<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Potters Financial Corporation
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
POTTERS FINANCIAL CORPORATION
519 BROADWAY
EAST LIVERPOOL, OHIO 43920
(330) 385-0770
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 1999 Annual Meeting of the Shareholders
of Potters Financial Corporation ("PFC") will be held at the East Liverpool High
School Alumni Association Clock Tower and Museum, 216 East Fourth Street, East
Liverpool, Ohio, on April 22, 1999, at 10:00 a.m. (the "Annual Meeting"), for
the following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
1. To re-elect four directors of PFC for terms expiring in 2001;
2. To ratify the selection of Crowe, Chizek and Company LLP as
the auditors of PFC for the current fiscal year; and
3. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only shareholders of PFC of record at the close of business on March 5,
1999, will be entitled to receive notice of and to vote at the Annual Meeting
and at any adjournments thereof. Whether or not you expect to attend the Annual
Meeting, we urge you to consider the accompanying Proxy Statement carefully and
to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM MAY BE ASSURED
AT THE ANNUAL MEETING. The giving of a Proxy does not affect your right to vote
in person in the event you attend the Annual Meeting.
By Order of the Board of Directors
East Liverpool, Ohio Anne S. Myers, Secretary
March 19, 1999
<PAGE> 3
POTTERS FINANCIAL CORPORATION
519 BROADWAY
EAST LIVERPOOL, OHIO 43920
(330) 385-0770
PROXY STATEMENT
PROXIES
The enclosed proxy (the "Proxy") is being solicited by the Board of
Directors of Potters Financial Corporation, an Ohio corporation ("PFC"), for use
at the 1999 Annual Meeting of Shareholders of PFC to be held at the East
Liverpool High School Alumni Association Clock Tower and Museum, 216 East Fourth
Street, East Liverpool, Ohio, on April 22, 1999, at 10:00 a.m. (the "Annual
Meeting"). Without affecting any vote previously taken, the Proxy may be revoked
by a shareholder through the execution of a later dated proxy which is received
by PFC before the Proxy is exercised or by giving notice of revocation to PFC in
writing or in open meeting before the Proxy is exercised. Any such later dated
Proxy or written notice of revocation shall be delivered to Potters Financial
Corporation, 519 Broadway, East Liverpool, Ohio 43920, Attention: Anne S. Myers,
Secretary. Attendance at the Annual Meeting, will not, of itself, revoke a
Proxy.
Each properly executed Proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the election of William L. Miller, Edward L. Baumgardner, W. G.
Billingsley and Suzanne B. Fitzgerald as directors of PFC for terms
expiring in 2001; and
FOR the ratification of the selection of Crowe, Chizek and Company LLP
("Crowe Chizek") as the auditors of PFC for the current fiscal year.
The cost of soliciting Proxies will be assumed by PFC. Proxies may be
solicited by the directors, officers and other employees of PFC and Potters
Bank, the wholly owned subsidiary of PFC, in person or by telephone, telecopy,
telegraph or mail only for use at the Annual Meeting. Proxies solicited in
connection with the Annual Meeting will not be used for any other meeting.
Only shareholders of record as of the close of business on March 5,
1999 (the "Voting Record Date"), are entitled to vote at the Annual Meeting and
will be entitled to cast one vote for each common share owned. PFC's records
disclose that, as of the Voting Record Date, there were 892,324 common shares of
PFC outstanding and entitled to be cast at the Annual Meeting. None of the
numbers of shares included in this Proxy Statement have been adjusted to reflect
the 10% stock dividend declared by the Board of Directors of PFC with a record
date of March 10, 1999.
This Proxy Statement is first being mailed to shareholders of PFC on or
about March 19, 1999.
<PAGE> 4
VOTE REQUIRED
ELECTION OF DIRECTORS
Under Ohio law and PFC's Code of Regulations (the "Regulations"), the
four nominees receiving the greatest number of votes will be elected as
directors. Each shareholder will be entitled to cast one vote for each share
owned. Shares as to which the authority to vote is withheld and shares held by a
nominee for a beneficial owner that are represented in person or by proxy at the
Annual Meeting but not voted with respect to the election of directors
("Non-votes") are not counted toward the election of directors or toward the
election of the individual nominees specified in the enclosed Proxy. If the
enclosed Proxy is signed and dated by the shareholder but no vote is specified
thereon, the shares held by such shareholder will be voted FOR the reelection of
the four nominees.
