LEXINGTON B & L FINANCIAL CORP, DEF 14A, 1998-12-22

LEXINGTON B & L FINANCIAL CORP
DEF 14A, 1998-12-22
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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<PAGE> 1

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant /x/
Filed by a party other than the registrant /_/

Check the appropriate box:
/_/ Preliminary proxy statement
/x/ Definitive proxy statement
/_/ Definitive additional materials
/_/ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

LEXINGTON B & L FINANCIAL CORP.
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(Name of Registrant as Specified in Its Charter)

LEXINGTON B & L FINANCIAL CORP.
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(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
/x/ No fee required.
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
- --------------------------------------------------------------------------------
/_/ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount previously paid:
N/A
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(2) Form, schedule or registration statement no.:
N/A
- --------------------------------------------------------------------------------
(3) Filing party:
N/A
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(4) Date filed:
N/A
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<PAGE> 2

December 22, 1998

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of
Lexington B & L Financial Corp. The meeting will be held at the office of B & L
Bank, 919 Franklin Avenue, Lexington, Missouri, on Tuesday, January 26, 1999, at
2:00 p.m., Central Time.

The Notice of Annual Meeting and Proxy Statement appearing on the
following pages describe the formal business to be transacted at the meeting.
During the meeting, we will also report on the operations of the Corporation.
Directors and officers of the Corporation, as well as a representative of Moore,
Horton & Carlson, P.C., the Corporation's independent auditors, will be present
to respond to appropriate questions of shareholders.

To ensure proper representation of your shares at the meeting, the Board
of Directors requests that you sign, date and return the enclosed proxy card in
the enclosed postage-prepaid envelope as soon as possible, even if you currently
plan to attend the meeting. This will not prevent you from voting in person, but
will assure that your vote is counted if you are unable to attend the meeting.

We look forward to seeing you at the meeting.

Sincerely,

/s/ Erwin Oetting, Jr.

Erwin Oetting, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER

<PAGE> 3

LEXINGTON B & L FINANCIAL CORP.
919 FRANKLIN AVENUE
P.O. BOX 190
LEXINGTON, MISSOURI 64067
(660) 259-2247
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 26, 1999

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NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Lexington B & L Financial Corp. ("Corporation") will be held at the office of B
& L Bank, 919 Franklin Avenue, Lexington, Missouri, on Tuesday, January 26,
1999, at 2:00 p.m., Central Time, for the following purposes:

1. To elect two directors to serve for a term of three years;

2. To ratify the appointment of Moore, Horton & Carlson, P.C., as
auditors for the Corporation for the fiscal year ending September
30, 1999; and

3. To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.

NOTE: The Board of Directors is not aware of any other business to come
before the meeting.

Any action may be taken on the foregoing proposals at the meeting on the
date specified above or on any date or dates to which, by original or later
adjournment, the meeting may be adjourned. Shareholders of record at the close
of business on December 11, 1998 are entitled to notice of and to vote at the
meeting and any adjournments or postponements thereof.

Please complete and sign the enclosed form of proxy, which is solicited by
the Board of Directors, and mail it promptly in the enclosed envelope. The proxy
will not be used if you attend the meeting and vote in person.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ E. Steva Vialle

E. STEVA VIALLE
SECRETARY

Lexington, Missouri
December 22, 1998

IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.

<PAGE> 4

PROXY STATEMENT
OF
LEXINGTON B & L FINANCIAL CORP.
919 FRANKLIN AVENUE
P.O. BOX 190
LEXINGTON, MISSOURI 64067
(660) 259-2247

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ANNUAL MEETING OF SHAREHOLDERS
JANUARY 26, 1999

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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Lexington B & L Financial Corp.
("Corporation") to be used at the Annual Meeting of Shareholders of the
Corporation. The Annual Meeting will be held at the office of B & L Bank, 919
Franklin Avenue, Lexington, Missouri, on Tuesday, January 26, 1999, at 2:00
p.m., Central Time. The Corporation is the holding company for B & L Bank and
Lafayette County Bank. This Proxy Statement and the enclosed proxy card are
being first mailed to shareholders on or about December 22, 1998.

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VOTING AND PROXY PROCEDURE

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SHAREHOLDERS ENTITLED TO VOTE. Shareholders of record as of the close of
business on December 11 1998 are entitled to one vote for each share of common
stock ("Common Stock") of the Corporation then held. As of December 11, 1998 the
Corporation had 1,008,685 shares of Common Stock issued and outstanding.

