to issue $11.5 million of 8.56% Cumulative Trust
Preferred Securities. These securities
7
<PAGE> 8
represent undivided beneficial interests in Pittsburgh Home Capital
Trust I. The Trust purchased junior subordinated deferrable interest
debentures which were issued by the Company.
Note 3 - Earnings per share
Earnings per share are based on the weighted average number of shares of
common stock. Basic earnings per share is calculated by dividing income
available to holders of common shares by the weighted average number of
common shares outstanding during the period. Options, warrants, and
other potentially diluted securities are excluded from the basic
calculation, but are included in diluted earnings per share.
The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator for basic and diluted earnings
per share - net income $ 319,552 $ 615,759 $ 892,636 $1,113,826
Denominator:
Denominator for basic earnings per
share - weighted-average shares 1,553,376 1,601,253 1,574,111 1,622,913
Effect of dilutive securities:
Employee stock options 7,773 33,693 14,649 30,232
Unvested Management Recognition Plan stock -- 14,535 -- 11,054
----------------------------------------------------------
Dilutive potential common shares 7,773 48,228 14,649 41,286
----------------------------------------------------------
Denominator for diluted earnings per
share - adjusted weighted-average
shares and assumed conversions 1,561,149 1,649,481 1,588,760 1,664,199
==========================================================
Basic earnings per share $ 0.21 $ 0.38 $ 0.57 $ 0.68
==========================================================
Diluted earnings per share $ 0.20 $ 0.37 $ 0.56 $ 0.67
==========================================================
</TABLE>
The Company accounts for its Employee Stock Ownership Plan (ESOP) in
accordance with SOP 93-6, "Employers Accounting for Employee Stock
Ownership Plans,"; shares controlled by the ESOP are not considered in
the weighted average shares outstanding until the shares are committed
for allocation to an employee's individual account. In accordance with
SOP 93-6, uncommitted shares held by the ESOP (133,782 and 150,072
shares at March 31, 2000 and 1999 respectively) are excluded from basic
average shares outstanding.
8
<PAGE> 9
Note 4 - Recent Accounting and Regulatory Developments
Financial Accounting Standards Board Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities," establishes accounting
and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and hedging
activities. As amended by FAS 137 the standard is effective for fiscal
years beginning after June 15, 2000, and will be adopted by the Company
for the year ended September 30, 2001. The impact of adoption is not
expected to materially affect the Company's financial condition or
results of operations.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At March 31, 2000, the Company's total assets amounted to $430.2 million
compared with $415.7 million at September 30, 1999, an increase of 3.5%. Cash
and interest-bearing deposits increased $800,000, or 15.1%, to $6.1 million at
March 31, 2000, compared to $5.3 million at September 30, 1999. Investments and
mortgage-backed securities decreased $23.0 million, or 21.0%, from $109.7
million at September 30, 1999 to $86.7 million at March 31, 2000. The Company
has continued to change its asset mix by decreasing its investment portfolio and
reinvesting the proceeds in higher yielding, internally generated loans
receivable. During the six months ended March 31, 2000, the Company's loans
receivable, net of allowance, increased $34.6 million, or 12.4%, to $312.7
million at March 31, 2000 compared to $278.1 million at September 30, 1999. The
growth is primarily attributable to increases in residential mortgage loans and
to a lesser extent, commercial real estate and home equity loans.
Total liabilities increased by $16.1 million, or 4.1%, to $409.8 million
at March 31, 2000 compared to $393.7 million at September 30, 1999. Deposits
increased by $3.4 million, or 2.0% to $172.9 million at March 31, 2000 compared
to $169.5 million at September 30, 1999. Borrowed funds increased $10.2 million
or 4.9% to $219.3 million at March 31, 2000 compared to $209.1 million at
September 30, 1999, as the Company increased its FHLB advances to aid liquidity
and fund loans receivable. Guaranteed preferred beneficial interest in
subordinated debt totaled $10.8 million at March 31, 2000.
Total stockholders' equity decreased $1.6 million or 7.3% to $20.4
million at March 31, 2000 compared to $22.0 million at September 30, 1999. The
decrease was primarily attributable to a $1.3 million decrease in comprehensive
loss along with the purchase of treasury shares totaling $1.1 million.
10
<PAGE> 11
RESULTS OF OPERATIONS
GENERAL. The Company reported net income of $320,000 for the quarter
ended March 31, 2000 as compared to $616,000 for the same quarter in 1999. For
the six months ended March 31, 2000, net income was $893,000 as compared to
$1.11 million for the six months ended March 31, 1999. The Company recognized
pre-tax net losses on investment sales of $175,000 and an early extinguishment
of a facility lease of $202,000 for the quarter, offset by a net gain on sale of
fixed assets of $77,000, and pre-tax net losses on investment sales of $172,000
and the same $202,000 pre-tax net loss on the early extinguishment of a facility
lease, again offset by a net gain on sale of fixed assets of $77,000 for the six
months ended March 31, 2000. This compares to a pre-tax net gain on investment
sales of $65,000 for the quarter and a pre-tax net loss on investment sales of
$5,000 for the six months ended March 31, 1999. Excluding the results of
investment sales, early lease extinguishment, and sale of fixed assets, net
income for the quarter ended March 31, 2000 was $526,000 as compared to $571,000
for the same quarter in 1999, a decrease of 7.9%. Excluding the results of the
investment sales, early lease extinguishment, and sale of fixed assets, for the
six months ended March 31, 2000 net income was $1.10 million as compared to
$1.11 million for the six months ended March 31, 1999, a decrease of .9%.
The Company recognized an increase in net interest income before
provision for loan losses of $63,000 or 2.8% for the quarter and $348,000 or
8.2% for the six month period as compared to the same periods in the prior year.
Noninterest income (excluding the investment sales, early lease extinguishment,
and fixed asset sales) increased $28,000 or 12.5% for the quarter and increased
$116,000 or 27.0% for the six month period as compared to the same period in the
prior year. Noninterest expense increased $156,000 or 10.4% for the quarter and
$499,000 or 18.1% for the six month period. The increase in noninterest expense
is primarily attributable to the increased personnel and facility costs of the
Company's newest branch office, increased personnel costs of the Company's
commercial lending department, additional consulting and professional services
fees related to the Company's strategic technology initiatives, facility
planning issues, and the development of a new Delaware investment company
subsidiary, and an overall increase in general operating expenses.
Diluted earnings per share was $.20 for the quarter ended March 31,
2000, compared to $.37 per share for the same quarter of 1999. Excluding the
investment sales, the early lease extinguishment, and the sale of fixed assets
items noted above, diluted earnings per share were $.33 for the quarter ended
March 31, 2000 and $.35 for the same quarter in 1999. Diluted earnings per share
was $.56 for the six months ended March 31, 2000 compared to $.67 for the same
period in 1999. The six months ended March 31, 2000 earnings per share amounts
included $.13 per share of losses relating to investment sales, early
extinguishment of lease costs, and gains on sale of fixed assets, as compared to
$.01 per share of gains related to trading activities and investment sales for
the six months ended March 31, 1999. Consequently, diluted earnings per share
excluding investment sales, early lease extinguishment costs, and gain on fixed
asset sales was $.69 for the six months ended March 31, 2000 as compared to $.68
for the six months ended March 31, 1999, an increase of 2.9%.
11
<PAGE> 12
INTEREST INCOME. Interest income increased $941,000 or 13.7% for the
quarter and $1.8 million or 13.0% for the six months ended March 31, 2000,
compared to the same period in 1999. The average balance on loans receivable
increased by $80.1 million and $75.1 million for the quarter and six months
ended March 31, 2000, which was partially offset by a 24 and 18 basis point
decline in the average yield earned thereon. The Company is continuing its
efforts to diversify its loans receivable portfolio from its previous emphasis
on one-to-four family residential lending to a more broad based, full service
commercial bank-like portfolio. It should be noted that the largest individual
dollar component of its loans receivable portfolio will continue to be its
residential lending, as this has been a Company strength, and the ongoing high
level of service and commitment will also continue in this area.