RATIFICATION OF SELECTION OF AUDITORS
The affirmative vote of the holders of a majority of the shares of PFC
represented in person or by proxy at the Annual Meeting is necessary to ratify
the selection of Crowe Chizek as the auditors of PFC for the current fiscal
year. The effect of an abstention or Non-vote is the same as a vote against the
approval of such ratification. If, however, a shareholder has signed and dated a
proxy in the form of the enclosed Proxy but no vote is specified thereon, the
shares held by such shareholder will be voted FOR the ratification of the
selection of Crowe Chizek as auditors.
VOTING SECURITIES AND OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
only persons known to PFC to own beneficially more than five percent of the
outstanding common shares of PFC as of March 5, 1999:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address Beneficial Ownership Shares Outstanding
- ---------------- -------------------- ------------------
<S> <C> <C>
Jeffrey L. Gendell 97,200(1) 10.89%
200 Park Avenue, Suite 3900
New York, NY 10166
Wm. Gaylord Billingsley 51,690(2) 5.79%
P.O. Box 2108
1110 Dairy Lane
East Liverpool, OH 43920
Towle & Co.
12855 Flushing Meadow Drive
St. Louis, MO 63131 46,600(3) 5.22%
</TABLE>
- ----------
(1) As reported in a Schedule 13D filed by Mr. Gendell, consists of 50,200
shares over which Mr. Gendell has sole voting and dispositive power and
47,000 shares with respect to which Mr. Gendell has shared voting and
dispositive power.
(2) Consists of 48,690 shares with respect to which Mr. Billingsley has sole
voting and dispositive power; 1,000 shares awarded, but not yet earned,
under The Potters Savings and Loan Company Recognition and Retention Plan
and Trust (the "RRP") with respect to which he has voting but not
dispositive power; and 2,000 shares owned by Mr. Billingsley's wife.
(Footnotes continued on next page)
2
<PAGE> 5
(3) Consists of 18,800 shares with respect to which Towle & Co. has sole
voting and dispositive power and 27,800 shares with respect to which Towle
& Co. has shared dispositive power.
The following table sets forth certain information with respect to the
number of common shares of PFC beneficially owned by each director of PFC and by
all directors and executive officers of PFC as a group as of March 5, 1999:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address(1) Beneficial Ownership(2) Shares Outstanding
- ------------------- ----------------------- ------------------
<S> <C> <C>
Edward L. Baumgardner 21,923(3) 2.43%
Wm. Gaylord Billingsley 51,690(4) 5.79%
Arthur T. Doak 19,782(5) 2.20%
William L. Miller 31,690(6) 3.52%
Timothy M. O'Hara 15,690(6) 1.74%
Peter D. Visnic 27,738 3.11%
Suzanne B. Fitzgerald 1,892(7) 0.21%
All directors and executive officers
as a group (10 persons) 192,000(8) 20.46%
</TABLE>
- ----------
(1) Each of the persons listed in this table may be contacted at the
address of PFC, 519 Broadway, East Liverpool, Ohio 43920.
(2) Each person has sole voting power and sole dispositive power unless
otherwise indicated. Each director's number of shares, except Mr.
Baumgardner's, includes 1,000 shares awarded but not yet earned under
the RRP, with respect to which the director has voting power but not
dispositive power. Mr. Baumgardner's unearned RRP shares total 3,000.
(3) Includes 10,500 shares that may be acquired pursuant to options granted
under The Potters Savings and Loan Company Stock Option Plan (the
"Potters Plan"); 6,250 shares with respect to which Mr. Baumgardner has
shared voting power as co-trustee of The Potters Savings and Loan
Company 401(k) Retirement Savings Plan (the "401(k) Plan"), including
1,543 shares with respect to which he also has sole investment power as
a participant; 673 shares allocated under The Potters Savings and Loan
Company's Employee Stock Ownership Plan (the "ESOP"), with respect to
which Mr. Baumgardner has sole voting but not dispositive power; and
1,000 shares owned by Mr. Baumgardner's wife.
(4) Includes 2,000 shares owned by Mr. Billingsley's wife.
(5) Includes 8,992 shares that may be acquired pursuant to options granted
under the Potters Plan; 92 shares not yet awarded under the RRP, with
respect to which Mr. Doak, as co-trustee of the RRP, has shared voting
power; and 8,000 shares with respect to which Mr. Doak has shared
voting and dispositive power with his wife.