QUORUM. The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of Common Stock entitled to vote is necessary
to constitute a quorum at the Annual Meeting. Abstentions will be counted as
shares present and entitled to vote at the Annual Meeting for purposes of
determining the existence of a quorum. Broker non-votes will be considered
shares present and will be included in determining whether a quorum is present.

VOTING. The Board of Directors solicits proxies so that each stockholder
has the opportunity to vote on the proposals to be considered at the Annual
Meeting. When a proxy card is returned properly signed and dated, the shares
represented thereby will be voted in accordance with the instructions on the
proxy card. Where no instructions are indicated, proxies will be voted FOR the
nominees for directors set forth below and FOR the ratification of the
appointment of auditors. If a stockholder attends the Annual Meeting, he or she
may vote by ballot.

The two directors to be elected at the Annual Meeting will be elected by a
plurality of the votes cast by the stockholders present in person or by proxy
and entitled to vote. Stockholders are not permitted to cumulate their votes for
the election of directors. Votes may be cast for or withheld from each nominee.
Votes that are withheld will have no effect on the outcome of the election
because the nominees receiving the greatest number of votes will be elected.
With respect to the ratification of auditors, stockholders may vote for the
proposal, against the proposal or may abstain from voting. Approval of
ratification of the appointment of Moore, Horton & Carlson, P.C. will require
the affirmative vote of a majority of the shares present in person or by proxy
at the Annual Meeting. Thus, abstentions will have the same effect as a negative
vote, while broker non-votes will have no effect on the voting.

REVOCATION OF A PROXY. Stockholders who execute proxies retain the right
to revoke them at any time before they are voted. Proxies may be revoked by
written notice delivered in person or mailed to the Secretary of the

<PAGE> 5

Corporation or by filing a later proxy prior to a vote being taken on a
particular proposal at the Annual Meeting. Attendance at the Annual Meeting will
not automatically revoke a proxy, but a stockholder of record in attendance may
request a ballot and vote in person, thereby revoking a prior granted proxy.

PARTICIPANTS IN THE B&L BANK ESOP. If a shareholder is a participant in
the B & L Bank Employee Stock Ownership Plan (the "ESOP"), the proxy card
represents a voting instruction to the trustees of the ESOP as to the number of
shares in the participant's plan account. Each participant in the ESOP may
direct the trustees as to the manner in which shares of Common Stock allocated
to the participant's plan account are to be voted. Unallocated shares of Common
Stock held by the ESOP and allocated shares for which no voting instructions are
received will be voted by the trustees in the same proportion as shares for
which the trustees have received voting instructions.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the
Corporation's Common Stock are required to file certain reports regarding such
ownership pursuant to the Securities Exchange Act of 1934, as amended ("Exchange
Act"). Based upon such reports, the following table sets forth, as of December
11, 1998, certain information as to those persons who were beneficial owners of
more than 5% of the outstanding shares of Common Stock. Management knows of no
persons other than those set forth below who owned more than 5% of the
outstanding shares of Common Stock at December 11, 1998. The following table
also sets forth, as of December 11, 1998, information as to the shares of Common
Stock beneficially owned by each director, by the Chief Executive Officer of the
Corporation, and by all executive officers and directors of the Corporation as a
group.

Amount and Nature Percent of
of Beneficial Common Stock
Beneficial Owner Ownership(1) Outstanding
- ---------------- ------------ -----------

<S> <C> <C>
BENEFICIAL OWNERS OF MORE THAN 5%

B & L Bank 101,200 10.01%
Employee Stock
Ownership Plan Trust

Terry Maltese 77,500(2) 7.68
Sandler O'Neill Asset Management LLC
SOAM Holdings, LLC
Malta Partners, L.P.
Malta Partners II, L.P.
Malta Hedge Fund, L.P.
Malta Hedge Fund II, L.P.
712 Fifth Avenue, 22nd Floor
New York, New York 10019

Jeffrey L. Gendell 64,400(3) 6.38
Tontine Financial Partners, L.P.
Tontine Management, L.L.C.
200 Park Avenue, Suite 3900
New York, New York 10166

</TABLE>
2

Amount and Nature Percent of
of Beneficial Common Stock
Beneficial Owner Ownership(1) Outstanding
- ---------------- ------------ -----------
<S> <C> <C>