12
<PAGE> 13
Average Balances, Net Interest Income and Yields Earned and Rates Paid
For the three months ended March 31,
<TABLE>
<CAPTION>
2000 1999
--------------------------------- ---------------------------------
Average Average Average Average
Balance Interest Yield/Rate Balance Interest Yield/Rate
-------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Investment securities $ 34,494 $ 730 7.59% $ 48,452 $ 831 6.86%
Mortgage-backed securities 65,088 1,118 6.87 91,954 1,475 6.87
Loans receivable:
First mortgage loans 266,170 4,940 7.42 204,971 4,116 8.03
Other loans 42,457 972 9.13 23,617 401 6.79
-------- ------ -------------------
Total loans receivable 308,717 5,912 7.66 228,588 4,517 7.90
Other interest-earning assets 3,965 49 4.94 3,563 45 5.05
-------- ------ -------------------
Total interest-earning assets 416,264 $7,809 7.50% 372,557 $6,868 7.37%
==== ====
Non-interest earning assets 16,185 13,185
-------- --------
Total assets $432,449 $385,742
======== ========
Interest-bearing liabilities:
Deposits $165,297 $1,869 4.52% $152,178 $1,718 4.52%
FHLB advances and other 223,425 3,374 6.04 187,838 2,648 5.64
Guaranteed preferred beneficial
interest in subordinated debt 11,500 252 8.77 11,500 252 8.77
Escrows -- -- -- 2,397 9 1.50
-------- ------ -------------------
Total interest-bearing liabilities $400,222 $5,495 5.49% $354,857 $4,618 5.21%
==== ====
Non-interest bearing liabilities 11,864 6,957
-------- --------
Total liabilities 412,086 361,814
Stockholders' equity 20,363 23,928
-------- --------
Total liabilities and stockholders' equity $432,449 $385,742
======== ========
Net interest-earning assets $ 16,042 $ 17,700
======== ========
Net interest income/interest rate spread $2,314 2.01% $2,250 2.17%
================== =================
Net interest margin 2.22% 2.42%
==== ====
</TABLE>
13
<PAGE> 14
Average Balances, Net Interest Income and Yields Earned and Rates Paid
For the six months ended March 31,
<TABLE>
<CAPTION>
2000 1999
--------------------------------- ---------------------------------
Average Average Average Average
Balance Interest Yield/Rate Balance Interest Yield/Rate
-------- -------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Investment securities $ 41,230 $ 1,528 7.41% $ 52,246 $ 1,809 6.92%
Mortgage-backed securities 69,365 2,345 6.76 91,047 2,974 6.53
Loans receivable:
First mortgage loans 263,751 9,888 7.50 206,929 7,922 7.66
Other loans 34,251 1,530 8.93 15,996 813 10.17
-------- ------- -------------------
Total loans receivable 298,002 11,418 7.66 222,925 8,735 7.84
Other interest-earning assets 3,796 88 4.64 4,330 96 4.43
-------- ------- -------------------
Total interest-earning assets 412,393 $15,379 7.46% 370,548 $13,614 7.35%
==== ====
Non-interest earning assets 16,507 12,860
-------- --------
Total assets $428,900 $383,408
======== ========
Interest-bearing liabilities:
Deposits $165,154 $ 3,725 4.51% $152,240 $3,525 4.63%
FHLB advances and other 219,055 6,550 5.98 185,081 5,322 5.75
Guaranteed preferred beneficial
interest in subordinated debt 11,500 504 8.77 11,500 507 8.82
Escrows -- -- -- 2,869 8 0.56
-------- ------- -------------------
Total interest-bearing liabilities $395,709 $10,779 5.45% $351,690 $9,362 5.32%
==== ====
Non-interest bearing liabilities 12,326 7,488
-------- --------
Total liabilities 408,035 359,178
Stockholders' equity 20,865 24,230
-------- --------
Total liabilities and stockholders' equity $428,900 $383,408
======== ========
Net interest-earning assets $ 16,684 $ 18,858
======== ========
Net interest income/interest rate spread $ 4,600 2.01% $ 4,252 2.02%
================ ==================
Net interest margin 2.23% 2.29%
==== ====
</TABLE>
14
<PAGE> 15
The average balance of investment and mortgage-backed securities totaled $99.6
million and $110.6 million with weighted average yields of 7.14% and 7.00% for
the three and six months ended March 31, 2000 compared to $140.4 million and
$143.3 million with weighted average yields of 6.57% and 6.68% for the same
periods in 1999. During the six months ended March 31, 2000, the Company
continued to change its asset mix by decreasing its investment portfolio and
reinvesting the proceeds in higher yielding, internally generated loans
receivable.
Net loans receivable at March 31, 2000 and September 30, 1999 are summarized
below:
<TABLE>
<CAPTION>
March 31, 2000 September 30, 1999
-------------- ------------------
<S> <C> <C>
First mortgage loans:
Secured by 1-4 family residence $ 247,203,657 $ 219,675,811
1-4 family residential construction 14,860,446 17,896,602
1-4 family residential construction - builder 18,254,577 20,827,475
Commercial construction 11,099,997 --
Non-residential 17,945,413 15,678,557
Less loans in process (21,126,111) (18,997,323)
Deferred loan costs 572,090 521,928
Unamortized premium on mortgage loans 36,651 --
------------- -------------
Total first mortgage loans 288,846,720 255,603,050
============= =============
Home equity loans and lines 20,747,776 18,556,225
Other loans 5,142,416 5,882,517
Less allowance for loan losses (2,004,468) (1,956,744)
------------- -------------
$ 312,732,444 $ 278,085,048
============= =============
</TABLE>
INTEREST EXPENSE. Interest expense increased $877,000 or 19.0% and $1.4
million or 15.1% for the three and six months ended March 31, 2000, compared to
the same period in 1999. The increase was due primarily to a $45.4 million and
$44.0 million increase in average interest-bearing liabilities for the three and
six months ended March 31, 2000 when compared to the same period in 1999.
Average deposits increased $13.1 million and $12.9 million for the three and six
months ended March 31, 2000 when compared to the same period in 1999. Average
borrowed funds increased $35.6 million and $34.0 million for the three and six
months ended March 31, 2000 when compared to the same period in 1999. Interest
expense associated with the guaranteed preferred beneficial interest in
subordinated debt totaled $252,000 and $504,000 for the three and six months
ended March 31, 2000 when compared to $252,000 and $507,000 for the same period
in 1999. In connection with the Bank's ongoing management of its interest rate
risk position, the Bank purchased a $25.0 million notional value interest rate
cap from the FHLB. The cap is an off-balance sheet hedge to the Bank's risk
associated with shorter term liabilities. The cost of the cap is being amortized
as a yield adjustment to interest expense over the five year term of the
15
<PAGE> 16
transaction. Interest expense associated with the amortization of the rate cap
totaled $25,000 for the six months ended March 31, 2000.
PROVISION FOR LOAN LOSSES. It is management's policy to maintain an
allowance for estimated losses based on the perceived risk of loss in the loan
portfolio and the adequacy of the allowance. Management's periodic evaluation of
the adequacy of the allowance is based on the Company's past loan loss
experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay, the estimated value of the
underlying collateral and current economic conditions. The allowance for loan
losses is evaluated based on an assessment of the losses inherent in the loan
portfolio. Management classifies all delinquent assets as Special Mention,
Substandard, Doubtful or Loss. The evaluation of the adequacy of the allowance
incorporates an estimated range of required allowance based on the items noted
above. A reserve level is estimated by management for each category of
classified loans, with an estimated percentage applied to the delinquent loan
category balance. In addition, management notes that there is an inherent risk
of potential loan loss in the Company's overall, non-classified loan portfolio.
This inherent risk is addressed by applying an estimated low and high percentage
of potential loss to the remaining unclassified loan portfolio. Management
extends out the various line item balances and estimated percentages in order to
arrive at an estimated required loan loss allowance reserve. Activity for the
period under analysis is taken into account (charge offs, recoveries, provision)
in order to challenge the Company's overall process, as well as its previous
loss history. The estimated range of required reserve balance is then compared
to the current allowance for loan loss balance, and any required adjustments are
made accordingly.
Activity in the allowance for loan losses is summarized as follows for the six
months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Balance at beginning of year $ 1,956,744 $ 1,737,973
Provision charged to income 300,000 300,000
Chargeoffs (176,709) (272,575)
Recoveries 2,190 2,251
----------- -----------
Balance at end of period $ 2,082,225 $ 1,767,649
=========== ===========
</TABLE>
16
<PAGE> 17
The Company designates all loans that are 90 or more days past due as
non-performing. Generally, when loans are classified as non-performing, unpaid
accrued interest is a reduction of interest income on loans receivable and is
only recognized when cash payments are received. Subsequent to September 30,
1999, the Company's non-performing assets decreased from $5.0 million at
September 30, 1999 to $3.3 million at March 31, 2000. This $1.7 million or 34.0%
decrease was primarily attributable to a $1.3 million or 42.2% decrease in
non-accruing loans and a $300,000 decrease in real estate owned. For the three
and six months ended March 31, 2000 the Company recognized net losses of $88,000
and $85,000, respectively, on foreclosed real estate.
Assets classified as a Loss are considered uncollectible and of such
little value that continuance, as an asset is not warranted. A Loss
classification does not mean that an asset has no recovery or salvage value, but
that it is not practical or desirable to defer writing off all or a portion of
the asset, even though partial recovery may be affected in the future. All loans
classified as loss have been written off directly or through provision in
specific allowance reserve. The allowance is increased by provisions for loan
losses, which are charged against income. During the three and six months ended
March 31, 2000, the Company recorded provisions for losses on loans of $150,000
and $300,000, respectively, which were the same provisions for losses on loans
in the same periods in the prior year.
Although management utilizes its best judgment in providing for losses
with respect to its non-performing assets, there can be no assurance that the
Company will be able to dispose of such non-performing assets without
establishing additional provisions for losses on loans or further reductions in
the carrying value of its real estate owned.
NONINTEREST INCOME. Noninterest income decreased by $337,000 or 117.8%
and $175,000 or 41.2% for the three and six months ended March 31, 2000 compared
to the same period in 1999. The Company closed its Oakland and Bloomfield branch
offices and transferred the deposits to its new facility located in Bloomfield.
The Company believes that the new facility will enable the Bank to expand its
deposit and loan base in the Pittsburgh community of Bloomfield. The Company
incurred a $202,000 loss for the early extinguishment of a facility lease, which
was offset by a net gain on the sale of its Oakland facility of $77,000. The
Company recognized pre-tax net losses on investment sales of $175,000 and
$172,000 for the three and six months ended March 31, 2000 compared to pre-tax
net gains on investment sales of $65,000 and a pre-tax net loss on investment
sales of $5,000 for the three and six months ended March 31, 1999. Noninterest
income (excluding the investment sales, early lease extinguishment, and fixed
asset sales) increased $28,000 or 12.5% for the three month period and increased
$116,000 or 27.0% for the six month period ended March 31, 2000 as compared to
the same periods in the prior year. Service charges and other fees increased
$20,000 or 10.3% and $93,000 or 25.0% for the three and six months ended March
31, 2000 when compared to the same period in 1999.