(6) Includes 8,992 shares that may be acquired pursuant to options granted
under the Potters Plan.
(7) Includes 92 shares not yet awarded under the RRP, with respect to which
Ms. Fitzgerald, as co-trustee of the RRP, has shared voting power.
(8) Includes 45,988 shares that may be acquired pursuant to options granted
under the Potters Plan; 2,406 shares allocated to the ESOP accounts of
officers, with respect to which such officers have sole voting power;
and the 6,250 shares held in the 401(k) Plan, with respect to which two
officers share voting power as co-trustees, including 2,414 shares with
respect to which four officers have sole dispositive power as
participants.
3
<PAGE> 6
PROPOSAL ONE
ELECTION OF DIRECTORS
The Regulations provide for a Board of Directors consisting of seven
persons. Each of the directors of PFC is also a director of Potters Bank.
In accordance with Section 2.03 of the Regulations, nominees for
election as directors may be proposed only by directors or by any shareholder
entitled to vote for the election of directors if such shareholder has submitted
a written notice of a proposed nomination to the Secretary of PFC by the close
of business on the fourteenth calendar day preceding the annual meeting of
shareholders. Each such written notice of a proposed director nominee must state
the name, age, business or residence address of the nominee, the principal
occupation or employment of the nominee, the number of common shares of PFC
owned either beneficially and/or of record by each such nominee and the length
of time such shares have been so owned.
The Board of Directors proposes the re-election of the following
persons to serve until the Annual Meeting of Shareholders in 2001 and until
their successors are duly elected or until their earlier resignation, removal
from office or death:
<TABLE>
<CAPTION>
Director Director of
of PFC Potters Bank
Name Age Position(s)Held Since Since
- ---- --- --------------- ----- -----
<S> <C> <C> <C> <C>
William L. Miller 58 Chairman of the 1995(1) 1982
Board & Director
Edward L. Baumgardner 55 Chief Executive 1995(1) 1995
Officer, President
& Director
Wm. Gaylord Billingsley 68 Director 1995(1) 1972
Suzanne B. Fitzgerald 60 Director 1997 1997
</TABLE>
- ----------
(1) Messrs. Miller, Baumgardner and Billingsley became directors of PFC in
connection with the 1996 reorganization of Potters Bank into a wholly
owned subsidiary of PFC and the extinguishment and cancellation of
Potters Bank common shares in exchange for PFC common shares (the
"Reorganization").
The following directors will continue to serve as directors after the
Annual Meeting for the terms indicated:
<TABLE>
<CAPTION>
Director Director of
of PFC Potters Bank Term
Name Age Position Held Since(1) Since Expires
- ---- --- ------------- -------- ----- -------
<S> <C> <C> <C> <C> <C>
Arthur T. Doak 50 Director 1995 1990 2000
Timothy M. O'Hara 49 Director 1995 1988 2000
Peter D. Visnic 52 Director 1995 1992 2000
</TABLE>
- ----------
(1) Messrs. Doak, O'Hara and Visnic became directors of PFC in connection
with the Reorganization.
4
<PAGE> 7
MR. MILLER has served as the Chairman of the Board of Potters Bank
since September 1991. Since 1983, Mr. Miller has been the President and Chairman
of the Board of MVP Enterprises, Inc., a nursing home provider in East
Liverpool. In addition, Mr. Miller has been a partner in Miller & Stacey, an
independent public accounting firm, since 1977.
MR. BAUMGARDNER has been the Chief Executive Officer, the President and
a Director of Potters Bank since February 1995 and of PFC since the
Reorganization. From August 1984 to October 1992, Mr. Baumgardner was the
President of Citizens Loan & Building Company of Lima, Ohio ("Citizens"). After
Citizens merged into American Community Bank, N.A. ("AmeriCom"), Mr. Baumgardner
served as the President of AmeriCom, from November 1992 to January 1995.
MR. BILLINGSLEY is retired from Billingsley, Inc., an Ohio corporation
which operated a supermarket in East Liverpool from 1955 to 1991.
MS. FITZGERALD has served as Dean of the East Liverpool Campus of Kent
State University since 1987. Prior to 1987, Ms. Fitzgerald, a registered nurse,
served three years as Director of the Nursing Program at that Campus.
