<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
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
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Pennwood Bancorp, Inc.
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ------------------------------------------------------------------------------
(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
[Pennwood Bancorp Letterhead]
October 15, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Pennwood Bancorp, Inc. The meeting will be held at the main office of Pennwood
Savings Bank, located at 683 Lincoln Avenue, Bellevue, Pennsylvania on
Wednesday, November 18, 1998 at 6:00 p.m., Eastern Time. The matters to be
considered by stockholders at the Annual Meeting are described in the
accompanying materials.
It is very important that your shares be voted at the Annual Meeting
regardless of the number you own or whether you are able to attend the meeting
in person. We urge you to mark, sign, and date your proxy card today and return
it in the envelope provided, even if you plan to attend the Annual Meeting. This
will not prevent you from voting in person, but will ensure that your vote is
counted if you are unable to attend.
Your continued support of and interest in Pennwood Bancorp, Inc. is
sincerely appreciated.
Sincerely,
/s/ PAUL S. PIEFFER
Paul S. Pieffer
President and Chief
Executive Officer
<PAGE> 3
PENNWOOD BANCORP, INC.
683 LINCOLN AVENUE
BELLEVUE, PENNSYLVANIA 15202
(412) 761-1234
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 18, 1998
----------
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders ("Annual
Meeting") of Pennwood Bancorp, Inc. (the "Company") will be held at the main
office of Pennwood Savings Bank located at 683 Lincoln Avenue, Bellevue,
Pennsylvania on Wednesday, November 18, 1998 at 6:00 p.m., Eastern Time, for the
following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(1) To elect one (1) director to a three-year term expiring in 2001 or
until his successor is elected and qualified.
(2) To ratify the appointment by the Board of Directors of KPMG Peat
Marwick LLP, as the Company's independent auditors for the fiscal
year ending June 30, 1999; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of any
other such business.
The Board of Directors has fixed September 30, 1998 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting and at any adjournment thereof. Only those stockholders of
record as of the close of business on that date will be entitled to vote at the
Annual Meeting or at any such adjournment.
By Order of the Board of Directors
/s/ JAMES W. KIHM
James W. Kihm
Vice President and Secretary
Bellevue, Pennsylvania
October 15, 1998
- ------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- ------------------------------------------------------------------------------
<PAGE> 4
PENNWOOD BANCORP, INC.
----------
PROXY STATEMENT
----------
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 18, 1998
This Proxy Statement is furnished to holders of common stock, $.01 par
value per share ("Common Stock"), of Pennwood Bancorp, Inc. (the "Company"), the
holding company of Pennwood Savings Bank (the "Savings Bank"). Proxies are being
solicited on behalf of the Board of Directors of the Company to be used at the
Annual Meeting of Stockholders ("Annual Meeting") to be held at the main office
of the Savings Bank, located at 683 Lincoln Avenue, Bellevue, Pennsylvania on
Wednesday, November 18, 1998 at 6:00 p.m., Eastern Time, and at any adjournment
thereof for the purposes set forth in the Notice of Annual Meeting of
Stockholders. This Proxy Statement is first being mailed to stockholders on or
about October 15, 1998.
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for the matters described below and, upon the
transaction of such other business as may properly come before the meeting, in
accordance with the best judgment of the persons appointed as proxies. Any
stockholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing with the Secretary of the Company written notice thereof
(James W. Kihm, Vice President and Secretary, Pennwood Bancorp, Inc., 683
Lincoln Avenue, Bellevue, Pennsylvania 15202); (ii) submitting a duly-executed
proxy bearing a later date; or (iii) appearing at the Annual Meeting and giving
the Secretary notice of his or her intention to vote in person. Proxies
solicited hereby may be exercised only at the Annual Meeting and any adjournment
thereof and will not be used for any other meeting.