17
<PAGE> 18
NONINTEREST EXPENSES. Noninterest expenses increased by $156,000 or
10.4% and $499,000 or 18.1% for the three and six months ended March 31, 2000,
compared to the same period in 1999. The increase was primarily attributable to
a $64,000 and $205,000 increase in salaries and employee benefits, a $71,000 and
$188,000 increase in other expenses, a $46,000 and $94,000 increase in premises
and occupancy costs, and a $13,000 decrease and a $35,000 increase in marketing
costs for the three and six months ended March 31, 2000 when compared to the
same period in 1999. The increase in noninterest expense is primarily
attributable to the increased personnel and facility costs of the Company's
newest branch office, increased personnel costs of the Company's commercial
lending department, additional consulting and professional services fees related
to the Company's strategic technology initiatives, facility planning issues, and
the development of a new Delaware investment company subsidiary, and an overall
increase in general operating expenses.
PROVISION FOR INCOME TAXES. The Bank incurred provisions for income
taxes of $145,000 and $397,000 for the three and six months ended March 31,
2000, compared with $278,000 and $502,000 for the same period in 1999. The
effective tax rates during the three and six months ended March 31, 2000 and
1999 were 17.4%, 26.3%, and 31.1% and 31.1%, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are deposits, advances from the
FHLB, repayments, prepayments and maturities of outstanding loans, maturities of
investment securities and other short-term investments, and funds provided from
operations. While scheduled loan repayments and maturing investment securities
and short-term investments are relatively predictable sources of funds, deposit
flows and loan prepayments are greatly influenced by the movement of interest
rates in general, economic conditions and competition. The Company manages the
pricing of its deposits to maintain a deposit balance deemed appropriate and
desirable. In addition, the Company invests in short-term investment securities
and interest-earning assets which provide liquidity to meet lending
requirements. Although the Company's deposits have historically represented the
majority of its total liabilities, the Company also utilized other borrowing
sources, primarily advances from the FHLB of Pittsburgh. At March 31, 2000, the
Company had $194.3 million of outstanding advances from the FHLB of Pittsburgh.
Liquidity management is both a daily and long-term function of business
management. The Bank uses its sources of funds primarily to meet its ongoing
commitments, to pay maturing savings certificates and savings withdrawals, to
fund loan commitments and to maintain a portfolio of mortgage-backed and
investment securities. At March 31, 2000, the total approved loan commitments
outstanding amounted to $17.3 million, and unused lines of credit amounted to
$7.4 million. Certificates of deposit scheduled to mature in one year or less at
March 31, 2000, totaled $65.8 million. Management believes that a significant
portion of maturing deposits will remain with the Bank.
18
<PAGE> 19
Under federal regulations, the Bank is required to maintain specific amounts of
capital. The following table sets forth certain information concerning the
Bank's regulatory capital.
<TABLE>
<CAPTION>
Tier I Tier I Total
Leverage Risk-Based Risk-Based
Capital Capital Capital
-----------------------------------
<S> <C> <C> <C>
Regulatory capital as a percentage 7.47% 14.55% 15.44%
Minimum capital required as a percentage 4.00 4.00 8.00
==============================
Excess regulatory capital as a percentage 3.47% 10.55% 7.44%
==============================
Well-capitalized requirement 5.00% 6.00% 10.00%
==============================
</TABLE>
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
In addition to historical information, forward-looking statements are
contained herein that are subject to risks and uncertainties that could cause
actual results to differ materially from those reflected in the forward-looking
statements. Factors that could cause future results to vary from current
expectations, include, but are not limited to, the impact of economic conditions
(both generally and more specifically in the markets in which the Company
operates), the impact of competition for the Company's customers from other
providers of financial services, the impact of government legislation and
regulation (which changes from time to time and over which the Company has no
control), and other risks detailed in this Form 10-Q and in the Company's other
Securities and Exchange Commission ("SEC") filings. Readers are cautioned not to
place undue reliance on these forward-looking statements, which reflect
management's analysis only as of the date hereof. The Company undertakes no
obligation to publicly revise these forward-looking statements, to reflect
events or circumstances that arise after the date hereof. Readers should
carefully review the risk factors described in other documents the Company files
from time to time with the SEC.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and qualitative disclosures about market risk are presented
at September 30, 1999 in Item 7A of the Company's Annual Report on Form 10-K,
filed with the SEC on December 29, 1999. Management believes there have been no
material changes in the Company's market risk since September 30, 1999.
19
<PAGE> 20
PITTSBURGH FINANCIAL CORP.
PART II
Item 1. Legal Proceedings
Neither the Company nor the Bank is involved in any pending legal
proceedings other than non-material legal proceedings occurring in the
ordinary course of business.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security-Holders
a) An Annual Meeting of Stockholders ("Annual Meeting") was held on
January 27, 2000.
b) Not applicable.
c) Four matters were voted upon at the Annual Meeting. The stockholders
approved matters brought before the Annual Meeting. The matters voted
upon together with the applicable voting results were as follows:
1) Proposal to elect two directors for a three-year term or until
their successors are elected and qualified - J. Ardie Dillen
received votes for 1,456,405; against 0; abstain 99,163; and
not voted 0. Kenneth R. Rieger received votes for 1,456,654;
against 0; abstain 98,914; and not voted 0.
2) Proposal to adopt the 2000 Stock Option Plan received votes
for 1,381,553; against 158,664; abstain 15,351; and not voted
0.
3) Proposal to amend the Company's Amended and Restated Articles
of Incorporation to change the corporate name to Pittsburgh
Financial Corp. received votes for 1,458,816; against 92,292;
abstain 4,460; and not voted 0.
4) Proposal to ratify the appointment by the Board of Directors
of Ernst & Young LLP as the Company's independent auditors for
the fiscal year
20
<PAGE> 21
ending September 30, 2000 received votes for 1,536,823;
against 15,211; abstain 3,534; and not voted 0.
d) Not applicable.
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Amended and Restated Articles of Incorporation of
Pittsburgh Financial Corp.
3.2 Amended and Restated Bylaws of Pittsburgh Financial Corp.
27 Financial Data Schedule
(b) No Form 8-K reports were filed during the quarter.
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PITTSBURGH FINANCIAL CORP.
Date: May 15, 2000 By: /s/ J.Ardie Dillen
----------------------------------
J. Ardie Dillen
Chairman, President and
Chief Executive Officer
Date: May 15, 2000 By: /s/ Michael J. Kirk
----------------------------------
Michael J. Kirk
Executive Vice President and Chief
Financial Officer
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PITTSBURGH FINANCIAL CORP.
ARTICLE 1. NAME. The name of the corporation is Pittsburgh Financial Corp.
(hereinafter referred to as the "Corporation").
ARTICLE 2. REGISTERED OFFICE. The address of the registered office of the
Corporation in the Commonwealth of Pennsylvania is 225 Ross Street, Pittsburgh,
Pennsylvania 15219.
ARTICLE 3. NATURE OF BUSINESS. The purpose of the Corporation is to engage
in any lawful act or activity for which a corporation may be organized under the
Business Corporation Law of 1988, as amended, of the Commonwealth of
Pennsylvania (the "BCL"). The Corporation is incorporated under the provisions
of the BCL.
ARTICLE 4. DURATION. The term of the existence of the Corporation shall be
perpetual.
ARTICLE 5. CAPITAL STOCK.
A. AUTHORIZED AMOUNT. The total number of shares of capital stock which the
Corporation has authority to issue is 15,000,000, of which 5,000,000 shall be
serial preferred stock, par value $.01 per share (hereinafter the "Preferred
Stock"), and 10,000,000 shall be common stock, par value $.01 per share
(hereinafter the "Common Stock"). Except to the extent required by governing
law, rule or regulation, the shares of capital stock may be issued from time to
time by the Board of Directors without further approval of stockholders. The
Corporation shall have the authority to purchase its capital stock out of funds
lawfully available therefor.
B. COMMON STOCK. Except as provided in this Article 5 (or in any resolution
or resolutions adopted by the Board of Directors pursuant hereto), the exclusive
voting power shall be vested in the Common Stock, with each holder thereof being
entitled to one vote for each share of such Common Stock standing in the
holder's name on the books of the Corporation. Subject to any rights and
preferences of any class of stock having preference over the Common Stock,
holders of Common Stock shall be entitled to such dividends as may be declared
by the Board of Directors out of funds lawfully available therefor. Upon any
liquidation, dissolution or winding up of the affairs of the Corporation,
whether voluntary or involuntary, holders of Common Stock shall be entitled to
receive pro rata the remaining assets of the Corporation after the holders of
any class of stock having preference over the Common Stock have been paid in
full any sums to which they may be entitled.
C. AUTHORITY OF BOARD TO FIX TERMS OF PREFERRED STOCK. The Board of
Directors shall have the full authority permitted by law to divide the
authorized and unissued shares of Preferred Stock into series and to fix by
resolution full, limited, multiple or fractional, or no voting rights, and such
designations, preferences, qualifications, privileges, limitations,
restrictions, options, conversion rights, and other special or relative rights
of the Preferred Stock or any series thereof that may be desired.
<PAGE> 2
ARTICLE 6. DIRECTORS. The business and affairs of the Corporation shall be
managed by or under the direction of a Board of Directors.