MR. DOAK has been President of The Milligan Hardware & Supply Company
in East Liverpool since 1985.
MR. O'HARA has been the Vice President of Operations of W.C. Bunting
Co., Inc., a supplier of decorative pottery in East Liverpool, since 1975.
MR. VISNIC has been the Vice President, the Licensed Administrator and
a director of MVP Enterprises, Inc. since 1983. From 1977 through 1992, Mr.
Visnic was a partner in Crable, Miller & Visnic, the predecessor of Miller &
Stacey.
MEETINGS OF DIRECTORS
The Board of Directors of PFC met 13 times for regularly scheduled and
special meetings during the fiscal year ended December 31, 1998, and took action
in writing without a meeting once. No director attended fewer than 75% of the
aggregate of such meetings and all meetings of the committees of which such
director was a member.
Each director of PFC is also a director of Potters Bank. The Board of
Directors of Potters Bank met 14 times for regularly scheduled and special
meetings during the fiscal year ended December 31, 1998, and took action in
writing without a meeting once. No director attended fewer than 75% of the
aggregate of such meetings and all meetings of the committees of which such
director was a member.
COMMITTEES OF DIRECTORS
The Board of Directors of PFC has an Audit Committee, an ESOP Committee
and a Stock Option Committee. PFC's Board of Directors has no nominating
committee or compensation committee.
The Audit Committee consists of Messrs. Visnic, Doak and O'Hara and is
responsible for reviewing PFC's financial statements. The Audit Committee of PFC
held two meetings during 1998.
The ESOP Committee administers the ESOP and presently is comprised of
Messrs. Doak and Billingsley and Ms. Fitzgerald. There was one meeting of the
ESOP Committee held during the fiscal year ended December 31, 1998.
5
<PAGE> 8
The Stock Option Committee is responsible for administering stock
option plans, including interpreting the plans and awarding options pursuant to
their terms. Its members are Messrs. Miller, Doak and O'Hara. The Stock Option
Committee met one time during 1998.
The Compensation and Benefits Committee of Potters Bank is responsible
for administering salaries and benefits for Potters Bank employees. Its members
are Messrs. Billingsley, Visnic and O'Hara. There was one meeting of the
Compensation and Benefits Committee during 1998.
EXECUTIVE OFFICERS
In addition to Mr. Baumgardner, the following persons are executive
officers of PFC and Potters Bank and hold the designated positions:
<TABLE>
<CAPTION>
Name Age Position(s) Held
- ---- --- ----------------
<S> <C> <C>
Anne S. Myers 46 Vice President, Secretary and Chief
Operating/Financial Officer of PFC and
Senior Vice President, Secretary and Chief
Operating/Financial Officer of Potters Bank
Albert E. Sampson 54 Vice President of PFC and Senior Vice President
and Chief Lending Officer of Potters Bank
Stephen A. Beadnell 36 Vice President, Treasurer, Controller and Internal
Auditor of Potters Bank
</TABLE>
Ms. Myers has served as Vice President and Chief Operating Officer of
Potters Bank since July 1992 and as Secretary of PFC and Potters Bank since
October 1996. Ms. Myers became Vice President and Chief Operating Officer of PFC
in connection with the Reorganization. In March 1997, Ms. Myers was named Chief
Financial Officer of PFC and Potters Bank. In April 1998, Ms. Myers was named
Senior Vice President of Potters Bank.
Mr. Sampson was named Vice President and Chief Lending Officer of
Potters Bank and Vice President of PFC in July 1996. In April 1998, Mr. Sampson
was named Senior Vice President of Potters Bank. From 1992 through July 1996,
Mr. Sampson served as Vice President of Lending of Home Federal Bank in
Hamilton, Ohio.
Mr. Beadnell has served as Internal Auditor of Potters Bank since April
1992. Mr. Beadnell became Controller in September 1996. In May 1998, Mr.
Beadnell was named Vice President and Treasurer of Potters Bank.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR COMPENSATION
PFC does not pay fees to directors. Each non-employee director of
Potters Bank receives a fee of $4,000 per year for service as a director of
Potters Bank and an additional $325 for each meeting of the full Board of
Directors and $175 for each committee meeting attended by the director. The
Chairman of the Board receives an additional annual fee of $4,000 and an
additional $650 for each meeting of the full Board of Directors attended but
receives no fees for his attendance at committee meetings.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table presents certain information regarding compensation
received by Edward L. Baumgardner, the President and Chief Executive Officer of
PFC and Potters Bank, for the fiscal year ended December 31, 1998. Mr.