VOTING
Only stockholders of record of the Company at the close of business on
September 30, 1998 ("Voting Record Date") are entitled to notice of and to vote
at the Annual Meeting and at any adjournment thereof. On the Voting Record Date,
there were 662,524 shares of Common Stock of the Company issued and outstanding
and the Company had no other class of equity securities outstanding. Each share
of Common Stock is entitled to one vote at the Annual Meeting on all matters
properly presented at the Annual Meeting. Directors are elected by a plurality
of the votes cast with a quorum present. The affirmative vote of the holders of
a majority of the total votes present, in person or by proxy, at the Annual
Meeting is required for the proposal to ratify the independent auditors for
fiscal 1999. Abstentions are considered in determining the presence of a quorum
and will not effect the plurality vote required for the election of directors
but will have the effect of a vote against the proposal to ratify the
independent auditors. Under rules applicable to
<PAGE> 5
broker-dealers, the proposals to be considered at the Annual Meeting are
considered "discretionary" items upon which brokerage firms may vote in their
discretion on behalf of their clients if such clients have not furnished voting
instructions. Thus, there will be no "broker non-votes" at the Annual Meeting.
INFORMATION WITH RESPECT TO NOMINEE FOR DIRECTOR,
DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide that the Board of
Directors of the Company shall be divided into three classes which are as equal
in number as possible, and that members of each class of directors are to be
elected for a term of three years. One class is to be elected annually.
Stockholders of the Company are not permitted to cumulate their votes for the
election of directors.
The nominee for director is not related to any other director or executive
officer of the Company by blood, marriage or adoption, and currently serves as a
director of the Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominee for director listed
below. If the nominee should be unable or unwilling to stand for election at the
time of the Annual Meeting, the proxies will nominate and vote for any
replacement nominee recommended by the Board of Directors. At this time, the
Board of Directors knows of no reason why the nominee listed below may not be
able to serve as a director if elected.
The person who receives the greatest number of votes of the holders of
Common Stock represented in person or by proxy at the Annual Meeting will be
elected a director of the Company.
The following tables present information concerning the nominee for
director of the Company and each director whose term continues, including tenure
as a director of the Savings Bank.
NOMINEE FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2001
<TABLE>
<CAPTION>
Positions Held Director
Name Age in the Company Since(1)
- -------------------- -------- ---------------------------- -------------
<S> <C> <C> <C>
H. J. Zoffer 68 Director 1991
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR ELECTION OF THE NOMINEE FOR
DIRECTOR.
2
<PAGE> 6
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE TERMS EXPIRE IN 1999
<TABLE>
<CAPTION>
Positions Held Director
Name Age in the Company Since(1)
- -------------------- -------- ---------------------------- -------------
<S> <C> <C> <C>
Mary M. Frank 80 Vice Chairman 1971
John B. Mallon 77 Director 1975
C. Joseph Touhill 60 Director 1991
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 2000
<TABLE>
<CAPTION>
Positions Held Director
Name Age in the Company Since(1)
- --------------------- -------- ---------------------------- -----------
<S> <C> <C> <C>
Paul S. Pieffer 50 Director, President and Chief 1985
Executive Officer
Robert W. Hannan 59 Director 1991
Michael Kotyk 68 Director 1998
</TABLE>
- -----------
(1) Includes service as a director of the Savings Bank.
Each of the directors of the Company is also a director of the Savings
Bank. Set forth below is information with respect to the principal occupations
during at least the last five years for each of the directors.
Mary M. Frank. Ms. Frank has served as Vice Chairman of the Board of
Directors of the Savings Bank since 1985 and Treasurer of the Savings Bank since
1992. Prior thereto, Ms. Frank served as the Executive Vice President and
Secretary of the Savings Bank from 1975 to 1985. Ms. Frank is the wife of Mr.
Charles R. Frank.
Paul S. Pieffer. Mr. Pieffer has served as President and Chief Executive
Officer of the Savings Bank since 1985. Prior thereto, Mr. Pieffer was the Vice
President of South Pittsburgh Savings and Loan Association, Pittsburgh,
Pennsylvania, from 1973 to 1985.
John B. Mallon. Mr. Mallon is presently retired. Prior thereto, Mr. Mallon
served as the President of Suburban General Hospital located in Pittsburgh,
Pennsylvania from 1952 to 1986.
3
<PAGE> 7
C. Joseph Touhill. Mr. Touhill has been the President of Touhill
Technology Management Corporation, Pittsburgh, Pennsylvania, since July 1997.
Previously, he was the Executive Vice President of EG & G Environmental, Inc.
located in Pittsburgh, Pennsylvania from 1994 to 1997. Prior thereto, Mr.
Touhill served as the Group Senior Vice President of ICF Kaiser International
located in Pittsburgh, Pennsylvania from 1990 to 1994.