A. NUMBER. Except as otherwise increased from time to time by the exercise
of the rights of the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation to elect additional
directors, the number of directors of the Corporation shall be determined as
stated in the Corporation's Bylaws, as may be amended from time to time.
B. CLASSIFICATION AND TERM. The initial directors shall serve until the
first annual meeting of stockholders after the effective date of the Articles of
Incorporation of the Corporation. At such first annual meeting, a classified
Board of Directors will be elected to succeed the initial directors. The Board
of Directors, other than those who may be elected by the holders of any class or
series of stock having preference over the Common Stock as to dividends or upon
liquidation, shall be divided into three classes as nearly equal in number as
possible, with one class to be elected annually at each annual meeting
subsequent to the first annual meeting of stockholders. The term of office of
the directors elected at the first annual meeting of stockholders shall be as
follows:
(1) the term of office of the directors of the first class shall
expire at the first annual meeting of stockholders after their election as
directors; and
(2) the term of office of the directors of the second class shall
expire at the second annual meeting of stockholders after their election as
directors; and
(3) the term of office of the directors of the third class shall
expire at the third annual meeting of stockholders after their election as
directors;
and, as to the directors of each class, when their respective successors are
elected and qualified. At each annual meeting of stockholders subsequent to the
first annual meeting of stockholders, the directors elected to succeed those in
the class whose terms are expiring shall be elected for a term of office to
expire at the third succeeding annual meeting of stockholders and when their
respective successors are elected and qualified. Notwithstanding the foregoing,
and except as otherwise required by law, whenever the holders of any one or more
series of Preferred Stock shall have the right, voting separately as a class, to
elect one or more directors of the Corporation, the terms of the director or
directors elected by such holders shall expire at the next succeeding annual
meeting of stockholders and vacancies created with respect to any directorship
of the directors so elected may be filled in the manner specified by the terms
of such Preferred Stock.
C. NO CUMULATIVE VOTING. Stockholders of the Corporation shall not be
permitted to cumulate their votes for the election of directors.
D. VACANCIES. Except as otherwise fixed pursuant to the provisions of
Article 5 hereof relating to the rights of the holders of any class or series of
stock having preference over the
- 2 -
<PAGE> 3
Common Stock as to dividends or upon liquidation to elect directors, any vacancy
occurring in the Board of Directors, including any vacancy created by reason of
an increase in the number of directors, shall be filled by a majority vote of
the directors then in office, whether or not a quorum is present, or by a sole
remaining director, and any director so chosen shall serve until the term of the
class to which he was appointed shall expire and until his successor is elected
and qualified. When the number of directors is changed, the Board of Directors
shall determine the class or classes to which the increased or decreased number
of directors shall be apportioned, provided that no decrease in the number of
directors shall shorten the term of any incumbent director.
E. REMOVAL. Subject to the rights of any class or series of stock having
preference over the Common Stock as to dividends or upon liquidation to elect
directors, any director (including persons elected by directors to fill
vacancies in the Board of Directors) may be removed from office with cause by an
affirmative vote of not less than a majority of the total votes eligible to be
cast by stockholders. Cause for removal shall exist only if the director whose
removal is proposed has been either declared of unsound mind by an order of a
court of competent jurisdiction, convicted of a felony or of an offense
punishable by imprisonment for a term of more than one year by a court of
competent jurisdiction, or deemed liable by a court of competent jurisdiction
for gross negligence or misconduct in the performance of such director's duties
to the Corporation. At least 30 days prior to such meeting of stockholders,
written notice shall be sent to the director whose removal will be considered at
the meeting. Directors may also be removed from office in the manner provided in
Sections 1726(b) and 1726(c) of the BCL, or any successors to such sections.
F. NOMINATIONS OF DIRECTORS. Nominations of candidates for election as
directors at any annual meeting of stockholders may be made (a) by, or at the
direction of, a majority of the Board of Directors or (b) by any stockholder
entitled to vote at such annual meeting. Only persons nominated in accordance
with the procedures set forth in this Article 6.F shall be eligible for election
as directors at an annual meeting. Ballots bearing the names of all the persons
who have been nominated for election as directors at an annual meeting in
accordance with the procedures set forth in this Article 6.F shall be provided
for use at the annual meeting.
Nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation as set forth in this Article 6.F. To be timely, a
stockholder's notice shall be delivered to, or mailed and received at, the
principal executive offices of the Corporation not later than 90 days prior to
the anniversary date of the immediately preceding annual meeting of stockholders
of the Corporation; provided, however, that with respect to the first scheduled
annual meeting following the completion of the conversion of Pittsburgh Home
Savings Bank, Pittsburgh, Pennsylvania (the "Savings Bank"), from mutual to
stock form, which is expected to be held on the fourth Thursday of January 1997,
notice by the stockholder must be so delivered or received no later than the
close of business on the fourth Thursday of October 1996, notwithstanding a
determination by the Corporation to schedule such annual meeting at a date later
than the fourth Thursday of January 1997. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or re-election as a director and as to the stockholder giving the
notice (i) the name, age, business address
- 3 -
<PAGE> 4
and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of Corporation
stock which are Beneficially Owned (as defined in Article 9.A(e)) by such person
on the date of such stockholder notice, and (iv) any other information relating
to such person that is required to be disclosed in solicitations of proxies with
respect to nominees for election as directors, pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including,
but not limited to, information required to be disclosed by Items 4, 5, 6 and 7
of Schedule 14A with the Securities and Exchange Commission (or any successors
of such items or schedules); and (b) as to the stockholder giving the notice (i)
the name and address, as they appear on the Corporation's books, of such
stockholder and any other stockholders known by such stockholder to be
supporting such nominees and (ii) the class and number of shares of Corporation
stock which are Beneficially Owned by such stockholder on the date of such
stockholder notice and, to the extent known, by any other stockholders known by
such stockholder to be supporting such nominees on the date of such stockholder
notice. At the request of the Board of Directors, any person nominated by, or at
the direction of, the Board for election as a director at an annual meeting
shall furnish to the Secretary of the Corporation that information required to
be set forth in a stockholder's notice of nomination which pertains to the
nominee.
The Board of Directors may reject any nomination by a stockholder not
timely made in accordance with the requirements of this Article 6.F. If the
Board of Directors, or a designated committee thereof, determines that the
information provided in a stockholder's notice does not satisfy the
informational requirements of this Article 6.F in any material respect, the
Secretary of the Corporation shall promptly notify such stockholder of the
deficiency in the notice. The stockholder shall have an opportunity to cure the
deficiency by providing additional information to the Secretary within such
period of time, not to exceed five days from the date such deficiency notice is
given to the stockholder, as the Board of Directors or such committee shall
reasonably determine. If the deficiency is not cured within such period, or if
the Board of Directors or such committee reasonably determines that the
additional information provided by the stockholder, together with information
previously provided, does not satisfy the requirements of this Article 6.F in
any material respect, then the Board of Directors may reject such stockholder's
nomination. The Secretary of the Corporation shall notify a stockholder in
writing whether his nomination has been made in accordance with the time and
informational requirements of this Article 6.F. Notwithstanding the procedures
set forth in this paragraph, if neither the Board of Directors nor such
committee makes a determination as to the validity of any nominations by a
stockholder, the presiding officer of the annual meeting shall determine and
declare at the annual meeting whether the nomination was made in accordance with
the terms of this Article 6.F. If the presiding officer determines that a
nomination was made in accordance with the terms of this Article 6.F, he shall
so declare at the annual meeting and ballots shall be provided for use at the
meeting with respect to such nominee. If the presiding officer determines that a
nomination was not made in accordance with the terms of this Article 6.F, he
shall so declare at the annual meeting and the defective nomination shall be
disregarded.
Notwithstanding the foregoing, and except as otherwise required by law,
whenever the holders of any one or more series of Preferred Stock shall have the
right, voting separately as a class,
- 4 -
<PAGE> 5
to elect one or more directors of the Corporation, the provisions of this
Article 6.F shall not apply with respect to the director or directors elected by
such holders of Preferred Stock.
ARTICLE 7. PREEMPTIVE RIGHTS. No holder of the capital stock of the
Corporation shall be entitled as such, as a matter of right, to subscribe for or
purchase any part of any new or additional issue of stock of any class
whatsoever of the Corporation, or of securities convertible into stock of any
class whatsoever, whether now or hereafter authorized, or whether issued for
cash or other consideration or by way of a dividend.
ARTICLE 8. INDEMNIFICATION, ETC. OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS.
A. PERSONAL LIABILITY OF DIRECTORS AND OFFICERS. The personal liability of
the directors and officers of the Corporation for monetary damages for conduct
in their capacities as such shall be eliminated to the fullest extent permitted
by the BCL as it exists on the effective date of these Amended and Restated
Articles of Incorporation or as such law may be thereafter in effect. No
amendment, modification or repeal of this Article 8.A, nor the adoption of any
provision of these Amended and Restated Articles of Incorporation inconsistent
with this Article 8.A, shall adversely affect the rights provided hereby with
respect to any claim, issue or matter in any proceeding that is based in any
respect on any alleged action or failure to act prior to such amendment,
modification, repeal or adoption.
B. INDEMNIFICATION. The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, including actions by or in the right of
the Corporation, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under Pennsylvania law.
C. ADVANCEMENT OF EXPENSES. Reasonable expenses incurred by an officer,
director, employee or agent of the Corporation in defending a civil or criminal
action, suit or proceeding described in Section B of this Article 8 may be paid
by the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such person to
repay such amount if it shall ultimately be determined that the person is not
entitled to be indemnified by the Corporation.