DIRECTORS AND NAMED EXECUTIVE OFFICER

Erwin Oetting, Jr., President 38,640 3.81%
and Chief Executive Officer
Steve Oliaro 14,495 1.44
Norman Vialle 11,295 1.12
Charles R. Wilcoxon 10,795 1.07
E. Steva Vialle 34,429 3.40
Glenn H. Twente 8,795 0.87

All Executive Officers and 176,346 17.18
Directors as a
Group (10 persons)
- --------------------
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has voting or investment power with respect to
such security. The table includes shares owned by spouses, other immediate
family members in trust, shares held in retirement accounts or funds for
the benefit of the named individuals, and other forms of ownership, over
which shares the persons named in the table may possess voting and/or
investment power. The amounts shown include the following amounts of
Common Stock which the following individuals have the right to acquire
within 60 days of December 11, 1998, through the exercise of stock options
granted pursuant to the Corporation's stock option plan: Mr. Oetting,
5,060 shares; Mr. Oliaro, 1,265 shares; Mr. N. Vialle, 1,265 shares; Mr.
Wilcoxon, 1,265 shares; Mr. E. Vialle, 3,542, shares; Mr. Twente, 1,265
shares; all executive officers and directors as a group 17,710 shares.
Shares held in accounts under the ESOP, as to which the holders have
voting power but not investment power, are also included as follows: Mr.
Oetting, 5,930 shares; Mr. Steva Vialle, 4,279 shares; all executive
officers and directors as a group, 16,209 shares.
(2) Information concerning the shares owned by Mr. Gendell and related
entities was obtained from a Schedule 13D dated November 17, 1998.
According to this filing, Mr. Gendell has shared voting and dispositive
power with respect to 64,400 shares, Tontine Financial Partners, L.P. has
shared voting and dispositive power with respect to 64,400 shares and
Tontine Management, L.L.C. has shared voting and dispositive power with
respect to 64,400 shares.
(3) Information concerning the shares owned by Mr. Maltese and related
entities was obtained from an amended Schedule 13D dated February 26,
1998. According to this filing, Terry Maltese has shared voting and
dispositive power with respect to 77,500 shares, Sandler O'Neill Asset
Management LLC has shared voting and dispositive power with respect to
77,500 shares, SOAM Holdings, LLC has shared voting and dispositive power
with respect to 77,500 shares, Malta Partners, L.P. has shared voting and
dispositive power with respect to 35,660 shares, Malta Partners II, L.P.
has shared voting and dispositive power with respect to 12,240 shares,
Malta Hedge Fund, L.P. has shared voting and dispositive power with
respect to 20,340 shares, and Malta Hedge Fund II, L.P. has shared voting
and dispositive power with respect to 9,260 shares .
</TABLE>

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PROPOSAL I - ELECTION OF DIRECTORS
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The Corporation's Board of Directors consists of six members. The Board of
Directors is divided into three classes with three-year staggered terms, with
one third of the directors elected each year. Two directors will be elected at
the Annual Meeting to serve for a three year period, or until their respective
successors have been elected and qualified. The nominees for election this year
are Erwin Oetting, Jr. and Steve Oliaro. The nominees are current members of the
Boards of Directors of the Corporation.

<PAGE> 7

It is intended that the proxies solicited by the Board of Directors will
be voted for the above named nominees. If any nominee is unable to serve, the
shares represented by all valid proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this time, the Board
knows of no reason why any nominee might be unavailable to serve.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
ELECTION OF MESSRS. OETTING AND OLIARO.

The following table sets forth certain information regarding the nominees
for election at the Annual Meeting, as well as information regarding those
directors continuing in office after the Annual Meeting.

<TABLE>
<CAPTION>
Year First
Principal Occupations Elected Term to
Name Age(1) During Last Five Years Director(2) Expire
---- --- ---------------------- -------- ------

BOARD NOMINEES

<S> <C> <C> <C> <C>
Erwin Oetting, Jr. 58 President and Chief Executive 1966 2002(4)
Officer of the Corporation and
President, Chairman of the Board
and Chief Executive Officer of
B&L Bank.

Steve Oliaro 53 Owner of Baker Memorials, Inc. 1989 2002(4)
and sole proprietor of Custom
Grafix Design, both in Lexington,
Missouri.