Baumgardner received the compensation included in the following table from
Potters Bank and received no compensation from PFC. No other executive officer
of Potters Bank or PFC earned salary and bonus in excess of $100,000 during the
year ended December 31, 1998.
<TABLE>
Summary Compensation Table
--------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------
Annual Compensation(1) Awards All Other
Compensation
- -----------------------------------------------------------------------------------------
Restricted
Stock
Name and Principal Year Salary($) Bonus($) Awards($)
Position
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Edward L. Baumgardner 1998 $118,000 $ 8,950 $45,000(2) $ 3,540(3)
President, Chief 1997 $113,000 $17,050 -- $16,870(4)
Executive Officer 1996 $110,000 $ 50 -- $ 4,570(4)
- -----------------------------------------------------------------------------------------
</TABLE>
- ----------
(1) Amounts reported do not include amounts attributable to perquisites
received. The cost of such benefits was less than 10% of Mr.
Baumgardner's salary and bonus.
(2) Mr. Baumgardner was awarded 3,000 common shares of PFC under the RRP on
August 1, 1998. One-fifth of such shares are earned and distributed
from the RRP trust on each of the first five anniversaries of the date
the shares are awarded. The figure represents the dollar value of such
awarded shares based on the $15.00 closing sales price per share
reported by The Nasdaq Stock Market for the shares of PFC on August 1,
1998. The aggregate fair market value of the 3,000 shares at December
31, 1998, was $60,000, based upon the $20.00 closing sales price
reported by The Nasdaq Stock Market. Dividends are paid on all awarded
shares at the same rate as they are paid to all shareholders, and the
dividends are earned and distributed from the RRP trust as the awarded
shares are earned and distributed.
(3) Consists of the matching portion only of Potters Bank's contribution to
Mr. Baumgardner's 401(k) Plan account. The additional discretionary
portion of Potters Bank's contribution to Mr. Baumgardner's 401(k) Plan
account and the allocation to Mr. Baumgardner's ESOP account are not
yet available.
(4) Consists of Potters Bank's contribution to Mr. Baumgardner's 401(k)
Plan account in the amounts of $9,972 in 1997 and $2,904 in 1996 and
the $6,898 and $1,666 aggregate values in 1997 and 1996 at the dates of
allocation to Mr. Baumgardner's account pursuant to the ESOP.
STOCK OPTION PLANS
Shareholders approved two stock option plans, the first at its 1994
Annual Meeting of Shareholders and the second at its 1998 Annual Meeting of
Shareholders. Under the plan approved in 1994, 105,800 shares (as adjusted to
give effect to a stock split in the form of a stock dividend effective in
December 1997) have been reserved for issuance upon the exercise of options to
be granted to directors, officers and other key employees. Options to purchase
105,716 shares have been granted under that plan, and options to purchase 47,188
of such shares are currently unexercised. In connection with the Reorganization,
each outstanding option was assumed by PFC, and all holders of options became
entitled to purchase one common share of PFC for each common share of Potters
Bank which could have been purchased upon the exercise of an option prior to the
Reorganization. Pursuant to the
7
<PAGE> 10
plan approved in 1998, 48,820 shares have been reserved for issuance. No options
have yet been granted under that plan.
Both plans are administered by the Stock Option Committee of the Board
of Directors of PFC. Under both plans, the Stock Option Committee may grant
options to officers and key employees at such times as it deems most beneficial
to PFC and Potters Bank based upon the officer's or key employee's
responsibility, tenure and future potential to PFC and Potters Bank. While the
plan adopted in 1998 also provides for discretionary awards to directors, the
Potters Plan provides for automatic grants to directors which were effective at
the time of the conversion of Potters Bank from the mutual form of ownership to
the stock form of ownership (the "Conversion") or will become effective upon a
new director becoming a member of the Board of Directors.