D. OTHER RIGHTS. The indemnification and advancement of expenses provided
by or pursuant to this Article 8 shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any insurance or other agreement, vote of stockholders or
directors or otherwise, both as to actions in their official capacity and as to
actions in another capacity while holding an office, and shall continue as to a
person who
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has ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs, executors and administrators of such person.
E. INSURANCE. The Corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of this Article 8.
F. SECURITY FUND; INDEMNITY AGREEMENTS. By action of the Board of Directors
(notwithstanding their interest in the transaction), the Corporation may create
and fund a trust fund or fund of any nature, and may enter into agreements with
its officers, directors, employees and agents for the purpose of securing or
insuring in any manner its obligation to indemnify or advance expenses provided
for in this Article 8.
G. MODIFICATION. The duties of the Corporation to indemnify and to advance
expenses to any person as provided in this Article 8 shall be in the nature of a
contract between the Corporation and each such person, and no amendment or
repeal of any provision of this Article 8, and no amendment or termination of
any trust or other fund created pursuant to Section F of this Article 8, shall
alter to the detriment of such person the right of such person to the advance of
expenses or indemnification related to a claim based on an act or failure to act
which took place prior to such amendment, repeal or termination.
H. PROCEEDINGS INITIATED BY INDEMNIFIED PERSONS. Notwithstanding any other
provision of this Article 8, the Corporation shall not indemnify a director,
officer, employee or agent for any liability incurred in an action, suit or
proceeding initiated (which shall not be deemed to include counter-claims or
affirmative defenses) or participated in as an intervenor or amicus curiae by
the person seeking indemnification unless such initiation of or participation in
the action, suit or proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors in office.
ARTICLE 9. MEETINGS OF STOCKHOLDERS AND STOCKHOLDER PROPOSALS
A. DEFINITIONS.
(a) Acquire. The term "Acquire" includes every type of acquisition,
whether effected by purchase, exchange, operation of law or otherwise.
(b) Acting in Concert. The term "Acting in Concert" means (a) knowing
participation in a joint activity or conscious parallel action towards a common
goal whether or not pursuant to an express agreement, or (b) a combination or
pooling of voting or other interests in the
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securities of an issuer for a common purpose pursuant to any contract,
understanding, relationship, agreement or other arrangement, whether written or
otherwise.
(c) Affiliate. An "Affiliate" of, or a Person "affiliated with," a
specified Person, means a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the Person specified.
(d) Associate. The term "Associate" used to indicate a relationship
with any Person means:
(i) Any corporation or organization (other than the Corporation
or a Subsidiary of the Corporation), or any subsidiary or parent
thereof, of which such Person is a director, officer or partner or is,
directly or indirectly, the Beneficial Owner of 10% or more of any
class of equity securities;
(ii) Any trust or other estate in which such Person has a 10% or
greater beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity, provided, however, such
term shall not include any employee stock benefit plan of the
Corporation or a Subsidiary of the Corporation in which such Person
has a 10% or greater beneficial interest or serves as a trustee or in
a similar fiduciary capacity;
(iii) Any relative or spouse of such Person (or any relative of
such spouse) who has the same home as such Person or who is a director
or officer of the Corporation or a Subsidiary of the Corporation (or
any subsidiary or parent thereof); or
(iv) Any investment company registered under the Investment
Company Act of 1940 for which such Person or any Affiliate or
Associate of such Person serves as investment advisor.
(e) Beneficial Owner (including Beneficially Owned). A Person shall be
considered the "Beneficial Owner" of any shares of stock (whether or not owned
of record):
(i) With respect to which such Person or any Affiliate or
Associate of such Person directly or indirectly has or shares (A)
voting power, including the power to vote or to direct the voting of
such shares of stock, and/or (B) investment power, including the power
to dispose of or to direct the disposition of such shares of stock;
(ii) Which such Person or any Affiliate or Associate of such
Person has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
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and/or (B) the right to vote pursuant to any agreement, arrangement or
understanding (whether such right is exercisable immediately or only
after the passage of time); or
(iii) Which are Beneficially Owned within the meaning of (i) or
(ii) of this Article 9.A(e) by any other Person with which such
first-mentioned Person or any of its Affiliates or Associates either
(A) has any agreement, arrangement or understanding, written or oral,
with respect to acquiring, holding, voting or disposing of any shares
of stock of the Corporation or any Subsidiary of the Corporation or
acquiring, holding or disposing of all or substantially all, or any
Substantial Part, of the assets or business of the Corporation or a
Subsidiary of the Corporation, or (B) is Acting in Concert. For the
purpose only of determining whether a Person is the Beneficial Owner
of a percentage specified in this Article 9 of the outstanding Voting
Shares, such shares shall be deemed to include any Voting Shares which
may be issuable pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange
rights, warrants, options or otherwise and which are deemed to be
Beneficially Owned by such Person pursuant to the foregoing provisions
of this Article 9.A(e), but shall not include any other Voting Shares
which may be issuable in such manner.
(f) Offer. The term "Offer" shall mean every offer to buy or acquire,
solicitation of an offer to sell, tender offer or request or invitation for
tender of, a security or interest in a security for value; provided that the
term "Offer" shall not include (i) inquiries directed solely to the management
of the Corporation and not intended to be communicated to stockholders which are
designed to elicit an indication of management's receptivity to the basic
structure of a potential acquisition with respect to the amount of cash and or
securities, manner of acquisition and formula for determining price, or (ii)
non-binding expressions of understanding or letters of intent with the
management of the Corporation regarding the basic structure of a potential
acquisition with respect to the amount of cash and or securities, manner of
acquisition and formula for determining price.
(g) Person. The term "Person" shall mean any individual, partnership,
corporation, association, trust, group or other entity. When two or more Persons
act as a partnership, limited partnership, syndicate, association or other group
for the purpose of acquiring, holding or disposing of shares of stock, such
partnership, syndicate, associate or group shall be deemed a "Person."
(h) Substantial Part. The term "Substantial Part" as used with
reference to the assets of the Corporation or of any Subsidiary means assets
having a value of more than 10% of the total consolidated assets of the
Corporation and its Subsidiaries as of the end of the Corporation's most recent
fiscal year ending prior to the time the determination is being made.
(i) Subsidiary. "Subsidiary" means any corporation of which a majority
of any class of equity security is owned, directly or indirectly, by the Person
in question.
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(j) Voting Shares. "Voting Shares" shall mean shares of the
Corporation entitled to vote generally in an election of directors.
(k) Certain Determinations With Respect to Article 9. A majority of
the directors shall have the power to determine for the purposes of this Article
9, on the basis of information known to them and acting in good faith: (A) the
number of Voting Shares of which any Person is the Beneficial Owner, (B) whether
a Person is an Affiliate or Associate of another, (C) whether a Person has an
agreement, arrangement or understanding with another as to the matters referred
to in the definition of "Beneficial Owner" as hereinabove defined, and (D) such
other matters with respect to which a determination is required under this
Article 9.
(l) Directors, Officers or Employees. Directors, officers or employees
of the Corporation or any Subsidiary thereof shall not be deemed to be a group
with respect to their individual acquisitions of any class of equity securities
of the Corporation solely as a result of their capacities as such.
B. SPECIAL MEETINGS OF STOCKHOLDERS. Except as otherwise required by law
and subject to the rights of the holders of any class or series of Preferred
Stock, special meetings of the stockholders of the Corporation may be called
only by (i) the Board of Directors pursuant to a resolution approved by the
affirmative vote of a majority of the directors then in office, (ii) the
Chairman of the Board or (iii) the President.
C. ACTION WITHOUT A MEETING. Any action permitted to be taken by the
stockholders at a meeting may be taken without a meeting if consent in writing
setting forth the action so taken shall be signed by all of the stockholders who
would be entitled to vote at a meeting for such purpose and filed with the
Secretary of the Corporation as part of the corporate records.
D. STOCKHOLDER PROPOSALS. At an annual meeting of stockholders, only such
new business shall be conducted, and only such proposals shall be acted upon, as
shall have been brought before the annual meeting by, or at the direction of,
(a) the Board of Directors or (b) any stockholder of the Corporation who
complies with all the requirements set forth in this Article 9.D.
Proposals, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation as set forth in this Article 9.D. For stockholder proposals
to be included in the Corporation's proxy materials, the stockholder must comply
with all the timing and informational requirements of Rule 14a-8 of the Exchange
Act (or any successor regulation). With respect to stockholder proposals to be
considered at the annual meeting of stockholders but not included in the
Corporation's proxy materials, the stockholder notice shall be delivered to, or
mailed and received at, the principal executive offices of the Corporation not
later than 90 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders of the Corporation; provided, however, that with
respect to the first scheduled annual meeting following the completion of the
conversion of the Savings Bank from mutual to stock form, which is expected to
be held on the fourth Thursday of January 1997, notice
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by the stockholder must be so delivered or received no later than the close of
business on the fourth Thursday of October 1996, notwithstanding a determination
by the Corporation to schedule such annual meeting at a date later than the
fourth Thursday of January 1997. Such stockholder's notice shall set forth as to
each matter the stockholder proposes to bring before the annual meeting (a) a
brief description of the proposal desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (b)
the name and address, as they appear on the Corporation's books, of the
stockholder proposing such business and, to the extent known, any other
stockholders known by such stockholder to be supporting such proposal, (c) the
class and number of shares of the Corporation stock which are Beneficially Owned
by the stockholder on the date of such stockholder notice and, to the extent
known, by any other stockholders known by such stockholder to be supporting such
proposal on the date of such stockholder notice, and (d) any financial interest
of the stockholder in such proposal (other than interests which all stockholders
would have).