Robert W. Hannan. Mr. Hannan has been retired since July 1998. Prior
thereto, Mr. Hannan was the Vice Chairman of Eckerd Corporation, Largo, Florida
from February 1997 to July 1998. Previously he served as the President of Thrift
Drug Inc. located in Pittsburgh, Pennsylvania from 1987 to 1997.
Michael Kotyk. Mr. Kotyk is presently retired. Prior thereto, Mr. Kotyk
was the Technical Director of Materials Technology at U.S. Steel Corporation,
Pittsburgh, Pennsylvania, from 1991 to 1993.
H. J. Zoffer. Mr. Zoffer has been Dean Emeritus since August 1996 and a
Professor since August 1966 of the Joseph M. Katz Graduate School of Business at
the University of Pittsburgh. Mr. Zoffer was the Dean of the Joseph M. Katz
Graduate School of Business from 1968 until August 1996. Mr. Zoffer is a member
of the Boards of Directors of the Homestate Growth Fund, Pennsylvania Select
Fund and Y2K Fund.
Charles R. Frank. Mr. Frank, whose directorship expires at the Annual
Meeting, has served as Chairman of the Board of Directors of the Savings Bank
since 1985. Prior thereto, Mr. Frank served as the President of the Savings Bank
from 1975 to 1985.
STOCKHOLDER NOMINATIONS
Section 3.12 of the Company's Articles of Incorporation governs
nominations for election to the Board of Directors and requires all such
nominations, other than those made by the Board, to be made at a meeting of
stockholders called for the election of directors, and only by a stockholder who
has complied with the notice provisions in that section. Stockholder nominations
must be made pursuant to timely notice in writing to the Secretary of the
Company. To be timely, a stockholder's notice must be delivered to, or mailed
and received at, the principal executive offices of the Company not later than
(i) 90 days prior to the anniversary date of the mailing of proxy materials by
the Company for the immediately preceding annual meeting and (ii) with respect
to an election to be held at a special meeting of stockholders for the election
of directors, the close of business on the tenth day following the date on which
notice of such meeting is first given to stockholders. Each such notice shall
set forth: (a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the stockholder is a holder of record of stock of the Company entitled to
vote at such meeting and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the stockholder and each nominee and
any arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would be
required to be included
4
<PAGE> 8
in a proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission; and (e) the consent of each nominee to serve as a director
of the Company if so elected. The presiding officer of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedures.
COMMITTEES AND MEETINGS OF THE BOARD OF THE SAVINGS BANK AND COMPANY
Regular meetings of the Board of Directors of the Company are held on a
quarterly basis. The Board of Directors of the Company held a total of 6 regular
and special meetings during the fiscal year ended June 30, 1998. No incumbent
director attended fewer than 75% of the aggregate total number of meetings of
the Board of Directors held during the fiscal year ended June 30, 1998, and the
total number of meetings held by all committees on which he or she served during
such year.
The entire Board of Directors of the Company acts as a Nominating
Committee for selection of nominees for election as directors of the Company.
The Board, acting as the Nominating Committee, met one time during the fiscal
year ended June 30, 1998.
The Board of Directors of the Savings Bank meets on a monthly basis and
may have additional special meetings. During the fiscal year ended June 30,
1998, the Board of Directors met 12 times. The Board of Directors of the Savings
Bank has established the following committees:
Audit Committee. The Audit Committee consists of Messrs. Touhill
(Chairman) and Mallon and Ms. Frank. The Audit Committee reviews the records and
affairs of the Savings Bank, recommends the Savings Bank's external auditor and
reviews their reports. The Audit Committee met two times in fiscal 1998.
Personnel/Compensation Committee. The Personnel/Compensation Committee
consists of Messrs. Mallon (Chairman), Hannan, Zoffer, Pieffer and Ms. Frank.
The Personnel Committee reviews the performance of the Savings Bank's officers,
makes recommendations as to pay increases and evaluates the Savings Bank's
overall personnel requirements. The Personnel Committee met two times in fiscal
1998.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information with respect to the principal occupations
during the last five years for the executive officers of the Company and the
Savings Bank who do not serve as directors.