DIRECTORS CONTINUING IN OFFICE

Norman Vialle(3) 72 Retired owner and operator of 1964 2000
Maid-Rite Drive-In, Lexington,
Missouri.

Charles R. Wilcoxon 86 Retired businessman. 1962 2000

E. Steva Vialle(3) 47 Executive Vice President, Chief 1992 2001
Operating Officer and Secretary of
the Corporation and B&L Bank.

Glenn H. Twente 71 Retired chiropractor. 1981 2001

- -------------------
(1) At September 30, 1998.
(2) Includes service on the Board of Directors of B & L Bank.
(3) Norman Vialle is the uncle of E. Steva Vialle.
(4) Assuming re-election at the Annual Meeting.
</TABLE>

<PAGE> 8

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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Board of Directors of the Corporation conducts its business through
meetings and of the Board and its committees. During the fiscal year ended
September 30, 1998, the Board of Directors of the Corporation held ten meetings.
No director of the Corporation attended fewer than 75% of the total meetings of
the Board and committees on which such Board member served during this period.

The entire Board of Directors functions as an audit committee to receive
and review reports prepared by the Corporation's outside auditor and as a
compensation committee to review and establish annual employee salary increases
and bonuses. During the fiscal year ended September 30, 1998, the Board of
Directors met one time in its capacity as an audit committee and one time in its
capacity as a compensation committee.

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DIRECTORS' COMPENSATION
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All of the Directors of the Corporation currently serve on the Board of
Directors of B&L Bank. Directors of B&L Bank received a fee of $750 per month
during the year ended September 30, 1998. No additional compensation is paid for
service on the Board of Directors of the Corporation.

B&L Bank has adopted a retirement plan to help ensure the retention of
directors of experience and ability in key positions of responsibility by
providing such directors with a retirement benefit upon their retirement from
the Board of Directors. The plan provides that a director who retires from the
Board with specified years of service will be designated a director emeritus and
continue to receive the compensation payable to members of the Board for a
period of five years following retirement. The same benefit would be payable to
the director (or his designated beneficiary) in the event of his death or
disability while serving on the Board if the director was otherwise eligible to
receive the normal retirement benefit. In the event of a change in control of
B&L Bank (as defined in the plan), the plan provides that all directors would be
deemed retired and the then present value of the normal retirement benefit would
be payable in a lump sum to each director on the effective date of the change in
control.

During the year ended September 30, 1997, each non-employee director
received a grant of 2,530 shares of restricted stock at no cost to the director
under the Corporation's 1996 Management Recognition and Development Plan. Each
non-employee director also received options to acquire 6,325 shares of Common
Stock at an exercise price of $15.125 under the Corporation's 1996 Stock Option
Plan. Both the restricted stock and the stock options vest ratably over a
five-year period.

<PAGE> 9

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EXECUTIVE COMPENSATION
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SUMMARY COMPENSATION TABLE. The following information is furnished for the
Chief Executive Officer of the Corporation. No other executive officer of the
Corporation or its subsidiaries received salary and bonuses in excess of
$100,000 during the fiscal year ended September 30, 1998.

LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS
-------------------------- ----------------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION AWARD($) OPTIONS(#) COMPENSATION($)
- -------- ---- --------- -------- ------------ -------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Erwin Oetting, Jr., 1998 $76,916 $7,490 9,796(2) -- -- $33,411(4)
President and Chief 1997 74,000 7,187 9,880 $191,331(3) 25,300 38,414
Executive Officer 1996 71,899 7,055 10,073 -- -- --

- -----------
(1) Does not include certain additional benefits, the aggregate amounts of which
do not exceed 10% of total annual salary and bonus.
(2) Consists of directors' fees of $8,500 and a $1,296 salary received from B&L
Bank's service corporation.
(3) Represents the total value of the award of 12,650 shares of restricted stock
on June 11, 1997, which award will vest ratably over a five-year period. At
September 30, 1998, the value of the unvested restricted stock award was
$131,560. Dividends will be paid on the restricted stock.
(4) Represents employer contribution to ESOP.
</TABLE>

OPTION EXERCISE/VALUE TABLE

The following information with respect to options exercised during the
fiscal year ended September 30, 1998 and remaining unexercised at the end of the
fiscal year, is presented for Mr. Oetting.

VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY OPTIONS
SHARES UNDERLYING UNEXERCISED OPTIONS AT FISCAL YEAR END($)
ACQUIRED ON VALUE ------------------------------ ---------------------------
NAME EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- ------------ ----------- ----------- ------------- ----------- -------------

<S> <C> <C> <C> <C> <C>
Erwin Oetting, Jr. -- -- 5,060 20,240 $ -- $ -

</TABLE>

EMPLOYMENT AGREEMENTS. The Corporation and B&L Bank (collectively, the
"Employers") have entered into a three-year employment agreement with Mr.
Oetting. Under the agreement, the salary level for Mr. Oetting is $78,000, which
amount will be paid by B&L Bank and may be increased at the discretion of the
Board of Directors or an authorized committee of the Board. In determining the
salary level for Mr. Oetting, the Board will consider compensation levels for
similarly situated executives at comparable institutions, the financial
performance of B&L Bank, as well as his individual performance. On each
anniversary of the commencement date of the agreement, the term of the agreement
may be extended for an additional year. The agreement is terminable by the
Employers at any time or upon the occurrence of certain events specified by
federal regulations.

The employment agreement provides for severance payments and other
benefits in the event of involuntary termination of employment in connection
with any change in control of the Employers. Severance payments also will be
provided on a similar basis in connection with a voluntary termination of
employment where, subsequent to a change in control, Mr. Oetting is assigned
duties inconsistent with his positions, duties, responsibilities and status
immediately prior to such change in control. The term "change in control" is
defined in the agreement as having occurred when, among other things, (a) a
person other than the Corporation purchases shares of Common Stock pursuant to a
tender or exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the beneficial
owner, directly or indirectly, of securities of the Corporation representing 25%
or more

<PAGE> 10

of the combined voting power of the Corporation's then outstanding securities,
(c) the membership of the Board of Directors changes as the result of a
contested election, or (d) shareholders of the Corporation approve a merger,
consolidation, sale or disposition of all or substantially all of the
Corporation's assets, or a plan of partial or complete liquidation.

The severance payment from the Employers will equal 2.99 times the
executive's average annual compensation during the five-year period preceding
the change in control. Such amount will be paid in a lump sum within 10 business
days following the termination of employment. Assuming that a change in control
had occurred at September 30, 1998, Mr. Oetting would have been entitled to
severance payments of approximately $233,000. Section 280G of the Internal
Revenue Code of 1986, as amended ("Code") states that severance payments that
equal or exceed three times the base compensation of the individual are deemed
to be "excess parachute payments" if they are contingent upon a change in
control. Individuals receiving excess parachute payments are subject to a 20%
excise tax on the amount of such excess payments, and the Employers would not be
entitled to deduct the amount of such excess payments.

The agreement restricts the executive's right to compete against the
Employers for a period of one year from the date of termination of the agreement
if Mr. Oetting voluntarily terminates employment, except in the event of a
change in control.

The Employers have also entered into employment agreements with other
executive officers of the Corporation and B&L Bank on substantially similar
terms.

SALARY CONTINUATION AGREEMENTS. B&L Bank has entered into a salary
continuation agreement with Mr. Oetting to ensure his continued service with B&L
Bank through retirement and to provide him with additional financial security at
retirement. The agreement provides that if Mr. Oetting remains employed by B&L
Bank through the retirement age specified in the agreement, B&L Bank will
provide him with monthly benefits of $2,917 for a period of 180 months following
retirement. The agreement provides for retirement at age 60 for Mr. Oetting.
Under the agreement, Mr. Oetting will vest ratably in his salary continuation
benefit over the number of years remaining to the specified retirement age.
However, in the event of a change in control of the Corporation or B&L Bank (as
defined in the agreements), Mr. Oetting would be fully vested as of the
effective date of the change in control. In the event that Mr. Oetting
terminates his employment with the Corporation or B&L Bank prior to the
specified retirement age, the retirement benefit will be reduced to the amount
of the vested benefit on the date of termination. In the event of the Mr.
Oetting's death while employed by the Corporation or B&L Bank, his designated
beneficiary will receive the same benefit as Mr. Oetting had retired at the
specified retirement age.