No options were granted to Mr. Baumgardner during 1998. The following
table sets forth information regarding the number and value of unexercised
options held by Mr. Baumgardner at December 31, 1998. No stock appreciation
rights have been granted under the Stock Option Plan.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and at 12/31/98 Option/SAR Values
- ------------------------------------------------------------------------------------------------------------------
Number of Value of
Securities Underlying In-the-Money
Options/SARs at Options/SARs at
12/31/98(#) 12/31/98($)(2)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized ($)(1) Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Edward L. Baumgardner 1,500 $10,437.50 10,500/-0- $122,010/-0-
</TABLE>
- ----------
(1) The figure represents the value of shares received upon the exercise of
options and is determined by multiplying the number of shares exercised by the
difference between the $8.38 exercise price and the fair market value on the
date of exercise.
(2) An option is "in-the-money" if the fair market value of the underlying stock
exceeds the exercise price of the option. The figure represents the value of
such option determined by multiplying the number of shares subject to the option
by the difference between the $8.38 exercise price and the fair market value of
the common shares subject to the option, which was $20.00 per share on December
31, 1998, based upon the closing sales price reported by The Nasdaq Stock
Market.
RECOGNITION AND RETENTION PLAN
Shareholders approved the RRP at the 1994 Annual Meeting of
Shareholders of Potters Bank. In connection with the Conversion, 31,740 (as
adjusted to give effect to a stock split in the form of a stock dividend
effective in December 1997) common shares were purchased by the RRP trust with
funds contributed by Potters Bank, and 39,968 (as adjusted) common shares were
awarded under the RRP to directors and executive officers. Since such awards
were made, 17,148 common shares have been earned and distributed to participants
and 8,320 common shares have been forfeited by the termination of employment of
participants.
The RRP is administered by the RRP Committee of the Board of Directors,
which determines awards of common shares to be made under the RRP. The common
shares awarded under the RRP are earned by a recipient one-fifth on each
anniversary of the date of the award. Awarded but unearned common shares are
held by the RRP trust. A recipient may direct the voting of all common shares
awarded to him or her, regardless of whether such common shares have been
earned, and will be entitled to receive any dividends or other distributions
paid on all awarded but unearned common shares.
8
<PAGE> 11
EMPLOYMENT AGREEMENT
PFC and Potters Bank entered into a three-year severance agreement with
Mr. Baumgardner, effective February 28, 1997. The agreement provides that if the
employment of Mr. Baumgardner is terminated at any time during such three-year
term (i) without Mr. Baumgardner's written consent, (ii) for any reason other
than "just cause" (as defined in the agreement), and (iii) in connection with or
within one year of a change of control, Mr. Baumgardner will be entitled to
receive, within 10 days of such termination, a payment equal to 1.2 times his
annual compensation for the prior year plus, if permissible under the benefit
plans, continued health insurance and other benefits for the remainder of the
three-year term of the agreement. If in connection with or within one year of a
change of control of PFC or Potters Bank, Mr. Baumgardner's compensation is
reduced, certain conditions of his employment are changed or Mr. Baumgardner's
duties or responsibilities are materially changed, Mr. Baumgardner will be
entitled to voluntarily terminate his employment and receive the same payment
and benefits. If the change of control occurs during the last year of the term
of the agreement, the term of the agreement will be extended to fifteen months
from the date of the change of control. Any payment under the agreement will be
subject to reduction, to the extent necessary, to comply with certain provisions
of the Code of 1986, as amended. Assuming termination for other than "just
cause" and in connection with such a change of control, Mr. Baumgardner would
receive $152,340, plus other benefits, based on his compensation for fiscal
1998.
CERTAIN TRANSACTIONS
Potters Bank has made loans to certain of PFC's directors and executive
officers, their affiliates and members of their families. All loans to directors
and executive officers are made on the same terms as offered to employees in a
company-wide benefit program. Loans to all directors and employees, other than
commercial and nonowner-occupied residential loans, are made with an interest
rate 1% below the interest rate for comparable transactions with other persons,
and no document preparation fees are collected. Commercial and nonowner-occupied
residential loans are made at market interest rates and on the same terms as
offered to the general public. The following table sets forth information on all
loans with balances greater than $60,000 at any time during 1997 and 1998 made
to directors and executive officers:
<TABLE>
<CAPTION>
Balance at
Name Type of Loan December 31, 1998
---- ------------ -----------------
<S> <C> <C>
William L. Miller Real estate - residence $364,989
William L. Miller Commercial real estate 330,200
Suzanne B. Fitzgerald Real estate - residence 91,261
Suzanne B. Fitzgerald Home equity line of credit 9,230
Timothy M. O'Hara Real estate - residence 66,616
Peter D. Visnic Real estate - residence 97,632
Edward L. Baumgardner Real estate - residence 55,917
Albert E. Sampson Real estate - residence 63,095
Albert E. Sampson Real estate - rental property 97,334
Stephen A. Beadnell Real estate - residence 141,773
</TABLE>
Potters Bank leases the land for its Calcutta, Ohio, branch from
Billingsley, Incorporated, a corporation owned by Mr. Billingsley. The rental
payments under the lease are $34,000 per year. The lease terminates on January
31, 2008, although Potters Bank has an option to renew the lease for up to five
additional five-year periods.