James W. Kihm. Mr. Kihm has been the Vice President and Secretary of the
Company since January 1997 and has held those positions with Savings Bank since
1985. Prior thereto, Mr. Kihm was the Vice President of Concord Liberty Savings
and Loan Association, Pittsburgh, Pennsylvania, from 1981 to 1985.
Joseph W. Messner. Mr. Messner has been the Vice President of Lending of
the Savings Bank since June 1994. Prior thereto, Mr. Messner served as an
underwriter with Creditvest, Inc. located in Pittsburgh, Pennsylvania from 1992
to 1994 and served as a loan officer at Norwest Mortgage, Pittsburgh,
Pennsylvania, from August 1991 to January 1992 and at NVR Mortgage, Pittsburgh,
Pennsylvania, from 1987 to April 1991.
5
<PAGE> 9
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) each person or
entity, including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), who or which was
known to the Company to be the beneficial owner of more than 5% of the issued
and outstanding Common Stock, (ii) the directors of the Company, (iii) certain
executive officers of the Company, and (iv) all directors and executive officers
of the Company and the Savings Bank as a group.
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group September 30, 1998(1)(2) Common Stock*
---------------- ------------------------ -------------
<S> <C>
Pennwood Bancorp, Inc. 65,080(3) 9.82%
Employee Stock Ownership Plan Trust
683 Lincoln Avenue
Bellevue, Pennsylvania 15202
Directors:
Mary M. Frank 21,273(4)(5)(8) 3.2
John B. Mallon 9,514(5)(8) 1.4
C. Joseph Touhill 7,615(5)(8) 1.1
Charles R. Frank 21,409(4)(5) 3.2
H.J. Zoffer 10,948(5) 1.7
Paul S. Pieffer 29,053(5)(6) 4.4
Robert W. Hannan 12,948(5) 2.0
Michael Kotyk 10,548(5) 1.6
All directors and executive officers 110,907(3)(5)(7) 16.7
of the Company and the Savings Bank
as a group (10 persons)
</TABLE>
(Footnotes on next page)
6
<PAGE> 10
- -----------------
* As of September 30, 1998, there were 662,524 shares of Common Stock issued
and outstanding.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of Common Stock are deemed to be
beneficially owned by a person if he or she directly or indirectly has or
shares (i) voting power, which includes the power to vote or to direct the
voting of the shares, or (ii) investment power, which includes the power
to dispose or to direct the disposition of the shares. Unless otherwise
indicated, the named beneficial owner has sole voting and dispositive
power with respect to the shares.
(2) All share amounts reflect the 4-for-3 split of the Common Stock effected
on May 15, 1998 ("Stock Split").
(3) The Pennwood Bancorp, Inc. Employee Stock Ownership Plan Trust ("ESOP
Trust") holds Common Stock on behalf of employee participants of the plan.
As of the Voting Record Date, 13,016 shares have been allocated to the
accounts of participating employees and will be voted in accordance with
such participants instructions. The 52,064 shares held in the ESOP Trust
which are unallocated will be voted by Messrs. Frank, Pieffer and Mallon
(the "Trustees") pursuant to the terms of the ESOP in the same proportion
for and against each proposal as the allocated shares are actually voted
by participants. The shares held in the ESOP Trust are not included in the
individual beneficial ownership amounts of the Trustees or the amount of
Common Stock beneficially owned by all officers and directors as a group.
(4) Includes 20,595 shares which are held jointly by Mr. and Mrs. Frank.
(5) Includes shares of Common Stock underlying vested stock options granted
under the Company's 1997 Stock Option Plan ("Stock Option Plan") in the
following amounts: Mary M. Frank, 678; John B. Mallon, 678; C. Joseph
Touhill, 678; Charles R. Frank, 814; H. J. Zoffer, 678; Paul S. Pieffer,
4,068; Robert W. Hannan, 678; and Michael Kotyk, 678.
(6) Includes 3,359 shares allocated to the account of Mr. Pieffer pursuant to
the Company's ESOP.
(7) Includes 7,548 shares allocated to the accounts of all executive officers
as a group pursuant to the Company's ESOP.
(8) Does not include 27,011 shares of Common Stock held in trust (the "RRP
Trust") for the Pennwood Bancorp, Inc. 1997 Recognition and Retention Plan
("RRP") which have not yet been earned and allocated. Messrs. John B.