DEFINED BENEFIT PLAN. B&L Bank is a participant in the Financial
Institution Retirement Fund ("FIRF"), a multi-employer, non-contributory defined
benefit retirement plan. The FIRF plan covers all employees who have completed
one year of service and have attained the age of 21 years and provides for
monthly retirement benefits determined based on the employee's base salary and
years of service after June 1, 1988. The normal retirement age is 65 and the
early retirement age is before age 65, but generally after age 55. Normal
retirement benefits are equal to 2.0% multiplied by the years of service to B&L
Bank and the employee's average salary for the five highest consecutive years
preceding retirement. Benefits under the plan are not subject to offset for
social security benefits. If an employee elects early retirement, but defers the
receipt of benefits until age 65, the formula for computation of early
retirement benefits is the same as if the employee had retired at the normal
retirement age. However, if the employee elects early retirement and receives
benefits prior to age 65, benefits are reduced by applying an early retirement
factor based on the number of years the early retirement date precedes age 65.
If a participant terminates employment prior to the normal retirement date or
early retirement date as a result of disability, the participant would receive
the vested percentage of benefits at the participant's normal retirement date.
Separate actuarial valuations are not made for individual members of the plan.
Pension costs and funding include normal costs. Pension expense for the fiscal
year ended September 30, 1998 was $17,500. As of September 30, 1998, Mr. Oetting
had 10.5 years of credited service under the plan.

The following table illustrates annual pension benefits payable at normal
retirement age, based on various levels of compensation and years of service.

Highest Five Year Years of Service
-------------------------------------------------------
Annual Compensation 5 10 15 25 35
- ------------------- -------------------------------------------------------

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COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
- --------------------------------------------------------------------------------

Section 16(a) of the Exchange Act requires the Corporation's executive
officers and directors, and persons who beneficially own more than 10% of any
registered class of the Corporation's equity securities, to file reports of
ownership and changes in ownership with the SEC. Executive officers, directors
and greater than 10% shareholders are required by regulation to furnish the
Corporation with copies of all Section 16(a) forms they file.

Based solely on a review of the forms it has received and written
representations provided to the Corporation by the above referenced persons, the
Corporation believes that during the fiscal year ended September 30, 1998 all
filing requirements applicable to its reporting officers, directors and greater
than ten percent beneficial owners were properly and timely complied with.

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TRANSACTIONS WITH MANAGEMENT
- --------------------------------------------------------------------------------

Federal regulations require that all loans or extensions of credit to
executive officers and directors must generally be made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons (unless the loan or
extension of credit is made under a benefit program generally available to all
other employees and does not give preference to any insider over any other
employee) and must not involve more than the normal risk of repayment or present
other unfavorable features. The Corporation's policy is not to make any new
loans or extensions of credit to executive officers and directors at different
rates or terms than those offered to the general public. In addition, loans made
to a director or executive officer in an amount that, when aggregated with the
amount of all other loans to such person and his related interests, are in
excess of the greater of $25,000 or 5% of capital and surplus (up to a maximum
of $500,000) must be approved in advance by a majority of the disinterested
members of the Board of Directors.

<PAGE> 12

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INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------

Moore, Horton & Carlson, P.C., served as the Corporation's independent
public accountants for the 1998 fiscal year. The Board of Directors has
appointed Moore, Horton & Carlson, P.C., to be its auditors for the 1999 fiscal
year, subject to the ratification by stockholders.

A representative of Moore, Horton & Carlson, P.C. is expected to be
present at the Annual Meeting to respond to appropriate questions from
stockholders and will have the opportunity to make a statement should he or she
desire to do so.

If the ratification of the appointment of the auditors is not approved by
a majority of the votes cast by stockholders at the Annual Meeting, other
independent public accountants will be considered by the Board of Directors. THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF AUDITORS.

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OTHER MATTERS
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The Board of Directors of the Corporation is not aware of any business to
come before the Annual Meeting other than those matters described in this Proxy
Statement. However, if any other matters should properly come before the Annual
Meeting, it is intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the judgment of the person or persons voting
the proxies.

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MISCELLANEOUS
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The cost of solicitation of proxies will be borne by the Corporation. The
Corporation will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of the Common Stock. In addition to solicitations by
mail, directors, officers and regular employees of the Corporation may solicit
proxies personally or by telephone without additional compensation. The
Corporation also has retained Regan & Associates, New York, New York, to assist
in soliciting proxies at a cost of $2,500 plus expenses up to $1,250.