9
<PAGE> 12
PROPOSAL TWO
SELECTION OF AUDITORS
The Board of Directors has selected Crowe Chizek to act as the auditors
of PFC for the current fiscal year and recommends that the shareholders ratify
the selection. The firm has audited PFC and Potters Bank since 1993. Management
expects that a representative of Crowe Chizek will be present at the Annual
Meeting, will have the opportunity to make a statement if he or she so desires
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS OF PFC RECOMMENDS THAT THE SHAREHOLDERS OF PFC
RATIFY THE SELECTION OF THE AUDITORS FOR THE CURRENT FISCAL YEAR. Accordingly
the shareholders of PFC will be asked to approve the following resolution at the
Annual Meeting:
RESOLVED, that the selection of Crowe Chizek as the auditors of PFC for
the current fiscal year be, and it hereby is, ratified.
PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS
Any proposals of shareholders intended to be included in the proxy
statement for the 2000 Annual Meeting of Shareholders of PFC should be sent to
PFC by certified mail and must be received by PFC by November 19, 1999. In
addition, if a shareholder intends to present a proposal at the 2000 Annual
Meeting without including the proposal in the proxy materials related to that
meeting, and if the proposal is not received by February 3, 2000, then the
proxies designated by the Board of Directors of PFC for the 2000 Annual Meeting
of Shareholders of PFC may vote in their discretion on any such proposal any
shares for which they have been appointed proxies without mention of such matter
in the proxy statement or on the proxy card for such meeting.
Management knows of no other business that may be brought before the
Annual Meeting. It is the intention of the persons named in the enclosed Proxy
to vote such Proxy in accordance with their best judgment on any other matters
that may be brought before the Annual Meeting.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN
AND RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
East Liverpool, Ohio
March 5, 1999 Anne S. Myers, Secretary
10
<PAGE> 13
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS OF
POTTERS FINANCIAL CORPORATION
1999 ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1999
The undersigned shareholder of Potters Financial Corporation ("PFC") hereby
constitutes and appoints Arthur T. Doak and Peter D. Visnic, or either one of
them, as the Proxy or Proxies of the undersigned with full power of substitution
and resubstitution, to vote at the Annual Meeting of Shareholders of PFC to be
held at the East Liverpool High School Alumni Association Clock Tower and
Museum, 216 East Fourth Street, East Liverpool, Ohio, on April 22, 1999, at
10:00 A.M. (the "Annual Meeting") all of the shares of PFC which the undersigned
is entitled to vote at the Annual Meeting, or at any adjournment thereof, on
each of the following proposals, all of which are described in the accompanying
Proxy Statement:
REVOCABLE PROXY
POTTERS FINANCIAL CORPORATION
FOR WITH- FOR ALL
HOLD EXCEPT
1. The election of four [ ] [ ] [ ]
directors:
WILLIAM L. MILLER
EDWARD L. BAUMGARDNER
WM. GAYLORD BILLINGSLEY
SUZANNE B. FITZGERALD
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK "FOR
ALL EXCEPT" ABOVE AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
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FOR AGAINST ABSTAIN
2. The ratification of the selection [ ] [ ] [ ]
of Crowe, Chizek and Company LLP
as the auditors of PFC for the
current year.
3. In their discretion, upon such other business as may properly come
before the Annual Meeting or any adjournment thereof.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. Unless otherwise
specified, the shares will be voted FOR Proposals 1 and 2.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents
should give their full titles.
Please be sure to sign and date Date
this Proxy in the box below. ---------------------
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Shareholder sign above Co-holder (if any) sign above
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DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED
POTTERS FINANCIAL CORPORATION
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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