Mallon and C. Joseph Touhill and Ms. Mary M. Frank serve as Trustees of
the RRP Trust. Pursuant to the terms of the RRP, shares of Common Stock
held in the RRP Trust which have not yet been earned and allocated are
voted by the Trustees in their sole discretion.
7
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information
concerning the compensation paid by the Company and the Savings Bank for
services rendered in all capacities during the three years ended June 30, 1998
to the Chief Executive Officer. No other executive officer of the Company and
its subsidiaries had total compensation during the last fiscal year in excess of
$100,000.
<TABLE>
<CAPTION>
============================================================================================================
Annual Compensation Long Term Compensation
------------------------------------------------------------------
Awards All Other
-------------------- Compensation
Name and Fiscal Other Annual (4)
Principal Position Year Salary Bonus Compensation(1) Stock
Grants(2) Options(3)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul S. Pieffer 1998 $87,000 -- -- -- -- --
President and Chief 1997 84,500 -- -- $86,177 20,340 $19,352
Executive Officer 1996 80,750 -- -- -- -- -
============================================================================================================
</TABLE>
(1) Does not include amounts attributable to miscellaneous benefits received
by the named executive officers. In the opinion of management of the
Company, the costs to the Company of providing such benefits to the
executive officer during the indicated periods did not exceed the lesser
of $50,000 or 10% of the total of annual salary and bonus reported for
the individual.
(2) In fiscal 1997, represents the grant of 8,134 shares of restricted
Common Stock pursuant to the RRP (as adjusted pursuant to the
anti-dilution provisions of the RRP to reflect the Stock Split) which
had the indicated value on the date of grant. The fair market value of
the aggregate restricted stock held by Mr. Pieffer at June 30, 1998
equaled $109,809. Restricted Common Stock awarded pursuant to the RRP
vests over a five-year period at a rate of 20% per year, beginning one
year from the anniversary date of the grant. Dividends declared in
respect of unvested share awards are held by the RRP Trust for the
benefit of the recipient and such dividends, including interest thereon,
is paid out proportionately by the RRP Trust to the recipients thereof
after the share awards become earned. Dividends declared in respect of
each vested share held by the RRP Trust are paid by the RRP Trust after
its receipt thereof to the recipient on whose behalf such share is then
held by the RRP Trust.
(3) Options received during fiscal 1997 have been adjusted pursuant to the
anti-dilution provisions of the Stock Option Plan to reflect the Stock
Split.
(4) In fiscal 1997, represents the allocation of shares of Common Stock
pursuant to the Company's ESOP.
8
<PAGE> 12
STOCK OPTIONS
The Company did grant any stock option awards to the named executive
officer during fiscal 1998.
The following table sets forth certain information concerning exercises
of stock options by the named executive officer during the fiscal year ended
June 30, 1998 and options held at June 30, 1998.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
===========================================================================================================================
Number of Unexercised Options at Value of Unexercised Options at Year
Shares Year End(1) End(2)
Acquired ------------------------------------------------------------------------------
on Value Exercisable Unexercisable Exercisable Unexercisable
Name Exercise Realized
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Paul S. Pieffer -- - 4,068 16,272 $54,918 $219,672
===========================================================================================================================
</TABLE>
(1) Stock options granted prior to May 15, 1998 have been adjusted pursuant
to the anti-dilution provisions of the Stock Option Plan to reflect the
Stock Split.
(2) Based on a per share market price of $13.50 at June 30, 1998.
DIRECTOR COMPENSATION
Members of the Board of Directors, with the exception of Mr. Pieffer,
receive $7,200 per annum for serving on the Board. Members of the Board serving
on committees do not receive any additional compensation for serving on such
committees.
Members of the Board of Directors are eligible to receive stock options
and stock appreciation rights pursuant to the Company's Stock Option Plan,
however, no such stock options or stock appreciation rights were awarded to
directors during fiscal 1998. In addition, members of the Board of Directors are
eligible to receive awards of restricted Common Stock pursuant to the Company's
RRP.
PENSION PLAN
The Savings Bank participates in a multiple employer defined benefit
pension plan that covers all employees that have attained 21 years of age and
have completed one full year of service (consisting of 1,000 hours worked during
the year). In general, the pension plan provides for benefits payable monthly at
retirement or normal retirement age 65 in an amount equal to a percentage of the
participant's average annual salary for the three consecutive years of highest
salary during his service with the Savings Bank, multiplied by the number of his
years of service, with a reduced level of benefits in the event of early
retirement prior to having attained age 65.