The Board of Directors may reject any stockholder proposal not timely made
in accordance with the terms of this Article 9.D. If the Board of Directors, or
a designated committee thereof, determines that the information provided in a
stockholder's notice does not satisfy the information requirements of this
Article 9.D in any material respect, the Secretary of the Corporation shall
promptly notify such stockholder of the deficiency in the notice. The
stockholder shall have an opportunity to cure the deficiency by providing
additional information to the Secretary within such period of time not to exceed
five days from the date such deficiency notice is given to the stockholder as
the Board of Directors or such committee shall reasonably determine. If the
deficiency is not cured within such period, or if the Board of Directors or such
committee determines that the additional information provided by the
stockholder, together with information previously provided, does not satisfy the
requirements of this Article 9.D in any material respect, then the Board of
Directors may reject such stockholder's proposal. The Secretary of the
Corporation shall notify a stockholder in writing whether his proposal has been
made in accordance with the time and informational requirements of this Article
9.D. Notwithstanding the procedures set forth in this paragraph, if neither the
Board of Directors nor such committee makes a determination as to the validity
of any stockholder proposal, the presiding officer of the annual meeting shall
determine and declare at the annual meeting whether the stockholder proposal was
made in accordance with the terms of this Article 9.D. If the presiding officer
determines that a stockholder proposal was made in accordance with the terms of
this Article 9.D, he shall so declare at the annual meeting and ballots shall be
provided for use at the meeting with respect to any such proposal. If the
presiding officer determines that a stockholder proposal was not made in
accordance with the terms of this Article 9.D, he shall so declare at the annual
meeting and any such proposal shall not be acted upon at the annual meeting.
This provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, directors and
committees of the Board of Directors, but in connection with such reports, no
new business shall be acted upon at such annual meeting unless stated, filed and
received as herein provided.
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ARTICLE 10. RESTRICTIONS ON OFFERS AND ACQUISITIONS OF THE CORPORATION'S
EQUITY SECURITIES.
A. RESTRICTIONS. The definitions and other provisions set forth in Article
9.A are also applicable to this Article 10. For a period of five years from the
completion of the conversion of the Savings Bank from mutual to stock form, no
Person shall directly or indirectly Offer to acquire or acquire the Beneficial
Ownership of (i) more than 10% of the issued and outstanding shares of any class
of an equity security of the Corporation, or (ii) any securities convertible
into, or exercisable for, any equity securities of the Corporation if, assuming
conversion or exercise by such Person of all securities of which such Person is
the Beneficial Owner which are convertible into, or exercisable for, such equity
securities (but of no securities convertible into, or exercisable for, such
equity securities of which such Person is not the Beneficial Owner), such Person
would be the Beneficial Owner of more than 10% of any class of an equity
security of the Corporation.
B. EXCLUSIONS. The foregoing restrictions shall not apply to (i) any Offer
with a view toward public resale made exclusively to the Corporation by
underwriters or a selling group acting on its behalf, (ii) any tax qualified
employee benefit plan or arrangement established by the Corporation or the
Savings Bank and any trustee of such a plan or arrangement, and (iii) any other
Offer or acquisition approved in advance by the affirmative vote of two-thirds
of the Corporation's Board of Directors.
C. REMEDIES. In the event that shares are acquired in violation of this
Article 10, all shares Beneficially Owned by any Person in excess of 10% shall
be considered "Excess Shares" and shall not be counted as shares entitled to
vote and shall not be voted by any Person or counted as Voting Shares in
connection with any matters submitted to stockholders for a vote, and the Board
of Directors may cause such Excess Shares to be transferred to an independent
trustee for sale on the open market or otherwise, with the expenses of such
trustee to be paid out of the proceeds of the sale.
D. EXPIRATION. Article 10 of these Amended and Restated Articles of
Incorporation shall expire and, along with all references thereto, no longer be
a part hereof on the fifth anniversary of the completion of the conversion of
the Savings Bank from mutual to stock form.
ARTICLE 11. AMENDMENT OF ARTICLES AND BYLAWS.
A. ARTICLES. The Corporation reserves the right to amend, alter, change or
repeal any provision contained in these Amended and Restated Articles of
Incorporation, in the manner now or hereafter prescribed by law, and all rights
conferred upon stockholders herein are granted subject to this reservation. No
amendment, addition, alteration, change or repeal of these Amended and Restated
Articles of Incorporation shall be made unless it is first approved by the Board
of Directors of the Corporation pursuant to a resolution adopted by the
affirmative vote of a majority of the directors then in office, and thereafter
is approved by the holders of a majority (except as provided below) of the
shares of the Corporation entitled to vote generally in an election of
directors, voting together as a single class, as well as such additional vote of
the Preferred Stock as may be required
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<PAGE> 12
by the provisions of any series thereof. Notwithstanding anything contained in
these Amended and Restated Articles of Incorporation to the contrary, the
affirmative vote of the holders of at least 75% of the shares of the Corporation
entitled to vote generally in an election of directors, voting together as a
single class, as well as such additional vote of the Preferred Stock as may be
required by the provisions of any series thereof, shall be required to amend,
adopt, alter, change or repeal any provision inconsistent with Articles 6, 7, 8,
9, 10 and 11 hereof which is not approved by the affirmative vote of 80% of the
Corporation's Board of Directors then in office.
B. BYLAWS. The Board of Directors, to the extent permitted by law, or
stockholders may adopt, alter, amend or repeal the Bylaws of the Corporation.
Such action by the Board of Directors shall require the affirmative vote of a
majority of the directors then in office at any regular or special meeting of
the Board of Directors. Such action by the stockholders shall require the
affirmative vote of the holders of a majority of the shares of the Corporation
entitled to vote generally in an election of directors, voting together as a
single class, as well as such additional vote of the Preferred Stock as may be
required by the provisions of any series thereof, provided that the affirmative
vote of the holders of at least 75% of the shares of the Corporation entitled to
vote generally in an election of directors, voting together as a single class,
as well as such additional vote of the Preferred Stock as may be required by the
provisions of any series thereof, shall be required to amend, adopt, alter,
change or repeal any provision inconsistent with Sections 2.3, 4.1, 4.2, 4.3 and
4.4 of the Bylaws and Article XI of the Bylaws which is not approved by the
affirmative vote of 80% of the Corporation's Board of Directors then in office.
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Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
PITTSBURGH FINANCIAL CORP.
ARTICLE I. OFFICES
1.1 Registered Office and Registered Agent. The registered office of
Pittsburgh Financial Corp. ("Corporation") shall be located in the Commonwealth
of Pennsylvania at such place as may be fixed from time to time by the Board of
Directors upon filing of such notices as may be required by law, and the
registered agent shall have a business office identical with such registered
office.
1.2 Other Offices. The Corporation may have other offices within or outside
the Commonwealth of Pennsylvania at such place or places as the Board of
Directors may from time to time determine.
ARTICLE II. STOCKHOLDERS' MEETINGS
2.1 Meeting Place. All meetings of the stockholders shall be held at the
principal place of business of the Corporation, or at such other place within or
without the Commonwealth of Pennsylvania as shall be determined from time to
time by the Board of Directors, and the place at which any such meeting shall be
held shall be stated in the notice of the meeting.
2.2 Annual Meeting Time. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year on the fourth Thursday
of January at the hour of 10:00 a.m., if not a legal holiday, and if a legal
holiday, then on the day following, at the same hour, or at such other date and
time as may be determined by the Board of Directors and stated in the notice of
such meeting.
2.3 Organization and Conduct. Each meeting of the stockholders shall be
presided over by the President, or if the President is not present, by any
Executive or Senior Vice President or such other person as the directors may
determine. The Secretary, or in his absence a temporary Secretary, shall act as
secretary of each meeting of the stockholders. In the absence of the Secretary
and any temporary Secretary, the chairman of the meeting may appoint any person
present to act as secretary of the meeting. The chairman of any meeting of the
stockholders, unless prescribed by law or regulation or unless the Board of
Directors has otherwise determined, shall determine the order of the business
and the procedure at the meeting, including such regulation of the manner of
voting and the conduct of discussions as shall be deemed appropriate by him in
his sole discretion.
<PAGE> 2
2.4 Notice.
(a) Written notice of every meeting of stockholders shall be given by, or
at the direction of, the Secretary of the Corporation or other authorized person
to each stockholder of record entitled to vote at the meeting at least (i) ten
days prior to the day named for a meeting that will consider a fundamental
change under Chapter 19 of the Pennsylvania Business Corporation Law ("BCL"), or
any successor thereto, or (ii) five days prior to the day named for a meeting in
any other case. A notice of meeting shall specify the place, day and hour of the
meeting, and, in the case of a special meeting, the general nature of the
business to be transacted thereat, as well as any other information required by
law.
(b) When a meeting of stockholders is adjourned, it shall not be necessary
to give any notice of the adjourned meeting or of the business to be transacted
at an adjourned meeting, other than by announcement at the meeting at which the
adjournment is taken, unless the Board of Directors fixes a new record date for
the adjourned meeting or notice of the business to be transacted is required to
be given by applicable law and such notice previously has not been given.