The Corporation's Annual Report to Shareholders, including financial
statements, has been mailed to all shareholders of record as of the close of
business on December 11, 1998. Any shareholder who has not received a copy of
such Annual Report may obtain a copy by writing to the Secretary of the
Corporation. The Annual Report is not to be treated as part of the proxy
solicitation material or as having been incorporated herein by reference.

A COPY OF THE CORPORATION'S FORM 10-KSB FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL
BE FURNISHED WITHOUT CHARGE TO SHAREHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO E. STEVA VIALLE, CORPORATE SECRETARY, LEXINGTON B & L FINANCIAL
CORP., 919 FRANKLIN AVENUE, LEXINGTON, MISSOURI 64067. The Corporation's Form
10-KSB is also available through the SEC's World Wide Web site on the Internet
(http://www.sec.gov).

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SHAREHOLDER PROPOSALS
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Proposals of shareholders intended to be presented at the Corporation's
annual meeting to be held in 2000 must be received by the Corporation no later
than August 24, 1999, to be considered for inclusion in the proxy materials and

<PAGE> 13

form of proxy relating to such meeting. Any such proposals shall be subject to
the requirements of the proxy rules adopted under the Exchange Act.

The Corporation's Bylaws set forth certain procedures which stockholders
must follow in order to nominate a director or present any business at an annual
stockholders meeting. Generally a stockholder must deliver written notice of his
or her intention to the Secretary of the Corporation not less than thirty days
nor more than sixty days prior to the date of a meeting of shareholders;
provided, however, that if less than forty days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, such
written notice must be delivered to the Secretary of the Corporation not later
than the close of the tenth day following the day on which notice of the meeting
was mailed to shareholders or such public disclosure was made. Based on the date
of the 1999 Annual Meeting, the Corporation anticipates that, in order to be
timely, shareholder nominations or proposals intended to be made at the 2000
Annual Meeting must be made by December 27, 1999. The Bylaws specify the
information that must accompany any such stockholder notice. Copies of the
Bylaws may be obtained from the Secretary of the Corporation.

BY ORDER OF THE BOARD OF DIRECTORS

/s/ E. Steva Vialle

E. STEVA VIALLE
SECRETARY

Lexington, Missouri
December 22, 1998

<PAGE> 14

REVOCABLE PROXY
LEXINGTON B & L FINANCIAL CORP.

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ANNUAL MEETING OF SHAREHOLDERS
JANUARY 26, 1999
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The undersigned hereby appoints the entire Board of Directors as the
official Proxy Committee with full powers of substitution, as attorneys and
proxies for the undersigned, to vote all shares of common stock of Lexington B &
L Financial Corp. which the undersigned is entitled to vote at the Annual
Meeting of Shareholders, to be held at the main office of B & L Bank, 919
Franklin Avenue, Lexington, Missouri, on Tuesday, January 26, 1999, at 2:00
p.m., Central Time, and at any and all adjournments thereof, as follows:

VOTE
FOR WITHHELD
--- --------
1. The election as directors of
all nominees listed below
(except as marked to the
contrary below). [ ] [ ]

Erwin Oetting, Jr.
Steve Oliaro

INSTRUCTION: TO WITHHOLD YOUR VOTE
FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE LINE BELOW.

FOR AGAINST ABSTAIN
2. The ratification of the appointment [ ] [ ] [ ]
of Moore, Horton & Carlson, P.C. as
independent auditors.

3. Such other matters as may properly
come before the Annual Meeting
or any adjournments thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE PROPOSALS.

This proxy also provides voting instructions to the Trustees of the B&L
Bank Employee Stock Ownership Plan for participants with shares allocated to
their accounts.

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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE ANNUAL MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
- --------------------------------------------------------------------------------

<PAGE> 15

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

Should the undersigned be present and elect to vote at the Annual Meeting
of Shareholders or at any adjournment thereof and after notification to the
Secretary of the Corporation at the Meeting of the shareholder's decision to
terminate this proxy, then the power of said attorneys and proxies shall be
deemed terminated and of no further force and effect.

The undersigned acknowledges receipt from the Corporation prior to the
execution of this proxy of the Notice of Annual Meeting of Shareholders, a proxy
statement for the Annual Meeting of Shareholders, and the 1998 Annual Report to
Shareholders.

Dated: _____________, 199__

_____________________________ ____________________________________
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER

_____________________________ ____________________________________
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER

Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.

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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE- PREPAID ENVELOPE.
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