9
<PAGE> 13
Payment of benefits under the pension plan generally will be made in the
form of a life annuity to an unmarried participant or in the form of a qualified
joint and survivor annuity to a married participant, although alternative forms
of benefits are available. The pension plan also provides a death benefit
payment, in the event of death prior to retirement.
For the year ended June 30, 1998, no pension expense was recognized by
the Savings Bank.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended ("1934
Act"), requires the Company's officers and directors, and persons who own more
than 10% of the Common Stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc. Officers, directors and greater than 10%
stockholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms they file. The Company knows of no person who owns 10%
or more of the Common Stock.
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that during the year ended June 30, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and 10%
stockholders were complied with.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
All loans or extensions of credit to executive officers and directors
must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with the
general public and must not involve more than the normal risk of repayment or
present other unfavorable features.
The Savings Bank's policy provides that all loans made by the Savings
Bank to its directors and officers are made in the ordinary course of business,
are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectibility or
present other unfavorable features. As of June 30, 1998, the Savings Bank had no
loans outstanding to its executive officers and directors.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick
LLP, independent certified public accountants, to perform the audit of the
Company's financial statements for the year ending June 30, 1999, and further
directed that the selection of auditors be submitted for ratification by the
stockholders at the Annual Meeting.
The Company has been advised by KPMG Peat Marwick LLP that neither that
firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual
10
<PAGE> 14
relationship that exists between independent certified public accountants and
clients. KPMG Peat Marwick LLP will have one or more representatives at the
Annual Meeting who will have an opportunity to make a statement, if they so
desire, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING JUNE 30, 1999.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to its 1999 Annual Meeting of Stockholders
must be received at the principal executive offices of the Company, 983 Lincoln
Avenue, Bellevue, Pennsylvania 15202, Attention: James W. Kihm, Vice President
and Secretary, no later than June 17, 1999. If such proposal is in compliance
with all of the requirements of Rule 14a-8 under the Exchange Act, it will be
included in the proxy statement and set forth on the form of proxy issued for
such annual meeting of stockholders. It is urged that any such proposals be sent
certified mail, return receipt requested.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Section 2.10 of the Company's
Articles of Incorporation, which provides that business at an annual meeting of
stockholders must be (a) properly brought before the meeting by or at the
direction of the Board of Directors, or (b) otherwise properly brought before
the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely with
respect to the Company's 1999 Annual Meeting of Stockholders, notice thereof in
writing to the Secretary of the Company. To be timely with respect to the
Company's 1999 Annual Meeting of Stockholders, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company no later than July 17, 1998. A stockholder's notice to the Secretary
must set forth as to each matter the stockholder proposes to bring before the
annual meeting (a) a brief description of the business desired to be brought
before the annual meeting, (b) the name and address, as they appear on the
Company's books, of the stockholder proposing such business, (c) the class and
number of shares of the Company which are beneficially owned by the stockholder,
and (d) any material interest of the stockholder in such business.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
June 30, 1997 accompanies this Proxy Statement. Such annual report is not part
of the proxy solicitation materials.
11
<PAGE> 15
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB
FOR FISCAL 1998 REQUIRED TO BE FILED WITH THE COMMISSION UNDER THE EXCHANGE ACT.
SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO JAMES W. KIHM, VICE PRESIDENT AND