2.5 Record Date. The Board of Directors may fix in advance a record date
for the purpose of determining stockholders entitled to notice of or to vote at
any meeting of stockholders, or any adjournment thereof, such date to be not
more than 90 days and not less than (i) ten days in the case of a meeting that
will consider a fundamental change under Chapter 19 of the BCL, or any successor
thereto, or (ii) five days in the case of a meeting for any other purpose, prior
to the date of the meeting established by the Board of Directors.
2.6 Quorum. Except as otherwise required by law:
(a) The presence of stockholders entitled to vote at least a majority of
the votes that all stockholders are entitled to cast on a particular matter to
be acted upon at a meeting of stockholders shall constitute a quorum for the
purposes of consideration and action on the matter.
(b) The stockholders present at a duly organized meeting can continue to do
business until adjournment notwithstanding the general withdrawal of enough
stockholders to leave less than a quorum.
2.7 Voting of Shares.
(a) Except as otherwise provided in these Bylaws or to the extent that
voting rights of the shares of any class or classes are limited or denied by the
Articles of Incorporation, each stockholder, on each matter submitted to a vote
at a meeting of stockholders, shall have one vote for each share of stock
registered in his name on the books of the Corporation.
(b) Except as otherwise provided by law or paragraph (c) of this
Section 2.7, any corporate action to be taken by vote of the stockholders of the
Corporation shall be authorized by
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receiving the affirmative vote of a majority of the votes cast by all
stockholders entitled to vote thereon and, if any stockholders are entitled to
vote thereon as a class, upon receiving the affirmative vote of a majority of
the votes cast by stockholders entitled to vote as a class.
(c) Directors are to be elected by a plurality of votes cast by the
shares entitled to vote in the election at a meeting at which a quorum is
present. Stockholders shall not be permitted to cumulate their votes for the
election of directors. If, at any meeting of the stockholders, due to a vacancy
or vacancies or otherwise, directors of more than one class of the Board of
Directors are to be elected, each class of directors to be elected at the
meeting shall be elected in a separate election by a plurality vote.
2.8 Voting List. The officer or agent having charge of the transfer books
for shares of the Corporation shall make a complete list of the stockholders
entitled to vote at any meeting of stockholders, arranged in alphabetical order,
with the address of and number of shares held by each. The list shall be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any stockholder during the whole time of the meeting for
the purposes thereof.
2.9 Proxies. A stockholder may vote either in person or by proxy executed
in writing by the stockholder, or his duly authorized attorney-in-fact. No proxy
shall be valid after 11 months from the date of its execution, unless otherwise
provided in the proxy.
2.10 Voting of Shares in the Name of Two or More Persons. Where shares are
held jointly or as tenants in common by two or more persons as fiduciaries or
otherwise, if only one or more of such persons is present in person or by proxy,
all of the shares standing in the names of such persons shall be deemed to be
represented for the purpose of determining a quorum and the Corporation shall
accept as the vote of all such shares the votes cast by him or a majority of
them and if in any case such persons are equally divided upon the manner of
voting the shares held by them, the vote of such shares shall be divided equally
among such persons, without prejudice to the rights of such joint owners or the
beneficial owners thereof among themselves, except that, if there shall have
been filed with the Secretary of the Corporation a copy, certified by an
attorney-at-law to be correct, of the relevant portions of the agreements under
which such shares are held or the instrument by which the trust or estate was
created or the decree of court appointing them, or of a decree of court
directing the voting of such shares, the persons specified as having such voting
power in the latest such document so filed, and only such persons, shall be
entitled to vote such shares but only in accordance therewith.
2.11 Voting of Shares by Certain Holders. Shares standing in the name of
another corporation may be voted by an officer, agent or proxy as the bylaws of
such corporation may prescribe, or, in the absence of such provision, as the
Board of Directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by him, either in
person or by proxy, without a transfer of such shares into his name. Shares
standing in the name of a trustee may be voted by him, either in person or by
proxy. Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver
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may be voted by such receiver without the transfer thereof into his name if
authority to do so is contained in an appropriate order of the court or other
public authority by which such receiver was appointed. A stockholder whose
shares are pledged shall be entitled to vote such shares until the shares have
been transferred into the name of the pledgee or nominee, and thereafter the
pledgee or nominee shall be entitled to vote the shares so transferred
2.12 Inspectors. For each meeting of stockholders, the Board of Directors
may appoint one or three inspectors of election. If for any meeting the
inspector(s) appointed by the Board of Directors shall be unable to act or the
Board of Directors shall fail to appoint any inspector, one or more inspectors
may be appointed at the meeting by the chairman thereof. Such inspectors shall
conduct the voting in each election of directors and, as directed by the Board
of Directors or the chairman of the meeting, the voting on each matter voted on
at such meeting, and after the voting shall make a certificate of the vote
taken. Inspectors need not be stockholders.
ARTICLE III. CAPITAL STOCK
3.1 Certificates. Certificates of stock shall be issued in numerical order,
and each stockholder shall be entitled to a certificate signed by the President
or a Vice President, and the Secretary or the Treasurer, and may be sealed with
the seal of the Corporation or a facsimile thereof. The signatures of such
officers may be facsimiles if the certificate is manually signed on behalf of a
transfer agent, or registered by a registrar, other than the Corporation itself
or an employee of the Corporation. If an officer who has signed or whose
facsimile signature has been placed upon such certificate ceases to be an
officer before the certificate is issued, it may be issued by the Corporation
with the same effect as if the person were an officer on the date of issue. Each
certificate of stock shall state:
(a) that the Corporation is incorporated under the laws of the
Commonwealth of Pennsylvania;
(b) the name of the person to whom issued;
(c) the number and class of shares and the designation of the series,
if any, which such certificate represents; and
(d) the par value of each share represented by such certificate, or a
statement that such shares are without par value.
3.2 Transfers.
(a) Transfers of stock shall be made only upon the stock transfer
books of the Corporation, kept at the registered office of the Corporation or at
its principal place of business, or at the office of its transfer agent or
registrar, and before a new certificate is issued the old certificate
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<PAGE> 5
shall be surrendered for cancellation. The Board of Directors may, by
resolution, open a share register in any state of the United States, and may
employ an agent or agents to keep such register, and to record transfers of
shares therein.
(b) Shares of stock shall be transferred by delivery of the
certificates therefor, accompanied either by an assignment in writing on the
back of the certificate or an assignment separate from the certificate, or by a
written power of attorney to sell, assign and transfer the same, signed by the
holder of said certificate. No shares of stock shall be transferred on the books
of the Corporation until the outstanding certificates therefor have been
surrendered to the Corporation.
3.3 Registered Owner. Registered stockholders shall be treated by the
Corporation as the holders in fact of the stock standing in their respective
names and the Corporation shall not be bound to recognize any equitable or other
claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as expressly provided
below or by the laws of the Commonwealth of Pennsylvania. The Board of Directors
may adopt by resolution a procedure whereby a stockholder of the Corporation may
certify in writing to the Corporation that all or a portion of the shares
registered in the name of such stockholder are held for the account of a
specified person or persons. The resolution shall set forth:
(a) The classification of shareholder who may certify;
(b) The purpose or purposes for which the certification may be made;
(c) The form of certification and information to be contained therein;
(d) If the certification is with respect to a record date or closing
of the stock transfer books, the date within which the certification must be
received by the Corporation; and
(e) Such other provisions with respect to the procedure as are deemed
necessary or desirable.
Upon receipt by the Corporation of a certification complying with the above
requirements, the persons specified in the certification shall be deemed, for
the purpose or purposes set forth in the certification, to be the holders of
record of the number of shares specified in place of the stockholder making the
certification.
3.4 Mutilated, Lost or Destroyed Certificates. In case of any mutilation,
loss or destruction of any certificate of stock, another may be issued in its
place upon receipt of proof of such mutilation, loss or destruction. The Board
of Directors may impose conditions on such issuance and may require the giving
of a satisfactory bond or indemnity to the Corporation in such sum as they might
determine, or establish such other procedures as they deem necessary.
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<PAGE> 6
3.5 Fractional Shares or Scrip. The Corporation may (a) issue fractions of
a share which shall entitle the holder to exercise voting rights, to receive
dividends thereon, and to participate in any of the assets of the Corporation in
the event of liquidation; (b) arrange for the disposition of fractional
interests by those entitled thereto; (c) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such shares are
determined; or (d) issue scrip in registered or bearer form which shall entitle
the holder to receive a certificate for a full share upon the surrender of such
scrip aggregating a full share.
3.6 Shares of Another Corporation. Shares owned by the Corporation in
another corporation, domestic or foreign, may be voted by such officer, agent or
proxy as the Board of Directors may determine or, in the absence of such
determination, by the President of the Corporation.
ARTICLE IV. BOARD OF DIRECTORS
4.1 Number and Powers. The management of all the affairs, property and
interest of the Corporation shall be vested in a Board of Directors. The Board
of Directors shall be divided into three classes as nearly equal in number as
possible. The initial Board of Directors shall consist of 9 persons. The
classification and term of the directors shall be as set forth in the
Corporation's Articles of Incorporation, which provisions are incorporated
herein with the same effect as if they were set forth herein. Directors need not
be stockholders or residents of the Commonwealth of Pennsylvania. In addition to
the powers and authorities expressly conferred upon it by these Bylaws and the
Articles of Incorporation, the Board of Directors may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by statute
or by the Articles of Incorporation or by these Bylaws directed or required to
be exercised or done by the stockholders.
4.2 Change of Number. The number of directors may at any time be increased
or decreased by a vote of a majority of the Board of Directors, provided that no
decrease shall have the effect of shortening the term of any incumbent director
except as provided in Sections 4.3 and 4.4 hereunder. Notwithstanding anything
to the contrary contained within these Bylaws, the number of directors may not
be less than 5 nor more than 15.
4.3 Vacancies. All vacancies in the Board of Directors shall be filled in
the manner provided in the Corporation's Articles of Incorporation, which
provisions are incorporated herein with the same effect as if they were set
forth herein.
4.4 Removal of Directors. Directors may be removed in the manner provided
in the Corporation's Articles of Incorporation, which provisions are
incorporated herein with the same effect as if they were set forth herein.
4.5 Regular Meeting. Regular meetings of the Board of Directors or any
committee may be held without notice at the principal place of business of the
Corporation or at such other place or
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<PAGE> 7
places, either within or without the Commonwealth of Pennsylvania, as the Board
of Directors or such committee, as the case may be, may from time to time
designate. The annual meeting of the Board of Directors shall be held without
notice immediately after the adjournment of the annual meeting of stockholders.
4.6 Special Meetings.
(a) Special meetings of the Board of Directors may be called at any
time by the President or by a majority of the authorized number of directors, to
be held at the principal place of business of the Corporation or at such other
place or places as the Board of Directors or the person or persons calling such
meeting may from time to time designate. Notice of all special meetings of the
Board of Directors shall be given to each director by five days' service of the
same by telegram, by letter, or personally. Such notice need not specify the
business to be transacted at, nor the purpose of, the meeting.
(b) Special meetings of any committee may be called at any time by
such person or persons and with such notice as shall be specified for such
committee by the Board of Directors, or in the absence of such specification, in
the manner and with the notice required for special meetings of the Board of
Directors.
4.7 Quorum. A majority of the Board of Directors shall be necessary at all
meetings to constitute a quorum for the transaction of business and the acts of
a majority of the directors present and voting at a meeting at which a quorum is
present shall be the acts of the Board of Directors. Every director of the
Corporation shall be entitled to one vote.
4.8 Waiver of Notice. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened. A waiver of notice signed by the
director or directors, whether before or after the time stated for the meeting,
shall be equivalent to the giving of notice.
4.9 Registering Dissent. A director who is present at a meeting of the
Board of Directors or a committee thereof at which action on a corporate matter
is taken shall be presumed to have assented to such action unless his dissent is
entered in the minutes of the meeting, or unless he files his written dissent to
such action with the person acting as the secretary of the meeting before the
adjournment thereof, or unless he delivers his dissent in writing to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
4.10 Executive, Audit and Other Committees. Standing or special committees
may be appointed from its own number by the Board of Directors from time to
time, and the Board of Directors may from time to time invest such committees
with such powers as it may see fit, subject to such conditions as may be
prescribed by the Board. An Executive Committee may be appointed
- 7 -
<PAGE> 8
by resolution passed by a majority of the full Board of Directors. It shall have
and exercise all of the authority of the Board of Directors, except in reference
to amending the Amended and Restated Articles of Incorporation, adopting a plan
of merger or consolidation, recommending the sale, lease or exchange or other
dispositions of all or substantially all the property and assets of the
Corporation otherwise than in the usual and regular course of business,
recommending a voluntary dissolution or a revocation thereof, amending these
Bylaws or except as otherwise provided by law. An Audit Committee shall be
appointed by resolution passed by a majority of the full Board of Directors, and
at least a majority of the members of the Audit Committee shall be directors who
are not also officers of the Corporation. The Audit Committee shall recommend
independent auditors to the Board of Directors annually and shall review the
Corporation's budget, the scope and results of the audit performed by the
Corporation's independent auditors and the Corporation's system of internal
control and audit with management and such independent auditors, and such other
duties as may be assigned to it by the Board of Directors. All committees
appointed by the Board of Directors shall keep regular minutes of the
transactions of their meetings and shall cause them to be recorded in books kept
for that purpose in the office of the Corporation. The designation of any such
committee, and the delegation of authority thereto, shall not relieve the Board
of Directors, or any member thereof, of any responsibility imposed by law. A
majority of the Board of Directors shall have the power to change the membership
of any committee of the Board of Directors at any time, to fill vacancies
therein and to discharge any such committee or to remove any member thereof,
either with or without cause, at any time.
4.11 Remuneration. No stated fee shall be paid to directors, as such, for
their service, but by resolution of the Board of Directors, a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of such Board; provided, that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of standing or special
committees may be allowed like compensation for attending committee meetings.
4.12 Action by Directors Without a Meeting. Any action which may be taken
at a meeting of the directors, or of a committee thereof, may be taken without a
meeting if a consent in writing, setting forth the action so taken or to be
taken, shall be signed by all of the directors, or all of the members of the
committee, as the case may be. Such consent shall have the same effect as a
unanimous vote.
4.13 Action of Directors by Communications Equipment. Any action which may
be taken at a meeting of directors, or of a committee thereof, may be taken by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time.
4.14 Chairman of the Board of Directors. The Board of Directors may elect
from among its members a Chairman of the Board and a Vice-Chairman of the Board
of Directors. The Chairman of the Board of Directors (or, in his absence, the
Vice Chairman of the Board, if one has been elected) shall preside at all
meetings of the Board of Directors. The Chairman of the Board
- 8 -
<PAGE> 9
(and the Vice-Chairman of the Board, if one has been elected) shall perform such
other duties as may be assigned from time to time by the Board of Directors.
ARTICLE V. OFFICERS
5.1 Designations. The officers of the Corporation shall be the Chairman of
the Board, a President, a Secretary and a Treasurer, as well as such Vice
Presidents (including Executive and Senior Vice Presidents), Assistant
Secretaries and Assistant Treasurers as the Board may designate, who shall be
elected for one year by the directors at their first meeting after the annual
meeting of stockholders, and who shall hold office until their successors are
elected and qualify. Any two or more offices may be held by the same person,
except that the offices of President and Secretary may not be held by the same
person.
5.2 Powers and Duties. The officers of the Corporation shall have such
authority and perform such duties as the Board of Directors may from time to
time authorize or determine. In the absence of action by the Board of Directors,
the officers shall have such powers and duties as generally pertain to their
respective offices.
5.3 Delegation. In the case of absence or inability to act of any officer
of the Corporation and of any person herein authorized to act in his place, the
Board of Directors may from time to time delegate the powers or duties of such
officer to any other officer or any director or other person whom it may select.
5.4 Vacancies. Vacancies in any office arising from any cause may be filled
by the Board of Directors at any regular or special meeting of the Board.
5.5 Other Officers. Directors may appoint such other officers and agents as
it shall deem necessary or expedient, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
5.6 Term - Removal. The officers of the Corporation shall hold office for a
term of one year and until their successors are chosen and qualify or until such
person's earlier death, resignation or removal. Any officer or agent elected or
appointed by the Board of Directors may be removed at any time, with or without
cause, by the affirmative vote of a majority of the whole Board of Directors,
but such removal shall be without prejudice to the contract rights, if any, of
the person so removed.
5.7 Bonds. The Board of Directors may, by resolution, require any and all
of the officers to give bonds to the Corporation, with sufficient surety or
sureties, conditioned for the faithful performance of the duties of their
respective offices, and to comply with such other conditions as may from time to
time be required by the Board of Directors.
- 9 -
<PAGE> 10
ARTICLE VI. FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Corporation shall end on the 30th day of September
of each year. The Corporation shall be subject to an annual audit as of the end
of its fiscal year by independent public accountants appointed by and
responsible to the Board of Directors or the Audit Committee of the Board of
Directors. The appointment of such accountants shall be subject to annual
ratification by the stockholders.
ARTICLE VII. DIVIDENDS AND FINANCE
7.1 Dividends. Dividends may be declared by the Board of Directors and paid
by the Corporation, subject to the conditions and limitations imposed by the
laws of the Commonwealth of Pennsylvania. The Board of Directors may declare
dividends payable only to stockholders of record at the close of business on any
business day not more than 90 days prior to the date on which the dividend is
paid.
7.2 Depositories. The monies of the Corporation shall be deposited in the
name of the Corporation in such bank or banks or trust company or trust
companies as the Board of Directors shall designate, and shall be drawn out only
by check or other order for payment of money signed by such persons and in such
manner as may be determined by resolution of the Board of Directors.
ARTICLE VIII. NOTICES
Except as may otherwise be required by law, any notice to any stockholder
or director may be delivered personally or by mail. If mailed, the notice shall
be deemed to have been delivered when deposited in the United States mail,
addressed to the addressee at his last known address in the records of the
Corporation, with postage thereon prepaid.
ARTICLE IX. SEAL
The corporate seal of the Corporation shall be in such form and bear such
inscription as may be adopted by resolution of the Board of Directors, or by
usage of the officers on behalf of the Corporation.
ARTICLE X. BOOKS AND RECORDS
The Corporation shall keep correct and complete books and records of
account and shall keep minutes and proceedings of meetings of its stockholders
and Board of Directors; and it shall keep at its registered office or principal
place of business, or at the office of its transfer agent or registrar,
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<PAGE> 11
a record of its stockholders, giving the names and addresses of all stockholders
and the number and class of the shares held by each. Any books, records and
minutes may be in written form or any other form capable of being converted into
written form within a reasonable time.
ARTICLE XI. AMENDMENTS
These Bylaws may be altered, amended or repealed only as set forth in the
Corporation's Articles of Incorporation, which provisions are incorporated
herein with the same effect as if they were set forth herein.
- 11 -
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