SECRETARY, PENNWOOD BANCORP, INC., 683 LINCOLN AVENUE, BELLEVUE, PENNSYLVANIA
15202. THE FORM 10-KSB IS NOT PART OF THE PROXY SOLICITATION MATERIALS.
OTHER MATTERS
Management is not aware of any business to come before the Annual
Meeting other than the matters described above in this Proxy Statement. However,
if any other matters should properly come before the meeting, it is intended
that the proxies solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the Company's Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
By Order of the Board of Directors
/s/ PAUL S. PIEFFER
Paul S. Pieffer
President and Chief Executive Officer
October 15, 1998
12
<PAGE> 16
FORM OF REVOCABLE PROXY
PENNWOOD BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PENNWOOD
BANCORP, INC. ("COMPANY") FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON NOVEMBER 18, 1998 AND AT ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of the Company as of September 30,
1998, hereby authorizes the Board of Directors of the Company, or any successors
thereto, as proxies with full powers of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held at
the main office of Pennwood Savings Bank, located at 683 Lincoln Avenue,
Bellevue, Pennsylvania, on Wednesday, November 18, 1998 at 6:00 p.m., Eastern
Time, and at any adjournment of said meeting, and thereat to act with respect to
all votes that the undersigned would be entitled to cast, if then personally
present, as follows:
1. ELECTION OF DIRECTOR
[ ] FOR [ ] WITHHOLD
Nominee for three-year term: H. J. Zoffer
2. PROPOSAL to ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ending June 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE> 17
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF NOT
OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEE TO THE BOARD OF DIRECTORS, FOR PROPOSAL 2 AND OTHERWISE AT
THE DISCRETION OF THE PROXIES. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO
THE TIME IT IS VOTED AT THE ANNUAL MEETING.
Dated:________________________, 1998
------------------------------------
------------------------------------
Signature(s)
PLEASE SIGN THIS EXACTLY AS YOUR
NAME(S) APPEAR(S) ON THIS PROXY. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY,
PLEASE GIVE TITLE. WHEN SHARES ARE
HELD JOINTLY, ONLY ONE HOLDER NEED
SIGN.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 18
FORM OF REVOCABLE PROXY
FOR PARTICIPANTS OF THE
COMPANY'S ESOP
PENNWOOD BANCORP, INC.
The undersigned hereby instructs the Trustees of the Employee Stock
Ownership Plan and Trust ("ESOP") of Pennwood Bancorp, Inc. (the "Company") to
vote, as designated below, all the shares of Common Stock of the Company
allocated to the undersigned pursuant to the ESOP as of September 30, 1998, at
the Annual Meeting of Stockholders to be held at the main office of Pennwood
Savings Bank, located at 683 Lincoln Avenue, Bellevue, Pennsylvania, on
Wednesday, November 18, 1998 at 6:00 p.m., Eastern Time, and any adjournment
thereof.
1. ELECTION OF DIRECTOR
[ ] FOR nominee listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for
to the contrary below) nominee listed
below
Nominee for three-year term: H. J. Zoffer
2. PROPOSAL to ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ending June 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Trustees are authorized to vote upon such other
business as may properly come before the meeting.
The Company's Board of Directors recommends a vote FOR the Election of the
Nominee for Director and for Proposal 2. Such votes are hereby solicited by the
Company's Board of Directors.
Dated:____________, 1998
---------------------------
Signature
If you return this card properly signed but you do not otherwise specify, shares
will be voted for the Election of the Nominees for Director and for Proposal 2.
If you do not return this card, your shares will not be voted.
<PAGE> 19
[PENNWOOD BANCORP, INC. LETTERHEAD]
October 15, 1998
TO: Participants in the Employee Stock Ownership Plan of Pennwood Bancorp,
Inc.
As described in the attached materials, your proxy as a stockholder of Pennwood
Bancorp, Inc. (the "Company") is being solicited in connection with the
proposals to be considered at the Company's upcoming Annual Meeting of
Stockholders. We hope you will take advantage of the opportunity to direct, on a
confidential basis, the manner in which shares of Common Stock of the Company
allocated to your account under the Company's Employee Stock Ownership Plan (the
"Plan") will be voted.
Enclosed with this letter is the Proxy Statement, which describes the matters to
be voted upon, and a voting instruction ballot, which will permit you to vote
the shares allocated to your account. After you have reviewed the Proxy
Statement, we urge you to vote your shares held pursuant to the Plan by marking,
dating, signing and returning the enclosed voting instruction ballot to the
Trustees of the Plan in the envelope provided. The Trustees will certify the
totals to the Company for the purpose of having those shares voted.
We urge each of you to vote, as a means of participating in the governance of
the affairs of the Company. If your voting instructions for the Plan are not
received, the shares allocated to your account will not be voted. While I hope
that you will vote in the manner recommended by the Board of Directors, the most
important thing is that you vote in whatever manner you deem appropriate. Please
take a moment to do so.
Please note the enclosed material relates only to those shares which have been
allocated to your account under the Plan. You will receive other voting material
for those shares owned by you individually and not under the Plan.
Sincerely,
Paul S. Pieffer
President
